Net losers with “free trade”

Container Ship
Container Ship

I’m currently reading The Myth of the Rational Voter: Why Democracies Choose Bad Policies (New Edition) (watch for a review over at Rat’s Reading eventually). While I love reading about economics, too often economists simplify things when arguing.

One area that frequently comes up is free trade. Libertarian and market-religion economists love to push free trade over all. I’m generally a fan of free trade, but one argument in favor of it bothers me: free trade improves everyone’s wealth/income/economic standing. This is not true. A better phrasing is that free trade improves a nation’s net wealth. But within the nation, some individuals will become net winners and some will be net losers. Under free trade over the long run, the gains from the net winners will be more than the losses for the net losers. But there will be net losers, particularly in the short run.

To illustrate, I shall pick a commodity. I’ll call the commodity airplanes. We might have one maker of planes in the country. For this illustration I’ll call that manufacturer Boeing, and I’m going to assume it has one owner. We might have one manufacturer because of protectionism from the government. (And in reality, Boeing receives significant subsidies from the U.S. government in several forms.) The protectionism will result in higher costs for airlines and thus higher prices for consumers, both for personal travel as well as for good shipped via airplanes.

If the U.S. were to eliminate the favored status for Boeing, as a whole we’d be better off. Foreign competition (and perhaps domestic as well) would lower the prices of airplanes. Travel would become cheaper and goods shipped via airplane would as well. We’d save a lot of money in small amounts that add up.

There would be one big loser though: the owner of Boeing. He’d lose lots of money.

Overall, the U.S. would be better off because the savings from all those cheaper goods and travel would (more than likely) be more than what the owner of Boeing lost. As a whole, we’re better off. But not everyone sees the same benefit and in particular the Boeing owner sees a huge loss relative to his former position.

Too often I read economists glossing over this fact that some folks are net losers from free trade. We are not all better off because of free trade. A better phrasing would be that most of us are better off because of free trade. There’s lots of different ways that can be framed. It could be looked at as protected industries stealing from the public and deserving nothing. It could be that the public should compensate the formerly protected in return for removing protection. But there isn’t any magic that turns everyone into winners.

Some economists believe that this distinction shouldn’t be made publicly. If free trade isn’t promoted as being a winner for everyone, the losers will band together and become special interests and could convince voters to be protectionist. In order to keep us on the march towards libertarian free trade with gains for most of us, we have to ignore the losers. One clue that an economist believes the distinction shouldn’t be made is if the economist has a position with the American Enterprise Institute or the Cato Institute. Often folks making such arguments aren’t economists at all, but pundits with some economic knowledge. (Yes, I fully realize I am a non-economist making economic arguments.)

In the early parts of the book, Bryan Caplan uses some phrasing that falls into this trap. I don’t think he’s one of the everyone’s a winner crowd. He’s a professor at George Mason University where folks like Tyler Cowen and Alex Tabarrok also teach (they run Marginal Revolution, an excellent econ blog). My view of GMU is that it is a home for non-dogmatic economic libertarians. Which is kind of where I find myself on the economic political spectrum. Kind of.

Now, back to The Myth of the Rational Voter.

Image Container Ship by Nedster78 used under a Creative Commons Attribution Non-Commercial ShareAlike 2.0 license.

R.I.P. Seattle Post-Intelligencer

Seattle Intelligencer Building (1874)
Seattle Intelligencer Building (1874)

The Seattle P-I announced today that it will publish it’s last print edition tomorrow, March 17th. After that it will go online only. What the online version will look like, how Hearst will staff it, and what kinds of news they will cover in the online incarnation have not been announced.

On one hand, I am sad to see the newspaper disappear. The P-I has been a part of Seattle for years, longer than the surviving Seattle Times in fact. I delivered the P-I for approximately three years in the 1980s, spanning the standalone time and the beginning of the Joint Operating Agreement with the Times, when their biggest rival took over all aspects of the paper except editorial. My grandparents to this day only pick up the P-I on their morning walks. I always considered it the better newspaper of the two Seattle dailies.

