Browsing by Author "Brito, Dagobert L."
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Item A Plan for the Possibility of Peace(James A. Baker III Institute for Public Policy) Brito, Dagobert L.; James A. Baker III Institute for Public PolicyItem A Proposal for Immigration Reform(James A. Baker III Institute for Public Policy) Brito, Dagobert L.; Olea Hector; James A. Baker III Institute for Public PolicyIt is not possible to deport the 10 million to 20 million undocumented workers currently in the United States without incurring unacceptable political and economic costs. However, there is not a consensus in the United States in favor of granting permanent resident status to such undocumented immigrants. This paper presents a possible solution to this impasse. The first element of the proposal is to register undocumented workers who are in the United States and grant them temporary work permits with repatriation dates spaced over a period of years. Such a proposal would allow employers to hire workers without penalty. The allocation of repatriation dates could be done by a lottery. Spacing repatriation of undocumented workers over a period of years would avoid a disruption in the labor market and permit a humane and rational schedule of repatriation. The undocumented workers that do not register and are identified can be deported without disruption of the economy. The second element of this proposal is that, in the case of undocumented immigrants from Mexico, the registering of undocumented Mexicans be done jointly with Mexico. Mexico has a very extensive network of consular offices in the United States. The task of registering undocumented workers would be much easier if Mexico registered its own nationals. Further, such an agreement could serve as a framework that would allow Mexican workers controlled access to the U.S. labor market. The number of non-Mexican undocumented workers is smaller, and thus the problem of registering non-Mexican workers is more manageable. There will be cases where implementation of this policy will result in hardship. These issues can be addressed separately once the current crisis is resolved. American immigration policy for the 21st century is an issue that will have to be further addressed soon in the political agenda of the United States. It is, however, an issue that is better addressed without the shadow of 10 million to 20 million undocumented immigrants hanging over the debate. Mexico and the United States can enter into talks immediately to start crafting an agreement. A well-crafted treaty can be presented to the U.S. Senate next year. Immigration reform could still be one of the accomplishments of the Bush administration.Item Allocation of Carbon in the Production of Liquid Fuels and Electricity(James A. Baker III Institute for Public Policy) Brito, Dagobert L.; Curl, Robert F.; James A. Baker III Institute for Public PolicyThe crude from Canadian oil sands provides enormous security and economic advantages to the United States, but the carbon dioxide emitted during its extraction and refinement is about double that of most conventional crudes. This paper proposes that the U.S. government formulate policies that foster the diversion of Canadian oil sands crude to U.S. Gulf refineries, offsetting the additional carbon dioxide they create by using gas instead of coal to generate electricity. The development of oil sands should reduce the U.S. trade deficit; it would also ease the economic pressure to accelerate the production of coal-to-liquid fuels, which would result in four times as much carbon dioxide per gallon of fuel as the Canadian oil sands.Item An Alternative Pipeline Strategy in the Persian Gulf(James A. Baker III Institute for Public Policy) Ewell, M. Webster Jr.; Brito, Dagobert L.; Noer, John; James A. Baker III Institute for Public PolicyThis paper examines the idea of increasing the capacity of the trans-Saudi pipeline system by using second-generation drag reduction agent (DRA) technology, so that in the event of a Strait of Hormuz (SoH) closure[1], most of the oil[2], which currently flows through the Strait could be rerouted through the Red Sea. We find that it should be technologically feasible to upgrade the pipeline system to a capacity of 11 MBD for a cost of $600 million. This capacity assumes the use of both the IPSA and Petroline pipelines; we also present several lower capacity, lower cost options. The upgrades will take at least 18 months to install, so they cannot be implemented in response to a crisis. DRA technology thus represents an opportunity to buy strategic insurance at bargain rates. The pipeline upgrade has several important strategic benefits. It can enhance the Saudi reputation as a stable, reliable oil producer, because it will allow Saudi oil to reach world markets even during a SoH crisis. It can reduce the economic damage to the worldメs oil importing nations in the event of a SoH crisis, allowing the world community to respond to a closure on a deliberate and risk-minimizing timeline. In particular, this may lessen the need for U. S. force to be based in the region. Finally, the existence of an alternate oil route can reduce the political leverage Iran can gain from threatening a SoH closure, as well as reduce their motivation to actually do so. It thereby increases regional security, and reduces the chance of a SoH crisis.Item Automation Does Not Kill Jobs. It Increases Inequality(James A. Baker III Institute for Public Policy) Brito, Dagobert L.; Curl, Robert F.; James A. Baker III Institute for Public PolicyThe authors have developed a model of the effects of automation upon an economy similar to the U.S. The model predicts that the most important consequence of automation is to lower the real wages of medium-skilled and low-skilled workers. Data covering the period 1984 to 2016 demonstrate, as the model predicts, that the share of these workers in domestic production has steadily, if somewhat noisily declined.Item Automation Does Not Kill Jobs; It Increases InequalityBrito, Dagobert L.; Curl, Robert F.; James A. Baker III Institute for Public PolicyThe authors have developed a model of the effects of automation upon an economy similar to the U.S. The model predicts that the most important consequence of automation is to lower the real wages of medium-skilled and low-skilled workers. Data covering the period 1984 to 2016 demonstrate, as the model predicts, that the share of these workers in domestic production has steadily, if somewhat noisily declined.Item Economic and Political Implications of New Developments in Thin Film Solar TechnologyBrito, Dagobert L.; Rosellón, Juan; James A. Baker III Institute for Public PolicyRecent developments suggest that solar panels that are expected to be in production by early 2002 will be able to compete with gas priced at $2.50 to $3.50 in the southern United States. If the cost of solar power continues to drop by a factor of two every five years, solar power will dominate gas for the production of electricity during the day within five years. Solar power produced hydrogen may be competitive with natural gas by 2010. The major uncertainty in the production of hydrogen is whether the cost of electrolyzers can be reduced.Item Economics of Pricing the Cost of Carbon Dioxide Restrictions in the Production of Electricity(James A. Baker III Institute for Public Policy) Brito, Dagobert L.; Curl, Robert F.; James A. Baker III Institute for Public PolicyOne of the more difficult issues in the debate over policy to reduce carbon dioxide emissions is calculating the cost of a carbon dioxide constraint. In this paper, we calculate the cost of a carbon dioxide constraint in the production of electricity by modeling the replacement of coal generators with natural gas generators. We find: 1) Replacing coal generators with natural gas generators is the most economical way to achieve a target of reducing carbon dioxide emissions by 20 percent. 