Telecom Reform Russian-style

Yuri Mamchur, Discovery Institute’s foreign policy fellow for the Future of Democracy in Russia and Eastern Europe program, has a post here about the Russian Duma banning cellphone companies from charging for incoming calls. The prime beneficiary appears to be Megafon, an upstart firm that (surprise!) has many powerful patrons and board members in the Kremlin, including President Putin’s wife Ludmila.

Andean Free Trade Agreement would spread harmful regulation

Word is the U.S. Trade Representative is prepared to capitulate to a South American country that wants to regulate mobile phone service like a state-owned monopoly. Colombia is pushing the plan, which flies in the face of all the available evidence that wireless is as competitive as you can get, and is contrary to recent Free Trade Agreements with Chile, Singapore and Central America. Colombia wants language included in the Andean Free Trade Agreement defining CMRS as a “major supplier” that should be subject to confiscatory regulation that was in vogue at the FCC in the Clinton years. Bureaucrats at USTR reportedly like the idea.

Silicon Wars

Richard Chang, founder and CEO of SMIC, the top new silicon “fab” on the Chinese mainland, plans to give up his Taiwanese citizenship after Taiwan fined him for an “illegal investment” in SMIC in 2000. At a time when most Taiwanese and Chinese recognize and welcome closer ties and more economic integration, there are still many politicians on both sides who stubbornly insist on looking backward. It seems unwise for Taiwan to drive away key people like Richard Chang, who, even though he now operates on the mainland, still can be a friend and benefactor of Taiwan through all sorts of cooperative economic and technological arrangements. I think this is just a blip on a large radar screen showing mostly Read More ›

Mundell and China

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 ›

1 + 3 = 4

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 ›

Rutledge on China

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 ›