Sunday, January 26, 2014

William Phillips - engineer and economist extraordinaire

Very few scientists/academicians will have as interesting a background as William Phillips. He is the Phillips of the famous or infamous Phillips curve, which illustrates an inverse relation between the rate of unemployment and the rate of inflation. While the Phillips curve may be considered too simplistic, it was a popular macroeconomic tool, possibly because of the work of Samuelson and Solow. In any case, it is Phillips who is the focus of this blog post, not the curve. The best source to learn about William Phillips is a talk by Tim Harford (The Undercover Economist) at the Cato Institute. If you want further details, read on.

Alan Bollard of the Reserve Bank of New Zealand has written beautifully on the life and works of William Phillips. This is an article from the journal "Economica." I hope you have free access to this article. If not, I have a few excerpts from the article here:
Bill Phillips was born in 1914 into a pioneering, hard-working and unusually innovative farming family in Te Rehunga (Arvind: Here is where Te Rehunga is on a map) in the Hawke's Bay region of New Zealand. His father had won a block of land in a ballot at the turn of the century, which by hard labour he converted from rough bush to a productive dairy farm.

Phillips' father was particularly important to him. ...he was an unusual inventor: he built the farmhouse and outbuildings himself. He followed this with a water wheel which was used to generate electricity from a stream. The Phillips farm was the first in the district to have mechanical milking machines.

School was a long bike, train and walking trip away. Despite arriving home late each day, the young Bill Phillips was expected to help with milking and other farm work. Bill soon showed his own technical precocity: building a book rack onto his bike so he could read while cycling, and later rebuilding a neighbour's broken-down truck so that he could (illegally) drive to school

But in 1929, world depression hit the remote hamlet of Te Rehunga. Dairy prices fell by a third....any dreams of a university education were abandoned....But rural New Zealand was not enough. Phillips wanted to sample the world....Here he spent a couple of years travelling the outback, hitching rides on freight trains and working in mining camps. Money came from a range of jobs: picking bananas, working on building sites, mining gold, running a cinema, and even crocodile hunting....He enrolled in a correspondence course in electrical engineering and remembers learning his first differential equations under a harsh Australian sun at an outback mining camp.
Arvind: How cool is that!
Bill Phillips then went gallivanting all across the China, Russia, and Eastern Europe and eventually ended up in England just a little before the breakout of WWII. Then, he enlisted with the RAF and was promptly transported back to the far east to protect Singapore from the Japanese. He was captured by the Japanese and, as even a POW, showed uncommon character. Dr. Bollard writes:
He helped to organize language classes teaching Mandarin and Russian. He secretly built electrical immersion heaters to help the troops make cups of tea. He was involved in a dangerous mission to steal parts, and build several clandestine radios.
After the war, he returned to London on a scholarship to pursue a degree in sociology, possibly because he wanted to rationalize WWII. However, he was disenchanted with sociology and got interested in economics because he noticed many similarities between what he had done in electrical engineering and what he was noticing in his economics lectures. Thus began his interest in economics which would lead him to develop hydraulic machines that mimic macroeconomics (sometimes called Hydraulic Keynesianism).

I will write a some more about William Phillips in a few days. In the mean time, you should listen to the first part of Tim Harford's talk at Cato to get a lively account of William Phillips' life, including his economics contributions. He (Harford) is a story-teller par excellence. He does justice to Phillips' colorful life like no written account can.

A little of digging reveals that Dr. Alan Bollard is quite actively involved in a topic I often blog about - free trade. He is the chairperson of APEC (Asia Pacific Economic Cooperation), which is quite actively involved with the TPP partnership. He was a governor of the Reserve Bank of New Zealand (Fed Chairperson's equivalent). In any case, Dr. Bollard is not just an economist. By night, he is also a novelist. In fact, the main character in his novel (The Rough Mechanical: The Man Who Could) is based on William Phillips. I wonder whether Bernanke has also written any potboilers during his tenure!

An addendum to the post: On searching, I came across another good paper giving greater insights into his life. As usual, I hope you have access to this article. I will just quote the last two paragraphs because this seems to be exactly the opinion I have of this man after reading just a little. Remarkable human being.
Until 1994 economists knew only that Phillips had been a POW in Java. Because of Robert Leeson’s alertness and persistence we now know something of Phillips’ activities in captivity.....

The more one learns about Phillips the more astonishing he seems. Barr (2000, p. 112) captured the essence of the man when he wrote that Bill Phillips was, ‘adventurous, tenacious, insatiably curious, shy, and with a lovely sense of humour. He is one of those rare people memories of whom always bring a warm smile to those who knew him’.

Friday, January 24, 2014

Reasonably priced food in Upper West Side, NYC.

Many journalists now-a-days are experimenting with living a week with the constraints of SNAP, at least the financial constraints. I saw one such report in WSJ, and another in Slate. The one in Slate, by Sarah Gray, was partly about buying/making/eating food within the budgetary constraints of SNAP, and partly about public policy.

