International Trade and Transportation

Recession, trade limits don’t mix

2009-03-07T21:45:00.000-08:00

I am not surprised at all that the stimulus package has “buy American” provisions in it. I suppose congressional leaders were reflecting the prevailing mood among the U.S. public, and even among most students in my introductory geography course.

My students’ “buy American” discussion was in the context of an assignment they had completed. I had asked them to pick 20 items at random in their apartments and note the countries where they were manufactured. They then had to identify any patterns they observed in the data.

As one would guess, about 50 percent to 60 percent of the goods they owned were manufactured in China. Barely a fifth of their “stuff” was made in the good ol’ USA. Some students were surprised to note that they owned things made in countries they did not even know existed.

The more we discussed the data, the more they seemed to be concerned about goods flooding this country from somewhere else. It didn’t take long before some of these students in an introductory geography class began wondering if we need to protect and encourage “our” businesses and not rely so much on China or other foreign countries.

The “buy American” provisions in the stimulus package reflect these same concerns. The package requires that only U.S.-made goods, particularly iron and steel, be used in public works and building projects that will be paid for by the stimulus dollars. Financial firms that are on government life support will not be able to hire foreign labor, either.

My typical response to students is to rely upon local examples. I ask them whether other countries might feel that importing planes manufactured by Boeing precludes the growth of an aircraft industry within their borders. I ask whether the import of Hollywood films is wiping out other countries’ native movie industry. I ask whether my students would be OK with those countries not buying our movies and planes.

It becomes clear that trade is a way of life, and imports and exports are basic characteristics of modern and successful economies — even during recessions. On the other hand, if countries implement a variation of autarky — the notion that a country should be self-sufficient and not engage in international trade — then the results are unfavorable.

India, during my formative years, practiced a version of “buy Indian” through an elaborate and regulated system of import-substituting industrialization. In this system, it was nearly impossible to get access to goods manufactured in another country. It didn’t matter whether it was chocolate or cement or cars, importing meant extensive governmental red tape and even bribes.

Had India continued down that path, it would not have undergone the economic and technological revolution that it has. The much joked-about call centers would not have been sited in India. Neither would Thomas Friedman have coined the phrase “the world is flat.”

As I have noted in earlier columns, absolute poverty in India has not been eliminated, and many other problems persist. But I am confident that the situation would be worse had India not switched its economic gears from autarky to policies that actively encouraged greater participation in the global economy.

So much to my students’ disappointment, I am not keen on closing our economy, even if only partially, with “buy American” provisions.

Also, the current economic crisis is not merely American but global. We are at a stage where China’s imports have dropped almost by half, and the economic contraction in Japan makes our recession look tame. So I am equally worried that other countries might start imitating America with their own versions of “buy domestically.” It is no wonder then that other key global players, including China and the European Union, already have warned us that they will keep a close watch on American protectionism.

To a large extent, the way out of this recessionary hole is by adopting a global slogan of “just buy, baby,” similar to Al Davis’ old tagline of “just win, baby” in the Oakland Raiders’ heyday. It’s simply unwise to chant, “just buy American, baby.”

Published in The Register-Guard

Appeared in print: Sunday, Mar 8, 2009, page G3

China's trade collapses

2009-02-11T21:12:00.000-08:00

The Economist: IMPORTS to China plunged in January, signalling that demand is shrinking alarmingly: they fell by 43.1% compared with a year earlier, worse than forecast and double the decline in December. But China's trade surplus, at $39.1 billion, is one of the biggest on record because a huge tumble in exports of 17.5 was dwarfed by falling imports. A recovery in Chinese exports is unlikely as the world slides deeper into an economic slump but imports may well pick up—China has resumed importing iron ore after running down stocks in recent months. China's economy could also get a boost from a big government stimulus package.

More on Essay 1

2009-02-03T19:39:00.000-08:00

Ok, it is now a week and a few hours past the deadline for Essay 1. And, by now you would have also received my feedback on your individual essays. In the video clip that I have embedded in this post, I have a few thoughts related to the contents of Essay1, and also on writing itself.

As always, if you don't find a video embedded, you can do one of two things:

1. Click on the hyperlink at the end of the email, where it says something like "Posted By Sriram Khé to ...." or

2. Here is the link to the YouTube clip itself.

Note that you can always go to the class blog page and revisit any of my communications to you, including the video clips.

PS: I forgot to switch the camera off, which is why the last 40 seconds come across like a color-version of silent movie; I couldn't be bothered with editing it out, after the multiple takes with all the muted videos :-(

Feedback on the Discussion Question

2009-02-03T19:10:00.001-08:00

Hey, here is my video-feedback on the questions that related to sharp decreases in air and sea cargo volumes. If this email does not have the video embedded in it, then click here for the YouTube clip. BTW, you may want to open up the notes from week 2 (?) and advance to slide 25, before you play the video clip.

Gravity Model

2009-01-21T18:35:00.001-08:00

As promised, here are my comments on the Gravity Model, and we can use that to think about trade and transportation. If you don't see the embedded video in the email, then click here for the YouTube clip.

Discussion question #3: cotton and t-shirts

2009-01-16T10:19:00.001-08:00

My comments are in the YouTube video clip that is embedded in my blog post, or you can click here for the video.

