Remembering Margaret Thatcher

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In May 1996 I attended the 50th Anniversary celebration of the Foundation for Economic Education at the Waldorf Astoria in Manhattan. Lady Margaret Thatcher was the keynote speaker, and William F. Buckley had been enlisted to introduce her and moderate the questions from the audience after her formal remarks.

Buckley was a big cheese himself, of course; it was not his custom to perform the warmup act. But it was a testament to his respect for her, and to her stature, that he accepted the role. His mandate was to keep the questions coming in order to accommodate as many guests as possible. To that end, Lady Thatcher was also encouraged to keep her responses to no more than two or three minutes.

Buckley performed his duties admirably. When Thatcher reached the two-minute mark, he stepped forward to the podium. Graciously Thatcher wrapped up her response and stepped back to yield the microphone, while Buckley recognized the next questioner. This happened twice. The third time Buckley stepped toward the podium, Thatcher did not yield. Leaning slightly toward the guest whose question (about China) she was answering, as though his question were the most fascinating topic she could imagine, she proceeded to filibuster charmingly for nearly ten minutes. Standing at her elbow, Buckley looked like nothing so much as an errant actor entering the stage too soon, unsure whether he should tiptoe back into the wings or muscle forward to cover his folly.

Eventually he chose the former option and backed awkwardly away from the podium. Only then did Lady Thatcher wind up her treatise on China and look back at Buckley disarmingly to invite his return to the microphone. From that moment forward Buckley listened to her remarks instead of watching his second hand, and watched her body language to know when it was time for the next question. The length of her comments varied according to their content, and the two performers worked in tandem beautifully for the remainder of the presentation.

She was an Iron Lady indeed, with an emphasis on “lady,” as she gently reminded William F. Buckley that he was, above all, a gentleman.




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Predators for the Extermination of Tragic Animals

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A recent article in a British newspaper is a cause for reflection, about both the content and the source.

The story reports the news that the “animal rights” organization which styles itself “People for the Ethical Treatment of Animals” (PETA) last year killed nearly 90% of the 1,600 lost or abandoned dogs and cats turned over to its Virginia headquarters’ animal “shelter.”

To be precise, of the 1,110 kitty cats and 733 puppy dogs handed over to its tender care, 1,045 of the cats and 602 of the dogs were slaughtered. Only two of the hapless cats and three of the distressed dogs were reclaimed by their owners. Twenty-two of the cats and 106 of the dogs were sent to another shelter (the story doesn’t tell us what subsequently happened to them). The fates of 34 of the cats and 7 of the dogs were classified as “miscellaneous.”

In fact, since 1998, PETA has liquidated 29,398 pets. The organization’s “shelter” was more like an extermination camp.

These facts were unearthed and brought to light by the Center for Consumer Freedom, a group that represents restaurant owners who are doubtless angry at all the PETA ads showing famous female celebrities posing naked in order to convince people not to eat meat or wear fur. This is called payback, and as we used to say in my youth, payback is a bitch (who may therefore be “put to sleep” if PETA gets hold of her).

The PETAphiles were not amused at the unfavorable information being released. They appear to believe that only they have the right to unattractive news about groups they hate. In justification of their actions relative to the innocent animals formerly in their care, a PETA spokeman averred, “We have a small division that does hand-on work with animals, and most of the animals we take in are society’s rejects: aggressive, on death’s door, or somehow unadoptable.”

Yes, all those killer kitties — ferocious felines attacking hapless hominids! We can all attest to the growing menace. And the animals “on death’s door” . . . let’s just kick the pesky pets though it!

The PETA mouthpiece petulantly added that, “CCF’s goal is to damage PETA by misrepresenting the situation and the number of unwanted and suffering animals PETA euthanizes because of injury, illness, age, aggression, and other problems, because their guardians requested it, or because no good homes exist for them.”

“Euthanize”: isn’t that the ultimate euphemism? And why is it ethical to slaughter injured or sick animals, rather than attempt to cure them, or keep them alive even if they are old, or find other “guardians” or homes for them?