Public policy aside, Ms. Gray's choice of foods for the week long experiment are poor. Says Sarah:
My final menu: a baked pasta dish with whole wheat rigatoni ($1.59), lean turkey sausage ($4.99), two cans diced tomatoes ($1.89 per can) and mozzarella cheese ($4.59); a stir fry with chicken ($6.10), brown rice ($2.59), Green Giant vegetable medley ($2.99) and a red bell pepper ($1.55).
And breakfast: Key Food instant oats ($1.99) and Tropicana OJ ($2.99), a splurge item that I purchased because it was on sale for about half off. I also purchased eight Yoplait Light yogurts as part of a “buy 4 get 4 free” promotion ($0.99 each), baby carrots ($2.00), organic chicken broth on sale ($2.99) for cooking, and a small bag of ground coffee ($1.99 on sale).
No wonder she was quite frustrated pretty soon. She used up her $40+ to purchase foods quite unwisely, as she herself realized. Says Sarah a little later in the article:
I realized I should have bought things like bananas (a purchase that I put back when I went far over my limit). They’re nutrient rich and keep you full. Canned soup should also have been a purchase — you can make it quickly, it keeps you full longer, and certain soups can be used in other recipes. 
I, fortunately, do not have the $41 per week constraint but I do try to minimize $$ spent on (reasonably high quality) fruits and vegetables.

I love eating, cooking, and shopping for food too. I live in the Upper West Side and used to shop at Fairway, which is not too far from where I live. When my parents visited us for a few months, I realized how costly it was to shop at Fairway. There are some really good quality stuff that you get there but it is a total rip off when it comes to dollars and cents. My father would go around all the grocery shops in the neighborhood (and not in the neighborhood) and compare the costs. So, Fairway went out of the window pretty soon.

So, where should you shop if you wanted pretty reasonable prices? Big caveat - I know only about vegetarian foods. West Side Market is a good choice for most fruits and vegetables. Especially during summers, this is the place to go for peaches, plums, nectarines, and any other such fruits you can think of. Most commonly used vegetables like carrots, potatoes, peppers, eggplants, leafy greens, green beans, etc are pretty reasonably priced. Large potato bags are usually pretty cheap. Since I don't buy them often, I am not sure of their prices. Usually, it is less than 75 cents per pound. Carrots also cost around 69 cents per pound. Reasonably priced peppers cost around 99 cents a pound.
The cheese collection at West Side Market is one of the best, rivaled only by Trader Joes, where I have started to buy from once again. In any case, the cheeses are pretty reasonably priced too.

What West Side Market is not cost effective for is any other food item. Dairy - no way. Run far away from this place. A gallon of milk costs $ 4.50 or $ 5. A standard container of yogurt (I think 2 pounds) is always higher than $ 3. Most other non-dairy items are pretty costly too. For that, I like the Met and C-Town, which are not too far from the Amsterdam/125th street intersection. In both places, you get some pretty good steals. For instance, I found a 32 pound tub of PollyO ricotta cheese on sale for $ 4 a few weeks ago! That is pretty cheap, especially for one who loves ricotta cheese. Usually around weekends, C-Town has tomatoes sold at 99 cents per pound. Sometimes, you get luckier and it is priced at 79 cents per pound! Bananas at 49 cents per pound is a total steal. In Trade Joes, they price bananas differently. Any price around 20 cents per banana is pretty reasonable.

Dairy at C-Town and/or Met is also very reasonable. Especially yogurt. Unlike Sarah from, one should never buy the small containers. Always go for the larger one. At least in these two grocery stores, you get 2 pound yogurt containers at $ 2.50 (sometimes $ 2). That is the lowest priced yogurt I've seen in the North East!

The nice thing with Met and C-Town is that you get vegetables that you do not necessarily at other American supermarkets. For instance, you get plantains ($ 1.29 for a bag of 4 or 5), batatas, etc. Finally, my opinion of canned foods: avoid them. They are usually pretty costly per unit weight. I know it is convenient to use canned food sometimes but the costs mount pretty soon.

All in all, I think there is pretty good access to reasonably priced raw ingredients that can fit well into even a SNAP-ish constraint. Don't get me wrong. The SNAP constraint is not only on $$ but also on time, stress, and other intangibles thankfully I am not subject to. Still, if you love to cook, and can spare a bit of time to shop for what you cook, you can make some things a little better.

With so much, I dont think you will find it necessary to look for food anywhere else. Except, you'd miss out on a lot of good and reasonably priced food. More on that later. Happy food hunting and cooking.

