Apple announced new 3G iPhone with added GPS and A-GPS functions beginning at 200 USD. They finally get the price right. It is unclear whether it is the pressure from the competitors, such as Nokia, or the overall economic situations. But finally they put their foot down to the earth.
By N. GREGORY MANKIW
Published: March 16, 2008
NO issue divides economists and mere Muggles more than the debate over globalization and international trade. Where the high priests of the dismal science see opportunity through the magic of the market’s invisible hand, Joe Sixpack sees a threat to his livelihood. This gap in perspective grows especially wide whenever the economy experiences short-run difficulties, as it is now. By all indications, the issue could come to dominate the presidential campaign.
Economists are, overwhelmingly, free traders. A 2006 poll of Ph.D. members of the American Economic Association found that 87.5 percent agreed that “the U.S. should eliminate remaining tariffs and other barriers to trade.”
The benefits from an open world trading system are standard fare in introductory economics courses. In my freshman course at Harvard, we start studying the topic in the second week, and we return to issues of globalization throughout the year. The basic lessons can be traced back to Adam Smith of the 18th century and David Ricardo of the 19th century: Trade between two countries creates winners and losers, but it leaves both nations with greater overall prosperity.
The general public, however, is less likely to take its cue from Adam Smith than from Lou Dobbs. In December, an NBC News/Wall Street Journal poll asked Americans, “Do you think the fact that the American economy has become increasingly global is good because it has opened up new markets for American products and resulted in more jobs, or bad because it has subjected American companies and employees to unfair competition and cheap labor?”
When this question was asked a decade ago, the public was almost evenly split. In the recent poll, however, only 28 percent endorsed globalization, while 58 percent opposed it. As the economy continues to weaken from problems in the housing and credit markets, you can expect to hear more about foreigners stealing American jobs, regardless of the true merits of the case.
This shift of public opinion toward economic isolationism may well become a political problem for John McCain. Compared with those of either of his possible Democratic rivals, his track record shows him to be a more unequivocal free trader. Here are some examples:
In 2002, Mr. McCain voted to give the president “trade promotion authority,” under which trade agreements were no longer subject to amendment by Congress. Barack Obama was not yet in the Senate at that time, but Hillary Rodham Clinton voted against the measure.
In April 2005, Mr. McCain voted to table a bill proposed by Senators Charles E. Schumer, Democrat of New York, and Lindsey Graham, Republican of South Carolina, that would have authorized a 27.5 percent tariff on Chinese imports if China failed to revalue its currency. Mrs. Clinton and Mr. Obama voted in support of the tariff proposal.
Also in April 2005, when 58 senators asked President Bush not to offer large cuts in farm subsidies as part of the Doha trade negotiations, Mr. McCain declined to put his name on the letter. Mrs. Clinton and Mr. Obama were among the signatories defending the subsidies.
In June 2005, Mr. McCain voted to ratify the Dominican Republic-Central America Free Trade Agreement, which lowered trade barriers with Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic. Mrs. Clinton and Mr. Obama voted against the treaty (although, in his most recent book, Mr. Obama wrote, “over all, Cafta was probably a net plus for the U.S. economy”).
In recent months Mr. McCain has expressed support for the pending free-trade agreement with South Korea, the world’s 12th-largest economy and the seventh-largest trading partner of the United States. Mrs. Clinton and Mr. Obama oppose it.
The most prominent recent flare-up in this debate is over the North American Free Trade Agreement. Negotiations for Nafta began under the first President Bush, and the treaty was eventually passed under (the first?) President Clinton.
Al Gore famously debated Ross Perot about the measure on “Larry King Live” on CNN. While Mr. Perot warned of a “giant sucking sound” sending American jobs south of the border, Mr. Gore gave Mr. Perot a framed portrait of Reed Smoot and Willis C. Hawley, the congressmen responsible for the tariffs that in the 1930s helped make the Depression great. It was a fine moment, both for political theater and mainstream economics.
