The free trade sickness

From a new NBER working paper we learn that free trade agreements are like a virus. Yes indeed, FTAs are "contagious" in that countries are more likely to "catch" the free trade bug if a nearby country is already ill. True story... sorta.

Abusing an already over-abused metaphor, the paper mentioned above seeks to explain why new waves of trade liberalization are usually clustered in particular geographic regions.

And you know what? No developing region of the world caught the bug quite as bad as Latin America.

[Developing regions: number of free trade agreements]

One thing to notice: the bug doesn't seem to have been very contagious before 1976. Why?

Well... you see, when the famous British virologist, Dr. Adam Smith, discovered the free-trade virus towards the end of the 18th century it simply wasn't very contagious. Yes indeed, discovered during a brief visit to a pin factory, the virus was seemingly benign and exhibited the potential to improve welfare around the world by causing the infected to divide their labor--but it was very difficult to become infected. Upon further experimentation by Smith's colleague, Dr. David Ricardo, it was discovered that the virus, if capable of infecting entire nations, would cause those infected to specialize in that which they had a comparative advantage in.

Unfortunately, after years of experimental trials, it was concluded that intense and prolonged ideological exposure was necessary for the virus to spread, relegating its existence to the deepest and darkest backwaters of the world economy.

But all of this began to change in the late 20th century when, due to an unknown event, the virus mutated into a highly contagious and extremely dangerous version. During this time countless developing countries fell ill, lowering their tariffs at alarming rates exhibiting a reckless disregard for their national health... and stuff.

Anyway, the moral of the story is that I read dumb academic shit so that you don't have to! Oh, and even frivolous scholarly articles that revolve around silly metaphors sometimes have a grain of interesting information.

The End.

Weekend Update

Lets keep it brief today:

• The mainstream media finally noticed that Colombia journalist Hollman Morris was denied a visa by the US. A week or so later, not too bad. With more coverage comes more details, and this looks pretty bad. From the WaPo, "He was ineligible, U.S. officials told him, under the "terrorist activities" section of the USA Patriot Act." Really, the Patriot Act? Mother fuckers.  I mean the only evidence of any "terrorist activities" is Uribe calling him "an accomplice to terrorism" last year. Amazing what a US ally can get though, right?
  
  
• On the same subject, Forero, the author of the WaPo story linked above, makes the same point both maladjusted and others made when the story first broke, "According to documents prosecutors have made public, the DAS had begun a campaign to discredit Morris by tying him to the FARC. Among the strategies were plans to "press for the suspension of the visa." I thought the US cut ties with the DAS though? Hmmm. At least the "DAS's possible role in providing the United States with information on Morris has raised concerns among some Democratic lawmakers on Capitol Hill."
  
  
• To Panama, where the latest seems to be an agreement being reached between dem gov'ment and striking workers. Official numbers have two killed with plenty more injured over the last few days. Reports indicate that the strikers have secured a temporary suspension of at least part of the law that caused all this. Check out Bananama Republic for some background and commentary, as this isn't getting the attention it deserves in the eng. lang world.
  
  
• Honduran Foreign Minister Mario Canahuati announced that Honduras will be opening a new military base in Guanaja, one of the Bay Islands. The US supported it, presumably with cash flow. But hey, the possibility of Zelaya closing down the Soto Cano air base definitely had nothing to do with the coup, no way.
  
  
• Also on Honduras, a new documentary that looks worth a watch. head over to Quotha, where you'll find the appropriate links.
  
  
• Finally, big ups to Spain. Also to Uruguay's Diego Forlan, who was my favorite player to watch during this years Cup, and took home the Golden Ball as the tourney's best player. So we'll end this with a video breakdown of each of Forlan's five goals. The best one's are 3-5, but watch them all:

Mid-Week Update

Posting has been light on accord of certain holidays and certain weather patterns that make computer use uncomfortable. But it's time to catch up with a lil journey through the intertubes.

