Global Development: Views from the Center

Congressman Xavier Becerra (D-CA) reportedly declined President-elect Obama's offer to be the new U.S. Trade Representative because he "came to the conclusion that [trade] wouldn't be priority number one, and it might not be number two or three." Given the enormous problems facing the American economy, and given American attitudes toward trade ranging from ambivalence to outright hostility, that is not surprising.

This is a joint posting with Robin Kraft

When I lived in Zimbabwe a mere 18 years ago, one U.S. dollar was worth about 2.5 Zimbabwe dollars. A few years later I returned and was shocked that the value of the local currency had fallen by more than 50% to Z$6: US$1. (How quaint!) Since the central bank has spent much of the last few years pointlessly trying to defy the laws of money supply -- printing more and more cash to pay its bills -- we are witnessing both hyperinflation (231 million % at last official count) and a mind-spinning vortex of collapsing value for the local currency. The government released a new Z$500 million note last week. As of last Friday, this was worth around US$10. But let's not forget that 14 zeros have been lopped off the currency in the past two years. Thus, using the original Zim dollar (I must still have a few in an old backpack) the exchange rate is really US$1 to:

Z$ 5,000,000,000,000,000,000,000

The excellent article by Anthony Faiola and Ariana Eunjung Cha in today's Washington Post (Downturn Choking Global Commerce) shows how close we are to the precipice in the global trading system and what is at stake with the trade negotiations in Geneva. Although there has been a long-standing assumption that countries would continue to ride the bike of trade liberalization forward, there are no guarantees. With too little forward motion, bicycles topple.

This is a joint posting with Kevin Ummel
Q: What can we do to save the earth?
Wendell Berry: "Stay put."
Economists are always irritating their colleagues by harping about opportunity cost, but the concept can be useful nonetheless. For example, consider the “carbon account” announced for the Poznan climate change meeting. According to the sponsors, travel and other logistics for the 8,000 conference participants will generate 13,000 tons of greenhouse gas emissions.
Participants have duly announced the purchase of “carbon offsets” as atonement for their logistical sins (which begins to sound like the sale of indulgences by the medieval Church, but that’s another story). The whole thing projects a reassuring aura: By purchasing offsets, the participants can cover the “climate cost” of the meeting.