Protectionism as a means to Free Trade?

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protectionism-as-a-means-to-free-trade

altFollowing a WTO ruling in their favour, Brazil proposed tariffs on US goods if American cotton subsidies weren’t repealed. With the proposal provoking little response, Brazil has recently threatened to disregard American intellectual property rights on top of the tariffs. This would include pharmaceutical drugs, movies, food, and much else. American lawmakers aren’t budging on the cotton subsidies.

So the die is cast and a serious trade war looms. I can’t get upset at Brazil for this. The country is trying to trade freely; it has filed suits against America through the WTO and the provisional tariffs do not extend to other countries. Indeed, the very fact that the Brazilian government is able to propose tariffs without implementing them shows both admirable restraint and a degree of autonomy that American leadership seems to lack. Entrenched agricultural interests in the US have the votes to block any legislation repealing the abusive subsidies, and even without their influence, there are always plenty of legislators eager to appropriate money from whomever they can.

Brazil has taken the unusual step of threatening intellectual property rights because they want these sanctions to have real bite. Mere tariffs will hurt Brazilian consumers as much as American exporters, and thus this kind of retaliatory action is self-defeating. However, with the suspension of American intellectual property rights, Brazilian consumers will be gaining something beneficial (albeit at the expense of overseas intellectual property markets). It is a gift of generic medications, of counterfeit DVDs, and of imitated clothing. American copyright holders should be worried, and they should put their energies toward lobbying for the end of American cotton subsidies – and other agricultural subsidies while they’re at it.

The Brazilian government is making these threats on behalf of the private sector. It is trying to tear down, rather than erect, trade barriers. This dispute is a tale of legitimate Brazilian business interests standing up to DC beltway graft. alt

Protectionism as a means to Free Trade?

4968
protectionism-as-a-means-to-free-trade

 Following a WTO ruling in their favour, Brazil proposed tariffs on US goods if American cotton subsidies weren’t repealed. With the proposal provoking little response, Brazil has recently threatened to disregard American intellectual property rights on top of the tariffs. This would include pharmaceutical drugs, movies, food, and much else. American lawmakers aren’t budging on the cotton subsidies.

 

So the die is cast and a serious trade war looms. I can’t get upset at Brazil for this. The country is trying to trade freely; it has filed suits against America through the WTO and the provisional tariffs do not extend to other countries. Indeed, the very fact that the Brazilian government is able to propose tariffs without implementing them shows both admirable restraint and a degree of autonomy that American leadership seems to lack. Entrenched agricultural interests in the US have the votes to block any legislation repealing the abusive subsidies, and even without their influence, there are always plenty of legislators eager to appropriate money from whomever they can.

 

Brazil has taken the unusual step of threatening intellectual property rights because they want these sanctions to have real bite. Mere tariffs will hurt Brazilian consumers as much as American exporters, and thus this kind of retaliatory action is self-defeating. However, with the suspension of American intellectual property rights, Brazilian consumers will be gaining something beneficial (albeit at the expense of overseas intellectual property markets). It is a gift of generic medications, of counterfeit DVDs, and of imitated clothing. American copyright holders should be worried, and they should put their energies toward lobbying for the end of American cotton subsidies – and other agricultural subsidies while they’re at it.

 

The Brazilian government is making these threats on behalf of the private sector. It is trying to tear down, rather than erect, trade barriers. This dispute is a tale of legitimate Brazilian business interests standing up to DC beltway graft.   

alt

Protectionism as a means to Free Trade?

4969
protectionism-as-a-means-to-free-trade

 Following a WTO ruling in their favour, Brazil proposed tariffs on US goods if American cotton subsidies weren’t repealed. With the proposal provoking little response, Brazil has recently threatened to disregard American intellectual property rights on top of the tariffs. This would include pharmaceutical drugs, movies, food, and much else. American lawmakers aren’t budging on the cotton subsidies.

 

So the die is cast and a serious trade war looms. I can’t get upset at Brazil for this. The country is trying to trade freely; it has filed suits against America through the WTO and the provisional tariffs do not extend to other countries. Indeed, the very fact that the Brazilian government is able to propose tariffs without implementing them shows both admirable restraint and a degree of autonomy that American leadership seems to lack. Entrenched agricultural interests in the US have the votes to block any legislation repealing the abusive subsidies, and even without their influence, there are always plenty of legislators eager to appropriate money from whomever they can.

 

Brazil has taken the unusual step of threatening intellectual property rights because they want these sanctions to have real bite. Mere tariffs will hurt Brazilian consumers as much as American exporters, and thus this kind of retaliatory action is self-defeating. However, with the suspension of American intellectual property rights, Brazilian consumers will be gaining something beneficial (albeit at the expense of overseas intellectual property markets). It is a gift of generic medications, of counterfeit DVDs, and of imitated clothing. American copyright holders should be worried, and they should put their energies toward lobbying for the end of American cotton subsidies – and other agricultural subsidies while they’re at it. 

