No hay misterio en alza de precios

No hay misterio en alza de precios

Por: Enrique Szewach
Ámbito Financiero

¿La inflación en la Argentina se está acelerando «misteriosamente»? La respuesta a esta pregunta resulta relevante porque, como sostuvo el jefe de Gabinete, y como marcaría la «ortodoxia», un país con superávit fiscal, tipo de cambio fijo y sin financiamiento monetario al gobierno, no debería tener un fenómeno inflacionario sostenido. De manera que, si efectivamente, la tasa de inflación se está acelerando, como lo comprueban las estimaciones privadas, las oficinas provinciales de estadística y cualquiera que haga compras sistemáticas en el país, debemos estar ante un fenómeno «nuevo» que no podría llamarse inflación. Cambio de precios relativos, Movimiento estructural de los precios de los alimentos, Adaptación de la demanda a un nuevo «equilibrio», Convergencia de la economía postshock devaluatorio de 2002, entre otros, han sido los distintos eufemismos utilizados por funcionarios públicos y economistas cercanos al gobierno, en su intento por redefinir y explicar lo que «la teoría convencional no explica».

Sin embargo, cuando una teoría fuertemente probada local e internacionalmente «falla», antes de buscar explicaciones alternativas o definir un nuevo « conundrum» a la Greenspan, sería conveniente revisar los datos. Entiéndase bien, no me niego al «progreso científico», ni me apego neciamente a viejas ortodoxias, simplemente sugiero que antes de desechar la teoría más simple, hagamos una evaluación más precisa de los datos relevantes. Repaso entonces los «pilares»:

1. Superávit fiscal. A los efectos macroeconómicos, ¿cuál es el superávit fiscal relevante? Ciertamente, no el superávit primario, dado que lo que se intenta medir es la demanda que agregan o quitan las cuentas públicas. Por lo tanto, lo que importa es el superávit total, puesto que cuando el Estado paga intereses de la deuda, le da poder de gasto a quién cobra los intereses, de la misma manera que se lo da a quien recibe un salario, o a quien cobra un cheque por una obra pública. Es cierto que la propensión a gastar de un asalariado es diferente de la que tiene un perceptor de renta, pero no necesariamente la de este último es cero. (Si no gasta, pero no fuga capitales, y deposita el dinero en un Banco local, le da capacidad prestable al sistema. Dicho sea de paso, lo mismo que hace el eventual superávit con las cuentas del Estado en la banca pública.)

# Déficit

Computando el pago de los intereses de la deuda, el gobierno muestra un modesto superávit. Pero para ello contabiliza los ingresos extraordinarios por la reforma previsional. Aunque gran parte de estos ingresos no es plata, sino el traspaso de bonos y otros instrumentos financieros que estaban en las cuentas de los aportantes en las AFJP y han sido transferidos al Estado. Como se sabe, ¡se han considerado como ingresos, títulos de deuda, acciones, etc.! Es decir se trata de una simple transferencia de titularidad, pero no de ingresos. De manera que neto de este «artilugio» el Estado tiene déficit total. Una manera alternativa de ver este punto es que la emisión de deuda pública neta está creciendo y no cayendo o permaneciendo constante. Si la deuda neta crece por nuevas emisiones es que hay déficit fiscal, lo midan como lo midan. De manera que, a los efectos de su influencia sobre la inflación, el primer pilar, el superávit fiscal, no existe. De todas maneras, coincido con aquellos que sostienen que la relación relevante es entre gasto público e inflación. Dado que el incremento del gasto público aumenta la demanda de no comerciables. Y como los precios de los comerciables no bajan, este aumento de la demanda de servicios termina por acelerar la tasa de inflación y hacer caer el tipo de cambio real.

2. El tipo de cambio fijo. Al respecto dos comentarios. Uno, si bien el dólar se mantuvo relativamente estable estos años, existe alguna «asimetría de expectativas». Es decir, cuando el dólar baja los precios no bajan, pero cuando el dólar sube los precios suben. Y en los últimos meses hubo una devaluación importante en la Argentina superior a 14%. Eso respecto del dólar. Pero dado que esa divisa se ha debilitado fuertemente en el mundo contra la mayoría de las monedas con las cuales la Argentina comercia, el peso se ha devaluado fuertemente contra el real, el euro y la mayoría de las monedas latinoamericanas y asiáticas. De manera que a los efectos de lo que estamos tratando de medir, el tipo de cambio no está fijo, sino que se ha devaluado y hemos importado inflación. Una prueba indirecta de esto es que el coeficiente de importaciones sobre el total de la producción industrial ya es igual al que existía en el mejor momento de la convertibilidad (21%).

¿Por qué entonces los industriales se quejaban antes, y ahora adulan, casi hasta lo grotesco, al Presidente y su política? Porque en la convertibilidad estábamos atados a un superdólar,y eso les impedía competir. Pero ahora estamos atados a un dólar al que le agarró la kriptonita de la Fed, de manera que salvo con Estados Unidos, compiten holgadamente, dado que el resto de las monedas se han fortalecido contra el peso. Ergo, el segundo pilar, tipo de cambio fijo, tampoco existe, la Argentina ha devaluado, y fuertemente en estos últimos tiempos, y el tipo de cambio real multilateral, sigue elevado, pese a la inflación interna.

3. El financiamiento al gobierno del Banco Central. Ya en la década del 80, desde FIEL se realizaron mediciones del gasto cuasi fiscal y del déficit del Banco Central. Si la autoridad monetaria compra reservas con emisión, por la parte que no esteriliza con deuda, esa emisión es gasto cuasi fiscal. De manera que sí está financiando gasto público. Esta política de compra de reservas, cuyos objetivos no discuto, obliga a fijar metas de crecimiento monetario bien por arriba de las requeridas para una política restrictiva en materia antiinflacionaria. Y, por ende, estamos frente a un contexto de tasa de interés negativa, aunque se quejen Néstor y Cristina. Otro pilar que los datos refutan.

En síntesis, puede ser que estemos ante un nuevo «fenómeno» argentino que exija teorías exóticas para explicar por qué no tenemos inflación, mientras los precios crecen a 20% anual. Pero para ello habrá que demostrar que las teorías más simples fallan. Por ahora los datos indican que más que frente a un misterio, estamos frente a un problema.

Stick to your guns, Rudy

By Jonah Goldberg - L.A. Times
September 25, 2007

When Rudy Giuliani spoke to the National Rifle Assn. last week, there was no way he could say anything remotely pleasing to the audience and remain consistent to his record. The former New York City mayor was one of the NRA's biggest targets in the 1990s, and for good reason: His positions were largely indistinguishable from the Clinton administration's, from which he received lavish praise for helping the feds impose an assault weapons ban, among other NRA no-nos.

So Giuliani went the way of many of his rivals by ditching his principles to appease the crowd. First, though, he tried a little comedy -- very little. He answered a call on his cellphone from his wife in the middle of his speech, a stunt about as well-received as Flounder's query of the poker players in "Animal House": "You guys playing cards?"

The rest of his speech played better for the simple reason that it was a full-fledged pander. Giuliani explained that his views have "evolved" since he was mayor. In presidential politics, evolution of this sort is usually code for throwing inconvenient baggage off the boat. So, in short order, stevedore Giuliani chucked years of anti-gun rhetoric over the side. The impetus for his newfound respect for the 2nd Amendment, Giuliani explained, was the "intervening event" of 9/11, giving new salience to the phrase "9/11 changed everything."

While one can hardly fault special-interest lobbies for cheering when presidential candidates kowtow to them, that doesn't mean the rest of us have to. Personally, my views are closer to the NRA's than they are to Giuliani's. But still, I was hoping that Rudy would have stuck to his federalist guns a bit more.

Giuliani has run the best campaign of any candidate in either party so far, despite an unfavorable political climate and the fact he lacks the kind of institutional pull Hillary Clinton has within her party. He has managed to take and hold on to an early lead, even with a record so littered with conservative red flags that it looks like one of those choreographed North Korean rallies.

On immigration, he's dodged nearly every bullet that hit John McCain. In a party allegedly hijacked by theocons and family-values fetishists, the thrice-married, pro-civil unions, former gay pride parade marcher has managed to win the hearts and minds of large numbers of social conservatives.

Obviously, Giuliani could never have pulled this off without 9/11. For the GOP, the war on terror is more than a foreign policy issue, it's a values issue too, like the fight against communism was during the Cold War. Still, if the war on terror was everything, McCain would be the front-runner rather than a fading, second-tier candidate.

Giuliani has won over many hostile Republican constituencies by offering an implied bargain of federalism. He understands that "what works in New York doesn't necessarily work in Mississippi or Montana." In other words, he doesn't seek to dye the multihued American quilt New York blue.

