The kidnapping and disappearance of 43 students from a teacher-training college in Ayotzinapa, Guerrero has sparked renewed attention to the devastating effects of the U.S.-backed drug war in Mexico. More than six months have passed since the students’ disappearance, and while dozens of police officials and local drug gang members have been arrested, the investigations are marred with allegations of coerced confessions, and investigators are accused of covering up the truth by suppressing information.

Currently, a “caravan” of family members of the victims is traveling around the U.S. to bring attention to the terrible consequences of the war against drugs in Mexico. Felipe de la Cruz Sandoval, spokesperson for the group of parents and a member of the Rural Teachers College of Ayotzinapa Guerrero, said the caravan aims “to shed light on the foreign policy of the United States, specifically the Mérida Initiative and its connection with the socioeconomic conditions and violence in Mexico.”

The Mérida Initiative was negotiated behind closed doors between former presidents George W. Bush of the U.S. and Felipe Calderón of Mexico in March 2007, and was inaugurated in December 2008. The former U.S. ambassador to Mexico, Antonio O. Garza, said months before it was approved that it was “the most aggressive undertaking ever to combat Mexican drug cartels.” U.S. funding for judicial processes, forensic services, investigative capacity, and Mexico’s judicial reforms doesn’t seem to have had much impact so far: impunity remains rampant in Mexico, with 98.3 percent of crimes going unpunished. According to a recent U.N. report, Mexican security agents regularly engage in torture. The U.N. Committee on Enforced Disappearances has also found that the problem of disappearances of civilians at the hands of the police and military is worsened by the government inaction.

I recently discussed these issues, by email, with Jesse Franzblau – a policy analyst who has been researching U.S. foreign policy and human rights in Mexico and Latin America since 2006. Franzblau has carried out research and written articles for the National Security Archive, The Nation, Al Jazeera, NACLA, Columbia Human Rights Law Review, the Universidad Nacional Autónoma de México’s Law Review and other outlets. Last year he was nominated, along with Mike Evans of the National Security Archive, and three Mexican journalists Carmen Aristegui, Daniel Lizárraga and Irvin Huerta (all formerly of Mexican news network MVS Noticias), for the 2014 Gabriel García Márquez Award for investigative journalism for their coverage of secret U.S. surveillance programs in Mexico.

Glenn Kessler has a difficult job. He is asked to assess claims that often arise in the middle of heated political debates. Inevitably his judgements will leave some unhappy. I sometimes fall into the unhappy camp, as is the case today with his assessment of Public Citizen's claims on the job impact of the Korea-U.S. Free Trade Agreement. He gave Public Citizen a whopping four pinocchios in saying that the deal led to the loss of 85,000 jobs.

Before getting to the substance, let me say that I have known Kessler for years, and I'm sure he reached this assessment in good faith. I have discussed many issues with him over the years (including a related trade issue) and I have always felt that he was trying to determine the facts of the situation. In this case, I just think he got it wrong.

He raises several objections to Public Citizen's number. Just briefly listing them, he is concerned about:

1) the relationship between the estimates of jobs per dollar of exports and jobs per dollar of imports;

2) the years chosen as endpoints for the Public Citizen analysis;

3) the nature of the counterfactual (i.e. what would have happened in the absence of the trade deal); and

4) Public Citizen's exclusion of re-exports from the calculation.

There is some validity to all of these concerns, but none of these issues individually or collectively undermine the basic story in the Public Citizen report.

Starting with the estimates of jobs per dollar, these are always very crude. Public Citizen took their estimate of jobs per dollar from a report from International Trade Commission which calculated how many jobs would be generated by a projected increase in exports associated with the U.S.-Korea Free Trade Agreement. Kessler points out that this estimate is from 2007 so it would be out of date by 2012, when the deal first took effect. Furthermore, it was an estimate of jobs per dollar of exports, not imports.

Both of these points are true, but not likely of much consequence. The original estimate of jobs per dollar of exports is at best a crude approximation rather than a carefully constructed number. Certainly no one could rule out that the true number in 2007 may have been 10 percent higher or 10 percent lower. Ideally we would have separate estimate for the jobs lost in the industries competing with imports, but it is unlikely to be hugely different. (Most exports and imports are manufactured goods.) Furthermore, U.S. imports tend to be somewhat less capital intensive than U.S. exports, which means that there are likely to be more jobs lost per million dollars of imports than are gained per million dollars of exports.

