Free Markets – Page 15 – artdiamondblog.com

Not Long on Dong—Vietnam’s Proletariat Use American Dollar Instead

“A black-market money exchange in Hanoi trades dong for dollars.” Source of caption and photo: online version of the WSJ article quoted and cited below.

They say that for children, ‘a spoonful of sugar helps the medicine go down.’ Maybe for adults, a spoonful of irony helps the zeitgeist go down?
America lost the war in Vietnam to the Communist Vietcong. Now, the Vietnam government, consisting of the linear descendants of the Communist Vietcong, has so run their currency (the dong) into the ground, that Vietnam’s proletariat are choosing to use the American dollar instead of the Vietnamese dong.

(p. C1) HO CHI MINH CITY, Vietnam–At a time when many emerging markets are trying to stem a destabilizing rise in their local currencies against the dollar, up-and-coming Vietnam is grappling with a rather different problem: Residents can’t get enough of the U.S. greenback, as their own currency, the dong, threatens to spiral lower.
. . .
. . . the Communist-run government’s determination to hit persistently high growth targets, coupled with state-directed lending growth of more than 30% annually in recent years, have flooded Vietnam’s economy with money and created a raft of problems for the local currency. The excess capital has triggered a sharper uptick in inflation than has been seen in other emerging markets, stripping confidence in the dong as residents doubt their government can manage rising costs in the months ahead.
. . .
. . . , the government is projecting an inflation rate of at least 7% a year for the next five years, far higher than its neighbors, in a sign that it intends to pursue its target-driven, growth-at-all-costs policies.
“This isn’t a sustainable way to run an economy,” says Nguyen Quang A, an economist who ran Vietnam’s only independent economic think tank until its founders opted to close it amid tightening government censorship.

For the full story, see:
JAMES HOOKWAY. “Vietnam Battles Dark Side of Boom.” The Wall Street Journal (Thurs., DECEMBER 16, 2010): C1-C2.
(Note: ellipses added.)
(Note: the online version of the article is dated DECEMBER 15, 2010; the last couple of sentences (starting with “the government”) appear in the online, but not in the print, version of the article.)

Environmentalist Antiglobalization “Vandals” Destroy Giorgio’s Corn

“Last week, Giorgio Fidenato, who had planted genetically modified corn, stood amid stalks that had been trampled by antiglobalization activists.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A4) VIVARO, Italy — Giorgio Fidenato declared war on the Italian government and environmental groups in April with a news conference and a YouTube video, which showed him poking six genetically modified corn seeds into Italian soil.

In fact, said Mr. Fidenato, 49, an agronomist, he planted two fields of genetically modified corn. But since “corn looks like corn,” as he put it, it took his opponents weeks to find his crop.
The seeds, known as MON810, are modified so that the corn produces a chemical that kills the larvae of the corn borer, a devastating pest. Yet while European Union rules allow this particular seed to be planted, Italy requires farmers to get special permission for any genetically modified, or G.M., crop — and the Agriculture Ministry never said yes.
“We had no choice but to engage in civil disobedience — these seeds are legal in Europe,” said Mr. Fidenato, who has repeatedly applied for permission, adding that he drew more inspiration from Ron Paul than Gandhi.
. . .
After Mr. Fidenato’s provocation, investigators did genetic testing to identify the locations of the offending stalks in the sea of cornfields that surround this tiny town. Officials seized two suspect fields — about 12 acres — and declared the plantings illegal. Greenpeace activists surreptitiously snipped off the stalks’ tassels in the hope of preventing pollen from being disseminated.
On Aug. 9, 100 machete-wielding environmental activists from an antiglobalization group called Ya Basta descended on Vivaro and trampled the field before local police officers could intervene. They left behind placards with a skull and crossbones reading: “Danger — Contaminated — G.M.O.”
Giancarlo Galan, who became agriculture minister in April, called the protesters “vandals,” although he did not say he would allow genetically modified crops. But Luca Zaia, the previous agriculture minister and president of the nearby Veneto region, applauded the rampage, saying: “There is a need to show multinationals that they can’t introduce Frankenstein crops into our country without authorization.”
Over the past decade, genetically modified crops have been a major (p. A8) source of trade friction between Europe and the United States.
Both the United States Food and Drug Administration and the European Food Safety Agency say that there is no scientific evidence that eating MON810 corn is dangerous.
. . .
. . . it is not clear that the battle of Vivaro will have a quick victor. Jail time or at least fines are expected for Mr. Fidenato (illegal planting) and Mr. Tornatore (trespassing and destroying private property).

