Bret Stephens: 'Beggar Thy Neighbor, Bankrupt Thy Country, Appease Thy Foe...Pretty Much Sums Up President Obama's Global Agenda'

Foreign policy 'change you can believe in':

In 1943, Walter Lippmann observed that the disarmament movement had been "tragically successful in disarming the nations that believed in disarmament." That ought to have been the final word on the subject.

So what should Mr. Obama, who this week becomes the first American president to chair a session of the U.N. Security Council, choose to make the centerpiece of the Council's agenda? What else but nonproliferation and disarmament. And lest anyone suspect that this has something to do with North Korea and Iran, U.S. Ambassador Susan Rice insists otherwise: The meeting, she says, "will focus on nuclear nonproliferation and nuclear disarmament broadly, and not on any particular countries."

But the problem with this euphemistic approach to disarmament, as Lippmann noticed, is that it shifts the onus from the countries that can't be trusted with nuclear weapons to those that can. Is Nicolas Sarkozy, with his force de frappe, about to start World War III? Probably not, though he has the means to do so. Should Mr. Obama join hands with Iran and the Arab world in pushing for Israel's nuclear disarmament, on the view that if only the Jewish state would set the right example its enemies would no longer want to wipe it off the map? If that's what the president believes, he should say so publicly, especially since he's offering the same general prescription for America's nuclear deterrent.

Of course what the administration wants is to set the right mood music for its upcoming talks with Iran. Mr. Obama would be better served having a chat with Moammar Gadhafi, who will be seated just a few chairs away at the Security Council: The mood music for his disarmament was set by the 4th Infantry Division when it yanked Saddam Hussein from his spider hole in December 2003. Col. Gadhafi gave up his WMD a week later.

Then again, it's not as if the administration doesn't know how to play hardball when it has a real villain in its sights. Like Chinese tire makers, for instance, who last week were slapped with a 35% tariff because Mr. Obama owed political favors to his friends in Big Labor. Quite something for a president who last year sounded off on the dangers of "trade policy [being] dictated by special interests."

In an op-ed in this newspaper, Brookings Institution economist Chad Bown noted that "the count of newly imposed protectionist policies like antidumping duties and other 'safeguard' measures increased by 31% in the first half of 2009 relative to the same period one year ago."

[...]

Meanwhile, Mr. Obama is earning kudos from the Russian government for his decision to pull missile defense from central Europe, even as Poland marked the 70th anniversary of its invasion by the Soviet Union. Moscow is still offering no concessions on sanctioning Iran in the event negotiations fail, but might graciously agree to an arms-control deal that cements its four-to-one advantages in tactical nuclear weapons.

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Outsourcing Redux

Free trade is one of those ideas that seems so great and so logical, we often forget that not everyone agrees. That is, we forget until we walk past a "fair trade" protest in Seattle or the "Fair Trade" cafe on campus at UCL. We can safely conclude that these people have never taken a basic economics course.

Today, after discussing CEO pay, Wal-Mart, free trade and other cool economic things, we did a little online research, re-watched the first volume of Milton Friedman's "Free to Choose," and found Greg Mankiw's blog. Among the many things posted was this gem, written back in 2004 about the outsourcing debate, but very readable and applicable today.

This dedication goes out to all you protectionists out there, wherever you may be. We know Valentine's Day was last week, but we hope you'll forgive our tardiness.

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Adam Smith on Outsourcing

By N. Greg Mankiw

If the American Economic Association were to give an award for the Most Politically Inept Paraphrasing of Adam Smith, I would be a leading candidate. But the recent furor about outsourcing, and my injudiciously worded comments about the benefits of international trade, should not eclipse the basic lessons that economists have understood for more than two centuries.

To avoid making the same mistake twice and clinching the award, I should let Mr. Smith speak for himself. Here is what he said in his 1776 classic The Wealth of Nations: “It is maxim of every prudent master of a family never to attempt to make at home what it will cost him more to make than to buy...What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry employed in a way in which we have some advantage.”

This is the basic theory of international trade. Since Smith penned these words, economists have added rigor to the analysis (thank you, David Ricardo) and have conducted numerous empirical and historical studies of the effects of trade. The verdict is in: Smith was right. Few propositions command as much consensus among professional economists as that open world trade increases economic growth and raises living standards. Smith’s insights are now standard fare in Econ 101.