The truth — revealed by that term, “guardian” (as opposed to the more common term “owner”) — is that many of the hard core of the PETA activists are hard-line animal rights activists, who conceptualize a pet as a free soul in slavery. From that perspective, if Fluffy or Fido cannot self-actualize in full Kantian autonomy by itself, and is to be the lifelong pet owned by some miserable human, then death may be preferable . . . death is more noble than forcing it to live a life of degraded bondage to a hideous human. To these activists, there should be no pets at all. You can create a no-pet society either by eliminating the institution of pethood or, failing that, by eliminating the pets.

Also interesting is the source. Notice that the information about the actions of this American PETA chapter was published in a British newspaper, not in the American mainstream media. PETA is an organization within the penumbra of the PC protection machine (AKA the MSM), so naturally no critical information is to be divulged.




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It’s Scary, All Right

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Stephenie Meyer, author of the Twilight book series about teenaged vampires and werewolves living in a small Oregon town, is a pop idol to the teenaged girls who grew up taking sides between “Team Edward” and “Team Jacob” as they debated whether the books’ high-school protagonist, Bella, should marry the vampire (Edward) or the werewolf (Jacob). (See my review of Breaking Dawn in Liberty, August 2008.) Talk about a step backward in the evolution of women’s opportunities!

The Host represents Meyer’s foray into legitimate science fiction, with its alien ganglia traveling from a distant planet that take over human bodies by inserting themselves surgically into the necks of unsuspecting hosts. (Wait! Wasn’t that already done in Invasion of the Body Snatchers [1956 and 1978] and Invaders from Mars [1953 and 1986]?) What made those two films and their remakes so powerful is that the invaders could be interpreted as a metaphor for alien ideas and philosophies that often overtake a community.

In the end, the problem is resolved when the aliens and the humans decide to be friends.

Unfortunately, The Host does not resonate with any philosophical relevancy. The opening scene teases the audience with the hint of a satisfying idea when the narrator says, “We are at peace. There is no hunger, no poverty, and no violence. The world is perfect. But it is not ours.” In this seemingly perfect world there is no violence or dishonesty, but peace has come at a price: there is no free will. Humans are forced by their invaders to do good. This “goodness” is represented in the lack of corporations and commercialism, of course; food is packaged in nondescript containers with labels that simply identify the contents in block letters, and obtained from a large box building called “STORE.” Notice I used the word “obtained,” rather than “purchased”; in this utopian world there is no money.

How food is produced and transported with neither profit motive nor coercion and distributed with neither money nor violence could have provided an interesting story. However, once again Meyer quickly moves away from addressing any philosophical problem so that she can focus on the romantic interests of her young protagonist, in this case Melanie (Saoirse Ronan). When Melanie is injected with a space-traveling “Soul” named “Wanderer,” her sense of will is somehow strong enough to enable her to keep fighting to control “their” body. She (or they) escape to the desert, where a community of humans, including Melanie’s brother, uncle, and boyfriend, has been hiding in underground caverns to avoid being injected by aliens. Melanie is still in love with Jared (Max Irons) but doesn’t want “Wanderer” to experience kissing him. Another buff young survivor, Ian (Jake Abel), falls for “Wanda,” and Melanie doesn’t want her (or their) body kissing Ian. A lot of slapping goes on as a result.

That’s the philosophical conflict we are forced to consider. We’re back to Team Edward and Team Jacob, but with a bizarre Siamese-twin kind of twist.

In the end, the problem is resolved when the aliens and the humans decide to be friends. Wanda shows them how to coax the aliens’ ganglia out of the hosts’ necks, without hurting either one. The aliens are placed in space-travel containers and shot into outer space, where they can terrorize another planet; but that’s OK because, as Wanda reassures them, “by the time they reach another planet your grandchildren’s grandchildren will be grown up.” That’s a little like saying, “The national debt doesn’t really matter because we’ll all be long gone before our grandchildren’s grandchildren have to pay it.” And if you don’t have children, then heck! You’re home free!

One qualification: the aliens are allowed to stay in their human host bodies if the human psyche or soul or essence cannot be revived after the alien is removed. In other words, if you sufficiently overpowered your host’s body, you get to keep it. So Melanie gets Wanda out of her system, Wanda gets a new body, and Ian gets a new girlfriend. And somewhere out in the distant universe, an unsuspecting population is getting some uninvited visitors.

Just so it isn’t us.

Let’s all sing a chorus of “Kumbaya.”