For the full story, see:
ELISABETH ROSENTHAL. “In the Fields of Italy, a Conflict Over Corn.” The New York Times (Tues., August 24, 2010): A4 & A8.
(Note: ellipses added.)
(Note: the online version of the review has the date August 23, 2010.)

“An ear of corn infested with corn borers. A modified variety is meant to counteract the pest.” Source of caption and photo: online version of the NYT article quoted and cited above.

A Late Bronze Age “Cornucopian Example of Multiculturism”

“Influences from Egypt and Mediterranean Asia appear to merge in this container, from around 1390 to 1352 B.C.” Source of caption and photo: online version of the NYT article quoted and cited below.

The cultural flowering (see above and below) brought about by Late Bronze Age Mediterranean trade, is highly compatible with arguments made in Tyler Cowen’s Creative Destruction, which argues that capitalism promotes the important kind of diversity that within cultures increases creativity and options for individual choice.
It would be interesting and useful to know more about the causes and effects of the dark age mentioned below–the one that started around 1200 BC. An earlier entry mentioned archeological evidence of a small family group near Katilimata on Crete who attempted to hunker down to defend themselves and their property from the invaders from the sea mentioned below.
Sometimes the Phoenicians are given credit for the trade, and Paul Johnson in his recent Heroes book (p. 4), identifies the evil invaders who killed the trade as being the Philistines.

(p. C28) For a truly cornucopian example of multiculturalism, though, nothing matches the contents of the Late Bronze Age merchant ship recovered from the sea off the southern coast of Turkey. Discovered by a sponge diver in 1984 and considered the oldest surviving example of a seagoing ship, it probably sank around 1300 B.C., packed with cargo representing a dozen cultures, from Nubia to the Balkans.

Although the ship’s home port is unknown, it appears to have traveled a circular route through the Mediterranean and Aegean, stopping in Greece, Crete, Turkey, Syria and Egypt, picking up and unloading as it went. Bulk materials included copper ingots, Cypriot pottery, African wood and Near Eastern textiles, all for waiting markets.
Divers also found luxury items, possibly personal possessions of the ship’s crew and passengers. Examples of ivory containers in the form of ducks have parallels with Egyptian prototypes, but were probably made in Mediterranean Asia. The two sources merge in a figure found in a tomb: a nude female swimmer with a chic, Nile-style pageboy who is hitching a ride behind an ivory-headed bird.
More precious and enigmatic is a standing bronze figure of a woman, probably a goddess, her head and face still covered with the sheet gold that may once have encased her whole body in a radiant epidermis. The exhibition catalog suggests that she might be a talismanic charm intended to protect the ship from harm.
Harm came anyway, as it did to much of the Mediterranean world, around 1200 B.C. with the arrival of mysterious, sea-based invaders, who conquered most of the great maritime cities, interrupting trade and easy cultural exchange, and bringing on a dark age, a depression. The depression — or was it severe recession? — didn’t last forever. The passion for acquisition, exchange and accumulation survived it, as it always does.
This passion is, of course, our own. It is one reason that we can, if we try, identify with the diverse people who, thousands of years ago, made the objects in this show. The globalist, all-in-it-together world model they invented is another reason. Their dark age could be one too.

For the full review, see:
HOLLAND COTTER. “Art Review; ‘Beyond Babylon’; Global Exchange, Early Version.” The New York Times (Fri., November 21, 2008): C23 & C28.
(Note: the online version of the review has the date November 20, 2008.)

The Cowen book mentioned in my initial comments, is:
Cowen, Tyler. Creative Destruction: How Globalization Is Changing the World’s Cultures. Princeton, NJ: Princeton University Press, 2002.

The Paul Johnson book mentioned in my initial comments, is:
Johnson, Paul M. Heroes. New York: HarperCollins, 2007.

