Egregious Indian protectionism against trade in services

For many decades, India was one of the most protectionist countries in the world. This did great damage to growth and knowledge in India. Tariffs dropped from ridiculous levels to ridiculous levels in the early 1990s and then got stuck there. Yashwant Sinha, as Finance Minister, initiated a remarkable program of cutting the peak . . . → Read More: Egregious Indian protectionism against trade in services

Regulated cost of capital for airports

Many elements of infrastructure have natural monopoly characteristics. Under these conditions, if the owner of the infrastructure is profit-maximising, he is likely to impose high user charges and extract a monopoly rent. As a consequence, in many infrastructure services in most countries, independent regulators are established which control the user charge.

The critical building . . . → Read More: Regulated cost of capital for airports

If Only There Were Some Way to Fix This

Here’s a summary of a recent paper:

The trends in offshoring and international trade that we have described are likely to accelerate. China currently employs around 120 million people in the manufacturing sector and, although some reports indicate that wages are rising in China, those wages are still only a tiny fraction of wages . . . → Read More: If Only There Were Some Way to Fix This

Flaws in the Defense of Free Trade

From Art Carden:

But there’s more to this than meets the eye. What we don’t see are the hidden costs of protectionism. The first is the waste from using costly production methods. Protectionism changes manufacturers’ incentives, and they use capital and labor that could have been better-used elsewhere to produce (say) cars. The economic . . . → Read More: Flaws in the Defense of Free Trade

Reining in the inflationary dragon

A lot is being written about inflation in India today. I thought it’s worth writing about the fascinating insights into inflation that come from focusing on the distinction between tradeables and non-tradeables.

What is a tradeable

A tradeable is a product which can be transported across the world at relatively low cost. As an . . . → Read More: Reining in the inflationary dragon

Riots and Free Trade

Here’s a chilling excerpt from a paper entitled The Los Angeles Riot and the Economics of Urban Unrest:

What caused the 1992 L.A. riot? While this question has no definitive answer, the evidence presented in this paper does suggest that South Central L.A. had some characteristics that made it more likely than other cities . . . → Read More: Riots and Free Trade

Trade Agreements and the Free Market

This sounds familiar:

Later this year, the Obama administration and Congress will seek bipartisan votes to pass free trade agreements with South Korea, Colombia and Panama. With 87% of global economic growth over the next 5 years taking place outside of the United States, trade supporters believe these agreements will create jobs and prosperity . . . → Read More: Trade Agreements and the Free Market

Nullification – A Way Out Of The Recession

Trace: Welcome back to the RunToGold Podcast, I have a special guest with us today, Thomas Woods. He is a senior fellow at the Ludwig von Mises Institute, a bastion for Austrian economics, he holds a degree from Harvard in history and a Ph.D. from Columbia, and he has a new book out called . . . → Read More: Nullification – A Way Out Of The Recession

In Memoriam: Paul Samuelson

On Sunday, December 13th, Paul A. Samuelson has died at the age of 94 (link).

He was on the economic giants of the 20th century. His ideas reshaped the economic science and revolutionized the mode of economic thinking around the world. With the mathematical rigour and analytical mastermind, his groundbreaking approach to economic . . . → Read More: In Memoriam: Paul Samuelson

In Defense of Free Trade

One issue that differentiates economists from the vast majority of the general public is free trade. Economists overwhelmingly support international trade, with little or no regulation or taxation, and abhor protectionism—trade policies designed to “protect” domestic jobs. Meanwhile, upwards of 80% of American citizens believe that the U.S. government should be protectionist—or at least . . . → Read More: In Defense of Free Trade