That written, I think the city news is in dire need of a shake-up and this might be the needed catalyst. Both dailies are as bland and mediocre as local TV news. They appeared to be in a fight for the most milquetoast middle of Seattle’s culture. When I moved back to Seattle after a decade in Idaho, I did not subscribe to either paper. I continued my subscription to the New York Times. In Idaho it was necessity because the Idaho papers and the Spokane papers are so provincial that the only way to get any kind of non-wire-service coverage of the world was to get newspapers from outside the confines of the Palouse.

On returning I found my sanity still necessitated a New York Times subscription. Too many puff pieces. Too often getting the story wrong. What comes to mind is how the P-I blithely cast aspersions on a crane operator after his crane fell over in Bellevue several years ago. He’s a former drug addict! That must be a factor in the accident! Then when his drug tests turned up clean, nary a word from the P-I in apology. They didn’t even give the clean bill of health the same prominence that they did the drug accusations. Those got page 1 for several days. The exoneration got buried. That is typical television news style. Lurid tales of murder, sex, drugs, and anything that might shock and scare middle-brow Ballard. And lots of boring, bland stories about snow, or rain, and fawning Microsoft coverage. Bleah. I couldn’t pay for that.

Instead, I subscribed to the P-I’s local news coverage via feed syndication. If the headline indicated something of interest, I’d read the excerpt. If that indicated something worthwhile, then I’d click through to the story. In the last 30 days, I only read 13% of the excerpts. And almost never about local politics, which should be a local paper’s forté.

Where did this news junkie get his news? The Stranger. The sad fact is that the local free alt weekly Stranger has hands-down the best news in Seattle. That’s partially because they are willing to have a point of view in their news pages, where the dailies have tried to be objective (maybe I’ll write about objectivity another time). But it’s partially also because they have dedicated reporters who really dig into our urban politics. The Stranger more often covers stories I care about than our other papers.

In it’s current form, the Stranger isn’t a substitute for a good daily. For one, they are too focused on politics and arts from a hipster perspective (despite the fact that they denigrate hipsters at every step, they are tied at the hip to them). They are also only once a week. They don’t have the numbers of staff to cover breaking news. They can’t do investigative journalism properly either because of their staffing levels.

The word I am hearing is that the online P-I will have greatly reduced staffing levels and will become something like Huffington Post, partially an aggregator. If that’s the case, I won’t bother paying much attention.

There are some experiments in news in Seattle. I am hoping one of them takes off. Perhaps The Seattle Courant, Publicola (awful name), or Crosscut (although anyone who publishes Knute Berger needs to have a CAT scan). Maybe something else.

With two bland dailies sucking up 90% of the news space in Seattle, I don’t think their was much room for these experiments. But over the last year as it became increasingly apparent that one or both would shut down, these online sources germinated (and the Stranger increasingly began using Slog as the vehicle for stories that later appeared in the print edition). Now that the P-I will be really emasculated, these perhaps can really thrive. It’s going to be scary, and ugly, and it’s sad that the P-I went. But something needed to die in order for something new to live.

Blagojevich Impeachment Trial Rules

Without taking any opinion on whether or not Rod Blagojevich should be impeached or not, I do have an opinion on the impeachment trial. I’ve seen lots of criticism of Blagojevich for not attending his trial or mounting a defense. Having read the Illinois Senate Impeachment Trial Rules I am in agreement with Blagojevich on this one.

The fix is in. He’s not allowed to mount an effective defense and is not being afforded due process. That may be perfectly fine in an impeachment trial, but it doesn’t mean that Blagojevich should participate in what is a show trial. Why waste the time?

Here’s what I found in my reading:

  • The defense is not allowed to challenge any of the prosecution’s evidence that is included in the House impeachment record. In other words, most of the evidence. — No objection, however,
    may be made against all or any part of the House impeachment record filed by the House Prosecutor with the Secretary.
  • Blagojevich is not allowed to present any evidence without the permission of the U.S. Attorney who is prosecuting him. The charges from the U.S. Attorney form the core of the impeachment charges. In other words, he could only stand in front of the Illinois Senate and say I didn’t do it. He can’t present any evidence to the contrary unless it’s already public or the U.S. Attorney approves.

Those aren’t rules that are conducive to participation. Given that set of rules, I wouldn’t participate either. The Illinois Senate should pass out the impeachment record, let everyone voting read it for a day or two, and just hold a vote. The trial is all show.

cforms II does not use a GPL compatible license

I helped a friend of mine set up a web site for her small business. She asked me if I could install some sort of contact form for it, so she wouldn’t have to rely in people getting her email address right. Sure, she could use a mailto: link, but even then some people manage to mangle her email address in the process. She wanted something where people could simply type what they wanted, hit send, and she could be sure it got to her.

