What I Believe, Part 1

I believe in Free Trade. I believe that the net benefits of free trade outweigh the costs. I think this has been demonstrated academically, and it makes intuitive sense. Pablo Fajgelbaum of the University of California, Los Angeles, and Amit Khandelwal, of Columbia University (from The Economist, and cited in this post from Tyler Cowen): 

...in an average country, people on high incomes would lose 28% of their purchasing power if borders were closed to trade. But the poorest 10% of consumers would lose 63% of their spending power, because they buy relatively more imported goods. The authors find a bias of trade in favour of poorer people in all 40 countries in their study, which included 13 developing countries. 

There is a negative impact on low-tech firms, but the firms that survive become more dynamic: 

An in-depth study of European industry by Nicholas Bloom, of Stanford University, Mirko Draca of Warwick University and John Van Reenen of the LSE found that import competition from China led to a decline in jobs and made life harder for low-tech firms in affected industries. But it also forced surviving firms to become more innovative: R&D spending, patent creation and the use of information technology all increased, as did total factor productivity. 

Neither major-party candidate in the presidential election is very supportive of free trade, with Trump being in favor of eliminating some existing trade deals like NAFTA. Mary Anastasia O'Grady explains how much of what Trump has said about NAFTA is incorrect:

Mr. Trump gave a quick nod to one genuine U.S. disadvantage during the debate when he talked about cutting U.S. corporate tax rates to spur investment at home. But his main message was that under NAFTA Mexico is “stealing” U.S. jobs. In fact, an interconnected North American economy has made U.S. manufacturing globally competitive. U.S. companies source components from Mexico and Canada and add value in innovation, design and marketing. The final outputs are among the most high-quality, low-price products in the world. U.S. automotive competitiveness is highly dependent on global free trade. According to the Mexico City-based consulting firm De la Calle, Madrazo, Mancera, 37% of the U.S.’s imported auto components came from Mexico and Canada in 2015. This sourcing from abroad is important to good-paying U.S. auto-assembly jobs. But parts also flow the other way. U.S. parts manufacturers sent 61% of their exports to Mexico and Canada in 2015. 

As a parent, I want my children to succeed. But I want this to happen in a way that prepares them for the real world, a competitive and dynamic world that owes them nothing. We don't help our industries by sheltering them from competition, and we may harm our own citizens in the process. Trade restrictions are almost always worse for American industry than it is for the industries from the countries we seek to deal with. One way to level the playing field is to stop playing favorites.

Leaking Implications

This is some interesting analysis of the WikiLeaks data in terms of how the U.S. and other nations may deal with Iran. David Frum writes:

But here’s the ghastliest irony of the leak. If it was Julian Assange’s intention to use information hacked from U.S. computer systems to protect Iran from U.S. military action, he has very likely massively failed at his own purpose.
The leak makes military conflict between Iran and the United States more likely, not less. The leak has changed the political equation in ways that reduce the restraint on U.S. policy.

I don't have any idea why Assange, the founder of WikiLeaks, has made this his mission in life. I don't want us to go to war with anyone, much less Iran, but there is more support for explicit action against Iran than was previously supposed.

Taking a WikiLeak

I'm not sure if many people are familiar with the WikiLeaks website (I think that name is stupid). It's aim is to reveal the unrevealed and the classified, regardless of the costs. It is run by a shady character, and over the last 6-9 months has been releasing in lumps the secret communications of the U.S. Military and now, the State Department.

As an American, some would say a jingoistic American, I view this as a net negative for the country. It reveals a weakness in both our systems for safeguarding data AND weakness in the character of at least one person with access to it. I hope he rots in jail. Just the same, some of the information contained in this most recent release is very interesting. Since it is out there, why not read it?

The New York Times has a helpful summary of the more interesting parts of these diplomatic cables. They cover a large period of time, with the vast majority dealing with 2007 to the present.

As with any setback, this event CAN be used to our advantage. A little more honesty is a good thing. Unfortunately, this is unintentional honesty, and that creates some treacherous dynamics. Where we have our more skilled diplomats we should be in good shape. I just don't have any idea where that happens to be the case.