On the second point, Kessler takes issue with where Public Citizen decided the trade agreement's impact would first be felt. There will always be some ambiguity on this sort of question because businesses will start responding once they are sure the deal will go into effect, even before it actually is in place. Whatever date one picks, it is pretty hard not to see a clear pattern of rising deficits around the time of the deal. Here's the data from the Commerce Department going back to 2007.

 

                Source: U.S. Department of Commerce.

The deal was ratified in late 2011 and went into effect in March of 2012. Whatever date we want to pick as the point at which the deal first started having an effect on trade, there seems no way of escaping the fact that there was a large increase in the deficit after that point.

April 7, 2015

Under a bill recently introduced in the Missouri legislature, people who receive Supplemental Nutrition Assistance Program (SNAP) benefits would not be able to use them to buy cookies, seafood, and certain other foods. In response, Matthew Yglesias argues

April 2015, Jake Johnston

Dean Baker
Truthout, April 6, 2015

Tyler Cowen used his Upshot piece this week to tell us that the real issue is not inequality, but rather mobility. We want to make sure that our children have the opportunity to enjoy better lives than we do. And for this we should focus on productivity growth which is the main determinant of wealth in the long-run.

This piece ranks high in terms of being misleading. First, even though productivity growth has been relatively slow since 1973, the key point is that most of the population has seen few of the gains of the productivity growth that we have seen over the last forty years. Had they shared equally in the productivity gains over this period, the median wage would be close to 50 percent higher than it is today. The minimum wage would be more than twice as high. If we have more rapid productivity growth over the next four decades, but we see the top 1.0 percent again getting the same share as it has since 1980, then most people will benefit little from this growth.

The next point that comes directly from this first point is that it is far from clear that inequality does not itself impede productivity growth. While it can of course be coincidence, it is striking that the period of rapid productivity growth was a period of relative equality. At the very least it is hard to make the case that we have experienced some productivity dividend from the inequality of the post-1980 period.

And many of the policies that would most obviously promote equality also promote growth. For example, a Fed policy committed to high employment, even at the risk of somewhat higher rates of inflation, would lead to stronger wage growth at the middle and bottom of the wage ladder, while also likely leading to more investment and growth.

The proponents of the Trans-Pacific Partnership (TPP) are doing everything they can to try to push their case as they prepare for the fast-track vote before Congress this month. Today, Roger Altman, a Wall Street investment banker and former Clinton administration Treasury official weighed with a NYT column, co-authored by Richard Haass, the President of the Council on Foreign Relations.

They begin by giving us three myths, all of which happen to be accurate depictions of reality. The first "myth" is that trade agreements have hurt U.S. manufacturing workers and thereby the labor market more generally. Altman and Haas cite work by M.I.T. economist David Autor showing that trade with China has reduced manufacturing employment by 21 percent, but then assert that the problem is trade not trade agreements. They tell us:

"the United States does not have a bilateral trade deal with China."

Of course if China became a party to the TPP the United States would still not have a bilateral trade agreement with China. (That's right, the TPP is a multilateral trade agreement, not a bilateral trade agreement.) This indicates the level of silliness to which TPP proponents must turn to push their case. As a practical matter, a trade agreement, the WTO, was enormously important in the increase in China's exports to the United States. China joined the WTO at the end of 2001, three years later the U.S. trade deficit with China had nearly doubled from $83 billion to $162 billion.

One of the few pleasures of the dismal science is getting to watch the surprised faces of economists and economic analysts when things don't turn out as they expect. NAFTA didn't lead to a boom in Mexico, who could have imagined? The 1990s stock bubble burst and took the economy and those big budget surpluses with it, how could that be? The housing bubble exploded, sending house prices plummeting and the financial system into the abyss, who could have imagined?

We got a smaller item in this sequence in response to yesterday's weak job report. The 126,000 jobs reported for March was far below most analysts' expectations. This report, coupled with weak data in other areas, is now leading many to question the predictions of an economic boom. One especially visible questioner was Wonkblog's Matt O'Brien. He told readers:

"the depressing message is that things weren't as good as we thought they were [emphasis added]."

I am going to beat up on Matt for the use of the plural here. Some of us knew that things were not very good and we said that repeatedly. For example, here I am back in early February making fun of Matt for telling readers that the U.S. economy is booming. I don't mean to make this personal. Matt was pretty much in tune with most people writing about the economy at the time, he was just perhaps a bit more forthright in putting his assessment into print.

