Category: Current Affairs

Should we worry about Mexican remittances?

Our trade deficit has reached a record high, and Mexicans are sending billions of dollars home to their poorer relatives. Is this a problem?

Most importantly, poverty in Mexico declines. Many recipients earn no more than a dollar or two a day. As for America, sending the funds does not damage the U.S. economy. For purposes of comparison, let’s say that Mexicans came to this country, worked to earn money, and then burned the dollar bills. Would this “trade deficit” hurt us? No. Wiring funds to Mexico has similar effects. If the dollars don’t come back, it is as if they have been burned. We have earned seigniorage by trading paper for goods. If the dollars do come back, someone is investing in the U.S. or buying exports.

The level of remittances does mean that we should be less worried about the trade deficit. Think of the remittance as redistributing wealth within Mexico, but without costing the United States real resources.

To some extent our trade deficit may reflect an inadequately low rate of saving. But wiring money abroad is not the central cause of low savings. First, migrant workers often contribute to our capital stock. Second, sending the money to Mexico is probably a substitute for spending it (most senders of remittances are themselves relatively poor, and thus have lower savings rates). So when these people “burn” their money by sending it abroad, they are lowering the real quantity of American resources devoted to consumption. Let’s not confuse sending money with sending real resources.

Read Econopundit for a more negative spin. Randall Parker inclines negatively on remittances as well. I often agree with Randall, but on this issue I am ready to send away…

The Poles praise Ronald Reagan

The passing of Ronald Reagan was a major event in Poland. It was prominent in the newspapers and in conversation. Lech Walesa recently wrote:

I often wondered why Ronald Reagan did this, taking the risks he did, in supporting us at Solidarity, as well as dissident movements in other countries behind the Iron Curtain, while pushing a defense buildup that pushed the Soviet economy over the brink. Let’s remember that it was a time of recession in the U.S. and a time when the American public was more interested in their own domestic affairs. It took a leader with a vision to convince them that there are greater things worth fighting for. Did he seek any profit in such a policy? Though our freedom movements were in line with the foreign policy of the United States, I doubt it.

Noble sentiments, and I agree. Note that Reagan was far more popular in Poland than here in the United States. Read some horrific criticisms of Reagan.

The irony is that Lech Walesa, author of these words, remains far more popular in the United States than in his native Poland. Taxi drivers told us that the Poles “hated” Walesa, even though we regard him as a hero for world freedom.

Walesa ran for office, and was elected President of Poland in 1990 with 74 percent of the vote. He lost narrowly when he ran again in 1995 (Reagan at least beat Mondale!). When Walesa ran for President in 2000, he received less than one percent of the vote. (Reagan, in contrast, if he could run again today, would win in a landslide.)

Walesa spoke too plainly, promised too much, and maintained unpopular prohibitions against abortion. But when the sad day comes that Walesa passes away, we Americans will stand ready with our unstinting praise.

Thanks to co-blogger Alex for the pointer.

Rebellion against newspaper registration?

If you read blogs, you sometimes get frustrated when the links lead you to newspaper registration. Even if you don’t have to subscribe or pay money, you are asked to provide personal information, such as age, gender, zip code, and perhaps even hobbies. Newspapers have moved increasingly to registration over the last year, read more here.

Not surprisingly, consumers are striking back. Many write in false names, ages, and email addresses. allows readers to bypass registration procedures for most of the major paper sites. In essence they have already registered for you. Just insert the web address you want and you arrive there immediately.

I’m not endorsing this practice, and I haven’t a clue about its legal status. The economics are easier to predict. To the extent that people can bypass registration, newspapers will cut back on their free web offerings. So, whether you like it or not, you are contributing to a public good when you register dutifully.

We bloggers stand on the other side of this equation. I subscribe to USA Today, and link to it frequently, in part because of its on-line archive. It requires no registration and the archives remain available, free of charge. Unfortunately I am not the marginal consumer in this market.

I’ve wondered why hackers don’t reproduce the major newspaper sites, such as New York Times, or The Wall Street Journal, and offer them to the public free of charge. Why can’t you use Kazaa to read these papers, whether or not you have paid for a subscription?

Has Bush cut back government bureaucracy?

