In China Too, Special Interest Groups Lobby Against Free Markets

RisingForeignInvestmentInChina.gif Source of graphic:  online version of WSJ article cited below.

 

(p. A1)  BEIJING — When Chinese President Hu Jintao visits the U.S. in mid-April, he is sure to field tough questions about Beijing’s trade and economic policies amid a wave of rising protectionism.  But he also is grappling with a similar backlash at home.

Amid one of the longest and fastest growth streaks of any modern economy, China is wrestling with concerns from a rising wealth gap to corruption to environmental damage.  But the latest uproar has turned on foreigners, targeting the many outside investors that have piled into China and prospered — even while fueling much of the country’s growth.

. . .

(p. A8)  In some ways, the 63-year-old Mr. Hu faces a more complex situation than his predecessors, as China becomes more like the U.S., with greater tolerance of dissenting views and organized interest groups.  Resistance to some market-oriented changes is mostly driven by special interests such as disenfranchised farmers, private businessmen and ministries trying to hold on to their powers.  At the national legislature’s March meeting, lobbying by interest groups picked up markedly.

 

For the full story, see:

KATHY CHEN.  "Amid Tension With U.S., China Faces Protectionist Surge at Home."  The Wall Street Journal  (Fri., March 31, 2006):   A1 & A8.

Precariousness: In France it is Sought and it is Feared

Coombs and VanderHam on the April 3, 2006 extreme ski run, in which they both died.  Source of caption information, and of photo:  online version of the first NYT article cited below.

 

Some seem to seek risk:

(p. A1)  ”La Grave goes from tranquil to frightening and mad, and it’s so exhilarating to be in those moods,” Mrs. Coombs said in a telephone interview last week.  Her husband, she said, ”never found anything more perfect.”

Last month, Mr. Coombs slipped off a cliff and fell 490 feet to his death.  He was 48. He was trying to rescue Chad VanderHam, his 31-year-old protégé and skiing partner from the United States.  Mr. VanderHam had gone over the same cliff moments earlier.  He also died.

Their accident, during a recreational outing, has focused attention on extreme skiing and on this remote destination, high in the Alps about 50 miles east of Grenoble.

For the full story, see:

NATHANIEL VINTON.  "Skiing Beyond Safety’s Edge Once Too Often."  The New York Times (Wednesday, May 17, 2006):   A1 & C23.

 

Others seem to fear risk:

PARIS, April 8 – Standing amid the chaos of the protests here this week, Omar Sylla, 22, tried to explain why the French are so angry about what seems to many people like such a small thing: the French government’s attempt to loosen labor laws a bit by allowing employers the right to fire young workers without cause during a trial period on the job.

Even after President Jacques Chirac promised to shorten the period to one year from two, the protests continued, and French students and unions have vowed to keep demonstrating until the law is repealed.

”We need less precariousness, not more,” said Mr. Sylla, the son of immigrants from Ivory Coast, who still lives with his parents in a government-subsidized apartment in a working-class suburb of Paris.

Mr. Sylla said he had searched for years for a job before finding work about a month ago as a baggage handler at Charles de Gaulle International Airport.  Even then, he said, he only got the job because his sister works at the airport and pulled strings on his behalf.

For the full story, see:

CRAIG S. SMITH. "French Unrest Reflects Old Faith in Quasi-Socialist Ideals." The New York Times, Section 1  (Sunday, April 9, 2006):   8.

 

Economists have long puzzled at how the same person can both buy insurance and gamble in a casino.  The first seems an act of risk-aversion, and the second of risk-seeking.  (Milton Friedman, and others, have tried to explain the paradox.)

But I am puzzled by something else.  When risks are taken, why are they so often taken in arenas such as rioting in the streets, or extreme skiing, where they achieve no noble purpose?  Whatever risks one is going to take, why not take them in the arena of innovation and entrepreneurship, where the potential benefits to the innovator and to human progress, are huge?

 

Economic Efficiency Arguments Mattered in Clearing Whirlpool to Acquire Maytag

A few weeks ago, the Justice Department cleared Whirlpool’s $1.7 billion acquisition of Maytag even though the new entity would have a dominating share of the marketplace, controlling about three-quarters of the market for some home appliances.

The department justified its decision by a combination of evidence and law.  That included confidential commercial information that the department says it cannot make public; a very broad definition of the marketplace to include foreign companies, some of which have yet to make a bigger push in the United States; and an expansive reading of the economic efficiency defense for permitting such deals.

The decision demoralized the career ranks of the antitrust division at the Justice Department, officials there have said.  And it left private antitrust practitioners in Washington wondering whether, in light of the decision and the flurry of corporate dealers, there are could really be any mergers that this administration would challenge.

 

For the full commentary, see:

Stephen Labaton.  "STREET SCENE: LEGAL BEAT; New View of Antitrust Law: See No Evil, Hear No Evil."  The New York Times (Friday, May 5, 2006):   C5.

 

Container Ships Revolutionized Shipment of Goods

Source of book image:  http://www.pupress.princeton.edu/titles/8131.html

 

Virginia Postrel’s periodic column in the New York Times over the past six years, was a beacon of optimism, clarity and fresh insights on how the economy works.  The excerpt below is from her last column.  Presumably she is moving on to other worthy challenges, but her column in the Times will be missed.

 

”Low transport costs help make it economically sensible for a factory in China to produce Barbie dolls with Japanese hair, Taiwanese plastics and American colorants, and ship them off to eager girls all over the world,” writes Marc Levinson in the new book ”The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger” (Princeton University Press).