Since her site was built using WordPress, the first place I headed was the WordPress plugin repository. The handy-dandy integration between WordPress 2.7 and the repository makes such things simple. By far the most popular contact form plugin is cforms II (no link). So I installed and configured. Voila! A little complex but it wasn’t too hard to work with.

Testing it out, I noticed a link at the bottom of the contact form. It pointed to Oliver Seidel’s web site. He’s the developer for cforms II. I didn’t like the placement for the link (my friend has a credits page where I would put it). So I immediately Googled how to do this. Lo’ and behold Mr. Seidel has deliberately made it difficult to remove the link. That’s fine. His software… sort of.

See, here’s the thing: All plugins on wordpress.org are supposed to use GPL-compatible licenses. That means that users get the source code, and they can do nearly whatever they want with it. Turns out that Mr. Seidel never actually included a license in the download (so far as I can tell). And on at least one page on his site, Mr. Seidel claims the license for cforms II is not open source or GPL compatible. Specifically, he says that users may not modify or redistribute the plugin or it’s source. That’s not GPL.

This plugin is so popular, and the credit line issue is so prominent, that the folks at Automattic (who run wordpress.org) can’t have missed it. Supposedly they check the license for every plugin to verify it is GPL compatible. They’ve booted hundreds of themes from the repository for lesser offenses. But the popular cforms II remains. Does Automattic not want to lose a popular plugin from their repository?

When uploading plugins to the repository, plugin authors assert that their plugin is GPL compatibly licensed. Did Mr. Seidel lie? Or did he just not read it very thoroughly? Regardless, if he’s not going to license it under a compatible license, he should voluntarily pull cforms II from the repository. He should not take advantage of the multiple benefits of the repository (easy installation, high prominence, etc.) if he doesn’t want to play by the rules.


Insult contest winner(s)!

I hereby announce the winners for my Insult King Rat contest. Here’s your prize, links to your site from this post without rel=”nofollow” added.

Christopher Mendes gets first link for saying he would bescumber me if I was already fimicolous. Which doesn’t make a whole lot of sense, but I suspect he typo-ed his entry by omitting the word not.

And I’ll give eliZZZa a link for saying I’m driven by larmoyance. My friends and I weren’t quite sure what she meant by that, as the definitions of larmoyant didn’t quite work in context. We think she meant to say I was a crybaby, but we are just guessing.

Anyway, here’s hoping you get some traffic for your efforts. Though it did seem like people weren’t even trying.

Magic home loans

In a post on the blog Credit Slips, the writer notes a development in Massachusetts. There, the supreme court essentially held that a home loan that was designed to be refinanced instead of repaid is inherently predatory and can’t be foreclosed on.

One of my favorite I don’t really feel guilty about it at all pleasures is watching Judge Judy. One type of case that comes before her a lot is where person A loans money to person B who had no job and no income. Ms. Sheindlin often rules against person A in those cases. “Well how did you expect them to repay you? Magic?” If you expected magic, then you really didn’t have a loan. You made a gift.

The situations described are similar and bring up something I hadn’t considered before. If the bank was expecting magic then they weren’t really making a loan, they were making a gift. And that’s the rule in Massachusetts now. If the person had the income to pay the loan terms, it’s a valid loan. If the person’s income at the time of the loan origination was insufficient to make payments, it’s a gift. The bank expected the value of the house to go up, the house to be refinanced, and they’d get their money out of the increased equity. In other words, Massachusetts says that is “magic.” Which has stopped happening pretty much.

The parallels between the home loans and the personal loans handled by Judge Judy aren’t complete of course. Judge Judy’s loans have no explicit collateral. And the amount in question is a lot greater. The Credit Slips blog post says the banks have to rework the terms under the ruling. So there has to be some incentive even under it for a home owner to re-work as well. Normally that’s foreclosure. If that isn’t available, I don’t know what is.

But it’s still interesting.