Today, Nafta could be hailed as a successful example of the bipartisanship that Mr. Obama promises. Most economists agree with Lawrence H. Summers, a Treasury secretary in the Clinton administration, who has said that Nafta “was really a watershed as to whether America was going to stand for larger markets, was going to stand for forward defense of our interests by trying to have a more integrated global economy.”
“It contributed to the strength of our economy,” he added, “both because of more exports and because imports helped to reduce inflation.”
Instead of becoming a beacon of bipartisanship, however, Nafta is the latest whipping boy for the anti-globalization crowd. During their last debate, Mrs. Clinton and Mr. Obama said they would withdraw from the treaty unless Canada and Mexico agreed to further concessions. Canadian authorities were quick to respond that if negotiations were reopened, they would ask for some concessions of their own. True to form, Mr. McCain offered his unconditional support for the landmark agreement.
With the two political parties apparently divided on trade policy, you might expect those free-trade-loving economists to be predominantly Republicans. But that’s not the case. One reason is that economists are not single-issue voters. Like everyone else, they are divided over contentious issues like health policy, the Bush tax cuts and the war in Iraq.
BUT another reason is that many economists don’t really believe the populist rhetoric coming from the Clinton and Obama campaigns. They expect that once in office, either candidate would pursue a policy more like that of Mr. Clinton, who relied heavily on the advice of economic moderates like Mr. Summers and Robert E. Rubin, another former Treasury secretary. When reports surfaced recently of an Obama economic adviser telling the Canadian government to ignore his candidate’s anti-Nafta rhetoric, some people were appalled, but many Democratic economists I know were secretly relieved.
It is hard to be confident, however, that on issues of trade policy either Democratic candidate would act like the last Democratic president. Maybe the candidates’ records as legislators are not good indicators of what their policies might be as president. Maybe campaign rhetoric about Nafta is nothing more than that. But counting on it requires, one might say, the audacity of hope.
N. Gregory Mankiw is a professor of economics at Harvard. He was an adviser to President Bush and advised Mitt Romney in his campaign for the Republican presidential nomination.
Economy: Who the candidates really listen to
Wednesday March 5, 12:40 pm ET
By Jeanne Sahadi, CNNMoney.com senior writer
You might think that being part of a presidential candidate’s brain trust would mean high-level meetings in plush quarters with good food.
Not exactly. There are high-level meetings – but they’re more likely to be conducted by phone or on the fly between stump speeches.
As for the food, when asked what surprised him most about campaign life, John McCain adviser Douglas Holtz-Eakin said, “How much I like eating out of vending machines.”
But of course, with an economy to save and crowds to sway, who has time for dinner?
The economy is front and center in people’s minds, and the leading presidential candidates are relying on economic experts to help them win the pocketbook persuasion game.
Here’s a look at the top economic advisers to the leading candidates.
McCain campaign: Douglas Holtz-Eakin
Holtz-Eakin, chief economic adviser to Republican John McCain, is doing his best to upend the old saw that economics is the dismal science.
“The first thing the economics adviser brings to any campaign staff is a hip coolness and bling,” he wrote in the New York Times Freakonomics blog. “Economists want to be valued for their minds and respected for their command of policy proposals … but it just doesn’t work that way,” he wrote.
Nevertheless, Holtz-Eakin, a former director of the Congressional Budget Office and former chief economist on President Bush’s Council of Economic Advisers, is well-respected among deficit hawks for his positions on less-than-hip issues like entitlement reform, for which he’s advocated early and often.
In his view, the sooner the long-term shortfalls in Medicare and Social Security are addressed, the better for the economy. Shoring up both programs would involve tough choices when it comes to spending cuts, Holtz-Eakin has said, a route he believes would be more effective than tax increases. Both he and other economists estimate the economy is not likely to grow enough to offset the mandatory spending pressures that will build as Baby Boomers retire.
