Wednesday's interesting reads

"Should the Next U.S. President Adopt a Tougher Stance on Trade Policy with China?" Online debate hosted by the Council on Foreign Relations (HT: Washington Wire). The debate is between Robert Scott, from the Economic Policy Institute, and Daniel Ikenson, from the Cato Institute. Scott is arguing for increased toughness, primarily through unilateral manuevers that might skirt WTO procedures, while Ikenson argues for working through the WTO.

I kind of laugh that we think it's unfair that China subsidizes its exports, either through currency "manipulation" (buying dollars and selling the yuan keeps the value of the yuan relative to the dollar low; the less valuable the yuan is relative to the dollar, the more yuan-denominated products we can buy from China, boosting exports) or straight subsidies to industries. The reason this is funny, of course, is because of the massive subsidies we give to our own farm industry. We're protecting the jobs of farmers, we say. We're increasing the supply of food, which helps lower food prices to consumers, we say. It's strategic, we say. Why in the world can't China do the same thing for the same reasons?

Granted, I don’t like subsidies in the slightest, but it seems pretty hypocritical, especially considering 1) we’re dealing with a country whose poor makes our own look like kings and 2) we used protectionist policies to further our own manufacturing interests under Washington. Not only that, but the subsidies are really just subsidizing our own consumption. An example from the debate. Scott argues that "the big-three U.S. auto companies benefit from subsidized Chinese auto parts imports." Who benefits when U.S. auto companies benefit? Some combination of people from three groups: 1) anyone who buys a car the big three sell because it will be cheaper, 2) anyone who works for the big three because we know the financial situation over there isn't great and lower costs helps profitability and keeps the firms open, and 3) anyone who owns stock in the big three, which is a lot of people through 401(k)s, pensions, etc.

Jerry Taylor at Cato@Liberty made a similar observation here in discussing subsidies for "Big Oil".

In the same Washington Wire post referenced above, there was a discussion among the commenters about what constitutes racism. It revolved around whether encouraging people of a certain race to vote for you specifically because you're of the same race is in deed racism. One commenter found a narrow definition of racism and argued that because those criteria didn't fit, it was racism. I posted the following in response:

"Appalledanddismayed,

I went to dictionary.com and saw your definition of racism. I scrolled a little further down and saw, from the American Heritage Dictionary, that racism is defined as, among other things, “prejudice based on race.” Prejudice can either be favorable or unfavorable and is really just a bias. How is voting for someone based on race not exhibiting “prejudice based on race”? Why is a favorable bias based on race OK? So you don’t think this is a conveniently isolated viewpoint, is a favorable bias based on religion or gender OK? If a favorable bias based on race, religion, or gender is OK, why wouldn’t an unfavorable bias based on race, religion, or gender be OK? And so you know I don’t believe either should be OK.

If Obama truly wants to lead us into a post-whatever world, he should be encouraging people to vote for him based on his policies and not because of a given characteristic. The world is too big and complex to focus our votes based on a single issue (say Iraq or abortion) or even worse on a quality that has no effect at all whatsoever on judgment (like race or gender)."

"Mom wins fight for autism insurance" CNN (HT: Marta?; I saw it on a news feed while I was waiting for the train).

"As a lawyer and a law professor, Unumb decided to do something about it, to force insurance companies in South Carolina to cover autism.

She wrote a bill, recruited other parents to help her lobby state legislators, and two years later, got the bill passed. Known as Ryan's Bill, it will go into effect as Ryan's Law in July.

Ryan's Law mandates that insurance companies provide up to $50,000 a year for behavioral therapy up to the age of 16. It also prohibits insurers from refusing other medical care to children because of their autism. It doesn't, however, apply to people or companies who are self-insured, such as the Unumbs."

I know you'll say I'm heartless, but...I have a problem with this. Mandates help two groups of people: the people who want/need help covering their expenses and the people who provide the services/products. This is a factor, I have no idea how much, in rising healthcare costs. Now, everyone who wants a policy in South Carolina, no matter how much money they make and no matter if they need this insurance or not, will pretty much be forces to pay for this autism care.

Now I don't want to appear insensitive to people who have autistic children (we do in fact go to church with two single mothers with a severely autistic child). But this legislation will have a few effects. First, everyone who buys a policy in that state will pay more. Why? Because the insurance companies who are "prohibit[ed]...from refusing medical care" are in fact a business trying to make money. They can either raise premiums to cover the additional costs or they can simply choose not to sell insurance. Since all insurance companies will be paying for the additional care, they all will be able to raise prices. Second, more children will likely be diagnosed with autism, because if they're diagnosed, they can get care. Third, those children who receive care already will demand more care because hey, if I've got $50k to spend, I might as well spend it, right? Which, by the way, will further increase the costs to insurance companies, further driving up the premiums. Fourth, you'll see a lot more care providers and some care requirers move to South Carolina. And fifth, you'll see a lot of wrangling among parents, care providors, and insurance companies about the questions surrounding who, what, when, how, etc gets the care.

"The Radical Solution" WSJ editorial by Holman Jenkins:

"No wonder economists of diverse ideological stripe are lining up behind a taxpayer bailout of homeowners and lenders, fearing the alternative is a global inflation crisis. But another option has hardly been considered in Washington, though it's old hat in the sticks: Using tax dollars to buy and demolish foreclosed, unoccupied or half-built houses in selected markets...