Tuesday, January 21, 2014

Why congress should not grant fast track authority

No, I'm not going to give my perspective. Rather, keeping in line with many of the other blog posts, I will rehash arguments from 1991 or 1992, from the heat of the NAFTA debate. Once again, I draw on words uttered by Craig Merrilees, from a testimony to the House Agriculture Committee (chaired by Rep. Kiki de la Garza, D-Texas). It was a fiery testimony, as evidenced by the very testy exchange with Rep. Thomas Coleman (R-Missouri). Mr. Merrilees outlined the following 6 points as to why Fast-track authority should not be granted to the executive branch:
  1. It is anti-democratic. Congress should not sit on the sidelines while the executive branch makes the deals.
  2. Scope for secret back-room deals. Lobbyists can influence policy more than what they can do in a more transparent process.
  3. Fast-track is not necessary to get a complex agreement. The doom and gloom scenario painted by the administration, if Fast-track is not passed, is scare tactics.
  4. Bush (Papa) and Salinas (then President of Mexico) make argument that things will fail without fast-track. Salinas needs the US market, with or without fast-track. You can replace Salinas with any other country engaged in TPP now, though I am not so sure that they need the US now like Mexico needed the US in the 90s.
  5. Fast-track gutted GATT discussions because of extremist positions of Carla Hills and government on agriculture, maybe because of the influence of agribusiness.
  6. Fast-track makes it impossible for Congress to vote up or down provisions of the trade deal that they find objectionable. The yes or no vote psychologically tilts everyone towards voting yes.
Finally, Mr. Merrilees makes a good and sarcastic comment: Finally, Richard Nixon argued for fast-track because he believed that we needed a stronger executive branch. If that is what you believe, you have a different version of history than I have. Touche!

I think many of the reasons hold true now too. Giving congress the responsibility of coming up with a trade deal on their own seems crazy, especially given the levels of cooperation we've seen over the last few years. I think, though, that on the issue of trade, there might be much better cooperation than on more politically charged issues. 

Monday, January 20, 2014

Plotting Pundits - the image says it all.

The pretty inspirational Ms. Tanden(s)

I dont know how you react to leaders of think tanks and other policy makers talking about issues of poverty, when you have a feeling, which might be based in reality or on the ever-reliable gut, that the person might not have had a brush with poverty at any stage of his or her life. Actually, I know that feeling is wrong for many of the commentators and even politicians - many, surely, have had pretty tough childhoods. Still, it is easy to see why the "elitist" label can easily stick to them.

Though I have always been impressed by Neera Tanden when I've heard her talk, there is always that nagging question at the back of my head: does she know what she is talking about when she talks about minimum wage and poverty and so on. At the same time, I dont think that you need to have been on minimum wage yourself to appreciate the problems faced by those on minimum wage. If that were the criterion we placed on policy makers, we'd have a tough time making policy at all.

Coming back to Neera Tanden. Her childhood story is pretty inspirational. She recounted her childhood roots at an Atlantic Live event on women and poverty. Her parents migrated to America most likely in the 1960s. They lived in the town of Bedford, Massachusetts. I think her father worked (place of work unknown) and her mother was a homemaker then. After a few years after Neera was born, their parents got divorced and her father left them for good. Given a choice between returning to India, and facing the stigma of being a divorced woman, and living in the US and going on welfare, she chose the latter. She went on a succession of jobs (travel agent, etc), and with the aid of government support, earned enough to even purchase a house in the same neighborhood. Given where Neera is now, she must've, obviously, done an awesome job. In any case, Neera Tanden gives a much better account of her story here. Please read through it and you will understand her position on issues much better.

Clearly, it is not just Neera Tanden's story that is inspirational. Her mother's is far more.

Sunday, January 19, 2014

Currency Manipulation

When you read literature on free trade, you are bound to come upon the topic of currency manipulation. Like with many other topics in economics, you have fairly respectable economists with different views on the topic. There are ardent free marketers who believe that the price is always right, i.e, the exchange rate of a currency is exactly what it should be, irrespective of the trade surplus or deficit of that country. Among the people mentioned in the links listed below, Don Boudreaux and Russ Roberts are good examples of those who think this way. In this podcast on EconTalk, Russ Roberts raises, what seems to me, a good point: How do you decide that a currency is over or undervalued? It seems equivalent to the question of whether a stock is over or under priced.

Then, there are people with a greater interest in labor issues, especially in the manufacturing industry. It is in these industries that workers have felt most strongly the whiplash of globalization. Job losses in better-paid, skilled manufacturing jobs in the US are well-documented. The source for these job losses is tougher to identify. It must be a combination of globalization, technology, free trade, and...currency manipulation. Depending on your perspective, you tend to apportion different percentages to these factors. There was a  coalition, known as the China Currency Coalition, which was active during the Bush years (2005) and blamed the currency manipulation for a big portion of the trade deficit. I'm not sure what it says about the issue that the coalition seems to be defunct now. (There were some good points made by Peter Morici, Professor of Business at University of Maryland, about how the trade deficit and China's policies were supporting the housing bubble in US. Remember, this is a press conference from 2005). Especially with China, there is the whole issue of geo-politics and a clash-of-ideas - their version of capitalism vs ours. Peter Morici fears that by not branding China a currency manipulator, and allowing them to dictate trade on their terms, they are exporting their version of capitalism to many parts of the world.