 

The Brazilian government is making these threats on behalf of the private sector. It is trying to tear down, rather than erect, trade barriers. This dispute is a tale of legitimate Brazilian business interests standing up to DC beltway graft.   

alt

Protectionism as a means to Free Trade?

4970
protectionism-as-a-means-to-free-trade

alt Following a WTO ruling in their favour, Brazil proposed tariffs on US goods if American cotton subsidies weren’t repealed. With the proposal provoking little response, Brazil has recently threatened to disregard American intellectual property rights on top of the tariffs. This would include pharmaceutical drugs, movies, food, and much else. American lawmakers aren’t budging on the cotton subsidies.

So the die is cast and a serious trade war looms. I can’t get upset at Brazil for this. The country is trying to trade freely; it has filed suits against America through the WTO and the provisional tariffs do not extend to other countries. Indeed, the very fact that the Brazilian government is able to propose tariffs without implementing them shows both admirable restraint and a degree of autonomy that American leadership seems to lack. Entrenched agricultural interests in the US have the votes to block any legislation repealing the abusive subsidies, and even without their influence, there are always plenty of legislators eager to appropriate money from whomever they can.

Brazil has taken the unusual step of threatening intellectual property rights because they want these sanctions to have real bite. Mere tariffs will hurt Brazilian consumers as much as American exporters, and thus this kind of retaliatory action is self-defeating. However, with the suspension of American intellectual property rights, Brazilian consumers will be gaining something beneficial (albeit at the expense of overseas intellectual property markets). It is a gift of generic medications, of counterfeit DVDs, and of imitated clothing. American copyright holders should be worried, and they should put their energies toward lobbying for the end of American cotton subsidies – and other agricultural subsidies while they’re at it.

The Brazilian government is making these threats on behalf of the private sector. It is trying to tear down, rather than erect, trade barriers. This dispute is a tale of legitimate Brazilian business interests standing up to DC beltway graft.

One facet of a totalitarian state

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The facets that define a totalitarian state are often hard to discern; there is always the risk of pushing the argument too far, evoking unsuitable analogies with the fascist governments of the last century. Nevertheless, a spade is spade, and this story of the persecution of a German family point to a dangerous state of affairs.

After the police came knocking, dragging their children off to school, Uwe and Hannalore Romeike and their three children applied for, and were thankfully granted, asylum in the US. Their crime? Educating their children in their home, rather than at school. Judge Lawrence O. Burman, a federal immigration judge in Tennessee, determined that they had a reasonable fear of persecution for their beliefs if they returned. He described the German Government’s actions as “repellent to everything we believe as Americans”.

Germany is not alone. In Sweden, a coalition led by a so-called Liberal party is getting tough on homeschooling, with the proposed introduction of a bill that would only allow home education under extraordinary circumstances. It would also allow the imposition of criminal sanctions on those parents that refused to supplicate to the will of the state.

And in the UK, the government is ignoring the Schools Select Committee in its call to make the registration of home-educated children voluntary. The Department for Children, Schools and Families (DCSF) defends its position as follows: “we cannot understand the logic of making it voluntary”. I can help them answer their confusion: because these children are not owned by the state.

There is much talk of how under Obama the US is becoming a socialist dystopia. Sure, things are bad and getting worse, but as the asylum offered to the German home educators illustrates, they still have a fair way to fall before they hit the strictures on freedom infesting the Old World.

A spring of discontent?

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altDespite the approaching General Election, industrial unrest is in the air. Strikes are currently impacting British Airways and may take place shortly at British Gas – owned by Centrica – and Network Rail.

Given the success of Ryanair and Easyjet, the British Airways strike is particularly self-defeating. Emulating the Government’s coal-stocking policy in the early 1980s, British Airways has recently assembled real fire-power - liquid cash of c.£2 billion. Hence, a strike, costing c.£7 million per day, could be resisted for some time. Given, too, that thousands of young people would adore to work as cabin crew, expect the management’s response to be increasingly robust. More dismissals and suspensions, the removal of historic travel perks for striking crews and the closure of the pension fund to newcomers are all likely.

In fact, a macho management style has been cited as the reason why most of the GMB’s 8,000 engineers working for British Gas’ boiler installation and maintenance division voted to support strike action. However, further discussions are expected shortly. Summer railway strikes are not unusual, so unrest at Network Rail is hardly surprising. Given its bizarre – and grossly inefficient management structure – strikes are likely, especially if there are redundancies and wages are squeezed.

There are common threads running through these three disputes. First, management is seeking to raise productivity – in the face of staff opposition. Secondly, remuneration levels remain an issue. In British Airways’ case, its accursed final pension schemes, with a combined deficit of £3.7 billion, have desperately damaged it – and may still scupper its much-needed tie-up with Iberia. Thirdly, these disputes all have a whiff of safety about them, especially given the various railways disasters of the last twenty years.

Finally, is it not rum that the unions behind this unrest are also major financial donors to a Labour Party struggling to be re-elected shortly?