The following reports on labor market policy were recently released:

Center for American Progress

Economic Snapshot: March 2015
Christian E. Weller and Jackie Odum

Center on Budget and Policy Priorities

SNAP Benefit Boost in 2009 Recovery Act Provided Economic Stimulus and Reduced Hardship
Brynne Keith-Jennings and Dottie Rosenbaum

Eileen AppelbaumThe Hill, April 3, 2015

The Labor Department reported that the economy added just 126,000 jobs in March, its weakest showing in two years. Downward revisions to the prior two month's data brought the three month average to 197,000. Clearly, weather played an important role in the weaker than expected report, as much of the Midwest and Northeast was hit by unusually severe weather in the second half of February and early March. As a result, construction lost 1,000 jobs after adding an average of 36,000 jobs in the prior four months. Manufacturing also lost 1,000 jobs after adding an average of 21,000 in the prior four months. Restaurants added 8,000 jobs in March, compared to an average of 43,000 a month from October to February. While not all of this slowdown was due to weather, it surely was an important factor.

A new opinion poll, reported on Wednesday by Jacqueline Charles of The Miami Herald, reveals that while Haitian President Michel Martelly’s personal approval rating remains high, more than 50 percent of respondents thought the country was “headed in the wrong direction.” The Herald reports:

Martelly, who will begin the final year of his five-year term in May, got a 57 percent job approval rating. But it’s an open question whether his popularity will give his choice of presidential candidate the win. Martelly is barred from running again, and Haitians are waiting to see which candidate gets his support.

More than half of Haitians believe the country is headed in the wrong direction, while nearly 70 percent do not believe things are going well today.

Eduardo Gamarra, a professor at Florida International University who conducted the poll (PDF), told the Herald that “members of the private sector” funded the poll and had contracted him to do a number of polls over the past few years. Gamarra was also an advisor to the Government of Haiti, contracted by the Ministry of Planning, until August 2014.

Given Gamarra’s previous relationship with the government, and the contradictions in the poll (such as Martelly having high approval, despite a majority believing the country is moving in the wrong direction and that their personal situations are worse than a year ago), questions have arisen about the methodology of the survey. Further, some 60 percent of respondents reported having voted in the last presidential election, though the official turnout was only about 20 percent. Either the sample was not representative, or a significant portion of the respondents were not completely honest.

In a conversation with HRRW however, Gamarra defended the survey and noted that the only reason it had been published was because the most pro-government findings had previously been leaked.

While Gamarra acknowledged that using cell phone numbers to obtain the survey sample could introduce a bias to the results, he noted that largely as a result of Digicel’s presence, market penetration of cell phones has reached unprecedented levels and that the results are consistent with prior face-to-face polling he had done in Haiti.

“A lot of people are surprised by the contradictions,” Gamarra said, but “this is typical in Haiti.” Haitians, he said, are not generally critical of the government, despite that the majority feel their situation is getting worse.

Earlier this week, Haiti’s electoral authority published the final list of 166 political parties that have successfully registered for planned elections later this year. With elections delayed for over three years and such a large number of parties participating, the election is seen as wide open.

While the headline number looks good for Martelly, Gamarra urged caution, pointing to the results in the important west department, home to nearly 30 percent of Haiti’s population and a key base of support for Martelly earlier in his term. “The government faces its greatest opposition in the west….as a result, I believe that the elections are wide-open,” he added. Indeed, the poll shows Martelly faring worse on almost every indicator in the department. Whereas his national approval rating is 57 percent, in the west department, it is just 38 percent, some 15 percentage points lower than in any other department.

April 3, 2015 (Jobs Byte)

April 3, 2015

Josh Barro comments on the exchange between former Federal Reserve Board Chair Ben Bernanke and Larry Summers and Paul Krugman. The key issue is whether the main problem with inadequate demand stems from the trade deficit or weak consumption and investment demand. I weighed in earlier on Bernanke's side.

Josh's question for Bernanke is that if the problem is the trade deficit, what do we do about it? Of course the main reason for the trade deficit is the over-valued dollar, which makes our goods and services less competitive internationally. This in turn is the result of the decision by other central banks, most importantly China's, to buy up large amounts of U.S. government bonds.

As Josh notes, some folks, like me, have urged that there be rules on currency values in trade deals like the Trans-Pacific Partnership (TPP). Bernanke rejects this route saying that it would be too complicated. (Hey, if you want complicated, try the TPP chapter on intellectual property.)

While currency rules would be fairly simple by trade agreement standards, Bernanke is right, we don't have to use trade deals like TPP to address the problem of an over-valued currency. Bernanke's proposed alternative is to "ask nicely."

Well, that's not exactly the way things work in international negotiations. Obviously China and the other countries who are deliberately propping up the dollar against their currency see it as being in their interest to do so. They are not going to hurt their economies, if they view this as the outcome of ending their currency intervention, just because President Obama asked nicely.