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Created: 2000-08-10
Last Modified: 2000-08-10
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Nader Demands Banning, Pulping of Harry Potter

J. Bradford DeLong
http://www.j-bradford-delong.net/
delong@econ.berkeley.edu

August 2000


Last month, late one night, I came across a column by Ralph Nader: "Au Revoir to Tom Friedman, Paul Krugman: What Might Happen if the New York Times Decided to Import Columnists from Mexico." It was cute--its point was that these free trade-loving economic columnists would be less enthusiastic if it were their careers and their incomes that might disappear because of foreign competition.

But ultimately I thought it was mendacious.

We all know that you cannot evaluate the effects of trade policy by looking just at what happens to the incomes of those who lose. You have to look at what happens to the incomes of the winners as well--there should have been a paragraph about how the newly-hired China-based columnists working for $25 a column can now afford eyeglasses for their children. You have to look at external costs and benefits from the industrial shifts brought about by trade. And, most important, you have to look at benefits to consumers.

My last thought as I drifted off to sleep was that Nader's column would have read very differently had it focused not on producer incomes but on household welfare...

I awoke to the hum of a fax machine. It was a press release from the Ralph Nader campaign. Its headline read: "NADER DEMANDS IMMEDIATE BANNING, PULPING OF HARRY POTTER!"

I read further:

"Yesterday in a speech at the National Press Club Green Party Presidential Candidate Ralph Nader demanded the immediate banning and pulping of all Harry Potter books. 'The average wage received by British women like Harry Potter author J.K. Rowling is less than half that of American men. The British government has subsidized the writing of the Harry Potter books with public funds.' Nader said. 'It is unfair to force hard-working American authors to compete against such low-wage government-subsidized competitition by foreigners who will work for slave wages. The import and sale of Harry Potter books should be banned by law. All copies currently in the United States should be confiscated and pulped.'

"The candidate went on to explain that each book by Harry Potter author J.K. Rowling sold in the United States robs American writers of two books' worth of sales. 'Harry Potter books are overpriced,' he explained. 'They crowd out sales of domestically written books by more than one-for-one. Each Harry Potter book sold takes bread from the mouths of hard-working American authors' families and takes jobs from American writers.' Simultaneously, Nader's campaign staff issued a study showing that U.S. sales of Harry Potter books had destroyed 12,000 American jobs.

"In response to reporters' questions about whether children would be disappointed to lose their favorite books of the year, Nader accused the reporters of slandering American writers: 'It's unpatriotic to say that American writers' books are not as interesting or engaging as Harry Potter novels,' the candidate said. 'Harry Potter books sell not because children enjoy reading them, but because of advertising by multi-national corporations. Multi-national corporations are the only beneficiaries from the reading of foreign-written books.'

"The candidate concluded his speech by saying that the banning of Harry Potter books should be just the first step. 'American children would be just as happy reading American-written books, just as their parents should be driving American-made cars, wearing American-made clothes, eating American-made bananas, and drinking American-grown coffee.'"

"That's odd," I thought as I finished reading the press release. We don't have a fax machine in our bedroom...


AU REVOIR TO TOM FRIEDMAN, PAUL KRUGMAN

What Might Happen If the NYT Decided to Import Columnists on the Cheap from Mexico

Ralph Nader

Imagine the following: the New York Times announced today that it was replacing its columnists, Thomas Friedman and Paul Krugman with the two leading bilingual writers from the Beijing Daily. A Times spokesman explained that the move was necessary to meet the global competition.

The two prize-winning Chinese newspaper columnists -- Li Gangsun and Mao Yushi -- pledged to work hard, and write four columns a week, if desired, for $25 a column. Media analysts estimated that the Times would reduce its costs by over 95 percent.

An accompanying Times editorial urged other companies and think tanks to consider opening up their ranks to free trade in executive talent from Third World countries. "It is time to practice what we preach and join the globalization movement," said the editorial, "and achieve the long-hidden efficiencies from these markets."