Government “Gave People the Crazy Juice”

“Peter J. Boettke of George Mason University is the emerging standardbearer for a revived Austrian school of economics.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B1) Peter J. Boettke, shuffling around in a maroon velour track suit or faux-leather rubber shoes he calls “dress Crocs,” hardly seems like the type to lead a revolution.

But the 50-year-old professor of economics at George Mason University in Virginia is emerging as the intellectual standard-bearer for the Austrian school of economics that opposes government intervention in markets and decries federal spending to prop up demand during times of crisis. Mr. Boettke, whose latest research explores people’s ability to self-regulate, also is minting a new generation of disciples who are spreading the Austrian approach throughout academia, where it had long been left for dead.
To these free-market economists, government intrusion ultimately sows the seeds of the next crisis. It hampers what one famous Austrian, Joseph Schumpeter, called the process of “creative destruction.”
. . .
(p. B3) It wasn’t a lack of government oversight that led to the crisis, as some economists argue, but too much of it, Mr. Boettke says. Specifically, low interest rates and policies that subsidized homeownership “gave people the crazy juice,” he says.

For the full story, see:
KELLY EVANS. “Spreading Hayek, Spurning Keynes; Professor Leads an Austrian Revival.” The Wall Street Journal (Sat., AUGUST 28, 2010): B1 & B3.
(Note: ellipsis added.)

Chinese Centralized Autocracy Prevents Sustained Innovation

Zheng He’s voyages of exploration were mentioned in a previous blog entry.

(p. C12) The real problem with contemporary China’s version of the Zheng He story is that it omits the ending. In the century after Zheng’s death in 1433, emperors cut back on shipbuilding and exploration. When private merchants replaced the old tribute trade, the central authorities banned those ships as well. Building a ship with more than two masts became a crime punishable by death. Going to sea in a multimasted ship, even to trade, was also forbidden. Zheng’s logs were hidden or destroyed, lest they encourage future expeditions. To the Confucians who controlled the court, writes Ms. Levathes, “a desire for contact with the outside world meant that China itself needed something from abroad and was therefore not strong and self-sufficient.”

Today’s globalized China has apparently abandoned that insular ideology. But it still clings to the centralized autocracy that could produce Zheng’s voyages in one generation only to destroy the technology and ambition they embodied in the next. It still officially celebrates “harmony” against the unruliness and competition that create sustained innovation. Its past would be more usable if it offered models of diversity and dissent or, at the very least, sanctuary from the all-or-nothing decisions of absolutist rule.

For the full commentary, see:
VIRGINIA POSTREL. “COMMERCE & CULTURE; Recovering China’s Past on Kenya’s Coast.” The Wall Street Journal (Sat., DECEMBER 4, 2010): C12.

Castro’s Reform: Private Restaurants May Now Have Up to 20 Seats

“Restaurants, . . . , offer limited menus.” Source of caption: print version of the WSJ article quoted and cited below. Source of photo: online version of the WSJ article quoted and cited below.

(p. A18) HAVANA–A package of capitalist reforms from President Raúl Castro is creating something new for many Cubans: uncertainty.

Since 1959, when Fidel Castro rode into Havana atop a tank, the Cuban state has promised its people the certainty of a job, food, education and health care. No one expected to get rich under the arrangement; the old joke here is that people pretend to work, and the government pretends to pay them.
. . .
On the island, where many Cubans have taken to using the word “changes,” rather than “reforms,” to refer to the restructuring, people remain cautious. Some suspect that once the economy recovers and small businesses begin to grow, the Cuban government will tighten the noose on entrepreneurs with stricter regulation and steep taxes.
A restaurant on Calle Animas offers an example of such frustrations. Opened in 1996 after an effort by Fidel Castro to jump-start the domestic economy after the collapse of the Soviet Union, it has never expanded, because of a law that limits privately owned restaurants to only 12 seats. “It’s the rules, you live by them,” the owner says.
Prices are high–about $20 for a lunch with fish from the fixed menu–largely, the owner says, because she can’t find ingredients anywhere except in underground markets, where prices are steep. Under the new rules, private restaurants will be permitted to have up to 20 seats. Still, the owner complains that state-run restaurants in the tourist district, which don’t face such restrictions, have many more than 20 seats.

