(”In 1969, a 14-year-old Beatle fanatic named Jerry Levitan, armed with a reel-to-reel tape deck, snuck into John Lennon’s hotel room in Toronto and convinced John to do an interview about peace. 38 years later, Jerry has produced a film about it. Using the original interview recording as the soundtrack, director Josh Raskin has woven a visual narrative which tenderly romances Lennon’s every word in a cascading flood of multipronged animation. Raskin marries the terrifyingly genius pen work of James Braithwaite with masterful digital illustration by Alex Kurina, resulting in a spell-binding vessel for Lennon’s boundless wit, and timeless message...”)
(Few economists now doubt that private household spending and corporate investment will rescue the economy on their own. The debate now lies in the scale and scope of the government’s intervention, as the only institution with the access to capital, macroeconomic scope, and investment horizon needed to jump-start the labor market, keep production cycles from seizing up, and create the necessary conditions for manageable lending and spending to resume.
In the following commentary, David Kotok of Cumberland Advisors suggests that any stimulus of this size shouldn’t be rushed or it risks not achieving the plan’s most basic objectives: immediate job creation and demand stabilization. While fiscal conservatives and liberals argue over the relative effects of tax breaks versus direct spending, the debate ought to focus on the nature of the spending itself. Infrastructure investments are a great way to support demand for key goods and services that have been disproportionately affected by the economic downturn, but if these projects take months and even years to plan and carry out, there may be better ways of borrowing $3,000 a head for every American and putting that capital to more immediate and productive use…)
Washington seems in disarray
February 13, 2009
Imagine! There is a Congressman who actually wants to delay the vote on the stimulus bill so he can read it and make sure it says what he was told it says. Kudos for him. There is still hope for our country.
This 575 page piece of legislation is being rammed through Congress without any hearings, without any detailed examination, without any vetting. It is loaded with pieces of spending that are not going to trigger job creating activity for months or even years or maybe never. It is larger than all the money spent on the Iraq war. Its size rivals the Defense Department appropriations. It will be funded through federal borrowing. And there has not been any comprehensive vetting of the component parts.
Now we are continually told that there will be a “catastrophe” or a “disaster” if this 789 billion dollar package is not passed at once. Note that there is a continuing reference that ONLY government can fix the economic problems in the United States.
Not once did anyone mention that Cisco financed a 4 billion dollar bond issue without any TARP funds and without any government guarantees. Note that Intel announced an investment of billions into an entire new facility that will be located in the United States (Arizona) and will be privately funded. Intel didn’t need TARP funds. Intel didn’t need the stimulus package. Not one official in the Obama administration has even acknowledged the Intel commitment.
All we hear is that government can fix what will otherwise be a complete disaster. And all we hear is that banks are not lending and that there is no credit available.
(While the world comes to terms with yesterday’s historic call for change, Nouriel Roubini and his team have pulled together a laundry list of the many great challenges that lie ahead…)
Barack Obama, the 44th President of the United States RGE Monitor
The 2008 U.S. Presidential election was historic itself owing to the candidates’ profile. But the timing of the elections as the U.S. and global economy are in the midst of the worst financial crisis and recession in decades reminds us of the Great Depression era and the 1980s recession when incoming Presidents Roosevelt and Reagan faced immense challenges to cure the economy’s woes.
By the time Obama takes his oath in January 2009, he will face an economy which is still in a middle of a severe and prolonged recession where households will continue to face unaffordable mortgage and other debt, declining value of homes (that financed their consumption all these years), risk of debt default or foreclosure, tight access to credit with stringent borrowing conditions, erosion of their retirement savings amid the bearish stock market, over a million lay-offs taking the unemployment rate to 7-8% and critical foreign policy challenges.