I want to post two interestIng opinion pieces from the Washington Post. The first one is by columnist Charles Krauthammer, who defends the president's recent trip to Asia as both necessary and appropriate, expensive or not. You can find it here.

The second is a piece by two Democratic strategists, who had worked for the Clinton and Carter administrations, who suggest that, to be successful as a president, Obama should declare that he will not run for President in 2012. I think this is highly unlikely to occur, and might not yield the results that they hope for.

For one thing, who would believe him? As the authors state, he doesn't have a lot of credibility with the right. I woud also argue that, having been less than stringent in adherence to his campaign promises, some might suspect that he would decide to run at a later time if his fortunes improved. Maybe the authors intend this to occur.

Secondly, would it really make him a better president? Would he be able to compromise? Or would it make him more strident. Coming from my admittedly Republican perspective, I don't think he has demonstrated capacity for compromise thus far, despite ample opportunity.

It could work. I'm just doubtful.

Changeup

Since I've only posted 3 times in the last 2 weeks I wanted to do something tonight in the few minutes I have before bed.

Time to look at what has worked for Obama, and by the measure of the world's admiration of our country, there has been dramatic improvement.

I have been dismissive in the past of some efforts to curry favor around the world, and I haven't changed my mind, but there is no question that this kind of change is good for America.

A Few Good Articles

This is some interesting criticism of President Obama in the context of how he presented himself at the United Nations last week. That critcism is consistent with Michael Barone's perception of Obama as a member of the blame-America cadre.

On the issue of Iran, Michael Ledeen looks at diplomacy's record in dealing with the regime.

Given Obama's record so far, guessing how the Obama administration will react to Iran and other issues is a difficult puzzle.

Lower Shields

The Obama administration has cancelled Bush-era plans for a land-based European missile shield. I don't know if this is good or bad militarily. I'm not well-versed enough in these issues to give an opinion.

I don't think it is a good political decision. It appears that the decision was made without much consultation with Poland and the Czech Republic. If that is true, it puts small but important allies in a weaker position relative to Russia.

This Polish newspaper is concerned about whether the move will embolden the more belligerent elements of the Russian governmental-military apparatus. Other Poles are worried about how this will affect their stature in Europe.

Only time will tell.

With Friends like These

We keep pushing ourselves further in the wrong direction with regard to Honduras. From today's WSJ:

The State Department announced Tuesday that it revoked the diplomatic visas of four Honduran officials because the U.S. doesn’t recognize the interim government of Roberto Micheletti. Hondurans can be forgiven if they recall the bitter Vietnam-era joke that while it can be dangerous to be America’s enemy, it can be fatal to be its friend.
The U.S. didn’t release the names of the banished, but the Honduran daily El Heraldo said they included the Supreme Court judge who signed the arrest warrant of former president Manuel Zelaya, as well as the president of the National Congress. Honduras is now in the fifth week of a constitutional crisis that was provoked when then-president Zelaya violated the Honduran constitution. He was warned by the attorney general but he persisted and, with support from Hondurans of all political parties, he was arrested and deported on June 28.

The Obama administration has yet to provide a reasonable justification for their treatment of the interim government, while said government has made a very clear case for the correctness of its actions.

Down the Drain

This article underscores the rightness of questioning when government or bureaucracy demands more money.

The UN has very little to show for the $196 billion spent on health programs.

Obama Gets it Right

I have written many times about U.S. trade with Colombia. Colombia has been among our truest allies in this hemisphere, in an environment that often hostile to that stand.

I'd been disappointed with Obama's failure to provide support for the proposed free trade pact with Colombia. It was part of my rational for rejecting his candidacy. While he has not pleased me on every point with regard to trade, this news is wonderful (from Investor's Business Daily):

