6/9/08

Economists Discuss the Impacts of Globalization on the US.  Especially focusing on the impacts of freer international trade on income inequality.  Tyler Cowen starts things out with this NYTimes oped piece in favor of free trade, stating "trade with China has already eased hardships for poorer Americans." Mark Thoma argues that "the net impact is more negative than Tyler indicates..., [therefore] maintaining political support for increased openness will require that the gains from trade and technological change be shared more equitably."    Brad DeLong points out that trade theory does predict that there will be losers from trade --the losers will be the owners of relatively scarce resources.  The question for DeLong is therefore, are these owners of relatively scarce resources more likely to be large numbers of relatively poor people, or small numbers of relatively rich people?  His conclusion is that trade has "been unfavorable to the working class when all the costs, including reduced economic security, reduced health care coverage, etc. are taken into account."    It is interesting to read the example of income distribution in India posted just below here in the light of the discussion of these economists.

posted June 9, 2008 at 12:15 p.m.

 

$7 a bushel Corn??  Corn prices hit record June 9.

posted June 9, 2008 at 11:50 a.m.

 

An Example of Income Distribution in India.  From the NYTimes.

posted June 9, 2008 at 8:40 a.m.

 

Cultural Differences in Attitudes toward "fairness".  In a commonly used experiment to determine people's attitudes toward fairness, people are matched up in pairs and the pair is given a sum of money (say $100).  One person (chosen at random) makes an offer to the other:  "I will keep $x and you will get $100 - $x.  Do you agree to that?"  If the second person agrees, that is how the money is split up.  If the second person rejects the offer, both people get zero.  So the real choice facing the second person (most of the time) is between an option that is "fair but poor" -- both people earn zero -- or unfair but rich -- one person earns more than the other, but both earn something.  The Washington Post reports on a cross country study.  "In many ways, fairness seems to matter more than absolute measures of how well they are faring -- people seem willing to endure tough times if they have the sense the burden is being shared equally, but they quickly become resentful if they feel they are being singled out for poor treatment."  The article cites a paper in the journal Science by anthropoligist Joseph Henrich, et al.  A (gated?) version of that paper is here.     Related:  Seratonin levels in the brain influence attitudes toward fairness.  Especially on point for "hungry and angry":  "The findings highlight why some of us may become combative or aggressive when we have not eaten. The essential amino acid necessary for the body to create serotonin can only be obtained through diet; our serotonin levels naturally decline when we don't eat."

posted June 9, 2008 at 7:15 a.m.

 

Immigrants to U.S. help relatives in the home country deal with the world food crisis.  From the Washington Post's Metro section.

"Filipinos in the Washington region say the unthinkable has become fairly common in recent months: Migrants are stuffing sacks of rice into care packages known as balikbayan boxes and shipping them to the Philippines, where shortages have led to soaring prices and rationing. Area immigrants from Haiti, where skyrocketing prices have sparked riots, are boosting orders of food from U.S.-based money transfer agents. The orders are plucked from the shelves of warehouses in Haiti and delivered to recipients within hours....  Only some immigrant groups also have well-established systems for the transfers of goods, said Manuel Orozco, a remittance expert at Georgetown University. Among them is the Filipino practice of sending 23-by-20-by-17-inch boxes packed with U.S. products, which are typically shipped for a flat rate of about $100 no matter what's stuffed inside. Another is the Haitian food transfer system, a method experts say has never taken off in other nations. Both are now facilitating family-level food aid.  On a recent afternoon, Jimmy Alazi paid $107 at Taptap Inc. on Georgia Avenue in the District, a one-desk office where Haitian expatriates can select from a product list that includes 24 cans of tomato paste ($42) and one live goat ($76). Alazi had chosen basics for friends in Port-au-Prince: 55 pounds of rice, three gallons of cooking oil, 25 pounds of black beans, 20 packets of spaghetti and 27.5 pounds of sugar. "When you send money they can use it for other things," said Alazi, 38, a Fort Washington insurance agent. "I want them to eat." "

posted June 9, 2008 at 6:40 a.m.