“History’s Has-Been”

Robert Samuelson says that Europe is going out of business.

A few countries (Britain, Ireland, the Netherlands) have acted, and there are differences between Eastern and Western Europe. But in general Europe is immobilized by its problems. This is the classic dilemma of democracy: Too many people benefit from the status quo to change it; but the status quo isn’t sustainable. Even modest efforts in France and Germany to curb social benefits have triggered backlashes. Many Europeans — maybe most — live in a state of delusion. Believing things should continue as before, they see almost any change as menacing. In reality, the new E.U. constitution wasn’t radical; neither adoption nor rejection would much alter everyday life. But it symbolized change and thereby became a lightning rod for many sources of discontent (over immigration in Holland, poor economic growth in France).

With the recent drop in the Euro, they may in fact be about to have a going-out-of-business sale.

World Outraged At Brutal Minnesota Death Camps

January 13, 1945

MINNEAPOLIS (Routers) The Roosevelt administration reeled today from new revelations of atrocities at POW camps in America’s heartland, where German and Italian prisoners have been worked to exhaustion, and many have died. Amid rising calls to shut the camps down, the international community has expressed shock at news of the harsh treatment of the Axis prisoners, eliminating any pretense at moral underpinnings for our war efforts in the Pacific and western Europe.

Produce Farms of Death

For many, the lachrymose ordeal begins when the prisoners first arrive, as they are housed in an onion-drying shed on the Odegard Farm in Isanti County. Many deaths have been reported, as some of the new arrivals are killed by the veteran prisoners, perhaps while camp guards simply look the other way.

But if they survive the first few days, new horrors are in store for them. There have been reports that prisoners were forced to toil in the fields for eleven-hour days, from seven in the early morning, until the late evening at 6 PM. For this, they get only three dollars a day, with no overtime pay. Thus, the local farmers are benefiting in this cruel war from what many say is tantamount to slave labor. Harvesting potatoes and onions in the fields of despair, they come back to their harsh camps each evening, in tears from the onion fumes (a chemical weapon precursor), dirt and “tater” skins under their fingernails, their lives an unending slog of spud-infested misery.

An Archipelago Of Torture

There is no relief for the POWs when they return to barracks. In the long hot, muggy summer twilight, the mosquitos come. Dubbed “swamp eagles” by the locals, they feast like locusts on the flesh and blood of the brutalized men who dare to venture out beyond the safety of screens in their rough-hewn cabins.

There have been claims, so far unsubstantiated, that some prisoners have been cruelly tortured, often kept awake at night by camp guards playing the Andrews Sisters on the radio. Some of them were made the butt of jokes, and forced to put womens’ nylons on their heads. One poor wretch was reportedly given repeated wedgies by the camp staff until he would reveal the words to all of the verses of “Lili Marlene.”

But sadly, this goes beyond physical deprivation and hardship–the prisoners’ spirituality has often been attacked as well. In many cases, the Germans’ beliefs have been ridiculed by their unfeeling captors, with one man’s copy of “Mein Kampf” reportedly torn up by an angry prison guard. Some claim that Adolf Hitler’s picture is used as a dart board at some of the camps, in plain view of the prisoners. There have also been failed attempts to deprive them of their own cultural traditions, forcing them to conform to midwestern mores, with severe punishments for using the word “scheisse,” instead of “uff da.”

The situation at the Odegard “Death Farm” isn’t unique–such conditions reputedly apply across many camps throughout the upper midwest. Olivia, Owatonna, Montgomery, all the way out to Algona, Iowa–like Manzanar, the formerly bucolic names may now go down in history as a vast network of brutal work camps that will shame America for the rest of its existence.

Good Hamburgers

The administration, of course, attempts to defend the camps.

The commanding officer claimed that “…the Italian POWs in Princeton drew illustrations, carved wood and played sports, including baseball and soccer. The POWs cooked their own meals and some visitors sampling the POWs

A Sideshow?

Roger Cohen asks if Europe matters any more:

At a recent meeting here of the Council for the United States and Italy, a group that brings together influential folk from both sides of the Atlantic, America’s often withering view of Europe was as clear as the light on the lagoon.

That view may be summarized as follows: a Continent reluctant to spend on defense, offering only “postmodernist” armies useful enough as peacekeepers but next to useless as warriors, given to earnest blah-blah about the pre-eminence of international law, inhabited by a declining and evermore aged citizenry living in overregulated economies that have not shown significant growth for at least five years.

Contrast that image with another offered at the meeting: that of an India growing at over 7 percent a year, inhabited by more than 500 million people under the age of 25, busy buying hundreds of advanced aircraft, convinced that armies are still created to fight, churning out English-speaking high-tech graduates by the million each year, and persuaded by Islamic terrorism that its strategic goals and America’s are often identical or at least complementary.

So, which of these parts of the world is more worthy of the attention of the United States? Which is a compelling affair: the intensifying and fast-changing relationship with India, or the largely stagnant alliance with Europe that served above all a cold-war strategic challenge now overcome?

Don’t Quota Me

Chinese apparel have been slapped with a quota. Quotas are worse than tariffs, but first here’s a little background.