On abortion, for example, Giuliani remains pro-choice, but he's signaled that he might be OK with "strict constructionist" judges overturning Roe vs. Wade and sending the issue back to the states. This isn't the pro-life ideal, but pro-lifers and even some conservative pro-choicers understand this would be enormous progress. And, if you believe even a fraction of the rhetoric we've heard for decades about how the GOP is held hostage by religious conservatives, it's hard not to salute Giuliani's courage.

Earlier in the campaign, he had a similarly base-displeasing position on guns. But Giuliani understood that such a view would have gotten booed by NRAers who legitimately believe that gun rights are as real as free-speech rights, and are far more grounded in the Constitution than abortion rights (gun rights have the No. 2 spot in the Bill of Rights, after all, while abortion rights merely exist in the fairyland of constitutional "penumbrae").

Still, Giuliani could have argued that all sorts of rights can and should be regulated at the local level while still preserving constitutional protections. He could have given the NRA half a loaf by saying that he'd appoint judges who understand that the feds shouldn't be in the business of restricting explicit constitutional rights. And while the courts certainly aren't on his side on this point, they aren't with him on abortion either.

In a race filled with liberals and conservatives alike who want to impose a single vision on the country, the Giuliani federalist bargain has the most potential for expanding meaningful freedom and political diversity. It'd be a shame if the stevedore is willing to throw that over the side at the first hint of stormy weather.

Calling Rudy

September 26, 2007 - WSJ

Most Americans understand it takes an extra chromosome to run for President, but there are some limits on odd behavior. Which makes us wonder what Rudy Giuliani was thinking last Friday when he accepted, and even flaunted, a phone call from his wife Judith in the middle of his speech to the National Rifle Association.

This was no emergency call. His cell phone rang in his pocket during his speech, which is itself unusual; most public officials turn theirs off during events, if only out of courtesy for the audience. Mr. Giuliani went on to answer it and carry on a routine "love you" and "have a safe trip" exchange with Mrs. Giuliani while the crowd (and those of us watching on C-Span) wondered what in the world that was all about.

His campaign aides spun the episode as a "candid and spontaneous moment" illustrative of the couple's affection. We might believe that if we hadn't heard stories of similar behavior by Mr. Giuliani as he has campaigned around the country. During one event in Oklahoma, we're told he took two calls, at least one from his wife, and chatted for several minutes as the audience waited. That episode followed Mr. Giuliani's eye-popping disclosure earlier this year that, if he's elected, his wife would sit in on Cabinet meetings. He later downplayed that possibility.

Mr. Giuliani has run an impressive campaign so far, especially on the issues. He has a record of accomplishment in New York, and he projects the kind of executive competence that many Americans want in a President. The rap on his candidacy, however, is that his personal history and behavior are simply too strange for someone who wants to sit in the Oval Office. Voters will decide whether that's true, but if nothing else Mr. Giuliani ought to be aware of this vulnerability and do nothing to compound it.

"That was just weird," one NRA audience member told the New York Post about the phone interruption. Mr. Giuliani doesn't need more weird.

Beware of Venezuelans Bearing Gifts

When Argentine customs officials caught a Venezuelan businessman trying to smuggle almost $800,000 in cash into the country last month, they parted him from his loot but allowed him to leave the country. He flew to Uruguay and then to Florida where, as someone who also holds an American passport, he has a home.

The mystery of where the money came from and where it was going has not been solved. But thanks to investigative reporting by the Argentine daily La Nación, we now know that there was good reason for Guido Alejandro Antonini Wilson to think he could just walk off that plane with a bag of money. As it turns out, the Argentine government of President Nestór Kirchner has a policy of allowing Venezuelans tied to the government in Caracas to come and go freely at Buenos Aires' Aeroparque airport, with no scrutiny of their baggage whatsoever.

This revelation has raised serious questions about Argentine sovereignty and about the relationship Mr. Kirchner has established with Venezuelan President Hugo Chávez. More to the point, Argentines
now want to know whether unchecked Venezuelan traffic through the country is what's behind the acceleration of Mr. Chávez's Bolivarian Revolution in Argentina, as it was in Bolivia. They also want to know if the money was destined for the political campaign of Mr. Kirchner's wife, Cristina Fernández Kirchner, who is the Peronist candidate in next month's presidential elections.

The Argentine government appeared happy to get rid of Mr. Antonini in the early morning hours of Aug. 4 when the money was discovered. With him out of the country, it apparently believed the whole thing could be easily swept under the rug. But then a local cable TV station reported the incident. Soon the wider Argentine media picked up the story and the public learned that the Venezuelan bagman had arrived on a charter flight from Caracas with two Argentine government officials and three executives of the Venezuelan state-owned oil company, PdVSA. This sparked a political firestorm for the Kirchners.

Now Argentina wants Washington to extradite Mr. Antonini. That process could take up to a year.
In the meantime, the presidential race is heating up and the first couple is claiming to know nothing about what Mr. Antonini was up to. For a while that seemed at least plausible. But as details have
emerged about the circumstances at Aeroparque, the government's umbrage at the suggestion that it could have been complicit in the matter is looking downright theatrical.

Mr. Chávez's influence has been rising in Argentina for some years now, in part because Mr. Kirchner has much in common ideologically with the Venezuelan. Like Mr. Chávez, Mr. Kirchner has surrounded himself with former left-wing terrorists and their sympathizers and has made anti-Americanism a central theme in his policy agenda. Mr. Kirchner is also a practical man and after Argentina was branded a deadbeat for its 2001 debt moratorium, the Chávez offer to play
international banker and buy up government bonds was an offer he couldn't refuse. Now the Antonini affair has exposed another facet of the Chávez-Kirchner alliance: open access to Argentina for Chávez
foot soldiers.

La Nación reported on Aug. 18 that PdVSA flights receive "preferential treatment" when they arrive in Argentina. The planes drop their passengers in the military zone at Aeroparque where they
clear Customs and Immigration. But according to the paper, that zone has one special feature that makes it relevant to the suitcase scandal: "there are no scanners to examine baggage."

The plane Mr. Antonini was on, which was hired by the Argentine state-owned energy company Enarsa, seems to have parked at the wrong terminal. That's why he got nabbed. La Nación also reports that sources familiar with airport activity say that in the past few months at least eight PdVSA flights have landed at the military zone in Aeroparque and that at least one PdVSA plane lands there every month. Given what was found on Mr. Antonini it is reasonable to ponder what these flights might be carrying. As La Nación has pointed out, one of the organizers of the anti-American rally in Buenos Aires when George W. Bush went to Uruguay in March admitted that the event
was paid for by Venezuela. But how the money got to Argentina is still not known.

Quite apart from money, there is also the question of revolutionary personnel coming and going. Citgo, the Venezuelan gasoline company that operates in the U.S. but has no business in Argentina or
Bolivia, has a U.S. registered plane that has landed more than once in Aeroparque. The same plane, in July 2006, was used for an official visit to a presidential summit in Cordoba, Argentina. "But,"
according to La Nación, "in that moment, it was operating as the transportation for the Cuban delegation." In fact, the paper says "these planes are used for both government and business purposes and it is difficult to know the nationality of the passengers because they fly Venezuelans, Cubans and Bolivians."

The highest ranking Argentine official on Mr. Antonini's flight was Claudio Uberti, the director of highway concessions. La Nación says that Mr. Uberti flew out of Argentina 27 times in the past 12 months and six of those trips were to Venezuela. The paper reports that he went more frequently than that to Venezuela but sometimes flew from Bolivia. When he arrived home on charter flights, he repeatedly used the military zone at Aeroparque. "If that had happened this time, Mr. Antonini wouldn't be famous," writes La Nación reporter Daniel Gallo. For his part, Mr. Antonini reportedly entered Argentina 12 times in the past year.

According to Mr. Gallo, "the PdVSA flights are peculiar in that their passengers, supposedly high-ranking Venezuelan representatives, do not appear on the registers or meeting agendas of Argentine
officials, as they should by law. Neither [Planning] Minister Julio De Vido nor Mr. Uberti report meetings with PdVSA that would have required the trips by such visitors."

It may take a good long time to figure out just where Mr. Antonini was going with his stash. Speculation ranges from laundering money to paying a bribe to funding political activity. But in a sense it doesn't really matter. What has been revealed since Aug. 4 is that Mr. Kirchner has sacrificed Argentine national security in order to satisfy Mr. Chávez. That can't be good for the stability of the
Southern Cone.

Mentiras presidenciales

Mentiras presidenciales

Por: Carlos Menem
Senador nacional. Ex presidente de la Nación

Ámbito Financiero
«Yo me puedo equivocar, pero mentir, nunca», mintió el Presidente de la República. Se trata del mismo funcionario que, unos años atrás, confesó ante empresarios españoles que no debían creer en sus dichos: «No atiendan a lo que digo. Mejor, miren lo que hago», les aconsejó, devaluando abiertamente la palabra de la máxima autoridad institucional de la Argentina. Paradójicamente, ese día, al confesar que mentía, que sus discursos iban por un lado y sus actos por otro, Kirchner dijo por excepción la verdad.