Yet, whenever the economy goes through a difficult time, as it has in recent years, free trade comes under fire. Some people now fear that trade is responsible for recent weakness in U.S. labor markets. The concern is understandable, but it is simply not true. Over the past three years, job losses are more closely related to declines in domestic investment and weak exports than to import-competition. To the extent that the rest of the world threatens U.S. prosperity, the main problem is not rapid growth in China and India, but slow growth in Japan and Europe.

Of course, global competition has caused employment declines in some industries. The world trading system is changing along with technology. Goods that could once be produced only domestically can now be produced abroad and imported over fiber optic cable. The Internet and advances in telecommunications have meant that more Americans are competing with workers in other nations. Even if more competition is good for consumers, it can produce very understandable anxiety among some workers and their families.

These technological changes, however, have not rendered Smith’s insights obsolete. The same principles apply to offshore outsourcing of services as to traditional trade in goods. This has been confirmed in a recent study by the McKinsey Global Institute. McKinsey researchers tallied up the costs and benefits associated with outsourcing and found that for every dollar the United States sends abroad, we get back about $1.12, resulting in a net gain of $0.12. Smith would not have been surprised.

Some people fear that Americans cannot compete with low-wage workers abroad, or that global competition will mean that wages will “race to the bottom.” The truth is that we can prosper in a global economy because our workers are among the best in the world. Our real wages are ultimately determined by our productivity, and American productivity growth has been spectacular over the past three years.

So, if trade is not the problem ailing the U.S. economy, what is? Smith again has the answer. “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things." This fits perfectly with three of the President’s priorities: defending the homeland against terrorist threats, reducing the tax burden on the American people, and reforming the tort system. (If Smith overlooked the importance of ensuring a reliable energy supply and reducing the cost of health care, we can forgive his eighteenth-century myopia.)

The President, like Smith, believes in the free enterprise system. The goal of policy should be to open up markets, not to retreat behind walls or throw rocks in our harbors. Economic growth is not zero-sum. Prosperity in one country is not a threat to prosperity in another. Free and open markets can mean better jobs both for Americans and for our trading partners around the world.

It may be a mere coincidence that Smith’s great book was published the exact same year that the Declaration of Independence was signed. But the founding fathers of the United States share an intellectual bond with the founding father of economics. They both believed that liberty and prosperity go hand in hand. Our founding fathers were well aware of Smith’s work. Benjamin Franklin knew Smith personally. When Franklin quipped that “No nation was ever ruined by trade,” he likely meant it as an understatement.

Perhaps quoting Adam Smith is risky. Smith was British, so some people may accuse me of outsourcing economic advice. But import competition is not a threat. I have great confidence that President Bush’s policies will grow the economy and create a job for every American who wants one, including his politically tone-deaf economist.

Dr. Mankiw is a professor economics at Harvard and former chairman of the Council of Economic Advisors.


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an angst filled Sports Review!

This is a new thing here at OL&L. In the past sports and pop culture frequently found their way into our posts. In the new round of posting that began a couple weeks before the midterm election, most everything has been political. And to be completely honest, we're getting a little bored by non-stop politics.

So this will be the first in what may become a "Weekly Sports Review"--a weekly survey of some of our favorite teams in sports. It will primarily deal with BYU Football and Basketball, and the Seattle Seahawks, Sonics, and Mariners. These are our five favorite teams. Occasionally the UW, WSU (Washington State, not Weber), and Gonzaga may also merit mention--usually only when the first five teams are sucking and we have to look somewhere, anywhere for a new bandwagon.

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BYU Basketball

We've stayed up till the wee hours of the morning to listen to the first two games of the season on ksl.com and have the sleep-deprived headaches to prove it. The Cougars lost the first gameon the road against UCLA and according to the Greg Wrubell and news accounts the day after, BYU had no one to blame but themselves. They stayed in the game and even went up by as many as 9 points in the first half despite attempting committing huge amounts of turnovers. The stat line at the end of the game showed BYU attempted 11 fewer field goals than BYU. This is due largely to two things: turnovers and poor offensive rebounding. The Cougars turned the ball over 23 times to 13 by UCLA. UCLA dominated offensive rebounds 14 to 3.

That's the game right there.

That said, it does not help that UCLA gets additional help from the officials. The Cougars made 7 of 10 free throws while the Bruins hit 21 of 30. In other words, officials called BYU for 3x as many fouls as the Bruins. This sort of homecooking makes winning the game nearly impossible. Probably the best example of this differential is found in the Bruins gameplan against Trent Plaisted. They went after him early and often and the officials obliged their efforts. By getting him to commit early fouls (ticky-tack or otherwise) they effectively neutralized him and in so doing, put BYU's best rebounder, post player, scorer, etc. on the bench.