The Mountaintop: Success without state funding

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altThis year’s Best New Play winner at the Olivier Awards, The Mountaintop, is a remarkable work. Not only has it won near-universal praise for its depiction of Martin Luther King’s final night alive and secured a production run on Broadway, but it has succeeded without any government arts subsidy. What this shows is that state funding is not necessary for the production of great art.

The play was first staged in a 65-seat theatre above a pub in Battersea and, thanks to popular acclaim and commercial success, made its way to the West End. Not a penny from the Arts Council was needed: this was a work of popular art that appealed to critics and theatregoers alike.

That a play like The Mountaintop was able to succeed without state funding vindicates the ASI’s recent report calling for government arts funding to be radically overhauled. Government funding for the arts distorts the market against unfunded but potentially very good plays by allowing bad, government-supported plays to undercut and out-advertise them. The result is that bland, state-approved plays can often outcompete better plays that could not win the Westminster stamp of approval.

Some have claimed that the free market inhibits innovation in the arts, which The Mountaintop’s awards and commercial success disprove. When government bureaucrats, not the theatregoing public, can influence which plays succeed, the art world risks being condemned to mediocrity. Thank god for The Mountaintop, whose critical and commercial success proves that great art can triumph simply by being great.

A response to the budget

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As election speeches go, the Chancellor's was pretty boring. No big economic announcements – investors want to see tougher action to reduce Britain's national debt, but know full well they won't hear anything like that until the election is out of the way. A few tiny 'giveaways' here and there – though measures like the one-year business rates cut simply cancels out the rise coming in on April 1 thanks to revaluation...and so on. A few new quangos (a new 'green' bank, a fund for university businesses, a credit disputes agency) that we can well live without. Even a few marginal and long-drawn-out privatizations of things like the Tote. But that was it.

The election message – albeit delivered in a sort of bank-manager style – was that things are getting better. Tax receipts are better than feared, benefit payments lower, unemployment a little higher, inflation a little lower, borrowing down on forecasts. True. But then the Chancellor did not mention that the trade deficit had risen by £7bn or that business investment has fallen 5%. Nor that a government which was borrowing £6bn a year when it came in is now borrowing 27 times that, at £167bn in 2009/10 and another £163bn forecast for next year.

Alastair Darling thinks that he can halve the deficit in four years. In other words, the national debt will still be growing, but not quite as fast as the records that he is setting right now. Once again, he didn't mention it, but the national debt will have grown to £1.3 trillion by 2015, and will still be growing. But that is on his own figures, which predict a huge revival and turnaround for the economy, and forecast growth next year of 3%-3.5%. Phooey. Darling, and his predecessor Gordon Brown, have always over-estimated growth (or under- estimated recession) in their budgets. Few economists think that the economy will swing from a record bust to a record boom in the space of two years. And wasn't this government supposed to save us from all that anyway? No, this is a rose-tinted election budget. It has very little to do with economic reality.

What makes the difference in education

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what-makes-the-difference-in-education

Miriam Rosen, the Executive Director of Ofsted was our Power Lunch guest this week. She outlined the schools regulator's way of working, which involves a lighter touch for good and outstanding schools and more emphasis on the less satisfactory ones.

There are 1001 things one can try in order to improve education – including spending hundreds of millions on new buildings, as Gordon brown has done. Sure, kids have to be treated as individuals and not statistics (which the obsession with exam results does not help either), and need a degree of discipline in order to learn anything. What seems to come out from Rosen's experience, though, is that what really makes the difference in education is good teachers and good teaching.

That chimes in with the work of James Tooley, who can point to countless excellent schools in Africa and India which do not even have buildings, with the teaching taking place under the shade of a tree. But if it's good teaching, it works – so much so that even the poorest parents are willing to pay for it.

But talent costs money. Many excellent teachers give up because they simply can't afford to live in some of the more affluent areas; and who wants to go to a failing school in a tough part of town unless they are decently rewarded? Naturally, the problem is the politicisation of education, in which remuneration is seen as an exercise in promoting equality rather than in steering talent to where it is needed (and telling non-talent that it isn't wanted, frankly). Until schools manage their own budgets and decide their own pay scales, I can't see things improving.

Cycles and decline

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At the moment President Obama is riding high on the back of the passing of his healthcare plans, but before too long he, and the US economy, will be on a downswing again. That's according to Dominic Frisby of Money Morning, who believes you can see four-year up and down cycles in stock markets in America, and indeed all over the world.

He's got some charts from the Dow and the Nikkei to back him up, and yes, you do see cycles, some more pronounced than others, but definite four-year cycles nonetheless. So the question is, why do they exist?

It's simple, and it's back to government as usual. With a four-year election cycle, there is an upswing of optimism that comes in with any new President. Then the administration starts doing all the 'bad' things it needs to do to balance its books, and optimism wanes. So we head on to a four-year low. Then the administration's focus turns to getting re-elected, so it starts spending money like water and the markets turn up. Pretty soon that turns out to be unaffordable and...well, the rest you know.

It's plausible; and on this theory, the second half of 2010 will be a lot uglier than the first. We've already had the high point of this particular cycle. Buckle up for the descent.