No lo hizo, en cambio cuando tuvo que dar explicaciones sobre los cientos de millones de dólares de Santa Cruz que sacó del país. ¿Quién no recuerda que mintió haberlos depositado en la Reserva Federal de los Estados Unidos? La Reserva Federal tuvo que -el término nunca estuvo mejor empleado- desmentirlo.

El Presidente miente consuetudinariamente y cuando no miente él, hace mentir a sus funcionarios. El caso del INDEC y sus cifras manipuladas, que se ha transformado en el hazmerreír y el escándalo del país y del mundo, es un ejemplo emblemático de la veracidad y la verosimilitud oficiales.

# Silencios

Las oportunidades en que el doctor Kirchner se acerca más a la verdad es cuando se encierra en el silencio. Lo hace a menudo. Por ejemplo, cuando se parapetó en El Calafate por varios días tras la tragedia de Cromañón. O cuando le comieron la lengua los ratones tras el fracaso de su protegido, el misionero Rovira, y su pretensión de reelección perpetua. Silencio tras el escandaloso y violento homenaje funerario al general Perón. Silencio despuésdel «toiletgate» de su ministra de Economía. Largo silencio después del descubrimiento de uno de los bultos de lavado de dinero con su amigo Chávez.

Una de sus recientes y penúltimas mentiras la produjo en el marco de un ataque al economista Carlos Melconian: lo acusó de menemista. Melconian, que hoy es candidato a senador en las listas del ingeniero Mauricio Macri, fue mi candidato a ministro de Economía en el año 2003. Pero no lo elegí entonces porque fuera «menemista», sino porque es un economista diestro e independiente. Melconian nunca fue menemista, aunque seguramente simpatizó con mis dos gobiernos (pero si eso fuera un pecado, se trataría de un pecado compartido por muchísimos argentinos, sin descontar al propio Kirchner, a juzgar por los abundantes elogios que derramaba sobre mi persona -aunque no olvidemos que tiene el hábito de mentir- en fin).

# Urticaria

Melconian no tuvo, en rigor, nada que ver con la gran gestión económica de la década del 90, que acaba de ser elogiada por Alan Greenspan, el ex titular de la Reserva Federal.

Reparo en que el párrafo anterior incluye dos elementos que le provocarán urticaria al presidente Kirchner: la mención a la Reserva Federal (que, como dijimos, tuvo que desmentirlo sobre los dólares que sacó de Santa Cruz) y la mención de la década del 90, una época que él trata de demonizar porque no puede emularla, aunque ha vivido de sus inversiones hasta ahora.

El Presidente miente, macanea, calla, oculta, manipula. Es cierto: a menudo también se equivoca. Y su principal equivocación reside en suponer que puede mentirle a todo el mundo, todo el tiempo. Está demostrado que eso es imposible. Y aunque Perón también le saque urticaria, voy a terminar con una frase clásica del General: «La única verdad es la realidad».

Republicans Can Win on Health Care

Republicans Can Win on Health Care
By KARL ROVE
September 18, 2007; Page A15


All around America, families are grappling with health-care concerns. They wonder if they'll have insurance at a price they can afford. They worry about how much out-of-pocket health costs take from the family budget. They question if they'll be able to pick their own doctor. Some feel trapped in jobs they don't like out of fear of losing their health insurance.

As the latest government-heavy plan announced by Hillary Clinton yesterday once again shows, the answers politicians offer on health care highlight the deep differences between liberals and conservatives. This is a debate Republicans cannot avoid. But it is one we can win -- if we offer a bold plan. Conservatives must put forward reforms aimed at putting the patient in charge. Increasing competition will ensure greater access, lower costs and more innovation.

Liberals see the concerns of families as a failure of private insurance, and want the U.S. to move toward a government-run, single-payer model. This is a recipe for making problems worse. Socialized medicine inevitably leads to poor quality, inefficiency, rising taxes and rationing. The waiting lines and poor care that cause people from other countries to come here for treatment are not the answer.

Government can help poorer and older Americans get quality health care without sacrificing what everyone wants -- the ability to choose their own doctor and health coverage that meets their family's particular needs. What reforms will do that?
• Level the tax playing field. People who work for companies get a tax break on the health insurance they get from their employer. Many small business employees, farmers and the self-employed are unable to benefit from the same tax advantage, because they or their employers can't afford health insurance. It's not fair or wise to penalize people who have to pay for health insurance out of their own pockets. They should benefit from the same tax advantage employees from bigger companies get.

The mortgage interest deduction made it easier for people to own a home and all America benefited. Similarly, every worker should get a deduction for health-insurance premiums. This would ease the burden on working families and make it possible for millions more Americans to own health insurance. Some Republicans in Congress support a tax credit rather than a deduction: that's reasonable, too. A deduction or a credit puts patients in charge by helping them get private coverage that meets their needs.

• Tax-free savings for health costs. We are encouraged to save tax-free for retirement and college; we should make it easier to save tax-free for out-of-pocket medical expenses, too. Tax-free savings accounts, paired with low-cost catastrophic health insurance, make coverage affordable for working families. For example, a youth minister told me his Health Savings Account (HSA) gave his family peace of mind because they now had insurance coverage for big emergencies and could save tax-free for everyday health expenses.

That's why, in less than three years, more than 4.5 million families have set up HSAs. Some Democrats want to rein in HSAs because they fear HSAs put the individual -- not government -- in charge and once someone gets to pick a plan that meets their needs, they won't like being dictated to by government.

And when people see they can save money by eating better, exercising and making healthy lifestyle choices, guess what? They do. I met with workers at Wendy's Headquarters in Ohio who were eagerly taking steps to lead healthier lives because it saved them money.

• Portability. When you change jobs, you don't have to change auto insurance, but you may have to change your health insurance and even your doctor. That's important in a world where young Americans are likely to have 10 jobs before they are age 36. Too many people are locked into jobs they don't like out of fear they'll lose health coverage. The solution is obvious: People should be able to take their health insurance with them when they change jobs.

• Arming consumers through more competition. Rep. John Shadegg (R., Ariz.) argues that people should be able to buy health insurance issued by a company based in another state. Lack of interstate competition helps to explain why the same health policy costs $8,334 in North Dakota but $10,312 in South Dakota. If consumers in South Dakota could buy that North Dakota policy, prices for health insurance would go down.

• Pool risk, lower costs. Large companies get purchasing power and savings because they share risk across large numbers of employees. Sen. Mike Enzi (R., Wyo.) and Rep. Sam Johnson (R., Texas) believe small businesses should be able to join together to pool risk, too. It would mean more competition and lower costs, and more people able to afford coverage.

• Greater transparency.Today, patients rarely know what a procedure will cost or how good a clinic or hospital is, except by reputation and word of mouth. For example, a study of metropolitan hospitals found prices for services varied widely -- by as much as 259% -- even after controlling for geographic variations in the cost of doing business. Putting information about cost and quality in the hands of patients would lower the cost and improve the quality of health care. Patients making informed choices would create market pressures for lower prices and better care.

• Stop junk lawsuits. I've heard sad stories from doctors and patients. The doctor who had to close her clinic in her hometown and move across the state to work at a hospital that would pay her rising liability insurance premiums. The head trauma specialist afraid that when he retired, his community in one of the poorest regions in the country couldn't attract a replacement. The pregnant woman who drove 80 miles from home in Las Vegas to get prenatal care.

Communities are losing talented health-care professionals who simply can't afford the bigger liability premiums caused by frivolous lawsuits. More than 48% of all counties in the U.S. have no ob-gyn physicians. Hospitals are finding it tougher to provide obstetrics, emergency room care or neurosurgery because of frivolous lawsuits. And doctors, afraid of lawsuits, practice "defensive medicine," ordering unnecessary tests and procedures which add to the cost of health care.

Whose interest does that really serve? If we want richer trial lawyers, let them keep filing junk lawsuits we all pay for. If we want better health care, curb frivolous lawsuits.

• Build on the progress already made by putting patients in charge and letting competition work. When Congress considered prescription drug coverage under Medicare, Democrats tried to have government set prices and deliver the drugs. When the Congressional Budget Office estimated the first year's monthly premium for seniors would be $35, Democrats tried to lock in that price.

Republicans disagreed, arguing competition would lower prices and provide more choices. They were right: Competition led to more options and an average monthly premium of around $23 -- an annual savings of $144 in the first year. Competition continues to save seniors (and taxpayers) money. When the bill passed, independent actuaries estimated the monthly premium for 2008 would be $41. Recently, Medicare officials announced that the 2008 average monthly premium will be around $25. Seniors would have paid over $4 billion more in prescription drug premiums the first two years of the program had Democrats mandated a $35 monthly premium. Taxpayers are saving also: This past January, the actuaries projected that the prescription drug benefit will cost $113 billion less over the next 10 years than estimated the previous year, primarily because of competition and low bids.