Editor's Note: Review of "The Host," directed by Andrew Niccol. Chockstone Pictures, 2013, 125 minutes.



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Lying as a Research Tool

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Several years ago a journal article reported on a mailing of hundreds of phony job-application resumés to potential employers. Conspicuously African-American-sounding names were assigned to some of the phony applicants. The researchers found a statistically significant degree of support for the differential response that they had conjectured.

Medical researchers convinced psychiatric hospitals to admit them as patients requiring treatment. Their purpose was to test how hard it was to convince physicians that these patients were sane, after all, and so gain release. In one twist, to see how admission procedures would be affected, one hospital was told, untruthfully, that fake patients would be sent its way (Sam Harris, The Moral Landscape, 141–142).

Research reported in NBER Digest, March 2013, involved sending about 12,000 phony resumés to employers who had posted some 3,000 job vacancies. The resumés showed how long a supposed applicant, if unemployed, had been unemployed. Statistics on “call-backs” from the employers supposedly confirmed discrimination against the long-term unemployed.

Such research raises several questions. Might not some of the employers (or hospitals) subjected to these experiments have vaguely sensed something peculiar and have responded or not responded accordingly? Is it fair to force the unagreed status of experimental guinea pig onto employers, wasting their time and imposing costs, all in addition to their ordinary burdens?  Most important, is lying a respectable tool of research? Should academics profit from having their own resumés augmented by such deceptions?




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The Clichés Come Home to Roost in Cyprus

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The clichés are frequent, abundant, and apt: have your cake and eat it too; kick the can down the road; squeeze the tube of toothpaste; see the chickens come home to roost — in that order. They are being used these days to describe financial crises and political responses to financial crises. A couple of years ago, writing about the role of Greece in the ongoing euro monetary-financial crisis, I said that the “contradiction is between the love of state largesse and the limits of governments’ ability to raise revenue,” and I suggested (unoriginally) that Greece might be a domino to tip other dominos (more clichés).

Now Cyprus. It’s the latest hotspot in the euro crisis. If you read or listen to news supplied by the mass media here in the US, you know that Cypriot banks are on the ropes. You know that they have a lot of euro-denominated deposits, including somefrom tax-dodging or money-laundering Russians. And you know that a bailout is in the works. However, unless you think or read more deeply, you don’t know how the situation in Cyprus fits into the bigger picture of euro zone troubles.

Even if you read The Economist, as I do, you only get a hint. In its March 30, 2013 issue, it got through two articles on the Cyprus bailout while barely mentioning how that was precipitated by Greece. I’m not saying there is a media conspiracy to obscure the facts, but there is a tendency to avoid speaking of and maybe even to avoid thinking of the complex and unsettling cause and effect relationships among the various financial unbalances in European banks, treasuries, and currencies. (Yes, I know there is supposed to be only one euro, but more on that below.)

Why would those rich Russians trust banks in miniscule Cyprus? Because the deposits were in Europe, in the euro zone, denominated in euros, and implicitly guaranteed by Europe.

The Economist said, “The troubles of the two banks were caused, some believe, by a decision to buy Greek government bonds that were then restructured.” It said thisonly in the context of an article mentioning that Cypriots feel like victims, in this case of the “restructuring.”

That sentence from The Economist does everything wrong. It directs us away from the truth that the euro mess is a great tangle of interrelationships with “moral hazard” at every knot. And it downplays important circumstances, employing euphemisms. “Troubles” should be “failures”; “some believe” should be deleted; “a decision” should be followed by a statement of the reasons and motivations for the decision; and “restructured” means “defaulted.”

As a corrective, I’ll tell you what I think is going on, preferring clichés to euphemisms.

How does a miniscule country get pumped up on foreign deposits? Why would those rich Russians trust banks in Cyprus? Because the deposits were in Europe, in the euro zone, denominated in euros, and implicitly guaranteed by Europe. That’s an example of having your cake and eating it too. The “cake” is having a hard currency that does not fluctuate against any other currency in the euro zone and can be freely transferred among all euro-zone countries, since it’s supposed to be the same currency. “Eating it too” is failing, as a nation, to have the reforms, institutions, sovereign finances, and controls in place that would justify the currency’s value and stability.