The country’s “current fiscal policy is unsustainable, as even draconian restraint in the annual spending on defense and nondefense programs are insufficient to guarantee that the current level of taxation will be sufficient to cover promises to seniors in retirement and health programs,” Holtz-Eakin wrote last spring in a public policy journal. “In short, U.S. fiscal policy requires fundamental shifts.”
Delaying reform, he went on to say, “will likely rely more heavily on tax increases to bring the budget into alignment because waiting permits spending to grow and tax increases are ‘quicker’ than benefit reductions.”
Obama campaign: Austan Goolsbee
Austan Goolsbee, a 38-year-old University of Chicago economics professor who advises Democratic frontrunner Barack Obama, is new to the presidential campaign scene. He is mostly an outside-the-Beltway guy, although he is a member of the panel of economists that advises the Congressional Budget Office.
Goolsbee said that one of the hardest parts of his job on the campaign trail was getting used to “having a BlackBerry buzzing on my hip 30 times an hour. It’s not the sort of thing you deal with as an economics professor.”
Neither is the current controversy over a conversation he had with a Canadian official about NAFTA.
But he is used to the politically fraught debate over how much to tax high-income Americans. In his estimate, the sky won’t fall if the top tax rate returns to 39.6% from the current 35%.
In one of his New York Times columns, Goolsbee points to data showing income for the top 1% of earners rose disproportionately relative to everyone else both when tax rates fell and when they rose.
“Seeing the same pattern … indicates that tax cuts weren’t responsible. It suggests that cuts for high-income taxpayers likely gave windfalls to those whose incomes were already rising sharply because of broader market forces,” he wrote.
Though he’s advising a Democrat, he’s managed to garner respect from some unlikely corners. “[Goolsbee] seems to be the sort of person – amiable, empirical and reasonable – you would want at the elbow of a Democratic president, if such there must be,” conservative columnist George Will wrote last October.
Clinton campaign: Gene Sperling
Far more seasoned on the political trail than Goolsbee or Holtz-Eakin is Gene Sperling, economic adviser to Democrat Hillary Clinton.
Sperling is a longtime member of the Clinton camp. He was national economic adviser to President Bill Clinton and currently is a senior fellow at the Center for American Progress, which is run by John Podesta, who served as President Clinton’s chief of staff.
What most surprised Sperling about campaign life this time around is how early candidates started talking about policy. In 1992, Bill Clinton’s campaign put out major proposals five months before Election Day. “This time, the policy announcements were starting a year before Iowa!”
While at the White House, Sperling played a central role in formulating economic policy, from coordinating the president’s Social Security and debt reduction efforts to helping expand the Earned Income Tax Credit for low-income workers.
Following his time at 1600 Pennsylvania Avenue, Sperling lent his talents to the Hollywood-version of the White House as a consultant and writer for “The West Wing.” That job, he said, did as much for his personal life as his time in the White House did for his professional one. At his first meeting with the show’s writers, he was seated next to a first-year writer who later became his wife.
In his book “The Pro-Growth Progressive: An Economic Strategy for Shared Prosperity,” Sperling calls for balancing the advantages of a global economy with the goals of protecting workers.
“With hundreds of millions of new middle-class consumers coming into the world economy, we should be confident that in the long run America will win more than it loses from an open global economy,” he writes. “What practical options do we have between simply assuming greater globalization will lift all boats, and resorting to self-defeating protectionism?”
Mint chocolate chip is Omaba’s favorite ice cream flavor! :) :)
Google Inc. is close to unveiling its long-planned strategy to shake up the wireless market, people familiar with the matter say. The Web giant’s ambitious goal: to make applications and services as accessible on cellphones as they are on the Internet.
In a move likely to kick off an intense debate about the future shape of the cellphone industry, Google wants to make it easier for cellphone customers to get a variety of extra services on their phones — from maps to social-networking features to video-sharing. To get its way, however, the search giant will have to overcome resistance from wireless carriers and deal with potentially thorny security and privacy issues.
