ES EN
Menu Menú

Publications

Publicaciones

Search Publications

Buscar publicaciones

Filters Filtro de búsqueda

to a

clear selection Quitar los filtros

none

Article Artículo

Serious and Deliberate Confusion on Trade at the Wall Street Journal

Alan Reynolds had a column insisting that the U.S. need not fear trade agreements impact on the United States labor market. The context is an argument that the presidential candidates are wrong to oppose the Trans-Pacific Partnership. The piece argues that trade agreements have not led to increased trade deficits and that imports from China really have not had much impact on the manufacturing sector in the U.S. His argument doesn't quite fit the data.

The piece lays out the basic argument in its subhead:

"If trade agreements are so lousy, why are our largest deficits with countries that lack a U.S. trade deal?"

It then notes that the United States largest trade deficits are with China and Japan and that we have trade deals with neither. This might be a good rhetorical point at the Wall Street Journal, but it has nothing to do with the issue at hand. The question is the direction of change following an agreement. While the data on this point is not entirely conclusive, there is evidence that deficits have generally increased with countries following the implementation of trade deals.

To take some prominent examples, the U.S. went from a modest trade surplus with Mexico in 1993, before NAFTA went into effect, to a deficit of more than $60 billion in 2015. It went from a trade deficit of $13.2 billion with South Korea in 2011, the year before a trade deal went into effect, to a deficit of $28.3 billion in 2015.

It is also important to note that the composition of trade is likely to shift against U.S. manufacturing as a result of trade deals. These deals are quite explicitly designed to increase payments from other countries for licensing fees and royalties to U.S. pharmaceutical, entertainment, and software companies. The more these countries are forced to pay Pfizer for drugs and Disney for Mickey Mouse, the less money they have to spend on U.S. manufactured goods. In other words, the gains for these companies from trade deals imply larger trade deficits in other areas like manufactured goods.

CEPR / October 28, 2016

Article Artículo

Confusion on This American Life on Trade

The usually excellent radio show This American Life may have misled listeners in its discussion of NAFTA and trade this week. The piece misrepresents both some of the key issues on trade and also economists' attitudes towards trade deals.

On the key issues, the piece notes that deals like NAFTA have led to job losses. It uses the figure of 700,000 jobs. It then compares this to the gains to the economy that are projected from lower tariff barriers and therefore lower priced goods.

What this discussion leaves out of the picture is the fact that the jobs lost are disproportionately for non-college educated workers. This puts downward pressure on the wages of non-college educated workers more generally as the displaced workers crowd into retail, services, and other sectors of the economy. So it is not just the 700,000 displaced workers who suffer as a result of this pattern of trade, it is non-college educated workers more generally who see their wages fall as a result of the deal.

This issue of wage inequality is important to remember when the segment tells listeners:

"In fact, there's this survey that the University of Chicago did where they asked all these economists all across the political spectrum, are Americans better off, on average, because of NAFTA?  95% said yes. 5% said they were unsure."

This might be taken as meaning that nearly all economists think that NAFTA benefited the country. Whether or not this is true, that is not the question they answered. This question asks the economists whether American "on average" are better off because of NAFTA. The question does not ask about distribution. This means that if NAFTA gave Bill Gates $100 billion and cost the rest of the country $99 billion, then the correct answer to this question is that NAFTA made the country on average better off. Even economists who think NAFTA was bad policy might think that it led to gains on average.

CEPR / October 26, 2016

Article Artículo

Haiti

Latin America and the Caribbean

World

OCHA’s Flash Appeal for Haiti: Reinforcing Failed Aid Modalities

On October 10, less than a week after Hurricane Matthew ripped across Haiti, the United Nations launched an emergency appeal for $120 million. Ten days later, donors have failed to fill the need, contributing just over 20 percent of the funds deemed necessary. But whom is the money being raised for? What planning or coordination went in to the $120 million ask? Are donors right to be hesitant?

An analysis of UN Financial Tracking Service data shows that the vast majority of the funds raised are destined for UN agencies or large, international NGOs. Reading press releases, government statements and comments to the press, it would seem that many lessons have been learned after the devastating earthquake of 2010: the importance of coordinating with the government, of working with local institutions and organizations, of purchasing goods locally and of building long-term sustainability in to an emergency response.

But, as one Haitian government official posed it to me, “we all learned the lessons, but have we found a solution?” Based on the UN Office for the Coordination of Humanitarian Affairs (OCHA) appeal, the answer is not yet.

Perhaps this should be of little surprise, the flash appeal is designed specifically to “fund United Nations aid activities” for the next three months, not to raise money for local organizations, the Haitian government or for long-term, sustainable projects.  But the analysis is nonetheless revealing.

Funding Destined for UN and Foreign NGOs

The appeal is largely based on individual projects from individual organizations, and does not appear to have been launched with input from the Haitian government. As can be seen below, the vast majority of funding is destined for UN agencies.

Table 1.

OCHA Appeal UN Agency 2

Looking at the above chart, one sees that 85 percent of the funding requested is for the UN’s own agencies and that, of the $28 million provided so far, 79 percent has gone to these same entities.

Of the remaining $17 million for other organizations, it is overwhelmingly allocated to large foreign NGOs such as CARE and Save the Children. Haitian organizations or institutions appear to have an extremely limited role in the appeal, if one at all.

Importance of Coordination and Long-Term Sustainability

There has also been an acknowledgement that more must be done to both coordinate with the Haitian government and the various actors on the ground and to focus earlier on in building long-term capacity. But the OCHA appeal does not have an emphasis on either.

Table 2.

OCHA Appeal Sector

As can be seen, about 50 percent of the total requirement is for the food security, nutrition and emergency agriculture sector. There is no doubt that agriculture production and food security are some of the largest concerns going forward, but most of these funds, $46 million, is for short-term food assistance through the World Food Program (WFP). On the other hand, just $9 million will go towards “restoration” of “rural productive capacity.” The WFP program has already received $7.4 million, while the restoration project has only received $800,000.

Jake Johnston / October 24, 2016