For the full story, see:
A WSJ Staff Reporter. “Cubans Dip a Toe in Capitalist Waters; As State Cuts Half a Million Jobs, Future Looks Murky to Some; ‘We’re Being Left to Fend for Ourselves’.” The Wall Street Journal (Weds., October 6, 2010): A18.
(Note: ellipses added.)

School Choice “Makes Parents and Students Happier with Their Schools”

Davis Guggenheim’s “Waiting for ‘Superman'” movie has brought renewed attention to the case for school choice. New York Times commentator Ross Douthat reasonably discusses that case:

(p. A21) Guggenheim’s movie, which follows five families through the brutal charter school lotteries that determine whether their kids will escape from public “dropout factories,” stirs an entirely justified outrage at the system’s unfairnesses and cruelties. This outrage needs to be supplemented, though, with a dose of realism about what education reformers can reasonably hope to accomplish, and what real choice and competition would ultimately involve.

With that in mind, I have a modest proposal: Copies of Frederick Hess’s recent National Affairs essay, “Does School Choice ‘Work’?” should be handed out at every “Waiting for ‘Superman’ ” showing, as a sober-minded complement to Guggenheim’s cinematic call to arms.
. . .
A real marketplace in education, he suggests, probably wouldn’t fund schools directly at all. It would only fund students, tying a school’s budget to the number of children seeking to enroll. If there are 150 applicants for a charter school, they should all bring their funding with them — and take it away from the failing schools they’re trying to escape.
This is a radical idea, guaranteed to meet intense resistance from just about every educational interest group. But Hess makes a compelling case that it needs to be the school choice movement’s long-term goal, if reformers hope to do more than just tinker around the edges of the system.
In the shorter term, meanwhile, he suggests that school choice advocates need to make a case for greater competition that doesn’t depend on test scores alone. Maybe charter schools, merit pay and vouchers won’t instantly turn every American child into a test-acing dynamo. But if they “only” create a more cost-effective system that makes parents and students happier with their schools — well, that would be no small feat, and well worth fighting for.

For the full commentary, see:
ROSS DOUTHAT. “Grading School Choice.” The New York Times (Mon., October 11, 2010): A21.
(Note: ellipsis added.)
(Note: the online version of the commentary is dated October 10, 2010.)

The Hess article is:
Hess, Frederick M. “Does School Choice “Work”?” National Affairs, Issue 5, FALL 2010.

Consumers Sack Noisy Green Bags

“Frito-Lay aims to quell complaints about SunChips bags by dumping the new bags for the old packaging.” Source of caption and photo: online version of the Omaha World-Herald article cited below.

The Omaha World-Herald ran a similar article to the WSJ article quoted below, in which they noted that the noisy Sun Chip bags are made from Inego which is a plastic made from corn at a Cargill facility in Blair, Nebraska.

(p. B8) Frito-Lay, the snack giant owned by PepsiCo Inc., says it is pulling most of the biodegradable packaging it uses for its Sun Chips snacks, following an outcry from consumers who complained the new bags were too noisy.

Touted by Frito-Lay as 100% compostable, the packaging, made from biodegradable plant material, began hitting store shelves in January. Sales of the multigrain snack have since tumbled.
. . .
Consumers have posted videos on the Web poking fun at the new bags and lodged fierce complaints on social-networking sites. Since January, year-on-year sales of Sun Chips have decreased each month, according to SymphonyIRI, a Chicago market-research firm that tracks sales at retailers.

For the full story, see:
SUZANNE VRANICA. “Sun Chips Bag to Lose Its Crunch.” The Wall Street Journal (Weds., OCTOBER 6, 2010): B8.
(Note: ellipsis added.)
(Note: I noticed the “sack” pun in a commentary by Eric Felton, WSJ, 10/8/2010.)

The Omaha World-Herald article mentioned above, is:
AP. “Frito-Lay Is Pulling Most Noisy Bags from Shelves.” Omaha World-Herald (Tuesday, October 5, 2010): 1D & 2D.
(Note: the online version of the article has the title “Frito-Lay pulls most noisy bags.”)