The president announced that his team must find a way to pass the agreement.
With world trade down 80%, the pact opens new markets to the U.S. He demanded immediate action, asking Colombia's trade minister to fly to Washington this week.
Then it got even better: Obama invited Uribe to the White House and
promised to visit Colombia himself, allowing the Colombians to lay out for him
their vast economic and social progress, and their desire to integrate into
global trade.
In a final flourish, Obama scribbled his autograph onto President Uribe's notes, writing: "To President Uribe, with admiration! Barack H. Obama." A smiling Uribe showed it to reporters. Given Uribe's discretion, it's likely that Obama asked him to do that.
The media made much of Obama's polite gestures to dictators, but he gave them nothing resembling what he gave to Uribe. Name one dictator Obama sat with for lunch. Which troublemaker got a White House invitation? Which tinhorn got a promise to visit?
And has anyone heard of Obama giving his autograph — "with admiration!" — to another president? It was as if Obama himself unclenched his own fist to reach out to the Colombian hand. Obama may have had political reasons to seek out Colombia — the Chavez-Obama pictures didn't do him any good domestically, and Drudge Report ran pictures of them all weekend, infuriating White House officials.
But the outlook for free trade has been improving for several weeks, too. On a visit to Medellin last month, Uribe gave us a veiled signal of positive moves on trade under the surface, and U.S. Trade Representative Ron Kirk has since made encouraging statements.

Credit must be given where it is due. Congressional Democrats may balk at passing the measure, and Obama may be tested, but this is smart politics and smart policy.

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On a completely unrelated note- I hate it when they lip sync the already painful group numbers on American Idol. It is extremely lame. Just wanted to share.

Missing out

Mary Anastasia O'Grady has often been cited in the SPOTD. I'm a fan of her writing, and given my leanings it should be no surprise that I agree with her assessment of the recent Summit of the Americas:

If President Barack Obama's goal at the fifth Summit of the Americas in Trinidad and Tobago this weekend was to be better liked by the region's dictators and left-wing populists than his predecessor George W. Bush, the White House can chalk up a win.
If, on the other hand, the commander in chief sought to advance American ideals, things didn't go well. As the mainstream press reported, Mr. Obama seemed well received. But the freest country in the region took a beating from Venezuela's Hugo Chávez, Bolivia's Evo Morales, and Nicaragua's Danny Ortega.

The president is still new on the job, but this seems another missed opportunity:

The first black U.S. president could have named hundreds of others being held in inhumane conditions by the white dictator. He could have also asked Brazil's President Lula da Silva, Chile's President Michelle Bachelet and Mexico's Felipe Calderón where they stand on human rights for all Cubans. Imagine if Mr. Obama asked for a show of hands to find out who believes Cubans are less deserving of freedom than, say, the black majority in South Africa under apartheid or Chileans during the Pinochet dictatorship. Then again, that would be no way to win a popularity contest or to ingratiate yourself with American supporters who are lining up to do business in Cuba.
Instead the U.S. president simply floated down the summit river passively bouncing off whatever obstacles he encountered. The Chávez "gift" of the 1971 leftist revolutionary handbook "Open Veins of Latin America" followed by a suggestion of renewing ambassadorial relations was an insult to the American people. Granted, giving the Venezuelan attention would have been counterproductive. But Mr. Obama ought to have complained loudly about that country's aggression. It has supported Colombian terrorists, drug trafficking and Iran's nuclear ambitions. As former CIA director Michael Hayden told Fox News Sunday, "the behavior of President Chávez over the past years has been downright horrendous -- both internationally and with regard to what he's done internally inside Venezuela."

So far Obama seems to be using a foreign policy approach that is all carrot and no stick.

Big Trouble in little Korea

North Korea launched a missile over the weekend with the ability to strike long-range targets. During his time as U.S. Ambassador to the United Nations, and since leaving that post, John Bolton has been a steadfast proponent of taking a tough line with North Korea.

In yesterday's Wall Street Journal he lays blame (rightfully) at the feet of the Bush administration, but puts the responsibility for future action firmly on President Obama's shoulders. This is appropriate, and one of Bolton's observations is particularly important:

Once the missile shot was complete, the administration's answer was hand-wringing, more rhetoric and, oh yes, the obligatory trip to the U.N. Security Council so that it could scold the defiant DPRK. Beyond whatever happens in the Security Council, Mr. Obama seems to have no plan whatever.

Obama may indeed have a plan, but so far he has failed to impress on foreign policy matters. His failed attempts to get help from Russia on Iran, and Iran's own rejection of his attempts at dialogue have seemed amateurish and naive.