(As Canadians flock to the polls later this month, quietly supplying 22 percent of America’s oil and 13 percent of its natural gas, its neighbours to the south have barely noticed. Cross-border oil flows are inevitable – given that America controls of a mere 2% of the world’s oil reserves and consumes almost 25 percent of supply – and securing its long-term petroleum assumes the full participation of Alberta’s carbon-rich tar sands and the off-shore bounty at Hibernia. Even Governor Palin’s Wildlife Reserve is virtually useless without passage by pipe across Canada’s Western provinces. Given the importance of “Securing America’s Energy Future” during a twin election year, it’s surprising that talk hasn’t returned to NAFTA, cleaner energy, or agricultural subsidies.
BANFF, Alberta (Reuters) – The way Daniel Yergin sees it, the high-stakes debate over energy security in the U.S. presidential campaign has ignored one of the most critical parts of the United States’ oil supply equation: Canada.
The United States’ neighbor to the north has quietly become its largest foreign oil and gas supplier, and that has actually improved energy security in the United States, said Yergin, energy and geopolitical analyst, Pulitzer Prize-winning author and chairman of Cambridge Energy Research Associates.
Meanwhile, Canada’s oil industry is struggling at home to keep boosting production of the country’s vast oil sands while facing major new environmental and cost hurdles, Yergin said.
“People debate oil imports, but what they don’t know is 22 percent of oil imports come from Canada, that 13 percent of our natural gas comes from Canada. Imports of energy from Canada need to be seen in the larger context of the trade and investment network that ties the two countries together,” he said in an interview in the mountain resort of Banff, Alberta.
Assuming that the United States decides to impose a $25 per barrel tariff on all imported oil (crude and product) – and Canada and Mexico were not exempt — let’s explore how this might affect:
a. The volume of oil imported into the United States?
Volume responses to a $25 tariff would vary over time. In the near-term, there would only be a negligible decrease in the volume of oil imported (given a low short-run elasticity of energy demand) as industries, supply chains, and consumers remain highly dependent on existing petroleum infrastructure. The redistribution of the tariff (with tax reductions) would partially offset the incremental cost to businesses and consumers, but the policy is unlikely to completely offset the macroeconomic effects of a 33% increase in a key industrial input.
In the mid-term, as industries and generators begin to shift away from higher-cost imported oil, domestic oil producers might begin building out untapped Arctic capacity and utilities might begin diversifying their energy portfolios into lower-cost fossil fuels and alternative energy technologies. Together, these processes should cause a more substantial decline in import volumes.
In the long-run, a more fundamental shift away from a high-carbon, high-cost, oil-dependent economy is likely to unfold, at which point oil imports would begin to decline more precipitously as demand for energy is almost completely replaced with lower-cost substitutes. This progression is an example of a typical “adjustment lag”.
(An excerpt from the mid-term “problem set” in ENR-302…)
3. The country of Xanadu is dependent of the use of domestically produced methanol for 100% of its energy needs. The price of methanol is set by a competitive market and the fuel is priced at $2.50 per gallon. Two large companies supply 80% of the market and each has costs of $1.50 per gallon. The opposition party and most of the national labor unions argue that these two companies are making obscene profits. They demand that the President place a mandatory price cap of $2.00 on the price of methanol to prevent “this abuse of market power.”
Assume that the elasticity of demand is 0.4 and the elasticity of supply is 0.8. Discuss in 250 words or less, the impact on supply and demand, if the President gives in and caps the price of methanol at $2.00 per gallon. Explain your answer.
(Another interesting analysis on the trade-off between economics and security. In this case, the existence of a low-cost, high-value, recreational good with addictive/inelastic demand has produced a covert, vertically integrated, structurally dynamic supply chain in northern Mexico. Stopping it would be akin to damming a river with a cheese cloth. Without a considerable increase in legal supply, a decrease in illegal demand, or ideally both, there’s little chance that the industry will dry up any time soon. More likely, as the author suggests, “The children and grandchildren of the Zetas will be running banks, running for president, building art museums and telling amusing anecdotes about how grandpa made his money running blow into Nuevo Laredo.” Sounds like the Bronfman affair all over again, without the legalization…)
Over recent months, the level of violence along the U.S.-Mexican border has begun to rise substantially, with some of it spilling into the United States. Last week, the Mexican government began military operations on its side of the border against Mexican gangs engaged in smuggling drugs into the United States. The action apparently pushed some of the gang members north into the United States in a bid for sanctuary. Low-level violence is endemic to the border region. But while not without precedent, movement of organized, armed cadres into the United States on this scale goes beyond what has become accepted practice. The dynamics in the borderland are shifting and must be understood in a broader, geopolitical context.