Knocking down surplus homes would be the most efficient and equitable way to spend taxpayer dollars. It can proceed experimentally. It can be turned off quickly when the need evaporates. It would not be a lesson to Americans that housing debt is not real debt and need not be repaid. It wouldn't benefit the most irresponsible lenders and borrowers at the expense of responsible ones. The housing market would still have to hit bottom, but the bottom would be higher (and sooner)."

He's talked about this a few times now, and I think it would be a good option. The biggest hangup, I think, is that we're destroying homes when people are homeless. It hearkens back to the Depression when New Dealers were slaughtering pigs to keep the prices high as people were starving. There's just something difficult about knocking down something with intrinsic value. I do like the following insight though:

"Today's foreclosure panic is due largely to the anomalous factor: Lenders and borrowers who crafted a new kind of mortgage for the purpose of betting on home prices. It pays off if house prices go up and is easily walked away from, leaving bondholders with the loss, if prices fall.

Would such "homeowners" even cooperate in their own bailout? In 2005, fully 15% of new mortgages were of the "no downpayment, no income documentation" variety – i.e., were bets on rising home prices. These borrowers aren't walking away because of interest-rate resets or income loss, but because they don't want to throw good money after bad."

"Does Obama Understand Defeat?" WSJ editorial by Bret Stephens:

"[H]ere are questions for Mr. Obama: Could there be something worse than the indefinite maintenance of a flawed policy? What if, following a U.S. withdrawal, Iraq collapsed into chaos? What if U.S. embassy personnel have to be helicoptered to safety from the roof of the Baghdad embassy? It's not as if this hasn't happened before."

I don't get into the Iraq debate very often, but I think this needs to be considered at least. Hopefully when Obama (and Clinton) say they will begin immediately to remove troops from Iraq, they mean they will do so only after they consult with miltary personnel and only then if they feel it's in the best interests of everyone impacted. Because to blindly follow a policy just because a mojority of the electorate wants you to is irresponsible.

"Tax Rebellion in Argentina" WSJ editorial by Mary Anastasia O'Grady:

"Mrs. Kirchner says the tax increase is a redistribution mechanism, suggesting that growers and ranchers have to be forced to share more of their good fortune with others. But the greater motivation behind the export-tax increase is inflation.

This government, it seems, will do just about anything to reduce inflation except the one thing that would solve the problem: Let the peso strengthen. It has imposed price controls on businesses; frozen, and then subsidized, energy prices; and prohibited the export of beef. Last year it fired the director of the government's agency for inflation data because she refused to fudge the numbers. Even so, prices rose by an estimated 20% in 2007 and expectations for this year remain high. This would explain the new round of confiscatory export taxes. By discouraging farmers from sending food abroad, the government thinks it can increase food supplies inside the country and damp prices.

While making farmers furious and reducing the incentive to produce, this does nothing to address the causes of the inflation, which are monetary expansion and the failure of the economy to attract investment and expand productive capacity. A strong peso and a commitment from the government to respect private property are what's needed to confront rising prices."

I mentioned this before, but this is crazy. Normally, we see protectionist policies geared toward protecting local business, effectively afraid of competition on the production side. This is strange to me because it is focused on competition on the consumption side (ie we're all competing to consume the same resources).

Juan Carlos Hidalgo at Cato@Liberty had this to add:

"The weak peso thus served as a subsidy to exporters, including the farmers now protesting the tax hike. So we actually have the Argentine government subsidizing and confiscating agricultural exporters at the same time, while creating inflation (which has led to price controls, bans on exports, and other economic beauties). And now, in response to the protests, the Fernández administration has announced new subsidies to farmers."

"The Poverty Hype" by Walter E. Williams at Townhall.com (HT: Club for Growth):

"Nearly all American families now have refrigerators, stoves, color TVs, telephones and radios. Air conditioners, cars, VCRs or DVD players, microwave ovens, washing machines, clothes dryers and cell phones have reached more than 80 percent of households. Yesteryear, only the well-to-do could afford many of these items. Cox and Alm say the biggest reason for the decline in prices is increased international trade and competition that forces producers everywhere to become more efficient and hold down prices. One of the surest methods to reduce the standard of living for all of us, particularly poorer households, is to buy into the special interests protectionist talk of today's political season. "

"Don't Do Something, Just Stand There" David Boaz at Cato@Liberty:

"The bias toward action is one good reason for constitutional and procedural constraints on government actions. Constitutional limits on what government can legislate, bicameral legislatures, supermajorities, the filibuster, the presidential veto–all are designed to prevent hasty action, whether from popular delusions, demagogic campaigns, or the simple desire to be seen doing something rather than prudently refraining from misguided actions."

"Threat to Homeschooling" by John Stossel at Real Clear Politics (HT: Club for Growth):

"I think the state court is looking at the state Constitution upside down. The court finds no constitutional right to homeschool one's children. But in a free country, people are free to do anything not expressly prohibited by law. If the Constitution is silent about homeschooling, then the right is reserved to the people. That's how the Framers of the U.S. Constitution said things are supposed to work."

This thing still enfuriates me.