The following table lists how many of the major agencies or departments had their budgets cut in a given Presidential term:

President and Term, Number of Budget Cuts [see the last link in this post for further explanation of the data. I’ve done minor editing and added the boldface]

Johnson, 4 out 15
Nixon, 3 out 15
Carter, 5 out 15
Reagan 1, 8 out 15
Reagan 2, 10 out 15
Bush, George H., 2 out 15
Clinton 1, 9 out 15
Clinton 2, 0 out 15
Bush, George W., 0 out 15

Obviously Reagan II made real efforts in this direction. George W. comes in tied for last with Clinton II. This is a highly imperfect proxy, but when you are 0 for 15 it is hard to blame measurement error alone.

Here is one unnoticed achievement of Ronald Reagan:

President Reagan is the only president to have cut the budget of the Department of Housing and Urban Development in one of his terms (a total of 40.1 percent during his second term).

Here is the full and sad story on Bush’s fiscal policy for the agencies and departments. Here are the underlying data.


Zimbabwe continues its short march into barbarism. Here’s is a quote from land minister John Nkomo – sadly reminiscient of early twentieth century history.

Ultimately, all land shall be resettled as state property. It will now be the state which will enable the utilization of the land for national prosperity.

Of course, he was quoted in the government controlled newspaper. And get this, it’s not good enough that the government take the land:

Mr. Nkomo urged farmers to volunteer their land to the state rather than wait for an order, saying, “The state should not be made to waste time and money on acquisitions.”

The people of Zimbabwe are starving because of land “redistribution” could a better example of Robert Lucas’s dictum be found?

Immigration and 9/11

One of the few bright notes since 9/11 is that there has been no backlash against immigrants. Consider, for example, that there were 25 percent more immigrants to the United States in 2002 than in 2000 (see Table 1). Nor has there been an immigration backlash against Muslims – there were 19 percent more immigrants, for example, from Iran in 2002 than 2000 (see Table 2). Even more surprising, despite heightened examination, 20 percent fewer aliens were expelled from the United States in 2002 than in 2000 (see Table 43).

Polish memories

1. Hearing Poles say they love America, but America does not love them.

2. Hearing a Krakow taxi driver praise Ronald Reagan.

3. Staying in a “Jewish hotel” that can’t get kosher food right and hires Poles to stage Klezmer music for German tourists.

4. Seeing the Basilica in Krakow, arguably the most beautiful church in Europe. Which is saying something. Here are some images, but they don’t come close to the real thing.

5. Visiting Auschwitz and Birkenau. Words fail, but everyone should make this trip if they can.

Ronald Reagan the Libertarian

Here’s a wonderful quote from Reagan in 1975 from Reason magazine.

If you analyze it I believe the very heart and soul of conservatism is libertarianism. I think conservatism is really a misnomer just as liberalism is a misnomer for the liberals–if we were back in the days of the Revolution, so-called conservatives today would be the Liberals and the liberals would be the Tories. The basis of conservatism is a desire for less government interference or less centralized authority or more individual freedom and this is a pretty general description also of what libertarianism is.

Now, I can’t say that I will agree with all the things that the present group who call themselves Libertarians in the sense of a party say, because I think that like in any political movement there are shades, and there are libertarians who are almost over at the point of wanting no government at all or anarchy. I believe there are legitimate government functions. There is a legitimate need in an orderly society for some government to maintain freedom or we will have tyranny by individuals. The strongest man on the block will run the neighborhood. We have government to insure that we don’t each one of us have to carry a club to defend ourselves. But again, I stand on my statement that I think that libertarianism and conservatism are travelling the same path.

I found the above quote from a nice roundup on Reagan by Pejmanesque. See also my earlier commentary (below) Mourning in America and Fabio’s Reagan’s Message to the World.

Academic Freedom

Earlier Tyler posted the story of Daniel Sumner, the agricultural economist at the University of California at Davis who has been accused of “treason” for analyzing US cotton subsidies for Brazil in a WTO case. One of the most troubling aspects of the case is that instead of backing him to the hilt, Sumner’s dean bowed to King Cotton and questioned his judgment.