William Rosen’s “The Most Powerful Idea in the World”

Source of book image: http://ffbsccn.files.wordpress.com/2010/07/the-most-powerful-idea-in-the-world.jpg

The range of William Rosen’s fascinating and useful book is very broad indeed. He is interested in THE question: why did the singular improvement in living standards known as the industrial revolution happen where and when it did?
The question is not just of historical interest—if we can figure out what caused the improvement then and there, we have a better shot at continuing to improve in the here and now.
I especially enjoyed and learned from William Rosen’s discussion, examples and quotations on the difficult issue of whether patents are on balance a good or bad institution.
Deirdre McCloskey taught me that the most important part of a sentence is the last word, and the most important part of a paragraph is the last sentence, and the most important part of a chapter is the last paragraph.
Here are the last couple of sentences of Rosen’s book:

(p. 324) Incised in the stone over the Herbert C. Hoover Building’s north entrance is the legend that, with Lincoln’s characteristic brevity, sums up the single most important idea in the world:

THE PATENT SYSTEM ADDED

THE FUEL OF INTEREST

TO THE FIRE OF GENIUS

In the next few weeks I will occasionally quote a few of the more illuminating passages from Rosen’s well-written account.

Book discussed:
Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

Manuel “Muso” Ayau, RIP

Manuel “Muso” Ayau. Source of image: online version of the WSJ article quoted and cited below.

(p. A21) Lago Amatitlán, Guatemala

High on a hill overlooking this picturesque volcanic lake, Manuel “Muso” Ayau–arguably Latin America’s most influential champion of liberty in the second half of the 20th century–was laid to rest last month.
. . .
Ayau and his colleagues read voraciously and debated vociferously. “All of us were self-taught in these subjects, which would come to absorb much of our time,” he recalled. Over the next half century CEES would publish over 900 pamphlets in defense of the market. Ayau’s many contributions (98) had titles like “On the Morality of Government,” “Planning: Rational or Absurd,” and “Robinson and Friday Invent the Common Market.” In October 1978 he wrote an essay in a CEES pamphlet called “Price Controls,” while Milton Friedman penned “In Defense of Dumping” in the same publication.
Those pamphlets went all over the region. Peruvian Enrique Ghersi, one of the co-authors of the 1986 best-seller “The Other Path,” says that one called “Ten Lessons for Underdevelopment” was “key to awakening in me the vocation and commitment to defend liberty.” CEES brought to Guatemala such intellectual giants as Ludwig von Mises (1964), Friedrich Hayek (1965) and Ludwig Erhard (1968).

For the full commentary, see:
MARY ANASTASIA O’GRADY. “Manuel Ayau: Champion of Liberty; He opened Latin America’s eyes to the true source of prosperity.” The Wall Street Journal (Mon., SEPTEMBER 20, 2010): A21.
(Note: italics in original; ellipsis added.)
(Note: the online version of the article is dated SEPTEMBER 19, 2010.)

On the left is a photo autographed by Ayau and Hayek. On the right is a bust of Hayek. Source of photo: taken by Art Diamond on April 4, 2009 at the APEE meetings held at Francisco Marroquín University (UFM) in Guatemala City.

Government Import Quotas Increase Price of Sugar in U.S.

Source of graph: online version of the WSJ article quoted and cited below.

(p. A1) The gap between what Americans and the rest of the world pay for sugar has reached its widest level in at least a decade, breathing new life into the battle over import quotas that prop up the price of the sweet stuff in the U.S.

For years, U.S. prices have been artificially inflated by import restrictions designed to protect American farmers. That has kept the price well above the global market.
But in recent days, the difference between the two has ballooned, giving new impetus to U.S. sugar processors and confectioners to step up their long campaign to pressure the government to increase import limits.
Attention to sugar prices, and the dwindling supply of sugar left in U.S. warehouses, has intensified in the lead up to April 1, after which the U.S. Department of Agriculture can review and change the import quotas, which now stand at 1.3 million metric tons.
Sugar users have long been vocal critics of the quotas but have failed to convince the government to change the limits. The quota has remained unchanged since it was first imposed in 1990, except for two temporary increases after Hurricane Katrina in 2005 and a major refinery explosion in 2008.

For the full story, see:
CAROLYN CUI. “Price Gap Puts Spice in Sugar-Quota Fight.” The Wall Street Journal (Mon., MARCH 15, 2010): A1 & A20.