In short, the best health reform proposals will be those that recognize and build on the virtues of our market-based medical system. Sick people around the world come here because they can't get quality care in their home countries. Many health-care professionals come here to practice, leaving behind well-meaning health-care systems where government is in charge, bureaucrats make the decisions, and where the patient doesn't have the choice he or she does in the U.S.

Mrs. Clinton may think Americans want to trade freedom and innovation for the illusory security of government regulation and surrender control of their health decisions to government bureaucrats. My bet is 2008 will teach us something different if Republicans make health care a centerpiece issue.

Mr. Rove recently left the White House, where he was an adviser to President Bush.

The Canadian dollar is now trading 1 for 1 vs. the US dollar for the first time since the mid-1970s. This is a very sad milestone. The charts below make some interesting points. Based on my estimates of purchasing power parity, the loonie is now as strong against the buck as it’s ever been. Conversely, the buck has never been weaker against the loonie. So is the loonie just terrifically strong or is the dollar hopelessly weak? I’m inclined for the latter explanation, and I say that because of the second chart, which shows that the loonie’s strength has gone hand in hand with the strength of commodity prices. And commodity prices are up a whole lot more in US dollar terms than they are in any other major currency’s terms. Indeed, you could make the case that commodity strength (and loonie strength, by extension) is largely a function of dollar weakness. Commodity prices haven’t changed much in loonie terms over the past 10 years, whereas they are up about 45% in dollar terms.

At what point are the guardians of the dollar’s value at the Fed and the Treasury going to sit up and take notice of the dollar’s slow and painful demise? Benign neglect of the dollar’s sinking value can’t be a permanent fixture of our monetary policy without some inflationary consequences down the road.

The list of weak dollar fundamentals is impressive:

Political: no one cares, not even the Fed or Treasury. Indeed, most politicians are actively pushing for a weaker dollar, particularly against China. A Democrat seems likely to win the presidency, according to the futures markets, and the Democratic Party seems absolutely committed to higher taxes in order to redistribute income and fund a nationalized health care scheme. As one who believes in supply-side logic, higher taxes are not only unnecessary (the budge deficit is so small as to be almost irrelevant) but dangerous to the economy’s health. And the prospect of higher taxes certainly does not add to the appeal of investing in the U.S.

Monetary: the Fed was very easy for a long time a few years ago, and they have just recently opted for backstopping the economy at the expense of a little more inflation. The Fed hasn’t said word one about the dollar’s value being a source of concern for a very long time.

Growth: the US economy is among the weakest of the G15, and is clearly overshadowed by the booming emerging market and Asian economies.

Global: there are quite a few countries who are feeling pretty bad about having pegged their currency to the dollar: Chile, China, and Saudi Arabia, to name a few, and there are rumblings about unpegging from the dollar in certain quarters. China’s inflation rate is going up as its currency sinks with the dollar. There are central banks who have amassed significant dollar reserves who are feeling sick to their stomachs.

Lots of people would like to believe this can’t go on forever, and the bold are thinking that the dollar might be one of the cheapest assets in the world today. But what is missing is a reason to believe that the dollar can reverse this ugly tide.

Lee Bollinger, Tough Guy

September 21, 2007 - WSJ

Mahmoud Ahmadinejad has his doubts about whether the Holocaust happened. He thinks the Jewish state should be wiped off the map. His regime funnels sophisticated munitions to Shiite militias in Iraq, who use them to kill American soldiers.

Oh, and by the way, his regime also executes homosexuals for the crime of being themselves. Maybe if Columbia University President Lee Bollinger were aware of the latter fact he would reconsider his invitation to the Iranian president to speak on his campus next Monday.

Mr. Bollinger, notoriously, voted in 2005 not to readmit an ROTC program to Columbia (absent from the university since 1969), ostensibly on the grounds of the military's "don't ask, don't tell" policy regarding gay service members. Never mind that other upper-tier schools, including Princeton, Dartmouth, Cornell and the University of Pennsylvania all have ROTC programs. Never mind, too, that in 2003 the Columbia student body voted in favor of readmission by a 2-1 margin. In Mr. Bollinger's view, "the university has an obligation, deeply rooted in the core values of an academic institution and in First Amendment principles, to protect its students from improper discrimination and humiliation."

Mr. Bollinger's position might at least be coherent were he not now invoking the same principles to justify his invitation to Mr. Ahmadinejad, whose offenses to gay rights and any other form of human dignity considerably exceed the Pentagon's. After promising that he would introduce the president "with a series of sharp challenges" -- including Iran's "reported support" for international terrorism -- he went on to say that "it is a critical premise of freedom of speech that we do not honor the dishonorable when we open the public forum to their expression."

We're all for free speech and the vigorous exchange of intellectual differences, though we don't see how Mr. Bollinger can be, given his decision to discriminate against young men and women who seek to make careers in the military. We also don't quite see how the right to free speech -- a freedom Mr. Ahmadinejad conspicuously denies his own people -- is tantamount to the right to an illustrious pedestal. Columbia is a selective institution in its choice of students as well as speakers; its choices confer distinction on those whom it selects. Were it otherwise, Mr. Ahmadinejad would surely have better uses for his time.

We will say this for Mr. Bollinger: The tough-guy act he promises for Monday's introduction will be something to watch. This time the irrepressible Mr. Ahmadinejad, we're sure, will bow his head in awe.

The $14 Million Country

September 20, 2007 - WSJ

What stands between Belgium and nothingness? The list, alas, isn't long. A royal family and the capital Brussels, the beloved but of late struggling Red Devils national soccer team and a talent for brewing robust beers and consuming black pots of mussels. And, lest the reader fears a dyed-in-the-wool Belgian might take undue offense, a dark and naughty sense of humor.

Now the jokes may soon be history, along with Belgium -- a place that native-born writer Luc Sante called "nowhere." Separated by language and brought together relatively recently by West European standards -- in 1831 -- by the Great Powers of Britain and France, the Walloons and Flemish bicker as never before. Some 100 days after the general elections, the country's two biggest communities still can't agree to form a new government. This impasse is prompting a bigger question: Why bother at all? Half the Flemish speakers, according to a poll out this week, want Belgium put to sleep.

As far as we can tell, patriots aren't rushing to the rescue. And protest, such as it is, has taken on a distinctly Belgian character. This week, Gerrit Six, a teacher, put up an ad on eBay: "For sale: Belgium, a kingdom in three parts . . . free premium: the king and his court (costs not included)." Interviewed by Associated Press Television News, Mr. Six said he wanted to "attract attention" and "make clear that Belgium was valuable, it's a masterpiece and we have to keep it."

The joke, perhaps inevitably, ended up on Belgium. The country attracted a top bid of €10 million, just under $14 million. Surely, even with its $300 billion plus in national debt, Belgium might fetch a little more on the open market. The Norwegian royal palace in Oslo was priced at $99 million in another recent hoax auction on eBay. We'll never know, as eBay pulled the Belgium item, saying the site can't host the sale of anything virtual or unrealistic. Which just about sums the place up.

To Kill an American

There was actually a report that someone in Pakistan had published in a newspaper an offer of a reward to anyone who killed an American, any American.

So an Australian dentist wrote an editorial the following day to let everyone know what an American is . So they would know when they found one.

"An American is English, or French, or Italian, Irish, German, Spanish, Polish, Russian or Greek. An American may also be Canadian, Mexican, African, Indian, Chinese, Japanese, Korean, Australian, Iranian, Asian, or Arab, or Pakistani or Afghan.

An American may also be a Comanche, Cherokee, Osage, Blackfoot, Navaho, Apache, Seminole or one of the many other tribes known as native Americans.

An American is Christian, or he could be Jewish, or Buddhist, or Muslim.
In fact, there are more Muslims in America than in Afghanistan . The only difference is that in America they are free to worship as each of them chooses.
An American is also free to believe in no religion. For that he will answer only to God, not to the government, or to armed thugs claiming to speak for the government and for G od.

An American lives in the most prosperous land in the history of the world.
The root of that prosperity can be found in the Declaration of Independence , which recognizes the God given right of each person to the pursuit of happiness.

An American is generous. Americans have helped out just about every other nation in the world in their time of need, never asking a thing in return.

When Afghanistan was over-run by the Soviet army 20 years ago, Americans came with arms and supplies to enable the people to win back their country!

As of the morning of September 11, Americans had given more than any other nation to the poor in Afghanistan . Americans welcome the best of everything...the best products, the best books, the best music, the best food, the best services. But they also welcome the least.

The national symbol of America , The Statue of Liberty , welcomes your tired and your poor, the wretched refuse of your teeming shores, the homeless, tempest tossed. These in fact are the people who built America .

Some of them were working in the Twin Towers the morning of September 11, 2001 earning a better life for their families. It's been told that the World Trade Center victims were from at least 30 different countries, cultures, and first languages, including those that aided and abetted the terrorists.

