Monthly Archives: February 2009

Signs good and bad

China’s Commerce Minister publishes and Op-Ed in the Wall Street Journal that promises China will abide by the G20 (Washington, November 2008) undertaking on protectionism and continue to promote import consumption.

Pascal Lamy understatement.


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Effect of a market ‘fix’…

Contrary to the spin, emissions-trading discourages conservation:

“But the fact is once emissions trading comes in, every tonne of emissions saved by households simply frees up an extra permit that will allow big polluters to increase their emissions. This is because emissions trading relies on a fixed number of pollution permits being in circulation at any point in time. While most people understand that emissions trading creates a cap above which emissions can’t rise, it also creates a floor below which emissions can’t fall.” Extract from The Australian

Trade policy in the Pacific

Image of Pacific trip

I’ll be away from home-base in Melbourne for the next couple of weeks, working on the design of a trade ‘capacity building’ program for non-government organizations (business and non-business, unions, universities) and individuals in Pacific Islands.

A long way to travel and dozens of people to meet and consult. Posting will be… light.

Next round of trade protection (Part II)

In this earlier post, I looked at three of the ‘old standbys’ that are likely to provide governments with all the ‘wiggle-room’ they need to increase protection while remaining nominally compliant with their WTO obligations.

This time, two more oldies but goodies that are still more likely, in my view, to figure in the coming round of trade protection. These two threaten high levels of ‘tailor-made’ protection for firms that are struggling through the recession, but they do so at the cost of lower levels of demand at home (so much for ‘stimulus’!), increased pressure on competitors in other countries and a further cut in world trade volumes. Bad for almost everyone.

At the end of this post I start to look at some defenses against the coming round of protection.

Case for due diligence in public policy

This is a great, if horrifying, read. Bruce McCulloch and Ross McKitrick have compiled a case-book of unsupported claims in science and public-policy research that complements Gary Banks’ recommendations on evidence-based public policy.

“Empirical research in academic journals is often cited as the basis for public policy decisions, in part because people think that the journals have checked the accuracy of the research. Yet such work is rarely subjected to independent checks for accuracy during the peer review process, and the data and computational methods are so seldom disclosed that post-publication verification is equally rare. This study argues that researchers and journals have allowed habits of secrecy to persist that severely inhibit independent replication. ” Extract from Check the Numbers: The Case for Due Diligence in Policy Formation

McCulloch and McKitrick have collaborated on many projects to check the empirical basis for economic and scientific research. In this paper—to which Ian Castles drew my attention—they present a powerful case for taking a skeptical, empirical approach to claims in journals that appear to support a convenient prejudice (dogma, belief, impression) or challenge common-sense.

Among a dozen-or-so accounts of lazy, mendacious research they include an extraordinary story of the “Boston Fed Study” that contributed to the regulatory failures underlying the ‘sub-prime’ financial markets collapse in the United States.

The next round of trade protection

Change in employment compared to earlier recessionsChange in employment compared to earlier recessions

Will there be one? You bet! The only questions are: how soon and how big?

With employment numbers in both industrialized and industrializing countries falling, world markets seizing up as a consequence of the credit squeeze, icons of globalization like Dubai bleeding debt (and emigrants) and governments rushing out ‘stimulus’ packages to prop up domestic demand, the scene is set for some un-neighborly action at every international border. Never mind that some of these “negatives” are likely to be part of the creative destruction that brings new ideas, new market entrants and, eventually, new growth.


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Climate ‘tipping’ points fall down

If you’re alarmed by claims—sometimes from official sources—about CO2 from thawing permafrost or cataclysms caused by a slowing or reversal of the “Meridional Overturning Circulation”, then relax!

It looks like neither one nor the other of these exotic risks stands up to scientific scrutiny.