Here are a few links that will provide additional details:

PBS' NewsHour report on the suicides of farmers in India. The website has an option for video streamlining, if you don't want to read the transcript.

A NY Times report (June 2008) on the global dispute over US cotton subsidies

An Oxfam report on how US cotton subsidies affect poor farmers in West Africa

Discussion Question #2

2009-01-13T20:04:00.001-08:00

Hey, here is my video response to the discussion question I gave you folks.

Incidentally, did you make sure you know where Cameroon is?

In case you did not, make sure you take it upon yourself to locate on a map the geographic areas that are referred to in articles that I send you. I have provided here a map of Cameroon--the map is from the CIA. Well, nothing secretive--the CIA factbook is a wonderful source of quite up-to-date basic info about countries.

And, hey, it is same with Ukraine that we discussed earlier--locate it on a map, if you have never looked it up before.

More on Uyghurs

2009-01-11T17:41:00.000-08:00

This blog post has nothing to do with trade and transportation itself. So, feel free to delete it if you don't care to read anymore :-)

So, there is a good chance that many of you came across the word "Uyghur" for the first time ever thanks to Noonie's intro. Well, it is not unusual for some of us who hail from the Indian subcontinent to find that we can easily relate to many things in this world--including the Uyghurs. Sufficiently intrigued?

In the English language, we use a word "moghul" to refer to a powerful business figure. Well, this word comes from how powerrful and influential the "Mughal Empire" was in India when the British and other European mercantile groups reached the lands that we now refer to as India.

Now, the Mughal dynasty began in 1526, when Babur defeated the reigning sultan in Delhi. The empire has some of its glorious days under Akbar and Shah Jahan. It was Shah Jahan who built the Taj Mahal as an everlasting tomb for his wife Mumtaz Mahal.

So, what is the connection to the Uyghurs you ask? Fair enough; I don't suppose I come to the point that easily :-)

As this Wikipedia entry notes, Babur descended from Timur (also known as Tamerlane.) During Timur's time, Turkic language became an official language of the state--up until then it was not unusual for Persian to be the administrative language, while Arabic was the language of choice for poets and scientists. Timur's rule also apparently provided for a burst of Turkic literature. Well, Timur was Turkic, with some Mongol heritage ....

Incidentally, one of the most famous Mughal empresses was also a "Nur" that Noonie refers to; the empress' name was Nur Jehan.

Fast forward to contemporary times .... Noonie mentioned the political tensions within China. Well, here in the US, we too are involved in a complex geopolitical issue that ties us with the Uyghurs and China. And this relates to the Global War on Terror.

A few of the people detained in Guantanamo are Uyghurs. The US cleared them of any crimes, and is ready to release them. But, because of the tensions that Noonie referred to, the Uyghurs don't want to be sent to China--for fear that the Chinese government will torture them. The US is in a pickle. As this news report from Australia notes, the Aussie government has refused to resettle them in Australia. My understanding is that the US is under court orders to release the Uyghurs, and many groups in the US are ready to help them settle in the US itself--I don't know what the finer issues are. So, for all you know, this may be one of the first stories to come out of the Obama administration, if he follows through on closing down Guantanamo.

I hope I am correct in all these..... Any additional thoughts from anybody, including Noonie?

Discussion Question #1: my video response

2009-01-09T15:19:00.001-08:00

Hey, here is my video-response to Discussion Question #1.
In the email, you might not see the video that I have embedded in the blog post; in that case, come on over to this blog post and click on the video, or just go directly to this YouTube link

My Blog for the class, and intro video

2009-01-09T15:09:00.000-08:00

Hey class, I thought it might be better for you if I started assembling all my commication to you in one place. Hence, this blog. Which means

Information about the syllabus, deadlines, etc., are at the website for the class: www.wou.edu/~khes/geog418online
The blog for the class, where, among other things, I will also embed my video clips, is: geog418online.blogspot.com

In the email, you might not see the video that I have embedded in the blog post; in that case, come on over to this blog post and click the video, or just go directly to this YouTube link.

You can see that I have way too much fun teaching--whether it is in the regular class, or online :-)

Testing the blog distribution

2009-01-09T15:00:00.001-08:00

Hey, this is an email to check how well the blog handles the geog418 distribution list as an email address.

I am intentionally also including pictures and videos to see how those come across as well.

Russia, natural gas, and Europe

2009-01-09T14:17:00.000-08:00

Hey, we are off to a good start with this question.

Later, if the new mic that I bought works, I will do a couple of video clips where I will address the questions. Here, in this email, I want to follow-up on some of your points:

Maybe you were thinking, well, how does Russia actually turn off the gas supply? This piece answers that and more.

There, you will find links to lots of other interesting (and trivial?) information as well. Such as, the need to pressurize the gas to transport it via pipes, which means there is also a need to set up additional compressor stations every few miles. And those compressor stations need gas to run them :-) And, yes, pipelines can also explode!

In this page, in the graphic, you will notice how important Russia's natural gas exports are. And, in the same graphic you will notice that for the most part continental trade is pipeline based, and it is liquified natural gas (LNG) otherwise.

Finally, if you want to watch Putin address the press on this matter, thanks to YouTube you can :-) No, you don't need to know Russian--there is a voice-over in English.

Having fun, yet?