So you can try to kill an American if you must. Hitler did. So did General Tojo, and Stalin, and Mao Tse-Tung, and other blood-thirsty tyrants in the world. But, in doing so you would just be killing yourself. Because Americans are not a particular people from a particular place. They are the embodiment of the human spirit of freedom. Everyone who holds to that spirit, everywhere, is an American.

Women Drivers

September 14, 2007 - WSJ

'Cats and dogs in the developed world have more rights than Arab women," says Wajeha al-Huwaider, the Saudi writer and human rights activist. With that in mind, she has co-founded, along with Fawzia al-Uyyouni, the League of Demanders of Women's Right to Drive Cars in Saudi Arabia.

Don't laugh; such a movement will strike many as quixotic considering the current status of women in the desert kingdom. In Saudi Arabia, the fairer sex can't work, travel, study, marry or see a doctor without the permission of a male "legal guardian." Strict dress codes are enforced by the vice police. Dissent, by men or women, isn't tolerated. Ms. al-Huwaider says she is taking one step at a time.

The league is now collecting signatures for a petition to be delivered to King Abdullah on September 23, the country's national holiday. Published on the liberal Arab Web site Aafaq last week, the petition demands that the King "return that which has been stolen from women: the right to (free) movement through the use of cars," according to a translation by MEMRI media research institute. As of this writing, the petition has collected 220 signatures. Those are 220 brave people.

There have been small signs of recent progress for women in Saudi Arabia, especially in the workplace. King Abdullah issued a decree last year saying women should be encouraged to work in all fields; and an increasing number of workplaces, including in government, are establishing separate sections for female employees. A year ago women were admitted to law school for the first time. Now if only they were free to drive themselves to school or work.

¿Alcanza cambio Néstor por Cristina?

¿Alcanza cambio Néstor por Cristina?

Por: Enrique Szewach
Ámbito Financiero

Mervy King es el titular de la Banca de Inglaterra. Hace poco utilizó los dos goles de Maradona a los ingleses en el Mundial 86 para ilustrar las diferencias entre «la vieja política monetaria» y la que él intenta instrumentar. En declaraciones que cita el «Finantial Times», King lo contaba más o menos así: «El primer gol, la 'mano de Dios', refleja la vieja política monetaria. Estuvo lleno de mística y tuvo mucha suerte de que no fuera anulado. Pero en el segundo gol, Maradona eludió a cinco jugadores ingleses, corriendo en línea recta desde la mitad de la cancha. Ese es un ejemplo de la práctica moderna de la política monetaria.

¿Cómo puede un jugador, corriendo en línea recta, eludir a cinco jugadores contrarios? La respuesta es que los defensores ingleses reaccionaron a lo que esperaban que Maradona hiciera...».

«La política monetaria trabaja de manera similar. Las tasas de interés de mercado reaccionan a lo que se espera que el Banco Central haga.» La reflexión del amigo Mervy no sólo me pareció interesante para reflejar lo que el Banco de Inglaterra intenta hacer, diferenciándose de la Fed y del Banco Central Europeo, en un intento por mostrarse más independiente y tratando de minimizar el «riesgo moral» de salvar a los que prestaron mal. Es muy aplicable para diferenciar la política económica del primer mandato del presidente Kirchner, con la que debería caracterizar «la profundización del cambio» de Cristina. En efecto, la política económica de estos años K también se parece al «gol con la mano» de Maradona. Mucha mística, mucho marketing y mucha suerte de que no lo anularan. Fue una política económica basada fundamentalmente en resultados. Tipo de cambio real alto para incentivar exportaciones y sustituir importaciones.

El shock inflacionario «heredado» de las estafas de Duhalde para licuar salarios y jubilaciones y partir de un elevado superávit fiscal en las provincias. La alta capacidad ociosa y el superdesempleo que permitió incentivar la demanda, ajustando más por «cantidades» que por «precios».

Extraordinario escenario internacional tanto en materia de commodities, como de tasas de interés y liquidez. Sobreinversión en infraestructura en los 90, etcétera. Fue una etapa en donde las dudas, los temores, el escepticismo se disiparon con rentabilidades extraordinarias, crecimiento del empleo y, por lo tanto, de los ingresos familiares, recuperación del crédito y, en estos últimos tiempos, crecimiento fuerte del salario real, pese a una peligrosa aceleración inflacionaria.

Goles hechos con la mano, es decir, con corrupción, avasallando las instituciones, sin rendición de cuentas, sin prioridades, sin planes, sin estrategias, mintiendo en los índices de precios, estafando a acreedores varios, incluyendo ahorristas y futuros y actuales jubilados,pero goles al fin. Y «la tribuna» disfrutando, aplaudiendo y celebrando la «picardía K». Había que salir de la crisis «de cualquier manera», aun con el riesgo de que nos expulsaran de la cancha.

Esa etapa se está cerrando. Ya no hay margen para alentar la producción. El crecimiento de la demanda se traduce en mayores importaciones y en mayores precios. La rentabilidad está cayendo por mayores costos y el peso se está apreciando por la aceleración de la inflación. Aunque la devaluación del dólar en el mundo juega a favor. El empleo sigue creciendo, pero ya a un ritmo menor. El crédito se está viendo afectado por la situación financiera internacional. Los precios de los commodities agrícolas continúan elevados, pero hay un límite a la producción local, en especial, por los mayores costos de insumos y las limitaciones energéticas, de tierras disponibles y climáticas. La licuación del gasto en las cuentas públicas provinciales se terminó, por presión sindical y electoral, y con ello, en general, el superávit fiscal regional. La ausencia de inversiones en el área energética obliga a subsidios crecientes y a racionamiento en los picos de demanda. La licuación del gasto nacional también está llegando a un piso. Y la sociedad está empezando a rechazar el pago de un impuesto inflacionario que ronda 20%, y ya no tiene ningún efecto positivo sobre las expectativas mentir con el INDEC.

# Cambio complejo

El camino, entonces, aparece claro en términos de alternativas, aunque complejo pensando en las dificultades. Quien suceda al presidente Kirchner puede jugarse a hacer otro «gol con la mano» y que, otra vez, el árbitro y los jueces de línea no «se aviven». Es decir, repetir «la gran Duhalde», devaluar, licuar, estafar, empezar de nuevo. Es un juego extremadamente peligroso. Primero, porque el contexto es muy distinto, en términos de pleno empleo y de capacidad ociosa. Segundo, porque es muy difícil suponer que se puede volver a engañar al árbitro (aun cuando se trate de árbitros argentinos). O puede intentar el «segundo gol de Maradona», es decir, anunciando una serie de políticas públicas que, actuando sobre las expectativas, genere que los empresarios inviertan aun con tasas de rentabilidad bajas, pensando en el futuro y no en el presente.

Que los sindicatos acepten ajustes salariales «para adelante», olvidando la inflación pasada, y que los inversores externos «perdonen» los pecados de estos años. Una vieja regla de oro de la negociación dice que «nunca se manda a negociar a la misma persona que no cumplió con la contraparte en una negociación previa». En ese sentido, ¿alcanzará con cambiar a Néstor por Cristina? ¿O sólo Maradona es capaz de reunir, bajo un mismo apellido, al tramposo y pícaro del gol con la mano y al genial futbolista que eludió a cinco defensores corriendo en línea recta?

Carlos Rosenwasser, el “Bebé” para los que lo conocen de chico o "el Ruso” entre los compañeros de la facultad. De familia de origen chaqueño, de muy chico se muda a una localidad del interior de la provincia donde Don Rosenwasser tuvo una farmacia durante muchos años.

Nota: sería apócrifo aquello de que uno de sus abuelos habría tenido un cargo jerárquico en Weisburg, Santiago del Estero. Personalmente creo que fue una bola armada por el propio Bebé para darse ínfulas.

A los pocos años fallece su padre y se muda con su mamá y hermana mayor a la capital de la provincia, donde termina la secundaria.

Después de muchos años de joda y algunos de esfuerzo, se gradúa como Contador Público Nacional en la universidad de una provincia vecina.

Hombre grande, casado y con hijos, ahora el Bebé le dice a todo el mundo que es santiagueño pura cepa. Un chanta.

Oil Politics

By MARY ANASTASIA O'GRADY
September 10, 2007 - WSJ

"Iran and Nicaragua, two revolutionary countries and peoples, will always be together side by side since they share goals and ideals."
-- Iranian President Mahmoud Ahmadinejad,Tehran, Sept. 4
When former Sandinista dictator Daniel Ortega won the Nicaraguan presidential election last November, he said he was a changed man. The new Ortega was supposed to have vanquished his inner Marxist and replaced it with a desire to maintain constructive relations with the U.S. and respect for private investment.