Anyway, here is a list of articles that I found interesting. Big disclaimer: I did not read all of them in entirety. My goal is to get a reasonable understanding of this topic, not to do FX trading tomorrow!
  1. Brian Palmer explains currency manipulation: If Currency Manipulation Is So Great for Exports, Why Don’t We Do It? 
  2. Fred Bergsten in Financial Times: Our chance to slash the high costs of currency manipulation 
  3. Don Boudreaux and Russ Roberts at EconTalk: China, Currency Manipulation, and Trade Deficits (audio)
  4. Simon Johnson at Economix blog: Preventing Currency Manipulation 
  5. Jerry Jasinowski at HuffPost: The Debilitating Currency War 
  6. Gilbert Kaplan at HuffPost: The Anti-Manufacturing Forces in Washington 
  7. Scott Paul at HuffPost: While Treasury Sleeps, Congress Stirs on China's Currency  
  8. China Currency Coalition press conference: Chinese Currency Control 
  9. Alan Tonelson at The Case for Coddling Currency Manipulation CollapsesWhy Obama Must Deal with Currency Manipulation in his Trans-Pacific Partnership

On most topics in economics, in which my expertise hovers imperceptibly above zero, I find it difficult to figure out what is reasonable and closer to truth. You cannot take ardent free marketers at their word if they try to preach their belief that currency manipulation is of no consequence, or that it is in fact good for us (non manipulators). On the other hand, when people with an interest in labor issues bring up this issue, it almost takes on shades of protectionism. So, it helps when economists from think-tanks that usually trumpet the virtues of free trade actually highlight this issue as a problem. In this case, I am referring in particular to Fred Bergsten and Joseph Gagnon from Peterson Institute for International Economics, which by no means can be accused of having anything but free trade  running through their veins. Essentially, they highlight in a report that currency manipulation has been a problem and continues to be one, though not as bad as a few years ago. However, Joe Gagnon cautions that it could become worse in the future, if no steps are taken to stem it. Finally, a few excerpts from Joseph Gagnon and Fred Bergsten's lengthy report on
By finally redressing the imbalance between deficit and surplus countries and forging effective linkages between monetary and trade policy, after almost 70 years of failure to do so, they could lead to the most fundamental changes in the international monetary system since the widespread adoption of flexible exchange rates in the 1970s.

Fortunately, such prioritization is justified by the very high costs of the status quo and the very high payoff from effective promulgation of the proposed strategy.

In particular, is it ready to take the risk that the manipulating countries that hold large dollar reserves, especially China but several of the other target countries as well, would respond by selling dollars, i.e., can the United States afford to take on its banker(s)?

Is it ready to acknowledge more broadly that the reserve currency role of the dollar is no longer an unmitigated blessing, and perhaps has even become a net cost for the United States

The budget deficit will obviously have to be trimmed substantially over the coming years, hopefully at a pace that will avoid throwing the economy into one or more recessions. The new Dodd-Frank regulations on financial institutions will need to be enforced aggressively and comprehensively.

The United States must also accept that, even if it is successful in attracting a number of allies to its cause, it will be the inevitable and essential leader of the effort. Hence it could jeopardize some of its other economic policy goals, and indeed broader foreign policy goals, vis-à-vis several key global players. For example, the United States will continue to seek help from China on other key economic issues, such as trade negotiations and climate change, as well as central foreign policy issues such as North Korea and Iran.....(Such) have led to US hesitation in recent years to confront China over the currency issue and especially to label it a manipulator.

The point here is simply that the United States (and its allies) should not be reluctant to push for substantial currency realignments that would produce an implied further depreciation of the dollar. From the standpoint of the global role of the currency, it would in fact be far superior to do so by insisting on an end to currency manipulation that produced artificially undervalued currencies, and thus an artificially overvalued dollar, than by overtly pushing the dollar down through explicit actions by the United States itself.
By the way, China is not the only currency manipulator. There are many others but they don't appear as major threats because they are not as big in size. According to Bergsten and Gagnon, China, Denmark, Hong Kong, Korea, Malaysia, Singapore, Switzerland, and Taiwan are the eight most egregious manipulators. Some others would add Japan to the list too. Many would also say that Japan and Korea manipulate their currencies in response to China.

Anyway, good luck in trying to make more sense of it. My basic questions still remain unanswered: (1) If currency manipulation were eliminated, how would it alter the trade deficit? (2) How will the unemployment situation in the US, and other countries, be affected by elimination of currency manipulation, (3) What will the effect on China and other currency manipulator nations be? Actually, I am so illiterate on this topic, I dont even know how to formulate my questions!