The U.S. border with Mexico has been intermittently turbulent since the U.S. occupation of northern Mexico. The annexation of Texas following its anti-Mexican revolution and the Mexican-American War created a borderland, an area in which the political border is clearly delineated but the cultural and economic borders are less clear and more dynamic. This is the case with many borders, including the U.S.-Canadian one, but the Mexican border has gone through periods of turbulence in the past and is going through one right now.
(An expanded look at the role corporations and hospitable business environments have played in stabilizing the anarchic system of international relations. This work is based on an earlier paper which focused on the “rise of the modern corporation” as a key independent variable in the calculus of global security…)
Private Risk, Public Reward: Stabilizing Frameworks and the Rise of Corporate Hegemony
By Devin DeCiantis | ISP-351 | Economics & Security
“The modern corporation as an institution is entitled to much more respect than it has frequently received.
It is, in fact, an institution at a cross-road in history,
Capable of becoming one of the master tools of society – capable also of surprising abuse.”
- Adolph Berle, Jr. The Twentieth Century Capitalist Revolution, 1954
Traditional theories about power structures have focused on the role of states as principal agents in international affairs. In aggregate, these theories justify most of the major geopolitical incidents that have shaped the modern world order, but none of them effectively do so on their own. That’s not to suggest that existing theories based on political cooperation don’t have their place among the predictive frameworks of the 20th century. Many of them have helped to explain some of the century’s most important economic and security inflections. This paper simply suggests that where prevailing theories break down, a careful examination of the often quiet and understated rise of the modern corporation may offer a compelling supplementary explanation.
(In this recent Times OpEd, Rochester economics professor Steve Landsburg points out how easily John Q. Public overlooks cause and effect in 21st century markets.
Let’s review: 1) goods and services require labor and capital to produce; 2) the price of labor and capital impact an item’s ultimate price; 3) factors of production are much less expensive in the developing world; 4) a decades-long public war on inflationin the developed world has prevented the price of goods from increasing in step with wages; however, 5) wage growth is now slowing and inflation has reached a 17-year high; thus 6) in their quest to find the lowest price, consumers who rebel against off-shoring jobs are simply biting the hand that feeds them, because; 7) free markets can’t produce wealth, they only facilitate transfers of wealth in a zero sum game; and 8) as prices grow faster than inflation, any repatriation of manufacturing capacity or protectionist trade policy will only make matters worse.
In a nutshell, America can’t produce a $1 flashlight or a $2,500 car, but as long as consumers expect these price points to endure, the market will continue to reallocate factors of production over the hills and far away. The lesson is simple: trade isn’t inherently evil, but hyper-consumerism sure brings out its claws…)
What to Expect When You’re Free Trading By STEVEN E. LANDSBURG
ROCHESTER–IN the days before Tuesday’s Republican presidential primary in Michigan, Mitt Romney and John McCain battled over what the government owes to workers who lose their jobs because of the foreign competition unleashed by free trade. Their rhetoric differed — Mr. Romney said he would “fight for every single job,” while Mr. McCain said some jobs “are not coming back” — but their proposed policies were remarkably similar: educate and retrain the workers for new jobs.
All economists know that when American jobs are outsourced, Americans as a group are net winners. What we lose through lower wages is more than offset by what we gain through lower prices. In other words, the winners can more than afford to compensate the losers. Does that mean they ought to? Does it create a moral mandate for the taxpayer-subsidized retraining programs proposed by Mr. McCain and Mr. Romney?
