Responding to the food crisis: free up

Soaring food prices in recent months have triggered a real crisis, riots in various countries, and all sorts of government responses that do not seem to work. Striking moves are export restrictions in Asia, and other countries such as Russia or Argentina, or a ban on trading in agricultural futures in India…

Nancy Birdsall, Center for Global Development, and Arvind Subramanian, from the Peterson Institute cannot be said to be absolute free market fundamentalists. Subramanian for example advocates a limitation to international capital flows, a matter on which I profoundly disagree. But the oped both wrote on how to respond to the food crisis in the Wall Street Journal Asia give their views the more weight when addressed to market skeptics. The problem they identified is thus:

“To prevent future crises, the fundamental incentives in agriculture need to be fixed. That in turn means efficient and food-friendly trade policies around the world. But not only are we far away from that objective, we are moving in the wrong direction.”

Both attack in particular the current fashion of biofuel subsidies (see my previous post on climate change too) and export bans:

Good sense into the climate change debate

This is a document that inspired me so much that my announced blogging pause will have to do away for now. At an international think tank forum in Atlanta, USA, this week-end, I grabbed a few publications on display for visitors, and must say I was gripped by one in particular: the Civil Society Report on Climate Change, published in November 2007 (I am posting this in my “Always late in my readings category ;-))by a coalition of 41 international free market and free society think tanks. Finally, some reason into the climate change debate! Neither denial of the fact of climate change nor Al Gore style alarmism and new-wave Bali five-star hotel bigotry.

What it says is basically the following: Kyoto-type protocols are not going to solve the problem. Imposing emission targets, as the current protocol does, will cost too much and contribute to impoverishing the world. At the same time, given the projected changes in temperatures, the targets imposed by Kyoto are largely insufficient.

Blogging pause

A set of circumstances leads me to not being able to blog regularly in the coming months. Hope to be back again as soon as I can…..

An apocalyptic end to the Greenspan era. On bailing out, regulating, or simply stopping taking risks

 

The Credit Crunch has reached unprecedented proportions, not least with the last bail-out of Bear Stearns. More losses are announced. When’s the next bail-out?

Until recently hailed the big guru of the financial world, former Fed chief Alan Greenspan, is now seen as at least partly responsible. He is also the author of a book I haven’t yet come round to read with a telling title: “The Age of Turbulence” (here a few comments on it). In the meantime the cacophonia on “what to do now” has started…..

Even “The Unthinkable” is being thought about, so we are told. 

Bothering to actually read Hayek

It took me years to get there…. I just finished Friedrich von Hayek’s famous “The Constitution of Liberty” (1960). I decided I would publicly admit my shame at doing the job I am doing and not having come round to read this book directly, and not simply about it in secondary sources. But I decided that I am certainly not the only one (am I wrong, dear reader?), and it is always good to share information and ideas. So here a quick, short, spontaneous review, appropriately saved under the the “Always late in my readings” category in this blog….

Is the negotiating agenda of the Doha Round too narrow?

The Doha patient is still in a coma. Surgical intervention is not in sight yet. But the complementary psychoanalysis at least has started….

With the risk of being accused of promoting only one institution’s reasearch, may I just draw the reader’s attention to a brand new paper by Peter Kleen, Senior Fellow for ECIPE and former head of the Swedish National Board of Trade. In the last months he has been comparing the Uruguay Round with the Doha Round, and trying to extract what their main differences and similarities are, in order to help find out what it is that blocs Doha. The results are summarized in his “So Alike and Yet So Different: A Comparison Between the Uruguay Round and the Doha Round.” The paper reveals many things - developing country coalitions have become more fluid and defensive, business support is not strong because of continued de facto globalization, FTAs and global growth, NGOs play a bigger role. But the Doha Round itself is a not as bold and innovative as the Uruguay Round, which created a new institution and brought in agriculture, services and TRIPs. I very much liked this idea:

“The Uruguay Round introduced into the world trading rules comprehensive frameworks in trade in services and intellectual property. In the Doha Round, however, the only truly new issues [.i.e. three "Singapore issues" - investment, competition, transparency in government procurement"] were eventually dropped.