Michael Ward a professor of economics at the University of Texas at Arlington (and a regular MR reader, I might add) has authored a Petition in Support of Academic Freedom stating in part:

To the extent that it is within their expertise and terms of employment:

1. It is appropriate for scholars to engage in public policy debates regardless of the comments’ effects on US producers or consumers.
2. It is appropriate for scholars to consult with interested parties in policy-making or judicial matters even when the adversary is the US government or US interests.

You can express your support here.

Haitian fact of the day

In Haiti’s slums, round swirls of dough can be found baking in the sun. They look almost appetizing until you learn the ingredients: butter, salt, water and dirt…

And the dirt biscuits of Haiti – called “argile,” meaning clay, or “terre,” meaning earth – are not exactly a final cri de coeur against starvation.

Like the mice in Malawi, they are a staple of the very poor, somewhere between a snack and a desperation measure. Making them has been a regular business for years. The clay is trucked in plastic sacks from Hinche, on the central plateau. Blended with margarine or butter, they are flavored with salt, pepper and bouillon cubes and spooned out by the thousands on cotton sheets in sunny courtyards that are kept swept as “bakeries.” They cost about a penny apiece.

“They’re not food, really,” said David Gonzalez, a reporter at The Times who has visited Haiti many times. “People with hunger pangs eat them just to fill up their stomachs.”

Here is the full story (NYT); it is sad to even use the “food and drink” category for this entry. Here is a previous installment of “Haitian Fact of the Day.”

Update: I wrote this post a few days ago, before the horrific flood. Flooding is such a severe problem in Haiti because of deforestation, brought on by poorly defined property rights to trees and forest.

Update on my whereabouts

Today Paris is lovely; I would sooner say I am enjoying the French than arguing with them. My airport terminal was intact, my jet lag minimal, and my goat cheese salad excellent. I continue to flirt with the idea that the French, of all Europeans, are most like the Americans. Both, for instance, have a missionary impulse toward other cultures. And both are obsessed with quality, albeit in differing directions. The saddest thing for me here is that in the 1970s, they replaced Les Halles, the old food market where much of French cuisine evolved, with a soulless shopping mall. I will never get over that loss. On the other hand, it is remarkable how many shops you can find that will sell you a bar of dark chocolate for $5 or more; I never feel I am overpaying.

Total information awareness everywhere

According to this article, a database firm sent the Feds a list of 120,000 “potential terrorists” based on a “terrorism quotient” developed by scoring over 4 billion records.

The scoring incorporated such factors as age, gender, ethnicity, credit history, “investigational data,” information about pilot and driver licenses, and connections to “dirty” addresses known to have been used by other suspects.

According to Seisint’s presentation, dated January 2003 and marked confidential, the 120,000 names with the highest scores were given to the Immigration and Naturalization Service, FBI, Secret Service and Florida state police….

Of the people with the 80 highest scores, five were among the Sept. 11 hijackers, Seisint’s presentation said. Forty-five were identified as being or possibly being under existing investigations, while 30 others “were unknown to FBI.”

“Investigations were triggered and arrests were made by INS and other agencies,” the presentation added. Two bullet points stated: “Several arrests within one week” and “Scores of other arrests.” It does not provide details of when and where the investigations and arrests took place.

I’m somewhat suspicious of these claims – my regressions are never that accurate! – but let’s pass on that question for now. What I find especially interesting is that the same firm is selling similar sorts of information to private buyers as well as to the government. SmartJury, a division of Seisint, provides:

…real-time access to public record information on potential jurors. Within seconds of entering potential jurors, you will receive reports including information such as: Criminal Records; Political Party Affiliations; Bankruptcies; Corporate Affiliations; Real Property Ownership (including value); Motor Vehicle Registrations; Web Site Domain Names; and 2000 Census Information (including median household income, average age, average years of education, and median home value).

Helpfully, SmartJury also provides demographic information from survey results to predict how each juror will vote! Part of the appeal of the jury system is the idea of drawing from a random/representative sample of the population – is that no longer possible? (And remember, the technology only needs to be good enough for the plaintiff to systematically identify just 1 juror who will push for acquital.)

And here is more meat for the conspiracy minded. The board chairman of Siesint is the former Director of the United States Secret Service and the board of SmartJury is littered with well-placed government types like Jack Kemp, William Bennett and Robert Kennedy Jr.

Thanks to Carl Close for the pointer.