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Article Artículo

Globalization and Trade

David Brooks Warns of Economic Collapse and War Without TPP

The Washington chattering class is really upset that the Trans-Pacific Partnership (TPP) looks like it's going down. David Brooks pulls out all the stops today, using his NYT column to yell at "Tea Party" Democrats for not supporting the fast-track authority that would facilitate the passage of the TPP.

Unfortunately, Brooks was largely unarmed with facts when it came to the attack. To start, he tells readers;

"The North American Free Trade Agreement, for example, probably didn’t affect the American economy too much. But the Mexican economy has taken off. With more opportunities, Mexican workers feel less need to sneak into the U.S."

If the Mexican economy has taken off since NAFTA they managed to conceal this fact from the I.M.F. and other keepers of official statistics. Here is the path of per capita GDP in the United States and Mexico post-NAFTA.

Book10 12779 image001

                            Source: International Monetary Fund.

Developing countries like Mexico are supposed to have more rapid growth than rich countries like the United States. Instead the gap has increased by about five percentage points since NAFTA as growth in the U.S. has exceeded growth in Mexico since NAFTA took effect. (The chart shows growth in international dollars, not adjusted for inflation.)

Brooks also seems to be inventive in his assessment of patterns of immigration. According to the Migration Policy Institute the number of Mexican immigrants to the United States rose from 4.3 million in 1990 to 11.7 million by 2010.

Dean Baker / June 16, 2015

Article Artículo

Haiti

Latin America and the Caribbean

World

Haiti Election News Round-Up

The following is cross-posted from the Haiti Elections Blog, which was created to help promote the free access to information and accountability within the electoral process. The blog is co-managed by several non-governmental organizations who work with and within Haiti. 

On Friday, the CEP published the final list of approved presidential candidates for the upcoming election scheduled to take place October 25, 2015. Of an initial 70 candidates, the CEP accepted 58. Among those excluded from the race was former Prime Minister Laurent Lamothe as well as former government ministers Thierry Mayard Paul and Josefina Gauthier. Among the 12 excluded candidates, 9 were excluded for lacking the proper discharge certificate. Radio Kiskeya provides a brief biographical description of each of the 58 candidates, while Le Nouvelliste provides a description of what they describe as the 12 leading candidates. Both Le National and Le Nouvelliste discuss the potential for political alliances in the run-up to elections. Le National points out that the “Lavalas movement is well represented” by a number of candidates but risks splitting the vote if they do not reach some sort of alliance. 

The “Core Group” released a statement on Friday welcoming the CEP’s publication of the list of presidential candidates. The statement reads in part: “The publication of the list of presidential candidates constitutes an important step in the implementation of the electoral process. The ‘Core Group’ reiterates its full support to the work of the Council and the ongoing organization of elections. The Group invites all stakeholders to continue to participate constructively in the 2015 electoral process. The ‘Core Group’ salutes the efforts of the Government of the Republic towards the continued strengthening of democracy in Haiti. The members of the Core Group emphasize the importance of building on the current momentum and supporting the CEP, the Government and people of Haiti, including the political parties, in the conduct of fair, transparent and inclusive elections in a climate of serenity.”

Many political parties are still questioning the electoral schedule provided by the CEP, reports Alterpresse. Legislative elections scheduled for August 9, despite assurances from the CEP that they will be held on time, are being questioned by leaders of Fusion, OPL and MOPOD among others. Secretary General of Fusion, Ramon Pradel, told Alterpresse that, “we do not believe that the elections will take place on that date," due to logistical questions that have yet to be worked out. Fusion and OPL have 97 and 93 candidates in the legislative race respectively, while MOPOD has 23. A key issue has been a significant funding shortfall in the electoral budget, but U.S. Haiti Special Coordinator Tom Adams stated over the weekend that the U.S. would increase their financial contribution. Adams has previously publically expressed his opinion that the August election should be delayed and incorporated into the October 25 presidential election as a way to save money, a position which is supported by many political parties in Haiti.  

Jake Johnston / June 15, 2015

Article Artículo

Financial Transaction Tax

Financial Transactions Taxes and Logic 101 for Fred Hiatt

I've been speaking and writing on financial transactions taxes for close to a quarter century. Most people don't find the concept that difficult to understand, but apparently Fred Hiatt does. In a column bemoaning the sidetracking of Obamanomics, Hiatt tells readers that Obama:

"has a targeted version of the left’s beloved financial transactions tax, too: a levy on the largest banks proportional to the riskiness of their liabilities."

Actually, the bank tax has nothing to do with a financial transactions tax. The bank tax is intended to compensate for the implicit subsidy given to large banks that markets view as too big to fail. Since investors assume that the government will bail the banks out if they get into trouble they are willing to lend to them at a substantially lower interest rate than would otherwise be the case. The tax is intended to offset this subsidy although the size of the tax proposed by Obama is an order of magnitude smaller than size of the implicit subsidy, which the I.M.F. recently estimated at $50 billion a year.

In contrast, a financial transactions tax is intended to reduce the excessive amount of trading in financial markets. While this trading uses economic resources, it contributes nothing to the productive economy. A recent analysis from the Bank of International Settlements found that countries with very large financial sectors, like the United States, experience slower growth. A financial transactions tax would go far toward reducing the amount of excessive trading in the financial sector.

Dean Baker / June 15, 2015