• From the current edition of The Nation, a detailed look at corn and Mexico. Clearly corn has a special cultural and historical place in Mexico, yet from NAFTA to GM crops farmers are under increasing pressure. On a similar note, Jan McGirk reports for Huff Post on the upcoming harvest of Mexico's first GM crop. The ban on GM crops was recently overturned. Money quote, from Clinton's science and tech point-woman, "We preach to the world about science-based regulations but really our regulations on crop biotechnology are not yet science-based."
  
  
• A pair of articles over the week or so look at the role foreign political consultants played in the recent Colombia election. First, Marc Ambinder at The Atlantic writes on Ravi Singh, who's role maladjusted had previously pointed out. Singh runs Electionmall.com, and is widely credited with leading Obama's social media campaign. Ambinder writes that after Santos lost ground in the polls to Mockus, "Then Singhs's team, working with the Web 2.0 Victory Team, along with local agencies and talent including Sistole, SigmaMovil and Servinformacion, kicked into gear, live-streaming his campaign speeches (Colombia has a 45 percent net penetration level), collecting 4 million emails, producing a "SuperSantos" video game (fight drug dealers!), organizing debate-watching parties, and helping voters find their polling places." Impressive.
  
  
• Next is the Miami New Times' report on J.J. Rendon, who is referred to as "Latin America's Karl Rove". Ouch! He's another character that maladjusted wrote a bunch about back during the campaign. About how this guy was basically Karl Rove, running a smear campaign.  Guy is a seriously shady character, linked to the right in Venezuela, Mexico and most recently before Colombia, Honduras. The article is a must read.
  
  
• Via The Harpers blog (on the Blog Roll to your right), new information comes to light about Nixon and Kissinger's involvement in a string of assassinations in Chile. Scott Horton quotes Jeff Stein from the WaPo Spy Blog, "President Richard M. Nixon and his national security adviser, Henry A. Kissinger, joked that an “incompetent” CIA had struggled to successfully carry out an assassination in Chile, newly available Oval Office tapes reveal. At the time, in 1971, Nixon and Kissinger were working to undermine the socialist administration of Chilean President Salvador Allende, who would die during a U.S.-backed military coup two years later." Click here to see the transcript. Horton adds the necessary background, "The comments plainly revolve around the death of Chilean General René Schneider, who was the commander-in-chief of Chile’s armed forces around the time of the 1970 presidential election that brought Allende to power. Within the Chilean military, Schneider resolutely opposed any coup d’état and insisted that the democratic process be respected. The CIA and Kissinger apparently concluded that he had to be eliminated so that the Allende government could be removed."
  
  
• Our fav secretary of state HRC went to Europe last week, using the equation to slip in some insults towards Venezuela. But don't worry, the next day she made a statement congratulating Venezuela on their independence day (July 5). Water under the bridge right? Wrong: "This new attack against our country from Hillary Clinton ... demonstrates a policy of intrigue, aggression and desperation," foreign minister Nicolas Maduro said. She did manage to slip in some backhanded shit in the congratulations though.
  
  
• The one year anniversary of the Honduran coup was a little while ago, today, news from Chile that the US is still actively lobbying governments that have yet to recognize Pepe "reconciliation" Lobo. Chile is apparently quite divided over recognizing the Honduran government, there is currently a bill in the Senate which will be voted on next week that asks Pinera to recognize Lobo.
  
  
• Also on Honduras, and for those in the greater DC area. Tomorrow there will be a showing of the documentary "Quien Dijo Miedo", supposedly a real solid movie on the coup. It's playing at the E Street Cinema for one night only, tomorrow at 6:30.
  
  
• Throughout the blogosphere we go....to Otto, who gives us the best take on the federal lawsuit against the Arizona immigration law. Check out the linky to watch the video.  Also props to Otto on a real nice smackdown of some douchey LA Times film critic who apparently doesn't know his ass from his elbow when it comes to Latin America. The WaPo, the NYT and the LATimes now all with epic fails on "South of the Border".
  