For consumers, this results in lower prices and more variety.  ”People now just take it for granted that they have access to an enormous selection of goods from all over the world,” Mr. Levinson said in an interview.  That selection, he said, ”was made possible by this technological change.”

. . .  

The idea of containerization was simple:  to move trailer-size loads of goods seamlessly among trucks, trains and ships, without breaking bulk.  But turning that idea into real-life business practice required many additional innovations.

New equipment, from dockside cranes to the containers themselves, had to be developed.  Carriers and shippers had to settle on standard container sizes.  Ports had to strengthen their wharves, create connections to rail lines and highways, build places to store containers and strike new deals with their unions.

Along the way, even the most foresighted people made mistakes and lost millions.  Malcom McLean himself bought fast fuel-guzzling ships right before the 1973 oil crisis and slow, economical ships just as fuel prices turned down.  ”Almost everybody who was concerned with containerization in any way at some point got the story wrong,” Mr. Levinson said.

It is a classic tale of trial and error, and of creative destruction.

 

For the full commentary, see: 

Virginia Postrel.  "ECONOMIC SCENE; The Container That Changed the World."  The New York Times  (Thursday, March 23, 2006):  C3.

 

The full reference to Levinson’s book is:

Levinson, Marc.  The Box:  How the Shipping Container Made the World Smaller and the World Economy Bigger.  Princeton University Press, 2006.

 

“giving individual schools more autonomy”

(p. A1)  SAN DIEGO — When San Diego’s school district began overhauling its science-education curriculum five years ago, it wanted to raise the performance of minority, low-income and immigrant students.

But parents in middle- and upper-income areas, where many students were already doing well, rebelled against the new curriculum, and a course called Active Physics in particular.  They called it watered-down science, too skimpy on math.

A resistance movement took hold.  Some teachers refused to use the new textbooks, which are peppered with cartoons.  They gathered up phased-out texts to use on the sly.  As controversy over the issue escalated, it played a part in an election in which the majority of the school board was replaced.  Now, further curriculum changes are under consideration.

. . .

(p. A11)  Mitz Lee, a parent activist at Scripps Ranch High, also a high-achieving school, continued quietly organizing opposition and eventually made it a cornerstone of her 2004 campaign for a seat on the school board.

Opposition to the program remained sharp among some veteran science teachers.  Tom Deets, who teaches at Patrick Henry High, argued that freshman who hadn’t passed eighth-grade algebra weren’t ready for physics.  Rather than teach the new course, he switched to math until the district offered him an administrative job.

Aiming to keep their hands on alternative teaching materials, an active underground sprang up, with teachers squirreling away old physics textbooks to make sure the district couldn’t collect them.  "At one time, I probably had 400 books," says Hal Cox, a retired submarine commander who teaches physics at Hoover High School.  "I put them in lockers, everywhere I could find."

The opposition came to a head with the school-board elections of 2004, when three critics of the district’s overall curriculum changes, including those in math and reading, were elected to its five-member school board.  The winners included Ms. Lee, who had campaigned for an end to "fuzzy" science and was elected by the widest margin of the new board members.  She has lately been pushing for giving individual schools more autonomy on course choice.  "I don’t want any more central mandates," Ms. Lee says.

  

For the full story, see:

ROBERT TOMSHO.  "Textbook Battle; Top High Schools Fight New Science As Overly Simple; San Diego’s Physics Overhaul Makes Classes Accessible, Spurs Parental Backlash; Test Scores Barely Budge."  The Wall Street Journal  (Thurs., April 13, 2006):   A1 & A11.

Virginia Senator George Allen has “a libertarian sense”

Virginia Senator George F. Allen.  Source of photo:  http://en.wikipedia.org/wiki/Image:George_Allen_official_portrait.jpg

 

Mr. Allen says he has "a libertarian sense."  He describes himself as more in sync with Thomas Jefferson and Ronald Reagan than with George Bush.  "I’m one who dislikes limits.  I don’t like restrictions.  I like freedom.  I like liberty.  Unless you’re harming someone else, you leave people free."

 

For the full interview, see:

FRED BARNES.  "THE WEEKEND INTERVIEW with George Allen; The Virginian."  The Wall Street Journal (Sat., April 22, 2006):  A8.

Hydrocarbons Exist in Abundance

Source of book image:  http://www.amazon.ca/exec/obidos/tg/detail/-/books/0521679796/reviews/702-4209854-6789623

 

In a useful commentary, Holman Jenkins quotes Exxon CEO Rex Tillerson:

"It is true that the age of ‘easy oil’ is over.  What many fail to realize is that it has been over for decades.  Our industry constantly operates at the edge of technical possibility, constantly developing and applying new technologies to make those possibilities a reality," he told a group in Washington last week.

Doubters might consult a new book by energy economist Mark Jaccard, entitled "Sustainable Fossil Fuels," winner of Canada’s Donner Prize.  He argues that hydrocarbons, in the form of oil, gas and coal, exist in such abundance, the challenge of technology is how to burn them more cleanly, not how to survive without them.

 

For the full commentary, see:

HOLMAN W. JENKINS, JR.  "BUSINESS WORLD; On Gasoline, Voters Get the Politicians They Deserve."  The Wall Street Journal (Weds., May 10, 2006):  A19.

 

The full reference to the Jaccard book mentioned by Holman, is:

Jaccard, Mark.  Sustainable Fossil Fuels:  The Unusual Suspect in the Quest for Clean and Enduring Energy.  Cambridge University Press, 2006.