The deposits in Cypriot banks, like all deposits, are loans. The banks had to invest the money. They bought Greek government bonds — more cake being had and eaten. The Greek bonds were paying better interest than, say, German bonds. That should tell you something, but they were supposed to be risk-free, again because of the implicit guarantee of Europe.

The Greek crisis, going back at least to 2004, is now nearly a decade-long process of kicking the can down the road. The can is, of course, severe economic pain that may take the form of extreme austerity, high inflation, and currency devaluation (which would require exit from the euro and, in the case of Greece, the dreaded “Grexit”). The bits of pain that were inflicted along the way — on bondholders, employees, and taxpayers — have always and ever been insufficient to constitute really doing something with the can other than kicking it.

The crisis in Cyprus demonstrates that Europe’s restructuring of Greek debt and bailouts of the Greek treasury were also largely examples of squeezing the tube of toothpaste. One pinches the problem here, and it bulges out over there. One collapse delayed begets another threat of collapse that demands immediate attention.

Cyprus may remain in the euro in name only. A euro that cannot leave Cyprus has a value different from and lesser than a euro that can travel freely.

Now, one or two birds at a time, the big flock of chickens is beginning to come home to roost. In the Cypriot bank bailout deal, bank shareholders are wiped out. They get nothing. Some bondholders are wiped out. Depositors are restricted from getting their money; there are daily withdrawal limits; and currency controls are in place. Some depositors, the uninsured with balances above 100,000, will not get all their money back; they will see their deposits converted to bank shares, probably worthless. In theory, smaller deposits are secure, and Cyprus keeps the euro.

The tough conditions for the bailout, ostensibly required by a commission composed of the European Central Bank, the European Commission, and the IMF, but in substance required by Germany, are the price for Cyprus “staying in the euro,” and that is the main goal of the bailout. But it is not clear that Cypriot euros are still the same as other euros. In other words, Cyprus may remain in the euro in name only. A euro that cannot leave Cyprus has a value different from and lesser than a euro that can travel freely. Such a euro sits in Cypriot banks, from which it can’t be freely withdrawn. The bailout may fail to render the banks solvent. The risk of insolvency, the restrictions on withdrawal, and the currency controls all undermine the value of the deposits.

Enter Gresham’s law: bad money drives out good — if the exchange rate is fixed by the state. In this case the bad money, Cypriot euros, drives out the good money, other euros, other currencies, precious metals, and other stores of value, because the exchange rate is fixed by law and by definition: euros are supposed to be euros. That’s what monetary union was supposed to mean. The troika cannot let the Cypriot euro float; that would be an immediate, rather than slow, failure of the bailout plan; therefore, the official exchange rate between the Cypriot euro and the real euro will be 1:1. Cypriots will withdraw their bad money as fast as they can. They will hoard good money. They will seek opportunities to spend or exchange their bad money at the official rate. Goods will leave the country to be sold for good money to be held abroad. Scarcity will reign. Cyprus will impose export controls (a usual next step after the imposition of currency controls), turning many of its people into criminals. In the 1980s, I saw this in Bénin, where after a period of currency controls, the markets were utterly bare and smugglers were being shot on sight. Next door in Togo, the markets overflowed with goods, including, I suppose, goods from Bénin.

There is much more to be said, about the near-certain collapse of the Cypriot economy, about “contagion” — the fear that similar blows will strike depositors in other weak euro zone countries, and the resultant capital flight — about many more chickens coming home to roost, about the suffering of men, women, and children, and about whose fault it is.

But the topic is depressing. I begin to feel sympathy for the journalists and reporters who do not dwell on these things. I’ll kick this can down the road.

How does a miniscule country get pumped up on foreign deposits? Why would those rich Russians trust banks in Cyprus? Because the deposits were in Europe, in the euro zone, denominated in euros, and implicitly guaranteed by Europe. That




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A Sincere Change of Heart?

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The old adage wisely instructs us to “give credit where credit is due.” I am about to give credit to someone to whom I have given extremely scant credit before: our current president. Obama is apparently doing something I want him to do: he is advocating more FTAs — free trade agreements.

This is a surprising — nay, mindboggling — reversal of the course he took during his first four years. In his first term, he started trade wars with Mexico, Canada, and other places. He stalled, until late in that term, any action on the three residual FTAs that President Bush had left him (with Colombia, Panama, and South Korea). And he generally mouthed the labor union line that free trade “steals” “American” jobs.