(This paper was written for quite possibly the best combination of professor and class I’ve ever experienced. If only all academic endeavor challenged so profoundly, surveyed so broadly, and bore as much intellectual fruit…)
Hegemonic Stability and the Rise of Global Corporations by Devin DeCiantis
“The logic of markets is borderless,
but the logic of politics remains bounded.”
- Louis W. Pauley, Who Elected the Bankers? Surveillance and Control in the World Economy, 1997
Traditional theories about power structures have focused on the role of states as principal agents in international affairs. In aggregate, these theories justify most of the major geopolitical incidents that have shaped the modern world order, but none of them effectively do so on their own. That’s not to suggest that existing theories based on political cooperation don’t have their place among the predictive frameworks of the 20th century. Many of them have helped to explain some of the century’s most important economic and security inflections. This paper simply suggests that where prevailing theories break down, a careful examination of the often quiet and understated rise of the modern corporation may offer a compelling supplementary explanation.
One need only look at trends in portfolio[1] and foreign direct investment flows[2] to witness modern corporations driving international stability forward, increasing in power and institutional authority as their patron states struggle with fiscal, political and military balance[3]. At the same time, existing global institutions for stabilizing trade and finance[4] have squandered much of their early credibility. As relics of past hegemonic efforts, they have struggled to foster international stability under the burden of disparate political control and meager tools of enforcement.
Corporations, on the other hand, have spent the better part of the last century finding ways to side-step trade restrictions, discordant legal systems, and countervailing duties in the pursuit of their own economic self-interest[5]. As this paper will argue, a by-product of that unabashed self-interest has been the foundation of a global system of open commerce and trade that has produced a more permanent structural stability than any of the hegemonic powers have been able to provide to date.
(Once the white gold of the natural resource world, catalyst of Caribbean war, and provider of luxurious European consumption, sugar still has its hold over American protectionist policy in some embarrassingly predictable ways…)
Sugar Industry Expands Influence
Donations Spread Beyond Farm Areas
Special to The Washington Post | Saturday, November 3, 2007; A01
When U.S. sugar farmers needed help this summer defending a $1 billion, 10-year subsidy plan in a new House farm bill, they found it in some surprising places. Among the 282 lawmakers siding with Midwest and Gulf Coast growers on a key vote was Rep. Carolyn B. Maloney (D-N.Y.), who represents Queens and Manhattan’s East Side. The only sugar refinery in the New York area is well outside her district.
Four days after she voted against a measure that would have derailed the new subsidy plan, Maloney hosted a fundraising event at Bullfeathers restaurant on Capitol Hill that netted $9,500 in contributions from sugar growers and refiners, according to Federal Election Commission records and Maloney’s election attorney, Andrew Tulloch. Tulloch called the timing of the July 31 fundraiser — dubbed a “sugar breakfast” on the campaign finance report of one group — a “pure coincidence.”
The House sugar vote illustrates the hold that agricultural interests maintain on farm policy even as the number of full-time commercial farmers has shrunk to a few hundred thousand. Sugar groups have used campaign cash and far-reaching alliances with labor unions and politicians to expand their influence far beyond the 15 states and few dozen congressional districts where sugar is grown by fewer than 6,000 farmers.
(After an inhospitable welcome at Columbia University and a defense of Iranian intentions in the halls of the UN, it was up to Charlie Rose to coax a straight answer from the puzzling Persian President and his schizophrenic vacillations between coherence and crusade. Neither Rose nor Ahmadinejad disappoint…)
(With great power may come great responsibility, but middle power certainly has its role to play policing the economic and political bulge. In this address at the CFR, Canada’s Prime Minister waxes idealistically about the challenges of a national resource bounty that rivals any in the world, a mixed ethnic heritage that is the model for progressive integration, and a desire to project Canadian sovereignty and foreign policy into the 21st century…)
A Conversation with Stephen Harper [Rush Transcript; Federal News Services] September 25, 2007, Council on Foreign Relations
PRIME MINISTER STEPHEN HARPER: “Merci beaucoup,” Marie-Josee. Thank you very much, Chairman Rubin, President Haass. Our consul general, Dan Sullivan, is here. And thank you all, ladies and gentlemen, for attending here today.Let me just say at the outset how delighted I am to have this opportunity to address the Council on Foreign Relations. In our judgment, there is no better forum, no organization more respected or influential than the council when the subject matter is the complex area of foreign policy. Your independent, nonpartisan work helps provide policymakers with the insight and perspective needed to build a better world. So it is for me a great honor, and I do greatly appreciate the opportunity to be here today.
