Tabloid Edition

Aquadots Recall

Aquadots, or Aqua Dots as they are sometimes called, have been recalled from all US retailers. The recall is over whether a Chinese subcontractor replaced a glue component with one that mimics the effect of rohypnol, the so called date rape drug. Thus if a child swallows some of the beads they can become comatose, as has happened to at least two children.

Aquadots were recalled inAustralia by the original manufacturer, Moose Enterprises, yesterday and now Spin Master is requesting that North America

take the children’s beads of their shelves because of concerns over a chemical reaction if children swallow the pieces. Moose Enterprises were first to recall their version of Aqua Dots, which are known as Bindeez in Australia. Spin Master has now recalled the toys in the United States They say they are “working diligently to identify any shipments that could potentially be included in a recall by the CPSC and Canadian official.”

It is unclear how many sets are being recalled. The company was first alerted to the danger after tests showed some batches of Aquadots were not made with it’s approved formula.

Kids love Aquadots but that's one reason why they're so dangerous:

The wildly popular craft beads known in the U.S. as Aquadots have been huge sellers.

Young Heather Lehane in Australia loved them, until she put them in her mouth.

"The ambulance wasn't that long in coming, but she was in such a state, so un-well. She was pale and just the vomiting and the fitting we just couldn't believe," said Charlotte Lehane, Heather’s Mother.

Two children in the U.S. and three in Australia have been hospitalized for eating Aquadots.

Only then was it discovered why. 

When ingested the body metabolizes the toy's adhesive into a compound similar to a date rape drug, potentially triggering seizures, even coma.

And from the Wall Street Journal about Aquadots:

More than four million Chinese-made toys sold in the U.S. as Aqua Dots are being recalled after reports surfaced that children swallowed beads containing a chemical found to mimic the effects of the so-called date-rape drug.

The Consumer Product Safety Commission said it has received two reports of children swallowing Aqua Dots and slipping into comas. Both children are now fine, the commission said. At least three children have been hospitalized in Australia, where the product is called Bindeez, after ingesting beads from the toy.

Whether it's an error with the orginal design or whether it's a problem with the sub-contractor, no one knows as yet. More to come, no doubt.

And a full news report:

And how TV reported it:

Stiglitz on Labour Laws

Joe Stiglitz is a Nobel winner. He's also most interested in development economics. A very interesting little snippet in his recent Project Syndicate piece:

And Malaysia had a third strike against it: for all the talk of the "white man's burden", the European powers did little to improve living standards in the countries they ruled. The dramatic decline in India's share of global GDP under Britain's rule, as Britain passed trade laws designed to benefit its textile producers at the expense of those in its colony, is the most visible example.

A decline in India's share of global GDP could be for entirely bengin, even beneficial, reasons. For example, if India was growing but the rest of the world was growing faster. But leave that aside, yes, we really did hamstring the Indian textiles industry. But not, however, by passing trade laws so much as imposing labour conditions upon the industry. We insisted that the Indian factories follow the same rules on child and female labour, working hours and so on, as the  factories in England.

A century and more on, does this remind you of anything? Yes, that's it, those people who insist that we must put labour standards into our trade agreements. The net effect will be the same as last time this was tried. It will benefit our own producers, cut off the Third World ones at the knees and perpetuate poverty there. That's not what the campaigners tell us of course, but it is what would happen.

Right on Brothers!

Sue the bastard!

He has fought with China over bras, shoes and candles. Now Peter Mandelson, the European Union trade commissioner, is facing a battle over imports of ironing boards.

Huahe Hardware, an exporter of ironing boards, has filed a lawsuit against the EU over anti-dumping tariffs, according to the official Xinhua news agency.

It would really be quite glorious to see this go all the way. The figures used in such anti-dumping cases are almost always fictitious: whatever the local trade association comes up with plus a bit for luck. Getting such numbers into court could prove highly embarrassing for the Complete Tit and his minions.

While we all know what realy ought to be done (you mean you're subsidizing our consumption of your production? Why, thank you!) even within their own nonsenses of rules, whereby they have to show that damage is being done to the EU economy before such duties can be imposed, they don't actually manage to make the numbers add up. So it'll be, as above, quite joyous to see some lawyers crawling all over them.

The Point of Trade

Phil Bloomer, one of Oxfam's honchos, indeed, the former head of Oxfam's "Make Trade Fair" campaign:

He'll see for himself how cheap products dumped on developing economies lower the prices of locally produced goods, and on his return could start pushing for pro-poor trade agreements.

He's suggesting that this is a bad thing.