Friday, January 17, 2014

One scary aspect of free trade - there are others too

When you have free trade, some of the worst features of a country get exported. It is not always that only good things get exported. I am not talking of Hollywood trash or Miley Cyrus and things like that. Those get exported without any free trade deals. In the first senate hearing (in 2014) on granting trade promotion authority to the Obama administration, Sen. Orrin Hatch (R - Utah) brought up the issue of health care. Apparently the world health care market is approximately $6 trillion and can blossom to $8.5 trillion soon. Now, imagine if America actually succeeds in exporting its super costly, mostly painful, model of health care all over the world. Should we not be content with having discontent only among ourselves?

More seriously, I'm not sure how well US healthcare companies are really positioned for the global market. I should gather data/articles on this to substantiate my thesis that products from US healthcare companies are too costly for most developing nations. I've heard that some Japanese (maybe South Korean too) and European companies are better suited for this. Cheaper technology is the key. Anyway, my knowledge of medical devices industry is next to zero - so, what I say is worth as much.

Thursday, January 16, 2014

Free trade - hearings on fast track have started again

There is no doubt that the ills of free trade treaties are much more apparent than the positives. Especially in a time of high unemployment, there is a tendency to ascribe more than the fair share of blame to NAFTA type trade pacts. However, there is no doubt that people from the Bush (papa) and Clinton administrations promised the heavens if NAFTA was signed. Obviously, what we have seen in the US is a reduction in the number of people working in high-wage manufacturing jobs. Many of them have moved elsewhere. Some to Mexico, some to Canada, and some to other parts of the world. However, many of these jobs were newly created. The GM and Ford cars being sold in India are newly created jobs - they have not taken anyone's job in the US. Some portion of the jobs that have been created in Mexico or Canada must be newly created - economists might be able to tell us what fraction that is. Some certainly have been transferred from the US to Mexico and Canada. That, obviously, creates much anxiety in the US and ill-will towards free-trade type deals.

The only entities that seem to come out on top are big corporations which can have subsidiaries in different countries. It is a little like Boeing threatening to leave Washington and relocate in any of the 20 or 22 states which were trying to woo Boeing. They had already done it once before and the threat was real. The end result is that employees have to cave in. The shareholders come out on top because all they are interested in are the dollars and cents. In some sense, this is inevitable. I am sure there are theories of trade that say that trade between a richer country and a poorer one will lift the standard of life in the poorer one and bring it in equilibrium with the richer one. Obviously, it means that the standard of life in the richer one has to fall.

How long it will take depends on the two countries involved. Imagine trade between two countries where the poorer one has a terrible government, which is not uncommon, and a richer one with a reasonable government. It is easy to see how big corporations can exploit the poorer country and benefit much more from the whole arrangement than the poorer country itself. In this context, a large country like China, India, or Brazil has an inherent advantage. The very fact that it is a big market means that companies have to agree to the rules imposed by the governments. It is much easier to browbeat Bangladesh compared to Brazil. For smaller countries, maybe the solution is to form trade blocs.  

All said and done, the people of US are lucky - they've created it for most part. The government is much more answerable to the people here than almost anywhere else in the world. In fact, a non-citizen like me can feel comfortable enough to participate in the political process and critique the government, if necessary. Such openness is not present elsewhere. Institutions to redress grievances due to the adverse impact of trade deals may not be available to citizens of many countries. Despite these misgivings, trade has been good for many countries (need data to back this claim), at least for some in China, South Korea, India, Brazil, etc. Given all the accidents over the last few months, I'm not sure that the people in Bangladesh have really benefited from their trade. But the problem there is not trade but the utter failure of successive governments in Dhaka. 

Anyway, about the senate hearing on granting the Trade Promotion Authority to the Obama administration. You can watch the entire hearing here. Senator Sherrod Brown brought up a good point about how free trade deals can empower corporations to take steps which seem simply wrong. In the hearing on Jan 16, 2014, he talked about how Philip Morris, the tobacco giant, took the government of Australia, not a tiny and corrupt country, to court over a legislation passed by the government. If you want further details about this, please read through this page. A few key excerpts are given here:
On 1 December 2011 the Tobacco Plain Packaging Act 2011 received Royal Assent and became law in Australia.
The Act forms part of a comprehensive Australian Government strategy to reduce the rate of smoking in Australia. Smoking is one of the leading causes of preventable death and disease in Australia.
Philip Morris Asia is challenging the plain packaging legislation under the 1993 Agreement between the Government of Australia and the Government of Hong Kong for the Promotion and Protection of Investments. On 21 December 2011, the Australian Government provided its response to Philip Morris Asia's Notice of Arbitration.
So, some kind of free trade deal with Hong Kong gives Philip Morris to challenge Australia over the decision of a democratically elected government. To some extent, this should be allowed. But trade deals cannot be loopholes by which to assault public policies. Again, if this can happen to Australia, imagine what could happen to some tiny, usually badly managed, country. BTW, David Cote, the CEO of Honeywell International, did not reply to the question posed by Senator Brown about the ability of corporations, such as Philip Morris and Honeywell, to take countries to international courts because of disagreements with public policies deleterious to their bottom-line.