The Times cited two examples where the CEOs from Boeing and General Electric, at retirement, replaced themselves with highly regarded, experienced executives from Shanghai and Cuernavaca who are taking office with an unheard of pay package for them of $19,000 a year. These two gentlemen had long prior experience with Boeing factory outsourcing in China and GE factories and suppliers moving to Mexico. With today's on-line technology, they are able to remain where they are, with occasional visits to the States.

Tom Friedman's last column had a wistful tone -- given his past paeans to corporate globalization -- but it had a defiant note when he concluded by writing: "I regret that my editors failed to recognize both my long service to the Times and my double Pulitzer prizes. It seems that the intangibles of quality and place have no value anymore. Apparently, everything now is for sale!"

At a departure ceremony, his editors gave Friedman an award for the reporter who has travelled the most and predicted that he would have a fine prospect for employment with fast expanding global Chinese media.

Professor Krugman's good-bye column was totally different. He developed an amended theory of comparative advantage to rebut the very thought of replacing him. "Totally unique commodities like me," wrote the noted economist, "can only adhere to a doctrine of superior advantage. My eminence cannot be compared to the exchange of early nineteenth century Portuguese wine for British textiles."

Krugman declared that he will return to his full-time faculty post at MIT where he will research how the practice of monopolistic competition can be exempted from world trade agreements and the imminence of widespread distance learning.

Li Gangsun's first column recommended that the Chinese government bring a number of WTO complaints against the non-tariff trade barriers erected by the upper classes of U.S. corporations and universities. "Since everything is for sale," he wrote, "then all these positions should be considered 'commerce and trade' and opened to vigorous competition worldwide."

As for those "tenured economics professors at Harvard and Stanford, who are always testifying for total free trade between nations," he wrote, "they are the essence of impermissible barriers to trade. There are numerous Chinese academics who could do a better job, either in situ or by Internet instruction, at far lower salaries, thus lightening the tuition and debt load for American students."

Word was leaked out that the upcoming meeting of the BusinessRoundtable, which will be closed to the press, will have on its agenda a debate over the topic -- "Globalization: if it's good for our workers, why not our top executives?"

Meanwhile, over at the offices of the U.S. Chamber of Commerce near the White House, CEO Tom Donohue is huddled with his aides. The Chamber was planning a joint press conference with its counterpart Mexican Chamber of Commerce to protest President Clinton's clear violation of NAFTA by banning Mexican truck drivers from access to all fifty states.

Already the Teamsters Union and consumer safety groups have been emphasizing the traffic safety hazards of such poorly maintained trucks. Moreover, Teamster drivers are angry over having to compete with $7-a-day Mexican drivers.

The aides have new information for Mr. Donohue that is furrowing his brow. It seems that the head of the Mexican Chamber, Jorge Zapata, after reading the Times, is preparing an offer to replace Mr. Donohue. Zapata, a hard-driving, Harvard Business School trained economist, is willing to work for one-eighth of Mr. Donohue's executive compensation package and move to Washington before the year's end. This could lead to reductions in management salaries at the Chamber below Mr. Donohue's level and result in an overall reduction in membership dues.

Mr. Donohue heaved a sigh and, deferring comment, suggested that they all go out for a three-martini lunch.


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(WTO bans organic labeling, seeks action against fair trade coffee (a response to Delong on Nader and Harry Potter)



I consider myself lucky to be a regular subscriber to Brad Delong's weekly thought-pieces. There can't be that many people in the world with the good sense to pay attention (and good luck to have access) to Brad's insightful and articulate ruminations.

The satirical dream-sequence on Ralph Nader, Harry Potter and the winners and losers from trade, however, left a bad taste in my mouth. Brad and I have on several occasions discussed what we consider Nader's poor understanding of certain global issues, so his perspective was not new to me. But I saw in Brad's piece a too-sanguine view of world trade, that very same view most economists seem satisfied with holding: the gains from trade are enormous, and protectionists just don't pay enough attention to the consumers and producers that _win_ when countries exchange goods freely -- and the other issues tha arise when rich and poor countries trade will just take care of themselves.

Gee, I thought, as I lay down for an afternoon nap to ponder this strange view. That view of trade is somewhat akin to using the number of daily safe plane flights as evidence that the FAA really has no work to do.

