There Tom Friedman goes again. This morning, in “Calling All Luddites,” Friedman offers a perfect example of his frequent, curious, and infuriating tendency to find an important topic, report on it with keen and witty observations, and then offer exactly the wrong solution to the problem. The best example of this is his good handle on globalization and the competitive pressures it puts on Americans and American businesses (he’s written two books on the subject). A very big, important topic, the essence of which Friedman captures for a popular audience better than most. Friedman’s solution? Raise tax rates on entrepreneurs and investors! Same thing this morning. He identifies a key shortcoming — America’s lagging communications capabilities compared to our international Read More ›
Why is 2004 economics Nobel laureate Ed Prescott so optimistic [registration required at Wall Street Journal] about Western Europe’s economic propects over the next decade? Because things are so bad, he writes, even most French and German politicians now realize they must change their ways. Prescott has done key research on the effects of taxes on labor markets and has shown virtually the entire difference between hard working Americans and liesurely Europeans can be explained by Western Europe’s high tax rates. Although Prescott’s Journal op-ed today does not mention Princeton professor and New York Times columnist Paul Krugman by name, the article seems a direct refutation of Krugman’s attempt last week to paint France’s high unemployment rate, low productivity, and Read More ›
Good insights and advice on U.S.-China relations from James McGregor.
This week the Bank of China clarified the world’s understanding of its new monetary regime. Its small 2-percent revaluation of the yuan vis-a-vis the U.S. dollar, the BoC said, “does not in the least imply an initial move which warrants further actions in the future.” Bottom line: we should not expect significant changes in the value of the yuan. This confirms my view that China is shrewdly dousing a political tinderbox, not fundamentally altering its successful sound money principles and policies. Our friend John Rutledge, who was initially worried about China’s move, now believes 1999 economics Nobelist Robert Mundell may be closely advising the Chinese, and Rutledge is relieved. I agree there are lots of reasons to believe Mundell is Read More ›
Senator John Ensign’s proposed new telecommunications law, the Broadband Consumer Choice Act of 2005 (S. 1504) would be the most positive step Congress could take to revive the telecom sector. The Ensign bill would limit the FCC’s ability to pick winners and losers and the cities’ ability to stall video competition while they extract cash and freebies from franchise applicants.
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Want to know what U.S. policy makers looking at telecom should have done 10 years ago? Well, today Senator John Ensign of Nevada introduced far-reaching communications legislation that would substantially deregulate broadband technology and services at both the federal and state level and also would free both cable and telecom carriers from many local video franchising rules and fees. It’s a sweeping move, preempting most of the complex and balkanized patchwork of state and federal laws. If a new Telecom Act is shaped around Ensign’s bill, we could enjoy an explosion in new communications investment. We can only hope that after 10 years of being blinded and confused by opponents of reform, who kicked up as much dust as possible Read More ›
In a July 21 New Jersey speech Verizon Communications CEO Ivan Seidenberg observed that whereas a few years ago less than one billion people worldwide were connected to the global economy the figure today is nearly 4 billion. A major factor in this explosion is the Internet and other modern networked communications. Nearly all the growth has been (quite naturally) in the less-developed countries–China, India, the countries of the former Soviet Empire and to a lesser degree, Latin America. With networked communications central to global economic prosperity the opportunity cost of policies that retard upgrade of the US’s skimpy bandwidth will increase. The relative influence of Asian telecom leaders will increase as well. Broadband policy is an essential and growing Read More ›
Oklahoma’s telecom regulators appear on the verge of loosening or eliminating many of the state’s price controls. SBC, the state’s main telecom company, said it would immediately deploy DSL service in 68 new communities and would upgrade all 208 of its switching centers in the state by 2007. Many regulators and state legislators call this practice — of investing in new technology when outdated regulations are relaxed — a quid pro quo threat. The rest of the world just calls it good business. In today’s competitive communications marketplace, too-big-for-their-britches state utility regulators cannot force companies to make large unprofitable investments. Governors, state legislators, and utility regulators everywhere should take notice: state telecom policy matters. One wishes these state commissions didn’t Read More ›
The National Association of Regulatory Utility Commissioners (NARUC) will hold another of its frequent meetings this weekend in Austin. These gatherings have been an opportunity for nervous state commissions to consider ways to reinvent themselves now that competition in telecommunications is eliminating the justification for utility-type regulation in this sector.
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John Rutledge, a key economist in the early Reagan administration and since a super smart watcher of financial markets, doesn’t like China’s currency change. He and I agree that China’s U.S. dollar peg has been a boon for both nations over the last decade. (I first wrote about the Chinese monetary issue and urged them to retain the dollar link after visiting China two years ago.) Our mild disagreement now hinges on politics. Were American politicians smarter about economics, and were our own Treasury Department not agitating for a Chinese currency change, I would be perfectly happy for China to continue its dollar peg. The idea that floating and flexible exchange rates are somehow “free market economics” is wrong. The Read More ›