To be continued....

Wednesday, January 15, 2014

Paid Ad in Wall Street Journal - 13 men and 1 woman!

As you turn the pages of Wall Street Journal, you are bound to find a page long ad which tries to look like something other than an ad. Most often, it is about a WSJ CEO conference in which a top WSJ journalist is interviewing some titan of Wall Street or CEO of a large company. Sometimes, you have ads for other things, like a feature about Russia, proclaiming bountiful opportunities. Or an ad by BP proclaiming its environmental record in the wake of Deepwater Horizon.

In any case, once in a while you come across something really interesting. A few months ago, I came across an ad for high performers in some company (I totally blank out the details). What stood out in that ad was that all of them were men. There was no woman at all. I found that rather surprising, even though it is well-known that the percentage of women drop as part of workforce as one climbs the ranks of management.

I came across one such ad in WSJ recently. It was a page long paid ad for a conference on economic prognostications for 2014. It was somehow related to Jim Cramer. Enough said, some of you may say. No, there is more, I retort. The ad, shown below is not as discriminatory because it contains one token woman, alongside thirteen other men. As I was sulking that this ad did not quite help prove my point about the make up of the finance industry, I realized this was even more precious. It turns out that the lone woman is Lynn Tilton, CEO of the appropriately named "Patriarch Partners!"

Tuesday, January 14, 2014

Arguments against the Free Trade Agreement. With Canada. 1987

As I was listening to some of the Congressional proceedings regarding NAFTA, I came across this video from 1987 in which Senators William Cohen (Republican) and George Mitchell (Democrat) of Maine argue against the free trade agreement with Canada on account of subsidies, especially to agriculture industry, by Canadian government. It is worth listening to.

Actually, the FTA with Canada did not provoke much discussion in the US. It, apparently, was front page stuff in Canada. Obviously, they were dead scared that the US would ruin them completely, and maybe even annex them. Maybe those fears continue to this day!

Random tangents:
William Cohen went on to become the Secretary of Defense under Bill Clinton. His wife, Janet Langhart, is, among other things, a playwright. It was when her one-act play Anne & Emmett was to be screened at the US Holocaust Museum that James von Brunn shot Museum Special Police Officer Stephen Tyrone Johns.The premise of the play is quite interesting - an imaginary conversation between Emmett Till and Anne Frank!

Monday, January 13, 2014

The Magnificently Moustached Craig Merrilees

The received wisdom is that free trade is good for all. At least, that is what most economists and policy makers believe. So, if you want to read or hear arguments against free trade as it is practiced now, you would have to scour carefully for sources. I dont watch any of the TV channels - so FOX, MSNBC, etc are useless to me. My sources are usually public talks and congressional hearings on these topics. Once in a while, you encounter the same person in multiple such talks and you realize that this person might have contributed in one way or another to  the debate on free trade. It is important to stress that these people are not necessarily critics of free trade as much as they are of trade policy.

One such person is Craig Merrilees and I got to know of him through his testimonies to the USTR and the House Agriculture Committee (chaired by Rep. De La Garza) during the NAFTA debate. Yes, from 1991. Sadly, when I tried to find if any of the newspapers had written about him or his testimonies, I found nothing, at least in the archives of New York Times. When I did a more extensive search on Factiva, which is owned by Dow Jones, I found few articles. It turns out that Craig Merrilees had been quite active in the environmental and labor movements. I'm not sure what it takes to be a spokesman for different causes, but Mr. Merrilees has been one for various organizations. In fact, before he became a spokesman for organizations interested in trade related issues, he was one for "Veterans Peace Convoy," an organization opposing the invasion of Nicaragua. You can find here an article related to a demonstration by the peace convoy at the White House. Since he was involved with opposing the invasion of Nicaragua, I wonder if Mr. Merrilees was a colleague of Mr. De Blasio, the current mayor of New York City.

A good article on the opposition to NAFTA in, what we would now call the mainstream press, is by Bob Davis ("Fighting NAFTA: Free-Trade Pact Spurs a Diverse Coalition of Grass Roots Foes." Wall Street Journal, December 23, 1992). Since this article is not available online, I post here some excerpts. 

