Daily Archives: 04/09/2011

Out of thin air?


via Out of thin air?.

“Three Stooges”-Style Budgeting

This seems more fitting than when economist mom posted it.  The article asks which stooge represents who in the budget fight.  I think Obama is Curley (not in charge, but being beat up).  I think Boehner isn’t really in charge either, Larry.  I think the tea party may be Moe the real boss, and not afraid to get rough, but kind of stupid.


My boss at the Concord Coalition, Bob Bixby, offers a very unique perspective on how the budget process is going, suggesting it goes beyond “childish.”  (In fact, Bob and I have often remarked to each other that we’re sure that real kids could outdo the adults in providing some pretty common-sense–and not just cute–suggestions on how to solve our budget woes.)  Bob’s set-up for the “Stooges” analogy (check out the video that goes with the blog post for Bob’s further explanation):

Moe, Larry and Curly are fighting in the back seat of the car. No one is in the driver’s seat. As the boys settle down, Curly looks up and says, “Hey, don’t look now but we’re about to be killed.”

Leave it to The Three Stooges to provide the perfect metaphor for what passes as a budget debate in Washington these days.

It appears that we’re headed for a government shutdown in April and a possible default in May all because politicians can’t stop squabbling over a few billion dollars from a small slice of the budget while our overall fiscal policy is headed for a cliff.

I’m not familiar enough with the Stooges’ individual personalities to figure out which of our leaders correspond best to each of the Three Stooges.  Any Three Stooges aficionados out there who also have been paying attention to how our leaders have been behaving in these debates?  Who is Moe?  Who is Larry? And who is Curly?

Oh, and how fitting… it is April Fools’ Day, after all!

“Three Stooges”-Style Budgeting
Fri, 01 Apr 2011 04:05:48 GMT


Gains and Losses from Trade with China

A new analysis of this is available.  It supports that many people are works are hurt by trade with China.   These impacts are not just reduced wages, also some people dropping out of the labor market due to reduced opportunities.

It’s important to note this looks at the effects on labor only.  Low cost imports can and do benefit consumers, increase profits and benefit some laborers.

It is easy to show trade if beneficial, but while gains exceed loses.  There are losers, and for trade with China labor appears to be a loser overall.  the policy issue is how mitigate those loses since society as a whole is better off.

From the conclusion to a provocative paper by David Autor, David Dorn, and Gordon Hanson, entitled The China Syndrome: Local Labor Market Effects of Import Competition in the United States:

our study suggests that the rapid increase in U.S. imports of Chinese goods during the past two decades has had a substantial impact on employment and household incomes, benefits program enrollments, and transfer payments in local labor markets exposed to increased import competition. These e¤ects extend far outside the manufacturing sector, and they imply substantial changes in worker and household welfare.

…. The relationship between employment and (instrumented) import exposure is illustrated in Panel B of Figure 3.

Figure from Autor, Dorn, and Gordon (2011).

While there are losses along several dimensions (employment, wages, deadweight losses associated with transfers), there are also gains. Putting these together, the authors conclude:


Gains and Losses from Trade with China
Menzie Chinn
Tue, 05 Apr 2011 05:22:34 GMT