This article from MarketWatch describes the difficulty OPEC has maintaining its agreements to limit output. Here is a money quote.

"... non-signatories represent a critical mass whose increased production as prices rise will compensate for a good portion of the quantities that OPEC and its partners have promised to remove ... This is besides that experience shows the deal’s signatories are likely to cheat each other."

How did high tariffs work for Argentina?

This article from CNN says not so well.

More on Venezuela

Venezuela closed its Colombia border to fight currency smuggling. The 72-hour shutdown will help it fight “mafias” smuggling hard-to-find cash, said president Nicolas Maduro. The move comes after the inflation-ravaged country yanked its largest-denomination bill—now worth just $0.02—from circulation.

How incentives work in socialist countries

How NOT to motivate physicians: lessons from Cuba

Cuba penalizes physicians for "not meeting quotas" on infant mortality.  How do they respond?

• When pregnancies are deemed risky, doctors have to coerce women to undergo abortion in spite of their wishes. 
•  On top of this, forced sterilization in some cases are an actually documented policy tool. These restrictions do reduce mortality, but they feel like a heavy price for the people. 
•  ...doctors ... lie about the statistics. One thing that is done by the regime is to categorize “infant deaths” as “late fetal deaths” – its basically extending the definition in order to conceal a poorer performance.

What happens when you adjust the infant mortality statistics?

• ...Cuba moves from having an average infant mortality rate ... to having the worst average infant mortality in that dataset – above that of most European and North American countries.

A long and very good exposition of the benefits and costs of free trade

Gwynn Guilford explains why the conventional wisdom about free trade is wrong. “Starting with Ronald Reagan, American presidents of both parties have oversimplified and overemphasized the benefits of free trade… That lapse has now invited a populist demagogue into the White House. Trump has correctly identified a problem. But by focusing only on free trade deals he risks repeating the very mistakes that conjured him forth in the first place.” Read more here.

From qz.com.

What do poor people think is in their self interest?

If you give the poor cash, they don’t waste it. Direct transfers lead to more spending on children’s food and health—especially when women are in charge.

Who in the US loses in a trade war with China

Josh Horwitz on the US companies and states that will suffer most if US-China relations worsen: “Any trade war that introduced new tariffs on US goods sold in China or made it more difficult for US companies to do business there would hurt some profoundly. In the aggregate, US soybean farmers, auto makers, and aircraft companies export the most to China.” Read more here.

From qz.com

Incentives matter

http://www.bbc.com/news/blogs-news-from-elsewhere-38208914 reports that visits to nursing homes in China increase when the home pays people to visit.

Will trade barriers make America great again?

Essay. How Latin America Pays the Price of Protectionism by: Taos Turner and Paul Kiernan Nov 26, 2016 Click here to view the full article on WSJ.com TOPICS: International Trade SUMMARY: As Donald Trump talks of tariffs, Argentina and Brazil show the costs that consumers and taxpayers pay for barriers on trade. CLASSROOM APPLICATION: After covering gains to trade and the costs of barriers to trade, instructors can have students read the essay to enforce the point that trade barriers carry costs. Instructors can ask students to evaluate whether the costs of trade barriers outweigh the benefits. QUESTIONS:  1. (Advanced) What is the evidence presented in the article that protectionism is damaging to a country's economy? 2. (Introductory) The article notes measures of the cost of protectionism. What is the measures noted? 3. (Advanced) Does protectionism spur hard work and innovation? Does free trade do so? 4. (Advanced) The essay uses the term "populism." What is populism? Interpret the statement: "The losers from populism can be found everywhere. They are the millions of jobs and hundreds of thousands of companies that were not created because of very disorderly macroeconomic policies." 5. (Advanced) The article notes "import substitution." What is import substitution? What is the anecdotal evidence presented in the essay of the damaging effect of import substitution? Reviewed By: James Dearden, Lehigh University

Is buying a luxury car irrational consumption?

China slapped a whopping tax on super cars. High-end imported cars were already subject to a 35% import tariff. Now an additional 10% tax will be imposed on vehicles costing more than $190,000. It’s part of president Xi Jinping’s drive to promote “rational consumption.”

From qz.com.

Price elasticity of oil

What is the implied price elasticity of demand for oil when the futures price of oil rises by 8.6% when OPEC announces an agreement that reduces production by 2%?

See http://qz.com/849133/oil-prices-are-up-8-6-after-opec-surprised-everyone-by-agreeing-to-a-deal/?utm_source=Quartz+Morning+Brief&utm_campaign=d7073aa20c-EMAIL_CAMPAIGN_2016_12_01&utm_medium=email&utm_term=0_1ff2527dbb-d7073aa20c-55459981.

The story on OPEC's agreement to reduce production courtesy of theSKIMM

THE STORY courteous

Yesterday, OPEC agreed to cut oil production for the first time in years. BF gassy D.

BACK UP.

OPEC’s the fam of 14 countries (like Saudi Arabia, Iran, Venezuela) that together produce about a third of the world’s oil. In recent years, their profits have droppedthanks to things like fracking in the US. Lots of supply, meet not enough demand. Rich countries like Saudi Arabia have been able ride it out. Struggling countries like Venezuela and Nigeria, whose economies depend on higher oil profits, have not. OPEC has been saying ‘no thanks’ to cutting oil production for years. That’s partly because Saudi Arabia and Iran have wanted to wait it out rather than risk giving up market share to the US and Russia. But prices kept dropping, so now the waiting game’s over.

SO WHAT JUST HAPPENED?

OPEC says it’ll cut oil production by more than a million barrels a day starting next year. Russia heard the news and said ‘us too.’ Good news for countries like Venezuela, which might get a little breather from years of economic troubles. Bad news for your morning commute since gas prices could be on the up and up.

theSKIMM

Talk is cheap, competition between oil-producing countries is still fierce, and some OPEC countries are known for not keeping their promises. So TBD on whether this deal sticks…and whether it does anything to bring oil prices back up.

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