The rash of China bashing is well-timed to keep the Chinese buying dollars according to Yuan Answers? (WSJ, 6/10, subscription required). A triangular trade where US sends dollars and st0ck and title deeds overseas to the rich savers of the world and imports lots of stuff in one way shipping containers from China is not a bad thing. In fact, it can be sustained indefinitely with the US capital st0ck continuing to grow. It is a testament to how our laws are not quite as bad as everyone else’s.

In economics we talk about how tariffs and quotas both imply a “deadweight social loss”. When prices are artificially raised via a tariff, the customer prices rise and the supplier prices fall. The quantity sold also falls. It is this last part that is the first component of deadweight loss. By reducing the quantity sold, profitable trades without the tariff become unprofitable because they are not profitable enough to beat the “spread” between the supplier and customer prices induced by the tariff. All this is Economics 101.

A quota has an additional element beyond this kind of loss. In a quota, the supply price rises too. That means that any supplier who can produce at the new higher price will try to fulfill their quota. Thus suppliers who would have cut back production under a tariff will continue to produce to fulfill their quota. Everyone is cut back pro-rata (or according to some formula, e.g., 7.5% more than last year even if growth would otherwise be 500%) and not according to who is the most efficient. Coase might say that quota shares could be traded, but this entails higher transactions expense than the decentralized trade that occurs with a competitive market price.

The additional inefficiency is happily born by international suppliers who receive a major benefit when a quota is imposed–higher prices. So the quota is a collusive bargain between the Government, the domestic suppliers and the foreign suppliers to raise prices on the consumers at the cost to the economy of two kinds of deadweight social loss. Diffuse harm, concentrated benefit. Can one file a class action law suit against an industry association that lobbies for selfish policy?

Don’t Quota Me

Chinese apparel have been slapped with a quota. Quotas are worse than tariffs, but first here’s a little background.

The rash of China bashing is well-timed to keep the Chinese buying dollars according to Yuan Answers? (WSJ, 6/10, subscription required). A triangular trade where US sends dollars and st0ck and title deeds overseas to the rich savers of the world and imports lots of stuff in one way shipping containers from China is not a bad thing. In fact, it can be sustained indefinitely with the US capital st0ck continuing to grow. It is a testament to how our laws are not quite as bad as everyone else’s.

In economics we talk about how tariffs and quotas both imply a “deadweight social loss”. When prices are artificially raised via a tariff, the customer prices rise and the supplier prices fall. The quantity sold also falls. It is this last part that is the first component of deadweight loss. By reducing the quantity sold, profitable trades without the tariff become unprofitable because they are not profitable enough to beat the “spread” between the supplier and customer prices induced by the tariff. All this is Economics 101.

A quota has an additional element beyond this kind of loss. In a quota, the supply price rises too. That means that any supplier who can produce at the new higher price will try to fulfill their quota. Thus suppliers who would have cut back production under a tariff will continue to produce to fulfill their quota. Everyone is cut back pro-rata (or according to some formula, e.g., 7.5% more than last year even if growth would otherwise be 500%) and not according to who is the most efficient. Coase might say that quota shares could be traded, but this entails higher transactions expense than the decentralized trade that occurs with a competitive market price.

The additional inefficiency is happily born by international suppliers who receive a major benefit when a quota is imposed–higher prices. So the quota is a collusive bargain between the Government, the domestic suppliers and the foreign suppliers to raise prices on the consumers at the cost to the economy of two kinds of deadweight social loss. Diffuse harm, concentrated benefit. Can one file a class action law suit against an industry association that lobbies for selfish policy?

Don’t Quota Me

Chinese apparel have been slapped with a quota. Quotas are worse than tariffs, but first here’s a little background.

The rash of China bashing is well-timed to keep the Chinese buying dollars according to Yuan Answers? (WSJ, 6/10, subscription required). A triangular trade where US sends dollars and st0ck and title deeds overseas to the rich savers of the world and imports lots of stuff in one way shipping containers from China is not a bad thing. In fact, it can be sustained indefinitely with the US capital st0ck continuing to grow. It is a testament to how our laws are not quite as bad as everyone else’s.

In economics we talk about how tariffs and quotas both imply a “deadweight social loss”. When prices are artificially raised via a tariff, the customer prices rise and the supplier prices fall. The quantity sold also falls. It is this last part that is the first component of deadweight loss. By reducing the quantity sold, profitable trades without the tariff become unprofitable because they are not profitable enough to beat the “spread” between the supplier and customer prices induced by the tariff. All this is Economics 101.

A quota has an additional element beyond this kind of loss. In a quota, the supply price rises too. That means that any supplier who can produce at the new higher price will try to fulfill their quota. Thus suppliers who would have cut back production under a tariff will continue to produce to fulfill their quota. Everyone is cut back pro-rata (or according to some formula, e.g., 7.5% more than last year even if growth would otherwise be 500%) and not according to who is the most efficient. Coase might say that quota shares could be traded, but this entails higher transactions expense than the decentralized trade that occurs with a competitive market price.

The additional inefficiency is happily born by international suppliers who receive a major benefit when a quota is imposed–higher prices. So the quota is a collusive bargain between the Government, the domestic suppliers and the foreign suppliers to raise prices on the consumers at the cost to the economy of two kinds of deadweight social loss. Diffuse harm, concentrated benefit. Can one file a class action law suit against an industry association that lobbies for selfish policy?

Biting Commentary about Infinity…and Beyond!