Now, this game is old news but it is important because this is exactly the sort of gameplan you will see executed against BYU again and again this season. It should be familiar because it was the same one that played out all year last year. Get Mr. Plaisted out and the rest of the team falls apart. The Cougars can't control the officiating but they can rebound better and take care of the ball. And Mr. Plaisted has got to find a way to stay in the game.

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BYU Football

Is the Cougar resurgence and our absence from Provo a coincidence? We hope so. We've personally attended 5 games between BYU and Utah: '99 in Provo, 2002 @Utah, '03 in Provo, '04 @ Utah, and '05 in Provo. All of those games were losses for BYU. Well, to appease the football gods, we're staying in London for this game and limiting our participation to ksl.com internet radio. On a side note, many thanks to KSL for providing this service. To listen to Seattle area teams we had to shell out hard earned cash and listened to the Seahawks get it handed to them by the 49ers.

The 2002-'04 losses to Utah seemed to have a common thread--Utah seemed to want to win more than BYU did. Of course there were those on the BYU side who played hard--Curtis Brown is one example--but as a whole, BYU seemed to care about the game less than the Utes. This may have something to do with the fact that Utah just cares more about this rivalry than BYU does. And there may be something to this argument. As a native of the state of Washington, we don't really understand all the ins and outs of the rivalry and how it extends into local high schools and involves (or doesn't) religion and politics and on and on. There are are more Utah natives on the Ute roster. They were born and raised in this rivalry while many BYU players hailing from California, Arizona, Washington, etc., are more familiar with the rivalries in their own home states. Maybe this is the reason they don't care as much. It doesn't hold the longtime meaning for them that it does for the players from the school to the north. Players and coaches have mentioned to the media that they think that last year they were too fired up and somehow this caused them to come out flat and fall behind the Utes forcing a furious comeback in the second half. Whatever.

BYU is solid on both sides of the ball this year. Yes, the defense is improved but some of this improvement is due to the fact that they didn't face Notre Dame and the Mountain West as a whole is experiencing something of a down year. We're still bothered that BYU got beat by BCS lightweights Arizona and Boston College. We think the team is good. But what, exactly, do you point to in order to prove your point? A good record against mediocre teams in the Mountain West? Numbers inflated by playing bad defenses? Ditto for defense? The only way BYU is ever going to get any national credibility whatsoever is by pounding crummy non-conference BCS teams and then beating a decent team in a bowl game. Unfortunately this year, it doesn't look as though the Pac-10 will oblige. They have SC and Cal and then a whole bunch of teams that beat up on each other and even the Trojans and Golden Bears aren't as tough as in past years. Consider this: the Pac-10 has been so medium, it's conceivable BYU could have a rematch against Arizona. Give us a break. With any luck Oregon will fall into the #4 slot and we'll get all the inevitable drama from the Crowton vs. BYU matchup. That's about the best BYU fans can hope for this year.

Finally, congrats to Curtis Brown on the rushing record. The last two years we've called again and again for BYU to get the ball to CB and this year they did it and they've won consistently. Less noted is the fact that Mr. Brown leads the team in receptions. He is the consummate team player. He has never complained about losing carris to Fui Vakapuna and has been consistent in placing team goals (just win, baby) over personal goals like the BYU rushing record.

Last year we predicted that BYU would win the conference championship. Vindication is always nice. But that vindication will be hollow if BYU doesn't take care of business against Utah. Regardless of record, this game always seems to be hard fought. We may be in a minority of one, but we'd take pounding Utah over the conference championship.

Moving along.

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If we were the Tuesday Morning Quarterback aka, Gregg Easterbrook, and conservative (rather than liberal/populist like him), we'd insert an aside here about how the protectionism suggested by some Democrats is stupid because it hurts Americans in terms of cost of living and also job creation. We'd argue that people worried about outsourcing of thousands of jobs ignore the tens of thousands of jobs that are created as a result. But of course, Mr. Easterbrook doesn't have to fit his cute little sociopoliticaleconomic observations inside of economic reality. It's easy to criticize Wal-mart ad nauseum as he does if one simply ignores all relevant economic data regarding the positive impact Wal-Mart's business practices have on America.