Lowering the price of locally produced goods is of course the entire point of trade, thus free trade is indeed a pro-poor trade policy.

Unfortunately, neither Bloomer nor Oxfam get this simple and basic point: they're still tied up in this dreadful idea that trade rules should be built and managed to benefit producers rather than consumers.

Oxfam: campaigning for the local capitalists rather than the poor consumers. Donate your money elsewhere.

A Decent Tory Policy At Last

Only two quibbles with this obviously sensible policy:

In our view, Real Trade would require rich countries to do five things: open their markets unilaterally to the products of all low-income countries; liberalise the "rules of origin" that result in 40 per cent of imports that should enter Europe tariff-free paying duties; give incentives to reduce the high tariff barriers between developing countries; abolish export subsidies that damage Third World agriculture; and give more Aid for Trade to help poor countries develop their exports.

In what way is this an advance on what is already done? Can't remember what the Lome convention is now called, but doesn't it include tariff free access for the poor? Or is it still restricted?

The other one is why is such unilateral free trade restricted to poor nations? Why not everyone?

One slight sadness: this is one of those stories that Owen Barder would obviously be able to comment upon usefully. As we all know, given the Mail's attack upon him, he no longer blogs. Thanks a lot guys.

Trading in Tiger Skins

This is a bloody sensible idea:

ZOOS are killing healthy tigers and other endangered species and selling their skins to be stuffed and mounted as trophies for private collectors, an investigation has found.

The skins are sold by the zoos to taxidermists who prepare them for clients in defiance of attempts by the government to stifle the trade in tiger products.

Last week undercover reporters from The Sunday Times were offered the skins from two zoo tigers, which were both only a few years old when they died, for £6,000. “There are too many of them and if they are not put down they will die of old age, get incinerated and thrown away,” Andre Brandwood, a Hertford-shire taxidermist, told them.

A pity there's going to be the usually bansturbator's cries that this should be outlawed. Supplying the demand from animals specifically bred lightens the pressure on wild animals, that's one part of it. Secondly, creating a value for the captive animals will increase the willingness to supply such animals. Thus there will be an increase in the total number of animals, even as the world population shrinks (there are already vastly more tigers in captivity than there are in the wild, as an example).

But no, there will be those who call for it all to be banned:

Craig Redmond of the Captive Animals’ Protection Society said zoos were overbreeding and creating a massive surplus of animals.

We're worried about tigers becoming extinct, aren't we? So overbreeding and a massive surplus of animals is actually what we want, no?

Twit.

Mandelson on China and Trade

Yes, Peter Mandelson is still a complete tit. His latest pronouncement on China and trade:

Peter Mandelson, the EU trade commissioner, has accused China of abusing the world trading system, warning in the bluntest language to date that Europe will not sit idly back while its exporters are blocked from the Chinese market.

Typical mercantilism. Measuring the good or not of trade by how high our exports are.

The outburst came as China's trade surplus ballooned to $22.45bn (£11.4bn) in April, an increase of 73pc over the year before. The surplus has risen almost tenfold in three years, much of it at the expense of Europe.

"Europe's trade deficit with China is growing at €15 (£10) an hour. It could reach €170bn in 2007 on the current trend," said Mr Mandelson.

"This is not tolerable. The current trade balance is artificially inflated. It is a product of politics, as well as economics. China must take concrete steps to address the problem," he told a small group of reporters yesterday, on the eve of the EU's annual trade summit with China.

Seeing the imports as something bad.

"If things do not change, if EU member states are not persuaded that this partnership is a genuine two-way street and is fully based on reciprocity, the policy of dialogue and cooperation can be 'challenged'," he said, using the Brussels code-word for retaliation.

And what in buggery do "states" have to do with this, or reciprocity? We should never be concerned with bilateral trade, whether it's deficits or surpluses. China ain't the sort of place that buys much that we Europeans make but it does buy lots of commodities to manufacture what we buy....and those places selling the commodities do buy what we do make. That's why it's called trade, d'ye see? We all do what we're best at and swap the results.

Further, the thing we actually want, the thing that makes us richer, is those imports. We're getting things cheaper than we can make them at home. This is the good part of trade: exports are simply those dreary things we send away to pay for them. If the Chinese are manipulating their currency, holding it artificially low, then they are impoverishing themselves (they get less for their exports than they would do, pay more for their imports than they would do) while making us richer (we pay less for our imports and get more for our exports). So why anyone would complain about such an obvious bargain is entirely beyond me.

Opps, sorry, yes, I forgot. Mandelson's a complete tit, isn't he?

