The Masses Rise

[josef k.]

I think it would be very, very difficult to achieve. Autarky as economic policy also tends to have significant costs.

 

[nomadthethird]

emblematically is about right. Obama is currently made of magical material which means he can represent whatever the other person wants him to.

Heard a radio phone-in yesterday where someone spent ages talking about the wonders of Obama and how he'd rejuvenated America and blah. He said we need the same here - an entrepreneur, someone to think outside the box.

So this politician who came up through the Chicago machine and has never run a business or even worked in the private sector (that right?) now symbolises the power and ingenuity of the free market. Gotta get me some of that Obama juice.

Wait, what? Am I reading this right?

Obama has worked in the private sector. He's a really successful lawyer.

From his resume:

1993-2002 Worked as an associate attorney with Davis, Miner, Barnhill & Galland. Represented non-profits and private individuals in urban development projects, voting rights cases, and wrongful firings. Filed major suit that forced the state of Illinois to enforce the Motor Voter Law and successfully argued a wrongful firing case before the U.S. 7th Circuit Court of Appeals.

 

[nomadthethird]

Plus, this is kind of a stretch I suppose, but not a big one--running a campaign, especially the way Obama did, with his hands in the New Media pies like no other, basically qualifies him for placement on all of those Forbes lists of 'private sector' movers and shakers.

 

[DannyL]

I think it would be very, very difficult to achieve. Autarky as economic policy also tends to have significant costs.

It's not autarky as such to suggest that big multi-national companies should be more answerable to the rules and laws in countries they trade in, is it? If we extend this argument, surely we'd end up saying there should be no limits on trade or the movement of capital, regardless of the cost? I think Cruddas is tapping into a big strream of resentment at the activities of hedge funds and the like.

 

[vimothy]

Waiting for Smoot-Hawley.

 

[vimothy]

Totally unrelated to the point I was (half) making, but is this the worst graph ever?

 

[josef k.]

"It's not autarky as such to suggest that big multi-national companies should be more answerable to the rules and laws in countries they trade in, is it?"

Companies certainly should be answerable to regulations and laws. But do you think it is desirable to put specific regulations and laws in place in order to prevent foreign-owned companies from employing foreign workers, to operate on British soil? Because this seemed to me the thrust of Cruddas's argument.

 

[crackerjack]

Companies certainly should be answerable to regulations and laws. But do you think it is desirable to put specific regulations and laws in place in order to prevent foreign-owned companies from employing foreign workers, to operate on British soil?

If these laws are being used to circumvent existing agreements with unions and undercut wages, then yes.

 

[josef k.]

So what regulations would you propose?

 

[crackerjack]

So what regulations would you propose?

Dunno, ask an employment lawyer. But if an employer has an agreement with a union, I don't think it should be able to bypass that for short term contracts.

 

[vimothy]

Fixing wages via unions is not always in the best interests of workers affected (cf. US autoworkers), to say nothing of everyone else.

 

[crackerjack]

Fixing wages via unions is not always in the best interests of workers affected (cf. US autoworkers)

I'd be willng to bet it is more often than it isn't.

 

[craner]

Masses stay at home, because of the snow.

 

[vimothy]

Depends what you mean, but I think the real issue is to what extent are policy responses to the global slow-down going to be driven by knee-jerk economic nationalism/protectionism, and how much of a negative effect are those policies going to have.

 

[dubble-u-c]

Depends what you mean, but I think the real issue is to what extent are policy responses to the global slow-down going to be driven by knee-jerk economic nationalism/protectionism, and how much of a negative effect are those policies going to have.

There might be positive effects derived from protectionism as well. There is no conclusive proof that Smoot Hawley caused trade contractions in 1930's. I.E. correlation does not prove causation.

It could be argued that it was the contraction in economic growth and debt overhang from ww1 in 1929 that caused the decrease in trade - not Smoot Hawley. Proof of that thesis could be argued from data gathered from that time frame and from our current recession.

I have no absolute proof of this but it seems that China and Japan have been using stealth protectionism via currency arbitrage/ manipulation for many years now. So, it might be in the West's best interest to protect our manufacturing and production base via protectionism as well.

Protectionism might also be necessary to some degree, in the short run, to redress trade imbalances .

 

[vimothy]

Well, I never actually claimed that Smoot-Hawley caused anything, but I think its pretty obvious that if you increase the costs of trade, its incidence will go down -- after all, that's why you are recommending it to affect trade balances. What the article from the Economist actually says is this:

In fact, few economists think the Smoot-Hawley tariff (as it is most often known) was one of the principal causes of the Depression. Worse mistakes were made, largely out of a misplaced faith in the gold standard and balanced budgets. America’s tariffs were already high, and some other countries were already increasing their own.

Nevertheless, the act added poison to the emptying well of global trade (see chart). The worldwide protection of the 1930s took decades to dismantle. And bad monetary and fiscal policies were at least based on the economic orthodoxy of the day: economists would tear each other apart over the heresies of John Maynard Keynes. On protection, there was no such division. More than a thousand economists petitioned Hoover not to sign the Smoot-Hawley bill. Bankers like Lamont sided with them; so did editorialists by the score.

China certainly is manipulating its currency to subsidise its export markets, i.e. keeping the renminbi low against the dollar to fuel development, which has serious implications for the US, and is indeed one of the chief causes of the current mess. I'm more interested in ideas like having the IMF act as a global asset manager for soveriegn wealth than trying to encourage everyone to engage in beggar thy neighbour trade policies and all out currency war, though.

 

[vimothy]

Good post on this subject over at the Baseline Scenario: http://baselinescenario.com/2009/01/23/protectionism-by-another-name/#more-2151

 

[dubble-u-c]

Well, I never actually claimed that Smoot-Hawley caused anything, but I think its pretty obvious that if you increase the costs of trade, its incidence will go down -- after all, that's why you are recommending it to affect trade balances. What the article from the Economist actually says is this:



China certainly is manipulating its currency to subsidise its export markets, i.e. keeping the renminbi low against the dollar to fuel development, which has serious implications for the US, and is indeed one of the chief causes of the current mess. I'm more interested in ideas like having the IMF act as a global asset manager for soveriegn wealth than trying to encourage everyone to engage in beggar thy neighbour trade policies and all out currency war, though.

I apologize for reading that into your post concerning Smoot Hawley.

For the most part I agree with you Vim. I hope this situation does not devolve into beggar thy neighbor trade policies and currency wars, but it seems China will continue to subsidize their currency.

So, will China allow the IMF to act as a sovereign wealth manager? I doubt it. Asia as a whole has not had good experiences with the IMF and the policies of the IMF.

I see catch 22's ...

 

[vimothy]

Not at all, sir, and agreed, absolutely. However, the side-effects of China's development strategy viz. the US (and thus everyone else) are a bit clearer now. And ultimately, the floating global pool of capital needs to go somewhere -- wants to go somewhere with some decent yield, in fact -- blowing up the US government would be rather futile, the CDO/RMBS tack didn't turn out so well, so it's going to have to go somewhere else... and there's definitely some people who could use it right now... Connecing savers with borrowers: that's what it's all about, right? But it's probably a non-starter (though the post does recommend totally changing IMF governance). Policy responses thus far have been pretty piecemeal: be nice to see some truly multilateral moves for a change.

 

[vimothy]

A related thought: China is emerging as the natural lender of last resort, as the US did in the 1930s. Its not had much luck with its investments so far, and its surely nervous about the coming reappropriation of its foreign exchange reserves (though the flight to quality is preventing that, for now) -- but don't you think there is a natural role for China in the current situation?