But old habits die hard. In mid-August Mr. Ortega seized an ExxonMobil storage facility on Nicaragua's west coast and after a trip to Iran this summer, he announced a deepening of bilateral ties with the Islamic fundamentalist government, including the opening of an Iranian embassy in Managua. Last week when the Iranian president welcomed Mr. Ortega's foreign minister to his capital, his comments were a veiled reference to the shared revolutionary history of the two parties, both of which first came to power in 1979.

Hanging out with Mr. Ahmadinejad is not the policy agenda of a pro-market democrat and it's worth asking what's going on, especially since Americans are being encouraged to invest in Nicaragua on the basis that Mr. Ortega is a new man. The answer seems to be that the wily old revolutionary is practicing oil politics as a method of generating funds for his party. To pull it off, he needs the help of Venezuelan President Hugo Chávez, which means kowtowing to the wishes of Caracas. For Nicaragua, that means giving Managua real estate to Tehran.

The master of oil politics is Mr. Chávez, who is riding high largely because he has an unaudited income stream coming from the state-owned oil company PdVSA, which is being used to liberally grease the chavista machine. Mr. Ortega, who may have shed Marxism but still has an insatiable appetite for power, wants to extend the Chávez model to Nicaragua. This explains the trouble for ExxonMobil and it may explain similar problems for multinational oil companies around the region. It can be no coincidence that wherever Hugo and PdVSA have turned up as "partners" -- Nicaragua, Argentina and the Dominican Republic -- foreign oil companies have come under attack in what looks like an attempt to make room for friends of the president. It's all done under the guise of "the law" but there is no mistaking the common thread.

Consider recent developments in Nicaragua, one of 16 Caribbean countries belonging to Petrocaribe, a Venezuelan pact that entitles members to PdVSA oil and gasoline on preferential terms.

Mr. Ortega wants to import through Petrocaribe and distribute through the state-owned energy company Petronic. But Petronic doesn't have the storage tanks it needs to run a monopoly-distribution operation with imported PdVSA product. Esso Nicaragua, which has operated in the country for more than five decades, does. That's why it seemed more than coincidental when Nicaraguan customs authorities took over the tanks on Aug. 17, alleging that the company had evaded taxes on the import of crude oil. ExxonMobil denies the charges.

The assault on the Esso facility has given Mr. Ortega's "investor-friendly" Nicaragua a black eye and one wonders why he would risk such bad publicity. His critics say it is because the scheme will allow him to create a political slush fund. If Petronic handles all PdVSA shipments to Nicaragua, the company can easily fiddle with inventory. With the president of Petronic also holding the post of treasurer of the Sandinista Party, it's not hard to imagine why many Nicaraguans are crying foul.

This is not the only Ortega effort to dislodge investors. Four private-sector deep-water exploratory concessions, granted by a former administration and insured by the U.S. government agency OPIC, have been ruled invalid by the Sandinista-controlled Supreme Court, raising more doubts about property rights in the country.

In the DR, which is also a beneficiary of Mr. Chávez's oil generosity, it looks like there is an attempt to copy Mr. Ortega's creativity. A political scandal erupted earlier this summer when it was revealed that a group close to President Leonel Fernández was aggressively bidding to buy the assets of Shell, which is divesting its Caribbean holdings. The DR press was outraged about the deal because it would essentially give a monopoly in the distribution of Petrocaribe product coming from Venezuela to Mr. Fernández's buddies. Government accusations, denied by the company, that Shell is a tax cheat and that it has disrupted Petrocaribe shipments suggest that the firm is under pressure to sell to this bidder.

In Argentina, Shell is being harassed by the government of President Nestór Kirchner, which has created a new state-owned energy company -- Enarsa -- to partner with PdVSA. (A few weeks ago customs officials in Buenos Aires discovered $800,000 in a suitcase that had been on an Enarsa-hired plane carrying Argentine and PdVSA officials from Caracas. It's still unclear where that money came from or where it was going.) Shell has been under attack by the government for raising its prices and it has been fined for supposedly not maintaining adequate supplies in the marketplace. It has also been refused the right to export its product and on Wednesday one of its refineries was closed by the government on charges of environmental violations, which Shell denies.

Argentina's El Clarin newspaper reported on Sept. 1 that Esso Argentina has hired J.P. Morgan to look for a buyer for its Argentine facilities. ExxonMobil says that it won't comment on speculation and is "continuing to run our business in Argentina as usual, developing and executing initiatives and projects as planned." What is clear is that in the land of the Peronists, the business environment for oil companies is strained.

It is doubtful that Argentina, the DR or Nicaragua would move so aggressively against private property if their energy needs were not being underwritten by Mr. Chávez. It is also foolish to think there is no political quid pro quo. The price Nicaraguans are paying is to cozy up to Iran; by making such a deal, Mr. Ortega is showing that he would readily sell the whole country down the river if it means that he can stay in power.

In the meantime U.S. investors might note that OPIC says it "has suspended support for any new investments in Nicaragua until the [oil exploration] concession issue has been resolved." The alarm bells don't ring much louder than that.

Watch Out for the China Bashers

Watch Out for the China Bashers
By ZACHARY KARABELL
September 5, 2007 - WSJ

The recent outcry over poisonous pet food and the recall of lead-tainted toys sourced by Mattel in China proves one thing: We have a China problem. It is not, however, a China problem in the way most people think. It is not a problem with safety standards that threaten our children and our pets. It is a problem with the very fact of China
as an emerging force on the global economic stage, and it underscores a profound and worrying trend in American political and economic life. For half a century we fought for the creation of a global capitalist system. Now that we have one, we seem to have forgotten one little thing: Capitalism means competition, and we are acting like we can't handle it.

To understand that the uproar over the toys isn't really about product safety, we need to look back at the past few years and see that the current hullabaloo is just the latest incarnation of our simmering China problem.

The rumblings began during the election of 2004, with accusations that U.S. companies that outsourced work to China were traitorous and being led by "Benedict Arnold CEOs." Never mind that most of the jobs outsourced to China had already been outsourced to Mexico a decade ago. The chorus grew two years ago, when one of China's state-owned energy companies attempted to buy Unocal. That led to a strenuous and
yes, bipartisan, position in Congress that allowing the deal to go forward would jeopardize national security and unfairly benefit China. Democratic Sen. Ron Wyden declared: "I don't think being a free-trader is synonymous with being a sucker and patsy." The Republicans were no better. The deal was scuttled.

Then last year, the sharply rising trade deficit and current account deficit with China generated pressure in Congress to force China to allow its currency (the yuan) to appreciate more rapidly against the U.S. dollar. The first proposal was sponsored by Sens. Lindsey Grahamand Charles Schumer and would slap China with a 27.5% tariff unless it allows for an immediate and sharp revaluation. The second is working
through the Senate this summer and is sponsored by Sens. Charles Grassley and Max Baucus. It would force the Treasury Department to label China a currency manipulator based on the fact that China doesn't allow the yuan to float freely. That in turn would lead to series of procedural moves with escalating penalties.

Never mind the fact that even a substantial rise in the currency wouldn't change the dynamics of U.S.-China trade. China is appealing not just because of costs but because of a reliable infrastructure and a proven ability to produce. Never mind that sourcing in China has direct benefits for hundreds of millions of Americans in the form of less expensive goods, from appliances to entertainment. Never mind that China partly subsidizes U.S. spending and consumption by purchasing hundreds of billions of dollars worth of U.S. Treasuries.

And never mind that China has become an integral market for U.S. goods and companies, as the purchasing power of Chinese consumers rises rapidly. Macau is already a larger market for U.S. gaming companies than Las Vegas, and multinationals such as Proctor & Gamble and GE are seeing some of their fastest, most substantial growth from selling to China, not from sourcing in China.

While the rhetoric in Congress and on the campaign trail isn't likely to derail these trends, the unwillingness to acknowledge the benefits of China's rise is part of a pattern of China bashing that raises questions about the ability of the U.S. to compete in the global economy that it did so much to create.

The issue of safety needs to be seen in this context. There is no question that standards in China are less rigorous than they should be. But consumer concerns over product safety long predate the current scare, and only a severe case of amnesia can turn this into a China issue. Remember Ralph Nader in his 1960s heyday? How about the global recall of Perrier water (made in France) in 1990 because of fears of benzene contamination? Or the rollover problem of the Ford Explorer in the same period? What about the recall of halogen torchier lamps in 1997 because of an unfortunate tendency for the bulbs to explode?

Read the annual report of the U.S. Consumer Product Safety Commission in 1990, which pointed to the recall of infant "bean bag" cushions made in the U.S. that caused 30 deaths. Moreover, given the recent outcry over dangerous tires made in China, we should remember that this pales in comparison to the 88 deaths attributed to defective Firestone Tires in the late 1990s that led to the recall of 6.5 million in 2000.

This is only a small sample of product recalls in the past 20 years that had nothing to do with China. While this year China is a major source of product defects, the actual number of faulty products is, regrettably, normal -- proportionate to how much it produces and comparable to the safety issues that have bedeviled manufacturers of
all nationalities in past decades. Companies, not countries, bear ultimate responsibility for what they sell under the label, and it says something about current attitudes that so many have collectively forgotten the recent history of product safety concerns and turned it into a China problem.

