Help Wanted, No Private Sector Experience Required

Nick Schulz has posted an excellent chart from a J.P. Morgan research report that illustrates the private sector experiences of cabinet officials since 1900.

The chart includes secretaries of State, Commerce, Treasury, Agriculture, Interior, Labor, Transportation, Energy, and Housing & Urban Development, and excludes Postmaster General, Navy, War, Health, Education & Welfare, Veterans Affairs, and Homeland Security—432 cabinet members in all.

Over 90 percent of the current cabinet’s experience was in the public sector.

Agricultural trade liberalization and poverty in Brazil

The International Food Policy Research Institute (IFPRI) has published a new paper called ‘Agricultural trade liberalization and poverty in Brazil.’ Below is the author’s abstract:

This paper addresses the potential effects of a world agricultural trade liberalization scenario on poverty and regional income distribution in Brazil, using an interregional applied general equilibrium (AGE) and microsimulation model of Brazil, tailored for income distribution and poverty analysis. The model distinguishes 10 different labor types and 270 different household expenditure patterns. Income can originate from 41 different production activities (which produce 52 commodities), located in 27 states in the country. The AGE model is linked to a microsimulation model that includes 112,055 Brazilian households and 263,938 adults.

The scenario is generated from a previous run of the MIRAGE model, which assesses the likely impacts of a Doha Development Agenda agreement, based on the draft on agriculture by Crawford Falconer and the draft on nonagricultural market access by Don Stephenson. The results of this global scenario are transmitted to the Brazilian model. Poverty and income distribution indexes are computed over the entire sample of households and persons, before and after the introduction of policy shocks. Model results show that the simulated trade policy shocks have positive effects on poverty and income distribution in Brazil. The simulated effects on poverty and income distribution are positive in aggregate, with benefits concentrated in the poorest households. The results, however, differ across the Brazilian territory, worsening in some important states, where the poverty and inequality indicators increase. The gains in agriculture are found to benefit all the agents involved, from workers to small producers to large farmers, rejecting the idea that just large farmers would gain.

Economic vandalism: Barack Obama and free trade

The Economist has a timely and spot-on article on Obama’s “string of ominously protectionist policies” highlighted recently by his decision to impose a 35 percent tariff on imported Chinese tires. The magazine writes:

This newspaper endorsed Mr Obama at last year’s election (see article) in part because he had surrounded himself with enough intelligent centrists. We also said that the eventual success of his presidency would be based on two things: resuscitating the world economy; and bringing the new emerging powers into the Western order. He has now hurt both objectives.

…The tyre decision needs to be set into the context of a string of ominously protectionist policies which started within weeks of the inauguration with a nasty set of “Buy America” provisions for public-works contracts. The president watered these down a bit, but was not brave enough to veto. Next, the president stayed silent as Congress shut down a project that was meant to lead to the opening of the border to Mexican trucks, something promised in the NAFTA agreement of 1994. Besides these sins of commission sit the sins of omission: the president has done nothing at all to advance the three free-trade packages that are pending in Congress, with Colombia, Panama and South Korea, three solid American allies who deserve much better. And much more serious than that, because it affects the whole world, is his failure to put anything worthwhile on the table to help revive the moribund Doha round of trade talks. Mr Bush’s tariffs, like the Reagan-era export restraints on Japanese cars and semiconductors, came from a president who was fundamentally committed to free trade. Mr Obama’s, it seems, do not.

Click here to read the full article.

Grocery Prices are Dropping

Tire Industry Opposed ‘Punitive Tire Tariff’

Mark J. Perry points to an interesting New York Times article that claims the “punitive tire tariffs” against China were in fact opposed by the domestic tire industry (Goodyear and Cooper):

Last Friday night, Mr. Obama, responding to a complaint by the United Steelworkers, imposed a 35 percent tariff on Chinese tires for cars and light trucks. China quickly responded by threatening to retaliate against American auto products and chicken meat, raising fears of a possible trade war, an especially unwelcome prospect just as the global economy is struggling to recover.

China has deplored the administration’s decision, suggesting it caved to domestic support for protectionism. The Tire Industry Association, which represents American tire retailers, said the decision was ill-advised and would lead to higher prices for consumers.

Asserting that the decision would hurt tire retailers, the association said it “believes this was a politically motivated decision that will end up costing more jobs than it saves. These tariffs will not bring back the jobs that the union claims have been lost.”

Responding to New Tire Tariff, China Targets American Auto Parts and Chicken Products

Just days after Obama bowed to union pressure and imposed a 35 percent tariff on Chinese tires, China has retaliated:

Chinese officials lambasted the decision, accusing the U.S. of engaging in protectionism and violating World Trade Organization rules. They argued that the U.S. tire industry had long ago abandoned the low-end market that China covets and said Chinese tire imports had increased only 2.2% between 2007 and 2008, state media reported.

By announcing the probe of U.S. imports, the Chinese Ministry of Commerce signaled that it was prepared to challenge Obama’s decision.

“Recently, the commerce ministry has received word from domestic industries indicating that [chicken and auto] products had entered our nation’s markets via dumping, subsidies and other unfair trade means,” the ministry said on its website, giving no details about the specific products.

James Zimmerman, a partner in the law firm of Squire Sanders & Dempsey in Beijing, recently told the Los Angeles Times, “American business in China should be prepared for what might be a zealous retaliatory response from China, which might impact a broad range of U.S. commercial interests.” Just what we need.

Americans Support Subsidies for Small Farmers

According to WorldPublicOpinion.org, Americans support agricultural subsidies for small farmers:

As for large farmers:

Where agriculture subsidies go

Farm Subsidies Over Time

The graph below illustrates that even in times of near-record profits, farm subsidies have remained high:

(Click to enlarge)

Of course, government support of the agricultural sector is not justified at any time, whether in periods of high or low profits.

Interesting Farm Fact

Mark J. Perry — According to the USDA, 91.20% of all U.S. farms were classified in 2003 as “small family farms” and those farms produced only 27.1% of the total farm output (see chart above). The other 8.8% of U.S. farms are “large-scale family farms” or “nonfamily farms,” and those two groups produced almost 73% of all farm output.