The Agenda

A Post Exclusively Devoted to WSJ Links

Rather than offer thematic unity, this post will draw together three things random things you should read:

* James Greenwood offers a compelling argument for “faster-growing genetically engineered salmon”:


Overfishing and pollution are quickly wiping out the native global fish supply. Already 80% of fish stocks world-wide are fully exploited or overexploited, according to a May 2010 U.N. report. If current trends continue, virtually all fisheries risk running out of commercially viable catches by 2050.

Fish farming has helped address this problem: About half of seafood consumed world-wide is now farm-raised. But it’s expensive. Shipping farm-raised salmon to the United States from Chile, where most of our fish originates, costs as much as 75 cents per pound.

Faster-growing genetically engineered salmon could help restore America’s domestic fish farming industry, trimming costs and reducing energy consumption. If the FDA approves the fish it would also spur investment in other food products. This could help meet the world’s growing demand for protein-rich food.

Greenwood goes on to discuss the virtues of “enviropigs.” When I contemplate future food nightmares, the one I fret about most is Peak Phosphate, which Lucas Rejinders described in Scitizen last year:

A reduction in phosphate rock supply may also limit agricultural productivity. Whether it will do so, is dependent on our efforts to improve phosphate recycling (especially to keep added phosphate in economic circulation) and to exploit unconventional external sources of phosphate. The development of much improved recycling and new external sources of phosphate is an important matter, because in the absence thereof agricultural yields will plummet, as pointed out by Newman (2). Current yearly grain yields in industrialized countries are well over 5 tons per hectare. But in the absence of an external phosphate supply, yearly yields in the order of 1 ton of grain per hectare were common in advanced agriculture on good soils (2). So, it is likely that without compensating the decreasing input of phosphate from phosphate rock with alternative sources of phosphate, agricultural productivity would be reduced to below a level that will allow for adequately feeding the nine billion people which are expected around 2050.  

Suffice it to say, this could get ugly.

* In describing the CAP plan in an earlier post, I didn’t emphasize the dangers of relying on the president’s budget projections as much as I should have. Achieving primary balance might be tougher than the CAP report suggests if OMB proved too optimistic on the revenue side and if spending exceeds the projections. With that in mind, Edward Lazear’s approach to spending restraint merits consideration:


To return to the healthier spending ratios of the past two decades, Congress should begin by enacting a budget that brings spending for fiscal year 2012 at least half way back to where it was in 2008. Republicans campaigning to take control of Congress should make such spending reduction a priority.

Second, Congress should begin limiting future spending according to an inflation-minus-one rule. That rule would hold that in any year when the ratio of government expenditures to GDP exceeds 18% (the 30-year average of tax revenues), Congress could increase spending only by the last three years’ inflation rate, minus one percentage point.

This would reduce the ratio of spending to GDP, because GDP growth would almost always exceed budget growth. There would be wrangling over what gets funded, but the amount of budget growth would be constrained. Further, because growth is tied to a historic number (the prior year’s budget) rather than a forecast, the rule would be tough to circumvent.

The predictability of this approach is one of its central virtues. Various departments will have a sense of the constraints they’re likely to face, and they can plan accordingly. One would hope that this effort would be accompanied by more flexibility, autonomy, and pay-for-performance for public employees. The most effective performers would be given salary increases while the least effective performers would be winnowed out over time. 

* The WSJ editorial board explains why the deferral of foreign income is actually really important:


At issue is how the government taxes American firms that make money overseas. Under current tax law, American companies pay the corporate tax rate in the host country where the subsidiary is located and then pay the difference between the U.S. rate (35%) and the foreign rate when they bring profits back to the U.S. This is called deferral—i.e., the U.S. tax is deferred until the money comes back to these shores.

Most countries do not tax the overseas profits of their domestic companies. Mr. Obama’s plan would apply the U.S. corporate tax on overseas profits as soon as they are earned. This is intended to discourage firms from moving operations out of the U.S.

Why is this a problem? The editorial makes a strong case, which centers on the damage done by our high rate of corporate income tax, but it’s worth thinking about U.S. firms with subsidiaries based in, say, China that compete primarily with Chinese firms for market share in China. How are these business units treated under the new law? 


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