I was awakened from this reflection by a CNN International news special, blaring from the bedroom television. "The World Trade Organization today declared organic food labeling an illegal restraint of trade," said the stern announcer. "Multilateral action is underway in Europe and North America to enforce this ruling and end the labeling of so-called 'organic' food. Cindy Weksel has more from WTO headquarters in Geneva."

The satellite feed from Switzerland hiccoughed, then a slightly less stern reporter appeared on a plaza before a tall gray office building. "The World Trade Organization has taken yet another brave action in its on-going battle to open world markets," she said. "The WTO has declared illegal all member country laws that seek to label certain agricultural products as 'organically grown'. Here to speak with me is the WTO Under-secretary for Agricultural Trade, Jean-Philippe Degoutant."

She turned to her left and the camera angle widened to include a sour gallic face atop an Armani suit. "Monsieur Degoutant, could you explain the ruling?"

"Yes, Cindy," he began, "zeez organeek rules are very dangerous, and eet eez very important to neep zem een zee bud. Zey represent a barrier to trade in such goods as low-grade American beef, genetically modified potato chips from Frito-Lay, and toxic chemical fertilizers and pesticides."

"Some groups have complained that such rulings won't allow consumers enough choice," Cindy pressed. "Isn't the ruling therefore somewhat undemocratic?"

"Exactement!" the under-secretary hastened to respond. "Zeez labels have led consumers to ignore the products of international agribusiness firms, in favor of local goods, such as regional fruits and vegetables produced in their own countries!" He paused to wipe his brow, momentarily overwhelmed by the outrageous imposition represented by local agriculture. "Such local self-reliance destroys ALL gains from trade," he continued, "so eet had to be outlawed." He added offhandedly, "As for democracy, zat eez an issue for countries to decide zemselves. Zee WTO's responsibility eez limited to trade."

"But couldn't there be trade in organic goods?"

Deboutant frowned. "C'est dommage, but eet eez too beeg a reesk to allow eet. No foreign eenputs, no foreign goods, no trade -- no gains from trade! That eez the threat of zee local agricultural production. Zee information was allowing consumers to damage zee global economy by avoiding goods from far away!" Degoutant elaborated the WTO's longer-term strategy of declaring _all_ labels as unfair restraints of trade. "So, wiz no labeling, consumers must choose based only on price -- so, zey are better off zan before, and zere eez no way for non-economic factors to prevent gains from trade!"

"So does the ruling have broader significance?"

"Absolument, Cindy," said Degoutant, smiling. "With zees precedent, eet weel be possible to prevent more trade-reducing labeling in zee future. For example, already we are trying to end zee labeling of so-called sustainable wood products. Can you imagine? How would we ever gain from zee trade in tropical hardwood wiz such laws?" He laughed derisively at the thought of consumer-led rainforest preservation standing in the way of global-welfare-enhancing trade.

That's funny, I thought, as the piece ended. I don't have a TV in the bedroom...

Contributed by Joshua Skov (WTO bans organic labeling, seeks action against fair trade coffee) on August 16, 2000.


Dear Professor deLong, Dear fellow Readers

I fully accept the point that one can not assess the consequences of free trade by just looking at those who loose. But it is also impossible to assess it by just looking at those who gain. I think that trade unionists and trade economists would be less in conflict about free trade if economist always told the full story they get from their theory, not only in Textbooks but also in newspaper commentaries. Free Trade, according to standard trade theory (Heckscher Ohlin) is potentially Pareto- improving. This means it makes no one worse off if there is a mechanism of redistributing parts of the gains from winners to losers. Dani Rodrik ("Has globalisation gone to far", Institute for international Economics March 1997) gives interesting arguments on this and related points which also help to understand why many people, we economist assume to be so rational, are against something as beneficial as free trade.

:-) Sepp Zuckerstdtter

PS: I know that new trade theory can give different results but I also want to mention that welfare implications of this models might also cut both ways. (I dont want to comment on the Potter books case)

Contributed by Sepp.Zuckerstaetter (Sepp.Zuckerstaetter@akwien.or.at) on August 14, 2000.


Professor of Economics J. Bradford DeLong, 601 Evans Hall, #3880
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