  
• Also on Arizona, a nice short post from The Mex Files on the success of the Sonora boycott of Arizona, titled "Immigrants don’t kill jobs… stupid politicans do". This is great, "The Sonoran boycott alone has cost 30 Arizonians their jobs:  probably all “native born” citizens.  They can thank their idiot governor for that."
  
  
• This has already gotten a lot of attention, but Peter Krupa over at Lat/Am Daily wrote over the weekend on the invasion of Costa Rica by the yankees. Okay, not exactly, but go check it out. Love this line, "Anyway, keep ironing around that wrinkle fellas. You’ll win the war on drugs any day now." Well said.
  
  
• On the "war on drugs", the Just the Facts blog has a long post debunking 5 assumptions of the war that is worth a read.
  
  
• This is also a bit old, and got passed around the web pipes like a, well, a pipe, but is worth pointing out in case anybody missed it. Glenn Greenwald had the story last week. A study done by the Harvard Kennedy School shows how the mainstream media covered waterboarding over the last 100 years, concluding "that the technique, almost invariably, was unequivocally referred to as "torture" -- until the U.S. Government began openly using it and insisting that it was not torture, at which time these newspapers obediently ceased describing it that way". Greenwald's description is spot on, as always, writing that the study "provides the latest evidence of how thoroughly devoted the American establishment media is to amplifying and serving (rather than checking) government officials."
  
  
• Dean Baker, at his Beat the Press blog, points out some "affirmative action" with regards to Mexico in Simon Romero's latest New York Times piece (cribbed from Otto, and not like the guy has a stellar rep anyway). Baker calls out Romero for citing Mexico's 4.5% first quarter growth as impressive. Baker writes, "This is actually rather weak growth given that Mexico's economy contracted 6.5 percent last year. By comparison, Brazil and Peru, two of the other countries highlighted in the article anticipate growth of more than 7.0 percent in 2010. Neither experienced a downturn as sharp as Mexico's."
  
  
• Last, but certainly not least, over at Tim's El Salvador blog, we get the latest in the ongoing case in Spain over the 1989 killing of  6 Jesuit priests in El Salvador. Tim writes, "The bombshell revelation was that the witness apparently testified that president Alfredo Cristiani had advance knowledge of the assassinations and approved them." And who is this Alfredo? Well none other than "the current head of ARENA following that party's loss of the presidency to the FMLN in 2009". Awesome!
  

Now hopefully we can get back to your regularly scheduled programming.

The Count

31...

...is the gap in percentage points between male and female hourly wages in Latin America. That's right, the region has made great progress in addressing gender disparities but income gaps nevertheless remain quite large.

For the full scoop head on over to Eclac, where you'll find a new report out this week on regional progress towards achieving the UN's Millennium Development Goals (MDGs). As usual, this publication is a wonk's statistical wet dream and contains far more fascinating information than could ever be adequately covered here. So go check it out, here.

But what's there to learn about gender equality in the region from the report's myriad of tables and graphs?

Insight number one is that gender disparities don't seem to be driven by educational differences. In most countries of the region men and women exhibit very similar levels of enrollment in both primary and secondary schooling (but not so similar when it comes to tertiary schooling).

Insight number two is that in most countries women have begun to diversify away from purely agricultural employment. In this area, both Venezuela and Colombia stand out for making the most progress.

Insight number three: wage equality has steadily improved since 1990 but the gap with respect to men still remains large. However, as can be seen below, the gap is significantly smaller for salaried employees.

[Average hourly and salaried income of women, compared to men, urban areas (in percentages)]

The blue line shows women's average hourly income in relation men, the purple line shows average salaries in relation to men and the black line, 100 percent, represents men's wages. The first thing to notice is the big improvement since 1990. However, as can be seen from the dotted trend line to the right of 2008, the gap continues to narrow at the current pace it won't completely close even by the year 2015.