We all know it is a challenge to understand the world we live in and the competing interests and values that shape international events. This challenge would not be so great if all the countries of the world were free, open, pluralist societies like ours, committed to democracy and equality of opportunity, committed to free and fair trade, aspiring to the principles and values that we as Canadians and Americans share.
But sadly, they are not. All of us here believe in a world in which freedom, democracy human rights and the rule of law are paramount and pervasive, but the reality in which we live is unfortunately otherwise.
And therefore, the tasks before us are sometimes — are often difficult, I should say, and sometimes daunting: preventing terrorism from reaching our shores; stopping the spread of nuclear, biological and chemical weapons; bolstering fragile states; helping rebuild societies shattered by chronic conflict; tackling climate change at the global level; sustaining and spreading economic growth and prosperity.
No country acting alone can successfully meet all of these challenges. They are too complex and too enduring to be addressed even by the world’s single most powerful nation.
Imagine! There is a Congressman who actually wants to delay the vote on the stimulus bill so he can read it and make sure it says what he was told it says. Kudos for him. There is still hope for our country.
The 2008 U.S. Presidential election was historic itself owing to the candidates’ profile. But the timing of the elections as the U.S. and global economy are in the midst of the worst financial crisis and recession in decades reminds us of the Great Depression era and the 1980s recession when incoming Presidents Roosevelt and Reagan faced immense challenges to cure the economy’s woes.
Volume responses to a $25 tariff would vary over time. In the near-term, there would only be a negligible decrease in the volume of oil imported (given a low short-run elasticity of energy demand) as industries, supply chains, and consumers remain highly dependent on existing petroleum infrastructure. The redistribution of the tariff (with tax reductions) would partially offset the incremental cost to businesses and consumers, but the policy is unlikely to completely offset the macroeconomic effects of a 33% increase in a key industrial input.
Over recent months, the level of violence along the U.S.-Mexican border has begun to rise substantially, with some of it spilling into the United States. Last week, the Mexican government began military operations on its side of the border against Mexican gangs engaged in smuggling drugs into the United States. The action apparently pushed some of the gang members north into the United States in a bid for sanctuary. Low-level violence is endemic to the border region. But while not without precedent, movement of organized, armed cadres into the United States on this scale goes beyond what has become accepted practice. The dynamics in the borderland are shifting and must be understood in a broader, geopolitical context.
Traditional theories about power structures have focused on the role of states as principal agents in international affairs. In aggregate, these theories justify most of the major geopolitical incidents that have shaped the modern world order, but none of them effectively do so on their own. That’s not to suggest that existing theories based on political cooperation don’t have their place among the predictive frameworks of the 20th century. Many of them have helped to explain some of the century’s most important economic and security inflections. This paper simply suggests that where prevailing theories break down, a careful examination of the often quiet and understated rise of the modern corporation may offer a compelling supplementary explanation.
Let’s review: 1) goods and services require labor and capital to produce; 2) the price of labor and capital impact an item’s ultimate price; 3) factors of production are much less expensive in the developing world; 4) a decades-long 
When U.S. sugar farmers needed help this summer defending a $1 billion, 10-year subsidy plan in a new House farm bill, they found it in some surprising places. Among the 282 lawmakers siding with Midwest and Gulf Coast growers on a key vote was 