Chinese officials recognize that reason and rationality aren't at work here. Zhao Baoqing, a Chinese trade official in Washington, recently attacked the quality of U.S. goods sold in China, and pointed to cranes and to generators made by General Electric as posing serious safety hazards. Most Americans will, in this climate, probably dismiss his claims as so much empty rhetoric, but the record of safety issues with U.S.-made products should give anyone pause before doing so.

As we plunge into this long election season, China is a convenient bogeyman for all sorts of ills and fears. Without question, China presents an unparalleled challenge. At various points in the 20th century, the U.S. faced military and ideological threats. But since the dawn of the American republic, we have never faced the kind of
economic challenge that China presents. It is playing the game of global capitalism almost as adeptly as we are, and our response for now seems to be a mixture of fear and disbelief.

Rather than seeing China as adding to an expanding global economic pie, we treat its ascendance as a zero-sum proposition for our workers, our companies, our currency and now even our health. While the evolution of China and the U.S. is anything but certain, and while each face internal issues that could derail the steady move forward, one thing should be fairly clear: Our China problem is going to harm
us more than it will derail China.

It is perfectly legitimate for us to demand that Chinese companies and authorities attend to product safety and to a level playing field in terms of trade. That, after all, is the guiding spirit of the World Trade Organization. It is perfectly legitimate, as both Hillary Clinton and Barack Obama have said, to treat China as a competitor and press the Chinese for greater access, more transparency, and assorted
reforms. But much of the rhetoric and cultural undercurrent these days casts China as the on-deck enemy should al Qaeda not prove up to the task of long-term adversary.

Like it or not, China is going to be a force to contend with, just as the U.S. was a century ago. Already, we are more linked to China than most of us realize or than many would like. If China-bashing becomes the prism through which China is viewed, the recent turmoil in the markets caused by the subprime mortgage mess will seem placid by comparison.

Mr. Karabell is executive vice president and chief economist of Fred Alger Management.

La fábrica argentina de inconsistencias

La fábrica argentina de inconsistencias

Por: Fernando Navajas
Ámbito Financiero

Un viejo adagio dice que si se les pide un diagnóstico a tres economistas, surgen cuatro respuestas distintas. Ese no parece ser el caso de la macroeconomía argentina actual. Si se toma una muestra bastante amplia de economistas, éstos van a decir mayoritariamente que la inflación, la evolución del gasto público y la restricción energética están en el centro de los problemas serios que importa mirar y analizar hoy.

¿Se están repitiendo unos a otros los economistas en la Argentina? En realidad no. Mi impresión es que examinando más en detalle los argumentos, se debería encontrar que la aceptación de esos problemas puede hacerse desde diferentes perspectivas. De hecho, no se necesita adscribir a un enfoque ortodoxo de la macro para reconocer los problemas mencionados. Tal vez lo más conveniente para ilustrar este contrapunto sea primero exponer y luego relativizar una visión ortodoxa, necesariamente estereotipada, del problema macro argentino actual.

La Argentina tuvo, con la crisis de 2002, un cambio fenomenal de precios relativos exagerado por la magnitud de la crisis financiera. Lo que hoy muchos llaman el «nuevo paradigma» de la macro argentina, esto es, los superávits fiscal y externo, no son más que el reflejo de este cambio brusco. Por ejemplo, la Argentina no hizo absolutamente nada en materia de reforma fiscal que haya ocasionado este cambio en la posición fiscal, sino que más bien es la devaluación real la que aparece como la «partera» de este milagro. La devaluación real, los precios externos más altos y las retenciones son toda la reforma fiscal que puede mostrar el milagro argentino. También la devaluación real ocasionó el ajuste en la posición externa de la economía, y lo que ha sostenido el resultado de la cuenta corriente (y también la posición fiscal) en pleno ciclo expansivo es el crecimiento excepcional de precios externos.

# Convergencia

A su vez, en lo monetario, el gobierno ha seguido en los hechos una política de tipo de cambio fijo, lo que hace que la cantidad de dinero de la economía sea endógena. Como la inflación es un problema monetario y dado que la cantidad de dinero de la economía es la que quieren tener los argentinos, lo que se llama inflación es, en realidad, una convergencia del tipo de cambio real a su equilibrio. Es la meta de mantener un tipo de cambio nominal demasiado elevada lo que ocasiona la inflación.

A su vez, la suba fenomenal del gasto público no causa la inflación per se, sino que induce a un menor tipo de cambio real de equilibrio y agrava por esta vía el problema inflacionario, generando a su vez un posible problema de solvencia o liquidez externa si se reduce demasiado el superávit fiscal primario. Por último, la crisis energética agrava la situación como todo shock negativo de oferta, y puede representar un problema de mala asignación de recursos, pero no es una parte necesariamente esencial de este relato, porque se arregla relativamente rápido poniendo bien los precios.

Las recomendaciones de política macroeconómica de esta visión son en cierto sentido bastante claras: abandonar la búsqueda de un tipo de cambio real por encima del equilibrio para ayudar a hacer converger los precios, y reducir la expansión del gasto público para detener la tendencia a la apreciación cambiaria y fortalecer la solvencia fiscal. Pero más allá de las recomendaciones, quedan algunos interrogantes referidos a la relevancia de este diagnóstico para explicar la inflación dado que el enfoque es casi agnóstico respecto del rol de la aceleración de la actividad económica y la presión salarial. Otro interrogante no menor para la relevancia del argumento se refiere a cuál es verdaderamente la situación de tipo de cambio real de equilibrio de la Argentina. Lo importante aquí es formarse una idea de qué tipo de cambio real es sostenible para un país con un alto grado de endeudamiento y una visible aprehensión hacia el capital privado extranjero como la Argentina post-2002.

La macroeconomía de tener que apoyarse en el ahorro interno por muchos años es el elemento más contundente para pensar en el tipo de cambio real de la Argentina. Pero también lo es la cuestión energética si lo que estamos viendo es una caída permanente de las exportaciones y, algo que yo he argumentado, una pérdida de la base de recursos naturales que obliga a aumentar los requisitos de capital de la economía para compensar la menor disponibilidad a futuro de gas natural. Si vamos a generar energía eléctrica con menos gas natural, entonces cualquier alternativa nos lleva a más capital (por ejemplo, para generar energía hidráulica y nuclear) y por esta vía a un tipo de cambio real de equilibrio más alto. En la jerga macro, la Argentina tiene en energía lo opuesto a la enfermedad holandesa.

# Inconsistencia

Sabemos que la Argentina es por su historia una máquina de fabricarse inconsistencias macroeconómicas. Pero la que se está fabricando ahora, me parece, no es por no querer dejar caer el tipo de cambio nominal, sino que viene de algo más estructural y profundo. Es porque el requisito de un tipo de cambio real más alto es inconsistente con la puja distributiva provocada por la bonanza de los precios internacionales, el pleno empleo y la consecuente expansión de los salarios reales y, pari pasu, del gasto público nacional y provincial.

Una de las lecciones poco aprendidas de los 90 es que el gasto público es bastante más endógeno (a los precios relativos y la suba del salario real) de lo que normalmente se cree y que controlar el gasto requiere de un diseño institucional que la Argentina nunca pudo implementar. Si el milagro macroeconómico argentino en lo fiscal no se debe a una reforma fiscal y sí, en cambio, a la «operación» de bajar los salarios reales con la devaluación, entonces aceptemos que cualquier puja como la que estamos viendo por mayores salarios hace intrínsecamente endógeno el gasto público. Si además la crisis de gobernabilidad contractual aleja al sector privado del financiamiento de la infraestructura, el gasto público tiene que subir vertiginosamente porque la inversión pública, explícita o implícita, va a ser convocada a cubrir el vacío. Esto es lo que estamos y vamos a estar viendo en materia de gasto público y no quedan otros «drivers», ya que lo previsional entra en la categoría del gasto social alimentado por la puja distributiva. Querer hacer un mini-2002 de vez en cuando, dejando ir el tipo de cambio para corregir las cuentas fiscales luce hoy, con pleno empleo, muy inflacionario.

Es curioso ver cómo diagnósticos disímiles en cuanto a las causas de la inflación y los roles del gasto público y la crisis energética convergen en recomendaciones similares en cuanto a la solicitud de prudencia fiscal. Es que semejante empuje del gasto público asusta a cualquiera que piense constructivamente en la estabilidad macroeconómica del país.

Pero como se argumentó, el gasto público no nace de un repollo del despacho del Ejecutivo o del recinto del Congreso (si bien esto último, y no lo primero, sería lo normal); tiene vida propia otorgada por un número amplio de razones estructurales asociadas a un genoma social-distributivo de larga data y arraigado en la cultura del país. Más vale que en la concertación propuesta, si gana el oficialismo, se entienda esto y se tenga conciencia de que no va a haber paz macro-financiera por mucho tiempo más si continuamos fabricando inconsistencias macroeconómicas.

