Summers vs Obama

The analysis of Professor Larry Summers:

Another cause of long-term unemployment is unionization. High union wages that exceed the competitive market rate are likely to cause job losses in the unionized sector of the economy. Also, those who lose high-wage union jobs are often reluctant to accept alternative low-wage employment. Between 1970 and 1985, for example, a state with a 20 percent unionization rate, approximately the average for the fifty states and the District of Columbia, experienced an unemployment rate that was 1.2 percentage points higher than that of a hypothetical state that had no unions.

The policies of President Barack Obama:

On the economy, President Barack Obama signaled once again the ground is shifting -- this time with regard to unions.

With his signature on three executive orders, President Barack Obama expanded workers rights and reversed Bush administration orders that were seen as anti-union.

Then, the president said something that hasn't been heard in the Oval Office for a long time. "I do not view the labor movement as part of the problem, to me it's part of the solution," said President Obama.

Smoot, Hawley, & Pelosi

The Washington Post reports:

The stimulus bill passed by the House last night contains a controversial provision that would mostly bar foreign steel and iron from the infrastructure projects laid out by the $819 billion economic package.

A Senate version, yet to be acted upon, goes further, requiring, with few exceptions, that all stimulus-funded projects use only American-made equipment and goods....

U.S. industrial giants including Caterpillar, General Electric and the domestic aerospace industry are emerging as strong opponents. The measures, they argue, could violate trade deals the United States has signed in recent years, including an agreement on expanding access to government procurements reached through the World Trade Organization.

But most damaging, critics say, would be the "protectionist message" attached to imposing such barriers on foreign companies.Nations including China and many in Europe are preparing to spend billions of dollars of taxpayer money on stimulus projects. American companies are angling for a piece of those pies, and retaliatory measures against U.S. companies, executives argue, could significantly complicate those efforts. This week, a European Commission spokesman threatened countermeasures if the Buy American provisions are approved.

I hope President Obama and his economists strongly oppose these first shots in a new trade war of protectionism. So far, the article says, "the administration has not addressed the issue publicly."

Temporary, Targeted, and Timely - Not!

David Brooks guesses what Larry Summers is, or should be, thinking about the stimulus bill.