Now, an implication of the difference in relative gaps between hourly and salaried employees is that the lower your income, the less equality you should expect vis a vis men. And this takes us to insight number four: Latin America has A LOT of women in politics. No, seriously. It beats every other developing region of the world except for the Caribbean.

[Percentage of members of parliament that are women, 1990, 2005 and 2009]

So the moral of the story is... more equality for women in the heights of power and wealth but significantly less futher down on the socioeconomic stratum.

But hey. Stop reading my ramblings and go enjoy your freakin' weekend.

Lat/Am Daily is back...

...and Peter Krupa has been making up for lost time with several good posts well worth a read. Who's this douche Obama appointed to head USAID's programs in Latin America? Why does so much cash on the US/Mexico border smell like laundry detergent? Go find out.

Argentina, where economic growth is a bad thing

Only with Argentina, whom investors and the business community (and press) clearly haven't forgiven for defaulting in 2001, can rising GDP forecasts be reported as a bad thing. Bloomberg reported yesterday that RBS raised their estimate of Argentina's GDP growth this year from 4.4% to 7%. Amazing you might say, that would put Argentina at the top of the hemisphere, and be a seriously nice way to rebound out of the world recession, but wait. According to RBS:

“This ‘full throttle’ growth strategy is likely to exacerbate current distortions in the economy,” RBS economist Boris Segura wrote in a report today from Stamford, Connecticut. This would leave “a heavy legacy to the next administration,” Segura said.

You know, if the US undertook a serious stimulus and our GDP forecast went up that much, this would probably be straight from a set of Republican talking points. I can see it now, "This 'full throttle' government spending is only going to drive the nation further into debt. Mr. Obama is going to leave this country in ruins for whoever our next President will be."In fact, I bet they've already said that.

Just a reminder that when reading the mainstream media's coverage of Latin America, it reads more like FOX News' coverage of Obama than what passes for good journalism on domestic issues.

Ideological Labels Are Fun: Colombia and Chile

Did you know that, despite simplistic labels to the contrary, the US' favorite client state actually is not the free-market paragon most people think? That's right, I'm talking about the supposedly "free-market" darling Colombia, which according to a new Inter-American Development Bank (IADB) working paper has been pursuing extensive industrial policies for quite some time.

The economic merits of these policies aside, this underscores that just because a country has a horrible human rights track record and is in the State Department's pocket, it doesn't necessarily mean it's also "neoliberal." In other words, the media (especially up north) likes to assume Colombia is "market-friendly" simply because it is US-friendly and has signed a handful of Free Trade Agreements. But in reality it has also been pursuing fairly heterodox policies for a while.

One obvious example of this is Colombia's long-running affair with capital controls. As maladjusted has pointed out before, Colombia's regulations on international capital flows are currently the highest in the region. During the 1990s, when South America regained access to international capital markets and all the cool kids on the block were liberalizing, Colombia had smart regulations in place to tax inflows. This helped reduce flow volatility, prevented excessive exchange rate appreciation and lengthened the maturity of foreign liabilities (which lowers the likelihood of experiencing a financial crisis).

In any case, the point is that when it comes to labeling a country's economic policy, what's accurate is seldom the same as what is politically sexy. The truth in South America has always been more nuanced than "neoliberal countries grow, leftist countries don't."

A natural parallel in this regard is the case of Chile, which to much fanfare staked out claims to first world status last year when it was officially admitted to the OECD. The conventional narrative holds that Allende's socialist policies were destroying the country before the free-market champion Pinochet took power and, with help from the Chicago boys, set the foundations for the country's future prosperity. But, of course, the reality isn't so simple.

Chile hasn't prospered because of pure neoliberalism. It has prospered because of resource nationalism (even Pinochet was smart enough to keep the state-owned copper company, CODELCO), the state promotion of exports (salmon, wine, and virtually every other major export success have received extensive gov. assistance) and, on the macroeconomic level, well devised capital controls (Chile is actually the paradigmatic example of success in this area).

Whatever.

Dichotomies challenged. Reality trumps ideological labeling. And I'm a closet post-modernist. The End.