By scaling down the Doha agenda, the focus on the market access issues in the goods area has increased. A success depends on breaking the “iron triangle”—getting the European Union (EU) to move on agricultural tariffs, the United States (US) on domestic agricultural support and the major developing countries on industrial tariffs. The complicating factors are that further reductions of support and tariffs are politically highly sensitive for many developed and developing countries and there are extremely limited possible trade-offs with concessions in other negotiating areas. Hence the present stalemate.”

Easter break

Regular readers might have noticed a fall in output in this blog recently. A high work load [and a social life that has been more eventful than usual...] has kept me away from the blogosphere. Now I am off for a little break and hope to be back soon with some fresh ideas. Happy Easter!

Grounds to be optimistic

There are many grounds to be pessimistic: Inflation and rising food and commodity prices, financial crunches, “Losing Russia”, post-cold war diplomatic farces in South America, the Darfur conflict, etc. etc. (Oh, I forgot Nicolas Sarkozy - I better not think of him…). Worse, antidepressants are not as effective as one would think, we socialise less, and no longer have time for children.

Well, not being a consumer of anti-depressants, I can’t possibly live with this gloom. So I looked for grounds to be optimistic to keep me going. I found some:

- Russia will probably not be as nasty as everybody fears - business will prevail.

- Increased trade rather helps improve air quality in China

- Politically, and in matters of immigration, Spaniards, for European standards, really rock. France is probably even finally discovering the market economy…

Russian and American election year - “Opportunity 08″

 This week-end’s big event: Russian presidential elections on Sunday!

Let’s see where the very likely winner Medvedev will take the country. But given that that the West has been very bad at dealing with Russia, I wonder if the next US president will be able to change tack and somehow be able to engage and tame the roaring Russian bear.

Worrying sign: Hillary Clinton - although apparently the best-informed US candidate on Russia - has demonstrated that she can’t even pronounce the name Medvedev…. I got this info from the really excellent Robert Amsterdam Russia-blog. Given that the US risks “Losing Russia”, we hope (oh no, that sounds like candidate Obama….!) that elections this year in both countries will bring change. Given Europe’ structural inability to take up the Russian challenge (a radical change in its foreign policy structures would be needed, as well as in its energy markets),  more immediate hopes can only be put on the United States. The Brookings Institution has a nice banner of the candidates (Huckabee is now lost). But I love the title: “Opportunity 08″. Let’s hope it will be seized in Russian affairs too.

BRIICS in the global economy

No, not BRIC countries, the BRIICS: Brazil, Russia, India, Indonesia, China, South Africa. BRICs was a term coined by Goldman Sachs to name today’s new high-growth emerging economies. BRIICS is the term used by the OECD: the rich-country think tank adds Indonesia, probably for reasons of regional, and demographic representativity. Indonesia is a South-East Asian middle-income country with an enormous population (223 million). And South Africa is added there as well too: it’s the most dynamic African economy. ECIPE’s director Razeen Sally is currently working on trade and investment policy of the BRIICs. If you are into graphics and statistics, you might find the powerpoint presentation (link Here: briics.ppt) he used for a speech in Australia recently quite a gold mine. What sticks out is the following:

• The most protectionist country is India. Across the board.
• The most expensive country to trade across borders with is Russia.
• The most complicated country to do business in is Indonesia.
• The country which is least capable of controlling corruption is no, not Russia (although it does badly), but Indonesia.
• The greatest foreign investor is Brazil.
• And the best performer in trade and FDI is China - no surprise.
• Interestingly, South Africa has the most FDI restrictive regime in the electricity sector - see slide number 14. Given the enormous electricity shortages South Africa is having, maybe it’s time to let investors in….?
• Yet those giants remain small.: 12.7% of world trade in goods and services (if one adds up the figures on slide 28). China itself has 6.9% of it. These countries however represent almost 3 billion people, nearly half the world’s population.