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Seahawks

Thanks to the cold blooded kicking of Josh Brown, The Seahawks have a winning record. If Mr. Brown misses those three field goals, the 'Hawks could be staring 3-7 in the face and people would be talking about the curse of the Super Bowl losers. We like Bill Simmons theory better. Basically it holds that official intervention led to a Steelers win but that the football gods ignore these outcomes and curse the team that should have lost the Super Bowl--the Steelers. A quick check of their record would confirm the basic assumptions of this theory.

Mike Holmgren has a different take on the Madden Curse that seems to have afflicted Shaun Alexander, keeping him out of games until last week's loss to San Francisco. Mr. Holmgren believes that being on the cover of the game does not make one more susceptible to injuries but that being on the cover makes players higher profile and encourages every team to take extra shots at the high profile Madden coverboy--in this case, Mr. Alexander. It doesn't help that Mr. Alexander plays for a team that won the NFC and made it to the Super Bowl. That type of streak puts a big bullseye on the collective team's back and encourages everybody to take their best shot.

And the Seahawks have had the injuries to prove it. Walt Jones, all-world left tackle has been hobbled by injuries all year. Floyd Womack, starting left guard and Steve Hutchinson replacement has been out. Robbie Tobeck dealt first with shoulder surgery and then a flu that has cost him two games and lots of weight and strength. Chris Gray is old, but reliable, thank goodness. Sean Locklear was suspended one game for substance abuse and has missed the last two with a high ankle sprain. And that's just the offensive line. Matt Hasselbeck has missed four games (we already talked about Mr. Alexander), backup TE Itula Mili has been injured, Jerramy Stevens missed the first few games, came back, and promptly sucked it up. the WRs have been solid and are definitely the strength of the team. Darrel Jackson leads the league in receiving touchdowns with 8. Deion Branch, Superbowl MVP, lines up on the other side and is better than solid. They have missed Bobby Engram who is on this team because all he does is convert 3rd downs. He's not fast and he's not big but he gets open and he always, always (except for that 2004 playoff game against the Rams) catches the ball. He has been missed.

The defense has no such excuses. They were good last year and with the addition of Julian Peterson, they should have been Top 5--at least Top 10. Instead they're hovering somewhere between Cleveland and Atlanta. Seriously, there is no excuse for this defense. Rather than improving or even holding constant, they have regressed. The only good statistic for this squad is that they are second in the league in sacks with 35. All that does is tell you that every once in a while they decide they are going to play so they can get the sexy sack and the rest of the time they are just kind of there. Frank Gore is good, but the Seahawks made him look like LaDainian Tomlinson. And speaking of LT, the Seahawks better hope that one of two things happens before they play the Chargers in Week 16--either they get their act together or the Chargers have homefield advantage locked up and sit all of their starters. Even then, Michael Turner might run all over the 'Hawks defense.

Enough with the doom and gloom. Mike Holmgren remains one of the best coaches in the NFL. He has a proven track record as head coach in Green Bay and Seattle. He was an effective assistant in San Francisco. Once the Seahawks get players back from injury the offense will start the click and take some of the pressure off of the defense. Plus, on the postive side, it's not as though the defense is getting beat because they lack the talent. They are in position, they are simply not make tackles. This is an easily correctable problem.

Watch for the Seahawks to win this week against a crummy Packers team and go on a run. They will win the NFC West (not saying much, we know) and make a run in the playoffs. The elements are there to get it done.

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Sonics

Writing about our favorite Seattle sports teams gets progressively more depressing as we go down the list.

The Sonics are 5-7 in their 40th year in Seattle but face the prospect of moving to Oklahoma City at the end of the year barring some plan to build them a new arena. We've read everything we can about this problem and are convinced that the current situation at Key Arena wont work. The Sonics can't make money the way things are now. But this doesn't necessarily mean that they deserve a corporate handout. So the Seahawks and Mariners got sweet stadiums built for them thanks to the taxpayers, so what? Does this mean that Seattle (Washington really, as the taxes affect more than just King County) should build a stadium for every professional sports team that wants one in Seattle. And how long, exactly, before either of the first two teams--Mariners, Seahawks--come looking for more, for another stadium. Are the current ones good for ten years, 20?

This issues raises a whole other set of questions. Should profession sports be run like a business? If it is to be run as a business, should it be run as one that is profitable from year to year or only profitable upon sale of the team. Coffee Tycoon Howard Schultz and the rest of his ownership group insisted that they lost millions of dollars, but then they sold the Sonics for $350 million. That's $150 million more than the $200 million they spent five years earlier. Granted, some of the purchase price was an assumption of debt, but still, did they or didn't they make money on the transaction?