Google is trying to loosen the grip wireless carriers have over the software and services consumers can access on cellphones. Carriers have considerable clout, especially in the U.S., where they control distribution of phones to consumers through their retail stores.
Within the next two weeks, Google is expected to announce advanced software and services that would allow handset makers to bring Google– powered phones to market by the middle of next year, people familiar with the situation say. In recent months Google has approached several U.S. and foreign handset manufacturers about the idea of building phones tailored to Google software, with Taiwan’s HTC Corp. and South Korea’s LG Electronics Inc. mentioned in the industry as potential contenders. Google is also seeking partnerships with wireless operators. In the U.S., it has the most traction with Deutsche Telekom AG’s T-Mobile USA, while in Europe it is pursuing relationships with France Telecom‘s Orange SA and Hutchison Whampoa Ltd.‘s 3 U.K., people familiar with the matter say. A Google spokeswoman declined to comment.
The Google-powered phones are expected to wrap together several Google applications — among them, its search engine, Google Maps, YouTube and Gmail email — that have already made their way onto some mobile devices. The most radical element of the plan, though, is Google‘s push to make the phones’ software “open” right down to the operating system, the layer that controls applications and interacts with the hardware. That means independent software developers would get access to the tools they need to build additional phone features.
Developers could, for instance, more easily create services that take advantage of users’ Global Positioning System location, contact lists and Web-browsing habits. They also would be able to interact with Google Maps and other Google applications. The idea is that a range of new social networking, mapping and other services would emerge, just as they have on the open, mostly unfettered Web. Google, meanwhile, could gather user data to show targeted ads to cellphone users.
“The most likely scenario from a Google perspective is to build some, if you will, inspirational platform [applications]; but primarily focus on getting third parties to do it because that’s where the innovation will come from,” said Google CEO Eric Schmidt, speaking at the All Things Digital conference in May. He said that “the new model of these phones is going to be person-to-person” with people exchanging videos and other types of data.
While many software developers are likely to cheer Google‘s open wireless platform, there are some potential risks for consumers. If Google isn’t careful, sensitive user information could end up in the wrong hands, leading to spamming, stalking or other invasions of privacy.
There is broad momentum already to make software development on mobile phones easier and more open. Apple Inc. initially limited the kinds of applications it allowed outside developers to make for its iPhone, but the company recently said it would release tools next year to broaden the range of features allowed. (Handset maker Nokia Corp. said its new Internet and multimedia platform, Ovi, is open to third- party applications.)
Microsoft Corp.‘s Windows Mobile operating system already gives software developers access to a range of tools to build programs for consumers, though the company does put all new services through a certification process to screen for programs that could hack into a customer’s phone or pose other risks.
Microsoft executives question what impact Google will have. “The idea that there are all these things software developers can’t do — it’s just not true,” said John O’Rourke, general manager of Microsoft‘s Windows Mobile unit said. “It’s hard to imagine what huge breakthroughs [Google] is going to have.”
Google‘s push comes as carriers are under pressure on other fronts to relax their hold on the wireless market. They face litigation over “locking” of phones, which prevents people from transferring devices from one provider to another.
Sprint Nextel Corp. agreed this month to unlock the phones of departing customers as part of a settlement in a California class- action lawsuit. Google and others, meanwhile, have criticized carriers for being a bottleneck on what software and services consumers can access.
Google helped push through controversial rules for a coming spectrum auction at the Federal Communications Commission that would result in a new cellular network open to all devices and software applications, even those not favored by an operator. Google has said it will probably bid for the frequencies.
For now, the company knows it has no choice but to work with operators to make its open platform successful. D.P. Venkatesh, CEO of mPortal Inc., which makes software for wireless operators, puts it this way: “There are a few things carriers control that will always keep them in charge at the end of the day.”