Misunderstanding Ricardo

Err, no:

Tax havens warp the foundations of market capitalism. David Ricardo's theory of comparative advantage says that production should gravitate towards geographically relevant areas: cheap manufactures come from China and France or Chile produce fine wines. But now we have thousands of companies operating from one building in the Cayman Islands, and a former Thai prime minister avoids paying tax on a $1.9bn sale through a British Virgin Islands company called Ample Rich Investments. Small wonder that people lack confidence in the global economy.

While Ricardo and others may indeed have used geographically relevant areas as examples, props for the structure of their arguments, comparative advantage does not depend upon them. It is the totality of the factors of production, of all the natural endowments, the learnt skills, the knowledge and yes, the regualtory and tax regimes, which lead to such advantages.  Tax havens arenot a warping of this, they're a natural reaction to the imposts placed upon economic activity.

Whether we call it tax avoidance or tax evasion, this is also a little odd:

Worse, it destroys wealth and slows growth.

That depends actually. If the money which has avoided (or evaded) tax is put to better use than the government which didn't get it would have done, then it increases wealth and speeds growth. If put to a worse one, then it does indeed destroy wealth and slow growth.

We can all think of examples on either side: a State with insufficient funds to ensure property rights and the rule of law (and the capacity and desire to enforce them if they had such money, not necessarily a given) could indeed speed growth and wealth creation by having that cash. One spending it upon the President's Palace might well not.  On the other side, this money that avoids or evades tax does not simply sit in some offshore lock box. It is, as the author suggests, recycled into other investments which do indeed increase wealth and speed growth.

Which does more is an empirical question, one with clear extremes and a lot of grey areas (according to your and my personal prejudices Bayesian Priors aboutthe efficacy of governmental versus market spending) in between.

We face uncomfortable questions and tensions. Company directors feel under pressure to minimise taxes, but tax is a vital contribution to society, and it is offshore where this all goes wrong, and where our queasy feelings originate.

Britain must abandon its anachronistic domicile rules and end its underhand games to eviscerate the EU's savings tax directive. We should push to reform international accounting standards so that companies must report on a country-by-country basis, at a stroke potentially producing more benefits for the world than a hundred billion dollars in annual foreign aid. But to win the battle against the cancer of tax havens will require much greater commitment to international cooperation, founded on a push for greater transparency. Global debate on these issues is long overdue. New branches of economics are required, asking questions such as how certain aspects of global financial and trade liberalisation foster criminogenic, corrupting environments.

No, the answer is to abolish corporation tax. As only individuals can, in the end, pay tax, tax individuals not companies and do away with the whole structure.
 

Bavarian Cuban Cooperation

Nice to see trade going on, enriching both parties:

In front of a picture of a skinny boy in his underpants hugging a water pump and flanked by a 1950s car, Thomas Lang, a Bavarian businessman, proudly describes his delight at striking a deal with the Cuban government.

"We've been asked to send 808 pumps to help the country's infrastructure get on its feet," he tells an audience at Munich's chamber of trade and industry (IHK), noting the dearth of clean drinking water for the Caribbean island's 11.4 million inhabitants.

Good, good. Clean drinking water, an important thing to provide. Slightly odd that such a well run and planned State like Cuba doesn't actually already do so of course. We usually associate water you ca't drink with places that are shit poor and badly run really, something that obviously can't be true of a place run by El Massimo Jefe now can it?

This however is a little less good:

The most delicious part of the deal for Bavarian traditionalists is the request for the luxury carmaker BMW to provide all of Cuba's ambassadors with its Series 1, 3 and 5 models. Even Raúl Castro, who is standing in for his sick brother, is to get a Series 5 car.

Seem to have forgotten that equality bit really, don't they?

So What's the Problem?

Various economists (Samuelson, Krugman, Stiglitz) chew over China and trade. The nugget at the heart of it:

By contrast, China's trade is mercantilist: It's designed to benefit China even if it harms its trading partners.

It may well be designed that way but as ever, there's a slip 'tween cup and lip. By deliberately having an undervalued currency (the accusation) China makes what they send us cheaper in our own currencies than it would otherwise be. We are therefore made richer by having more money (resources) to spend on other things.

Those Chinese exporters are therefore receiving fewer pounds, dollars, euros etc than they would have, making them poorer.

Which is what always happens with a mercantilist trading policy. It might start out attempting to make the country (economy, people etc) adopting it richer but in fact it makes them poorer. We've known this for 190 years and running now.

The complaints about China's trade policies are therefore entirely misguided. We could point out that they are only shooting themselves in the foot while we are making hay at their expense, but why would we want to do that while we are the ones that benefit?