But shortly before his reelection, he caved. In the face of a clearly stagnant economy he signed the three FTAs. He has now gone farther. In some of his recent speeches, he has advocated two new large FTA deals — one with the EU, and one — initially proposed by Bush — called the Trans-Pacific Partnership (TPP). He is in favor of concluding those deals quickly. (The US started participating in the TPP negotiations under Bush in 2008.)

Obama backed the notion of an EU deal in his state of the union address, saying, “Tonight, I’m announcing that we will launch talks on a comprehensive trans-Atlantic trade and investment partnership with the European Union . . . because trade that is fair and free across the Atlantic supports millions of good-paying American jobs.”

Of course, free trade with anywhere supports millions of “good-paying” jobs. This proposition has been urged by mainstream economists ever since the debacle of the Smoot-Hawley tariffs — or for that matter since Adam Smith. It has recently been brilliantly explored by Daniel Griswold in his primer on the subject, Mad about Trade (which I have reviewed for these pages). Obama is, it seems, only just learning this.

The trade deal with the EU would be huge. The economies of the EU and the US together constitute over half of world GDP, and the trade between them already accounts for one-third of all trade flows.Not commonly known in the US, but explored in detail in Griswold’s book, is the fact that as of 2010, US private investment in France and Belgium (combined) exceeded US private investment in China and India (combined). According to some estimates, an EU-USA FTA would likely add as much as 1.5% to GDP growth in both regions.

Of course, free trade with anywhere supports millions of “good-paying” jobs. President Obama is, it seems, only just learning this.

Concluding the TPP would also be huge. It would greatly expand the current, modest FTA called the Trans-Pacific Strategic Economic Partnership (“P4” or “TPSEP”), which includes Brunei, Chile, New Zealand, and Singapore. The proposed TPP would embrace Australia, Canada, Malaysia, Mexico, Peru, Vietnam, and us. Japan has just announced that it will join the TPP talks as well. Obama hasn’t commented on the Japanese dimension, but he has indicated that he favors the TPP, viewing it as his “pivot” toward Asia.

There would be great advantage to including Japan in a large free trade zone with the US. The other nations with whom we are negotiating either have FTAs already (Australia, Canada, Chile, and Mexico), or are very small potatoes economically (Brunei, New Zealand, Malaysia, Peru, and so on). Japan, by contrast, is a country with which we have no FTA, and is the third largest economy on earth.

But as happy as I am that Obama seems to be seeing the light, I find myself filled with doubts.

Start with the fact that the president is a notorious liar and dissembler. As a senator, he feigned support for immigration reform but covertly helped kill Bush’s bill, and in the two years in which his party controlled both houses of Congress he refused to introduce a bill of his own. Yet he campaigned for reelection promising — comprehensive immigration reform!

Similarly, as a senator and during his first term (to which he was elected with enormous contributions from union funds) he fought off or stalled all free trade measures. Now he favors free trade? One can be forgiven for wondering whether his conversion is sincere.

Doubt also arises from the question of how persuasive Obama can be on the issue. The opponents of the new FTAs will use his own past arguments against him — the canards about free trade costing jobs, about its resulting in the famous “race to the bottom,” and so on.

Most importantly, the new FTAs are fraught with special difficulties. Let’s begin with the EU. The problem lies with countries such as France, which is highly unlikely to open its domestic manufacturing sector to true competition. The French are notorious for protecting their film and other “cultural” industries by import quotas and direct subsidies. They are famed for their inventiveness in erecting “non-tariff barriers” to trade. And they just elected a Socialist government that loathes free-market economics (which leftist Europeans disparagingly call “neoliberal economic theory”).

The opponents of the new free trade agreements will use Obama's own past arguments against him — the canards about free trade costing jobs, about its resulting in the famous “race to the bottom,” and so on.

Especially contentious is the issue of agricultural imports. America has always been an agricultural hyperpower, thanks to the vast expanse of its arable land and the incredible productivity of its farmers. American farmers have been at the forefront of agronomic invention, from the use of tractors to the use of GPS (global positioning satellite location finding) to the genetic manipulation of grains. France, in particular, and Europe, in general, oppose the sale of genetically modified foods, and are lavish in their subsidization of their farmers.