"The anti-free-trade movement began to branch out from its labor-union roots in 1987 when a Minnesota farm activist named Mark Ritchie became fascinated with GATT. The 40-year-old organizer of food co-ops and the early-1980s Nestle infant-formula boycott (based on the Swiss company's pushing formula in the Third World) moved his family to Brussels for six months to study the workings of the intricate trade organization.
He hit on a little-known facet of the broad round of trade liberalization being negotiated: Under new GATT rules, foreign governments would have firmer ground for challenging U.S. environmental laws as barriers to trade. Returning home, Mr. Ritchie, a mesmerizing speaker, spread the alarm in meetings with environmentalists and foundations over the next three years. With family-farm groups, already fearful of Reagan administration efforts to slash farm subsidies, he preached that a free-trade pact would further reduce prices for farmers.
He hit pay dirt when Barbara Dudley, executive director of the Veatch Program, a Unitarian Church charity that bankrolls environmental causes, heard a talk at an Adirondack Mountain lodge in early 1990 and donated $50,000 to his cause. Mr. Ritchie hired Mr. Merrilees, a veteran environmental organizer, and they launched the Citizen Trade Campaign. "We weren't just talking about tariffs," Ms. Dudley says. "We were talking about threats to environmental, health and safety regulations." 

That is how Mr. Merrilees comes into the picture. In any case, Mr. Merrilees makes pretty powerful case for opposing Fast Track, or the Trade Promotion Authority. This video clip, in particular highlights all the points that opponents of Fast Track are now making. Basically, the reasons have not changed much. Just that the country has changed - its no longer Mexico. You'll see that he comes across as a passionate opponent to Fast Track.

Anyway, Mr. Merrilees is now a communications director for the International Longshore and Warehouse Union (ILWU). If you see the video clip, you'll see why the title of this post is right. He looks like a left-leaning version of John Stossel!

An update to this post: Bob Davis, whose article I referenced above still writes for WSJ. He mostly writes on business/economics in China. He is also the co-author with David Wessel of a book titled "Prosperity: The Coming Twenty-Year Boom and What It Means to You." Written in the throes of the tech boom, it would be an understatement to say that Bob and David did not foresee the future. I've not seen any interviews of Bob Davis but David Wessel, whenever he has to talk about this book, admits gracefully that he was way off target. 

Sunday, January 12, 2014

Fast Track and Free Trade

Fast track negotiating authority, or the more benignly named Trade Promotion Authority (TPA), is a Presidential authority granted by the Congress to negotiate trade deals with other countries. Under this process, once a trade deal has been signed, Congress can vote only to accept or reject it in toto. The Congress does not have the right to modify any portion of the trade deal. In addition, it has only 60 working days to study and discuss the deal.

Unless you don't follow any politics, you would have no doubt come across a few articles with words like "TTIP", "TPP", or "TAFTA" in the headlines, and most likely ignored it because it did not seem related to the economy. Well, wrong decision. The Obama administration, i.e. the executive branch, is seeking fast track or TPA authority once again to negotiate trade deals with EU (TTIP - Trans Atlantic Trade and Investment Partnership and TAFTA - Trans Atlantic Free Trade Agreement) and a bunch of Asian countries (TPP - Trans Pacific Partnership). All these trade deals are made under the assumption that increased trade benefits all parties involved. There is, perhaps, recognition that it affects adversely at least some segments of society, but that the overall benefits outweigh them.

I'm not sure what kind of public discussion took place when the original fast track authority was granted to the Nixon/Ford administrations in 1974-75. I could go back to newspaper articles from then to find out what was happening. For reasons I will explain below, I don't expect to find much in the newspapers. The most famous or infamous free trade deals signed under the fast track authority are the Canadian-American Free Trade Agreement (CAFTA), which was signed in 1988, and the North American Free Trade Agreement (NAFTA), which was signed in 1993. Actually, I'm not sure about when exactly these deals were signed. There is some time lag (the 60 days) between the USTR (United States Trade Representative) signing the deal and it coming into effect. Still, 1988 and 1993 seem quite right.

When you try to look into accounts of public discourse on these trade deals in the US newspapers, you hardly come across anything substantive. Apparently, there was quite some discussion about CAFTA in Canada. Hardly anything in the US. By the time it came to NAFTA, because Mexico was involved, there was lot more discussion in the US. I'm not sure how much was reported (I really dont know - I did not scour through the nytimes archives). One important source of information - first person accounts - is CSPAN. Search for "NAFTA" and you'll have at your fingertips hours and hours of videos of discussions on free trade from 1987 to 2013. Of course, listening to hours and hours of video is, unless your work is related to aspects of trade policy, a terrible pain. Fortunately, CSPAN allows you to make clips from videos and I have identified a few videos from the CSPAN archive that I found particularly useful in becoming better educated about trade policy. You can find the full videos and clips here. I will write more about the contents of the videos themselves in a few days.