Sound Transit Proposition No. 1 Mass Transit Expansion

The Sound Transit Board passed Resolution No. R2008-11 concerning an expansion of mass transit. This measure would expand and coordinate light-rail, commuter-rail, and (beginning 2009) express bus service, and improve access to transit facilities in King, Pierce and Snohomish Counties, and authorize Sound Transit to impose an additional five-tenths of one percent sales and use tax, and to use existing taces to fund the local share of the $17.9 billion estimated cost (includes construction, operations, maintenance, interest and inflation), with independent audits, as described in Resolution R2008-11 and the Mass Transit Guide. Should this measure be approved?


Yes.

I would dearly love to see them pick better neighborhoods to serve. Rainier Valley was good choice. West Seattle, Ballard, Bellevue, Lake City, the Aurora corridor, and other places would have been better. Nevertheless, buses aren’t the answer. And we’re not getting a monorail. So light rail it is. One light rail train can carry far more passengers than a host of cars. Seattle will never be a world-class city without this. It will spur economic growth along the rail lines. It will reduce congestion. It will give us a lot without taking anything away except a little bit of money temporarily.

City of Seattle Proposition No. 2 Parks Levy

The City of Seattle’s Proposition 2 concerns increased property taxes for six years for parks purposes.

If approved, this proposition would fund acquiring, developing and restoring parks, recreation facilities, cultural facilities, green spaces, playfields, trails, community gardens, and shoreline areas; all as provided in Ordinance 122749. It would authorize regular property taxes higher than RCW 84.55 limits, allowing collection of up to $24,250,000 in additional taxes in 2009 (up to $145,500,000 over si years). Taxes collected in 2009 would be limited to $2.60 per $1,000 of assessed value, including approximately $0.19 of additional taxes.

Should this levy lid lift be approved?


It’s kinda pricey, but there’s a good argument for it. If Seattle is going to become a world-class city, it’s going to get a lot denser. The additional people will not have the single family home and yard that has been Seattle’s reason for being for a century. We’ll need open spaces and green spaces for people. That means parks. And we need to start developing them now, so that we will be ready when we are a bigger city.

I will vote yes.

City of Seattle Proposition No. 1 Pike Place Market Levy

The City of Seattle’s Proposition No. 1 concerns increased property taxes for six years for Pike Place Market.

If approved, this propsition would fund seismic, safety, energy-saving, and other basic infrastructure improvements at the publicly-owned Pike Place Market, last renovated in the 1970s; all as provided in Ordinance 122737. It would authorize regular property taxes higher than RCW 84.55 limits, allowing collection of up to $12,500,000 in additional taxes in 2009 (up to $73,000,000 over six years). Taxes collected in 2009 would be limited to $2.60 per $1,000 of assessed value, including approximately $0.10 of additional taxes.

Should this levy lid lift be approved?


I am torn on this one, but ultimately I think I will vote for it.

Mostly I just don’t know that the benefit to Seattle is worth the public cost. I don’t think Pike Place Market really brings in that many tourists. Sure they’ll go there once they get here. But I don’t think it brings additional tourists who wouldn’t have come otherwise. On the other hand, I like the market (I used to hang out there every day after high school) and I like the ability to buy fresh foods and handmade items. But I don’t go there that often anymore. I’d love to see businesses renting there put up more of the infrastructure money.

Count me for this one, but reluctantly.

King County Superior Court

Position No. 1:

Position No. 22:

Position No. 37


I wouldn’t know these candidates from Adam. And I wouldn’t know how to evaluate a judicial candidate for the most part. So I’m just going to vote what The Stranger tells me to vote in these races.

Bradshaw, Hill, and Rietschel. Other folks, sorry for not knowing your strengths. You might have been good.

Washington State Representative District 43 Position 2

Choices are:

  • Frank Chopp (Prefers Democratic Party)
  • Kim Verde (Prefers G O P Party)

Chopp isn’t a bad representative. But he could be doing so much more. As Speaker of the House, he could have used the super-majority the Democrats held to enact some amazing things. Instead, he’s held back for fear of losing the majority. In other words, don’t overstep. Well, that makes some sense. However, we elected Democrats for a reason. If they don’t do anything, what’s the point. He’s also enthralled by the B.I.A.W., an anathema to good business and good government in the state.

Kim Verde is worse. And she won’t even use her party’s name, Republican.

Hold my nose and vote for Chopp? Or skip this race? Does it matter, given that Chopp is popular?