With unemployment running high in many EU countries — especially Greece and Spain, where it approaches 25%, or about what the US suffered during the Great Depression — an FTA with America will be a tough sell. The average European is as much a believer in populist economic fallacies as the average American, and especially in the myth that free trade costs domestic jobs. (It’s always funny how opponents on both sides of an FTA can argue that it will send jobs over to the other side).

You can catch a glimmer of the difficulty in clenching this deal when you hear Karel De Gucht, no less than the EU trade commissioner, who is pitching an FTA with the US to lower the automobile tariffs that make cars so expensive in Europe, hasten to assure France that it would never be required to dismantle its subsidies and quotas on cultural industries.

Even more problematic will be an FTA that involves Japan. The Japanese certainly want the benefits an FTA with America would bring, such as an end to the tariff we impose on their automobiles — a tariff that runs as high as 25%. If these tariffs were eliminated, Japan’s auto imports alone would jump by perhaps 6%. (No doubt this is why the UAW, the AFL-CIO, and the domestic automakers are alarmed at the very idea of ending those tariffs). But Japan is erecting large obstacles to an early deal for true free trade. They are aggressively “pulling a Bernanke,” that is, weakening the value of the yen, so that Japanese manufactured goods will drop in price compared to American goods. This would rather quickly reduce the impact of our tariff barriers.

An even more significant problem is the fact that a real FTA that included Japan would immediately open Japanese farmers to massive competition by America’s vastly more efficient agriculture. To cite one example: Japan imposes a stunning 778% tariff on imported rice. In other words, Japan’s rice farmers are so comparatively inefficient that they need to be protected by a tariff of nearly eight-fold the American price — a whole new meaning for the Eightfold Way!

Japanese Prime Minister Shinzo Abe, who decided to join the TPP talks, already faces opposition to his move, and has promised, “I will protect Japan’s agriculture and its food at all costs.” That doesn’t make it sound as if there were much chance of a major deal to open trade on both sides.

Over the long term, of course, competition would be good, very good, for Japan. Its citizens would get cheaper food, enabling them to buy more of other things or save more capital to create or expand competitive industries. Free trade would free up people from the farms, enabling them to work more creatively and productively in knowledge-based industries. This would be a major advantage, given that Japan’s population is aging rapidly.

But economics is not the same as culture. In a nation as socially cohesive and static as if Japan, it will be very difficult to convince people to allow their farm industry to shrink. Yet you don’t need to be Japanese to succumb to the myths of protectionism. Populist economics is popular all over the world because, well, the populace is basically the same all over the world. As Hayek noted, our evolution from hunter-gatherers has left us with instincts that are often counterproductive.

If Obama really has seen the light — about which, again, I am skeptical — he would do better to emulate Bush. Go for bilateral FTAs with countries with whom we have a better chance of success. I would urge him to focus on just two countries: Brazil and India. I will be brief here, having discussed the possibility of an FTA with Brazil elsewhere.

Start with the fact that bilateral FTAs are inherently easier to negotiate, since the special interest groups, those omnipresent rentseekers, are easier to hold in check, being fewer than those aroused by action on a broader front.

In a nation as socially cohesive and static as if Japan, it will be very difficult to convince people to allow their farm industry to shrink.

Second, note that while countries such as Japan and France are very culturally homogeneous, Brazil and India are, like the US, ethnically and culturally diverse. Such diversity tends to lessen (though not to eliminate) the tribalist-populist impulse to fear trade with the Other.

Third, Brazil and India are big countries. Brazil, with 200 million citizens, is the fifth largest country in population, and India is the second largest. Unlike Japan and most of Europe, Brazil and India are still growing in population, so they will have a young labor force for decades to come. They are likelier than other countries to allow the importation of food, and more eager to gain access to our manufactured goods markets.

Finally, both countries are growing economically at a fast clip. Brazil already has the world’s sixth largest economy. Both are nations whose greatest economic growth lies in their future, not their past.

They seem altogether better bets than those the administration is pursuing. Maybe — my recurring skepticism whispers — that is why the administration isn’t pursuing them.

ldquo;race to the bottom,

ldquo;race to the bottom,




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