We believe that owning a professional sports team should fall somewhere between business and hobby. We buy ski equipment from year to year and enjoy it immensely but we don't expect to make a profit off of it. Of course professional sports aren't the same as a hobby like skiing, but we don't believe they should be treated like an out and out business either.

We love the Sonics and follow them daily. Growing up, we followed the Sonics teams of Gary Payton and Shawn Kemp and unwisely bet our uncle when they played the Bulls in the NBA Championship. We attended a game versus the Kings during the 2005 playoffs and the Key Arena (the Sonics current venue) was rockin'. It is a great place to watch games. We don't want the Sonics to leave but we don't want to build the Sonics a several hundred million dollar arena at little to no cost to the team either.

This Sonics team has a lot of potential. They have Ray Allen. Rashard Lewis looks ready to be a perennial All-Star. Luke Ridnour is finally coming into his own. Chris Wilcox is ready to break out. Bob Hill seems to be a good coach. and 12 games plus his run to end the year is not enough to judge. Give the Sonics the month of December and then we'll talk about the direction of the team. They need to go on a run like the Mariners circa 1995 to have a chance at persuading the public to build them something new. We hope it happens. In the meantime, we'll be watching their games on the foxsports.com gamecast.

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Mariners

Talk about a dissappointment. We love the Mariners. But for the last three years, this love has been unrequited.

We are an admitted believer in the Moneyball approach. This wasn't a book just about the importance of OPS (on base percentage + slugging percentage) but a book about finding value where others didn't. That's the lesson of Billy Beane and the Oakland Athletics. Ever year people say, "well, this is the year they are finally going to eat it," and every year, they win. They win because Beane is able to identify value and acquire it and because he is good at making a deal.

A few years ago the Mariners had an outside shot at getting Billy Beane. Whether it was money or partial ownership or whatever, missing out on getting him as GM was the biggest single Mariners personnel mistake in the last decade. Forget about losing Griffey (that one still hurts) or A-Rod or Randy Johnson. If the Mariners had gotten Mr. Beane they wouldn't have wasted time and money on Jeff Cirillo or Scott Spiezio. Instead of signing Carl Everett the Mariners might have gotten Frank Thomas. Seriously Bill Bavasi (current M's GM), how do you sign Carl Everett over Frank Thomas in any year? The A's paid less and got way, way more from Mr. Thomas. Mr. Bavasi is loved by the old school baseball establishment. Which is to say, he resists against the grain evaluation that might give him an advantage.

If the Mariners were smart, they would pay free agent pitcher Barry Zito whatever he wants and then get some cheap back of the rotation pitcher or promote from within. If they are serious about pursuing Jason Schmidt then Mr. Bavasi will prove himself to be the fool we think he is. Schmidt is the classic National League player who has a decent (not good) ERA and barely wins more than he loses--IN THE NATIONAL LEAGUE WEST. The NL west is baseball's worst division. One more time, Mr. Schmidt went 11-9 in baseball's worst division. Mr. Zito, on the other hand, went 16-10 with a 3.83 ERA in the American League in a division with (minus the M's) good offenses. He will be younger--28 vs. 34--and is left handed. It's important to note that of the Big 3, Zito is the one Mr. Beane kept. And he would keep him again this year except that Mr. Zito will price himself out of the A's range. But not the Mariners. The Mariners can afford him.

The issue of the Mariner's payroll is another issue that irks about this team. When they announce what they will pay their players in a given year, they say, 'well, it's going to stay about the same.' And stupid sportswriters let them get away with it. In 2001 the Mariners supposedly bumped their payroll to about $90 million. And then it stayed the same for the next four years. Is there a sportswriter in the city of Seattle who has heard of inflation?

Assuming they adjusted 2.5% per year for inflation, to keep things the same, their budget should have gone to $92,250,000 in '02, $94,556,250 in '03, $96,920,156.25 in '04, $99, 343,160.16 last year, and $101,826,739.16.

We understand that the numbers clubs release are just projected budgets, but should sportswriters at least make them be honest about those numbers. Rather than saying, "we're going to keep the same number as last year--$90 million," can't someone say, "well, that $90 million isn't the same $90 million it was back in 2001, now it's worth far less. You are, in fact, deceiving fans by telling them that your budget is the same."

Please Mr. Bavasi, spend the money to get Barry Zito.


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