In the meantime, if you are interested in reading about trade, you can read some of the articles by Alan Tonelson, who writes incessantly on trade related issues at, literature at Global Trade Watch, and a book titled "Taking Trade to the Streets: The Lost History of Public Efforts to Shape Globalization" by Prof. Susan Ariel Aaronson, now at George Washington University. I'm sure there are many other books on this topic but this the only one I've read a little of and it is interesting. Lori Wallach, one of those few people who tried to argue against NAFTA and Fast Track in 1991 and also against TPP/TTip/Fast track now is out with a book "The Rise and Fall of Fast Track Trade Authority," which from her involvement on this issue then and now, seems to be worth reading. How can I forget to mention DemocracyNow?

You can also listen to some of the events related to trade at well-known think tanks. However, you will be sorely disappointed if you think there will be debate. Almost all of them believe that free trade is manna from heaven. I have rarely seen substantive debate on these issues at the think tanks. Even left-leaning think tanks like Center for American Progress hardly pay any attention to trade related issues or the trade deficit. What is sad is that newspapers do not write enough about this. It looks like in business and economics journalism, writing about trade and labor related issues is not sexy enough! Wall Street Journal may create a twitter handle called @WSJCentralBanks but I doubt they'll ever create one called @WSJTrade or even @WSJFreeTrade and report all that is unreported on this issue.

Saturday, January 11, 2014

Another dessert to end the day with - Banackers

My sweet tooth forced me to conjure a new dessert a few days ago. We don't, usually, stock up on off-the shelf sweets. Apart from ricotta cheese, cottage cheese, yogurt, and honey to make my other go-to dessert. On my way back from work, I had an epiphany about a dessert. I love bananas, especially when cooked with oats or in banana bread or cookies. Unfortunately, I'm not much of a baker. It requires attention to detail that I'm incapable of. Also, I hate using the kitchen oven to bake a puny little thing. Way too much waste of energy.

I decided to make banana cookies with Graham crackers. All you have to do is crush a few graham crackers. In fact, you don't want to remove them from their pouches - just crush them inside the pouch and then transfer the power to a tupperware or glass container. It should not be all powder. Add as many bananas as you wish - you should get a pretty sticky doughy paste when you mix the two. Usually, I add about 3 or 4 bananas to 2 or 3 pouches of Graham crackers (a pouch contains about 5 or 6 wafers). To this add a small amount of butter. Flatten this in your tupperware/glass container so that you have a layer about 0.5 inches thick. Cook it in a microwave oven for about 6 minutes.

What you get out is awesome banana cracker cookies. They are not hard or crumbly like cookies - a little moist in the inside, and maybe a little crusty or dry on the outside. After eating them, and getting to know what is in them, my son christened this "banacker," and so it shall be known, at least in our household.

I tried this in the traditional oven too (usual conditions - 350 F, 40 minutes, covered most of the time). While the entire layer was more uniformly cooked, it lacked the moistness of the output from the microwave oven. All a function of the time taken to cook. I prefer the microwave version. Also, its much faster.

Happy eating.

Friday, January 10, 2014

Starting and finishing off the day with great food

Once in a while I have a craving for something really nice and sweet. The only sweet that can really satisfy me then is a really good baklava, with pistachios and honey. However, that is not always in supply. In any case, good baklava is pretty expensive. Moreover, something like baklava is OK as a dessert but not to start off the day, though people in the Mediterranean might object.

Since I decided to reduce my rice consumption to near-zero, I have been consuming lots of oats. Rolled oats, usually purchased at Costco. Pretty reasonably priced stuff. I'm not sure how you go about making your oats but I hit upon a method, with some help from the chef at the day care which my son attends. Its pretty straightforward - to the desired quantity of oats, add roughly twice the quantity of water. Add some brown sugar and a pinch or two of salt. To this, add a good dose of powdered cinnamon (hopefully you just powdered it just then). Now comes my own addition - add some powdered cloves. We have cloves that my wife purchased in 2002! It was a really big packet and we hardly used it until recently. Anyway, add the powdered cloves. To this, mash a banana or two. Hopefully, you've used a ceramic bowl or tupperware. If not, transfer it to one and cook in a microwave oven for about 6 or 7 minutes. What you get out is delightful bliss. But I'm about to make it even better. Add some yogurt to this - just plain, whole milk yogurt. It makes for a super creamy oaty breakfast.

OK, that is good for the morning. What about the evening dessert? Something equally healthy but not as heavy as oats. I hope you have yogurt, Greek yogurt, ricotta cheese, and cottage cheese in your refrigerator. You should also have walnuts and/or almonds. Some raisins wont be bad too. You certainly need to have good honey. Toast the walnuts in a toaster over for a few minutes. Four or five minutes. A few more minutes for almonds. In the mean time, take a scoop of each - yogurt, Greek yogurt, ricotta cheese, and cottage cheese - in a bowl. Drop your toasted walnuts/almonds into this. Ideally you should hear the sizzle as walnuts make contact with yogurt. Drizzle, or better still, pour honey onto this. Top it with raisins. Do I need to say what you should do next?

Happy eating!