On the Road

By JOHN SEMMENS
September 1, 2007 - WSJ

More than 39,000 people were killed and 1.8 million injured in traffic accidents last year. The economic cost of these crashes was approximately $140 billion. A substantial number of the crashes involved drivers -- and vehicles -- that shouldn't have been on the road.

Many solutions to the carnage have been offered over many years. One obvious solution has been avoided. Assign responsibility for vehicle safety inspections and licensing drivers to the one institution with the most to gain from keeping bad drivers and unsafe cars off the road: the insurance industry. If we truly believe that only capable, responsible drivers and safe cars should be on the road, then it's time to try a new approach.

Employees at the state (any state) motor vehicle division, good people all, will give virtually anyone with two forms of identification a driver's license so long as they are not seriously vision impaired and are able to pass a multiple-choice exam and minimum proficiency driving test. Their responsibility ends there; they have no stake in what happens after those drivers hit the road. Auto insurers, on the other hand, care only about what happens when those drivers get behind the wheel.

If auto insurers had the job of licensing drivers and registering vehicles -- a role, incidentally, that insurers have in the maritime industry -- they would be forced to adopt what I refer to as the "Disneyland" model. In Disneyland, customers are covered by the company's liability insurance. Consequently, to reduce risk the management restricts who may use which facilities and under what circumstances. For instance, in order to ride the California Screamin' roller coaster, you must be at least four feet tall and should not be pregnant, have high blood pressure or suffer from heart, back or neck problems.

Since the business is held strictly liable for any injuries suffered by those entering the park, management makes every effort to enforce the park's safety rules.

Private licensing and registration would work the same way. Because they would be insuring the drivers and cars they license, insurance companies would be vigorous in their testing and car-safety requirements, letting only qualified individuals venture out onto the roadways. They would be more likely to ferret out those unqualified to drive, from those whose driving abilities have become compromised with age or habitual substance abuse to those who have been ticketed on more than one occasion for reckless or aggressive driving. Such high-risk individuals are now cut far too much slack in most states.

Insurers also would be more likely to develop methods to allow such drivers back on the road when specific criteria are met. For instance, insurers might re-license and insure reformed DWI abusers if they use only vehicles equipped with devices that disable the ignition when alcohol is detected in the driving cabin.

The "Disneyland" model would also reduce the number of uninsured and underinsured driving on the roads, by reducing the ambiguity concerning who will be responsible for damages.

Today, an estimated 14% of all motorists operate uninsured vehicles. An even larger number of vehicles are grossly underinsured. Most of the 44 states requiring auto liability insurance (Alabama, Mississippi, New Hampshire, Tennessee, Virginia and Wisconsin do not) allow absurdly low minimum coverage -- in Arizona, where I live, the minimum is $15,000/$30,000/$10,000. This means an insurer will cover bodily injury damages only up to $15,000 for a single victim, $30,000 for multiple victims, and $10,000 for vehicle property damage. Considering that 85% of crashes involve multiple vehicles, and that a single fatality costs an estimated $1 million or more, this is woefully inadequate.

Under the current system, private insurance companies have little incentive to stop people from buying inadequate levels of insurance, since damages caused by underinsured drivers are capped and damages caused by uninsured drivers are borne by either the uninsured driver or the victim. Under a private licensing, registration and insurance system, insurers would make sure that all vehicles have adequate insurance coverage.

Highway crashes remain the leading cause of death for the age group four through 34, ranking above everything else, from cancer and HIV to poisoning, drowning and suicide. We can and should do better.

Right now we rely on government employees' and contractors' "devotion to duty" as the main motivation for licensing only qualified drivers, registering only safe and properly functioning cars, and enforcing mandatory auto insurance laws. They are no doubt devoted to duty -- but the result is a system in which the primary incentive is to follow procedure and rules, not reduce unnecessary risk.

The market's "pursuit of profit" would introduce a different and better set of incentives. Why not give it a try?

Mr. Semmens is a research fellow at the Independent Institute and a research project manager in the Arizona Department of Transportation.

Reaganomics 2.0

By STEPHEN MOORE
August 31, 2007 - WSJ

Earlier this year the cover of Time Magazine depicted Ronald Reagan with a tear running down his cheek -- the message being that the political class has abandoned the Reagan legacy. There's no doubt Reagan's pro-growth, tax cutting philosophy is in full-scale retreat: This Congress has proposed higher tax rates on personal income, capital gains and dividends. Ironically, the Reagan economic philosophy of lower taxes, less regulation and free trade has never been more in vogue abroad -- so much so that it has become the global economic operating system.

Let's call this phenomenon Reaganomics 2.0.

In the Pacific Rim nations, for example, Malaysia, New Zealand, Singapore, Taiwan and Vietnam all have cut taxes this year or have plans to do so. Singapore has cut taxes multiple times in recent years and it now operates with no capital gains tax.

But the remarkable attitudinal shift on taxes has been in Europe, which in the 1980s and '90s showcased their gold-plated social safety nets, boasted of their citizens' willingness to pay high tax rates to maintain them and were openly contemptuous of the Reagan tax-cutting philosophy. Now those same nations of old-Europe seem to be in a sprint to see which country can get their tax rates lowest quickest. Nicholas Vardy, the editor of "The Global Guru" economic newsletter calls the phenomenon "Europe's Reagan Revolution."

French President Nicolas Sarkozy has plans to cut his country's business income tax by at least five percentage points as part of his economic rehabilitation plan. Spain and Italy are negotiating plans to lower their corporate tax rates, and the U.K. already did so earlier this year. Sweden and Russia last year eliminated their estate taxes because they said the tax was economically counterproductive. In Germany under Chancellor Angela Merkel, the corporate tax rate has been reduced to less than 30% from 39%.

Some of this tax chopping in Old Europe is a response to the success of the U.S. tax rate reductions and the fast pace of job creation that ensued from economic growth -- though few European officials will acknowledge that reality. But a bigger factor more recently has been the impact of the flat-tax revolution in Eastern Europe. Dan Mitchell of the Cato Institute says there are now 14 nations with flat taxes, 10 of them in nations formerly behind the Iron Curtain. "The pace of tax reform in these nations is so frantic, that it's hard to keep up to date with the changes," he says. Poland hasn't yet established a flat tax, but recently cut its business tax to 19% from 27%.

Austria cut its corporate tax rate to keep pace with its neighbor, Slovakia which recently adopted an 18% flat tax. Singapore is cutting taxes to compete with its 16% flat-tax rival Hong Kong. Northern Ireland wants to cut its tax rates so that it can compete with the economic gazelle of Europe, the Republic of Ireland. In 1988 Ireland was a high-unemployment stagnant economy with a 48% corporate tax rate, today that rate is 12.5% and the rest of the world is now desperate to match its economic results. Meanwhile German Finance Minister Peer Steinbrueck sold the latest tax cuts as "an investment in Germany as a business location."

The idea that jobs, businesses and wealth follow low tax rates is widely accepted. Nguyen Van Ninh, head of the Department of Taxation in Vietnam is typical. He concedes that the corporate tax cuts may lose revenues, but "on the other side, the business environment will become more and more attractive, resulting in increased investment."

This is all very good news -- except in the U.S. Arthur Laffer, one of the architects of the Reagan tax policies, believes that one major explanation for the strength of the euro and the weakness of the dollar in recent years, is the divergent paths on tax policies on the two sides of the Atlantic. Europe is cutting levies, while the only debate among the political class in Washington is how high to jack them up.

Still, it is a testament to the Reagan economic revolution launched in 1981 that, a quarter century later, global tax rates are 25 percentage points lower on average today than in the 1970s. And those figures don't even include this latest round of chopping under Reaganomics 2.0. The enactment of supply-side policies is helping ignite one of the strongest and longest world-wide economic expansions in history. Yet few are giving Reagan or his ideas the credit. Mr. Vardy points out that there are only two official statues of Reagan in Europe. Last month the Poles unveiled one financed by an American entrepreneur. The first was erected in Budapest to commemorate Reagan's "tear down this wall" speech in Berlin. Now tax walls are being torn down.

Alas, there's only about one place on the planet where politicians hold Reaganomics in outright disrepute today -- and that is here. The Democratic leadership in Congress believes that tax rates don't matter much if at all, and that the Bush tax cuts were a giveaway to the rich. Presidential candidate John Edwards has even suggested a near doubling of the U.S. capital gains tax rate as part of his economic program, and his rivals all have schemes to soak the wealthy as well.

All of this threatens to move America from leader to laggard in the global race for job creation, capital investment and prosperity. Maybe that explains the tear rolling down the Gipper's cheek.

Mr. Moore is a member of the Journal's editorial board.