2) Unless there is a technological breakthrough in carbon sequestration, the carbon intensity of coal means that “clean coal” cannot be a significant factor in reducing carbon dioxide. Replacing existing coal generation capacity with modern coal generation plants can only reduce total carbon dioxide by 5 percent. 3) The distribution of the efficiency of coal generators in the United States is very concentrated. This concentration restricts the range over which carbon dioxide prices effectively manage the displacement of coal by gas. At current prices for fuels, a carbon price of approximately $30/metric ton (MT) will shut down 10 percent of coal generator capacity, and a price of $45/MT will shut down 90 percent of coal generator capacity. 4) The narrow range for the price of carbon dioxide means that coal generator capacity is very sensitive to the price of carbon dioxide emissions. This creates the possibility that a market in carbon dioxide permits will result in high volatility in the market for electricity. 5) The carbon prices implied by the transition from coal to gas will have very little impact on transportation fuels. Consumption of transportation fuels would only be reduced by about 5 percent or less by carbon dioxide prices that are compatible with the transition from coal to gas.Item Education and Asymmetric Hispanic Assimilation: A Preliminary Exploration(James A. Baker III Institute for Public Policy) Brito, Dagobert L.; James A. Baker III Institute for Public PolicyIn a recent book, Samuel Huntington argues that Hispanic immigration threatens “America’s identity, values and way of life.” He supports this argument by citing data that supports the widely held belief that Hispanics have not assimilated as well as other ethnic groups, and in fact some investigators have reported that the educational achievement of Hispanics actually declines in the third and fourth generations. This paper uses the data from the National Longitudinal Survey of Youth 1997 (NLSY97) to explore the implications of the assumption that Hispanics who are high school graduates are more likely to intermarry with the rest of the non-Hispanic population than Hispanics who are not high school graduates. The calculations in this paper suggest that the perception that Hispanics are not assimilating as well as other immigrant groups can be explained by selective assimilation that removes a large fraction of the more educated members of the group from the population that is being observed.Item Evolution of the International LNG MarketBrito, Dagobert L.; Hartley, Peter R.; James A. Baker III Institute for Public PolicyWe argue that lower shipping costs together with some other recent changes in the LNG industry are likely to favor shorter term multilateral trades of LNG relative to long term bilateral and project-specific contracts. Such a change in market structure would mimic previous changes in the world oil market, adding credence to the hypothesis that fundamental economic factors are the dominant driving force.Item Immigration Reform: Compromise or Stalemate(James A. Baker III Institute for Public Policy) Brito, Dagobert L.; James A. Baker III Institute for Public PolicyThe status of the approximately 11 million undocumented individuals currently in the United States is one of the more difficult problems in immigration reform. This is a proposal for a pragmatic solution to this problem that accomplishes four goals. First, it makes possible the enforcement of immigration laws at a reasonable cost. Second, it does not create incentives for future illegal immigration. Third, it brings the existing undocumented population under the protection of the law. Fourth, it collects the necessary data so that the selection of who is granted permanent residence is in the best interest of the United States. The solution involves the registration of undocumented residents and then a multi-staged lottery to first allocate repatriation dates and subsequently to grant permanent residence status based on the demographic information collected in the registration.Item Legal, informational, and testing restrictions in employment: A study of antidiscrimination policy(1998) Sadka-Negrin, Joyce Carol; Brito, Dagobert L.This dissertation addresses the problem of informational and legal restrictions on employment screening processes such as educational requirements and standardized testing. For the past two decades, the legal system in the U.S. has struggled with this issue and has labeled certain information or tests as discriminatory because they have adverse impact on minority groups. In the first chapter, we consider the major legal cases in this area and discuss the rationale for these major decisions in light of the evidence on testing and information from the fields of psychometrics and economics. We find that the legal system must take into account the productive inefficiencies that can be caused by informational restrictions, as well as the effects on incentives of firms and workers involved in these legal limitations. In chapter 2, we develop an extension of the language model of discrimination, adding differences in worker ability and the use of language knowledge as a signal of ability. We show that legal restrictions unambiguously lower output. They also result in lower wages for low ability minority workers, without increasing the wage for high ability minorities. Thus informational restrictions have an adverse and regressive effect on the minority income distribution. In chapter 3, we allow firms two selection devices, a standardized test and a language interview. We also consider two possible firm technologies. We find that firms will react to testing restrictions by producing through methods that are less sensitive to employee ability. This results in a regressive wage effect, even in the case of one language group. With two language groups, we find that integration tends to increase with restrictions on standardized testing, but production is reduced and low ability minority wages fall.Item Mathematica Programs for "Automation: Wage Stagnation and Inequality" [Dataset](Rice University, 2020) Curl, Robert F.; Brito, Dagobert L.; EconomicsThis describes the calculations made to determine the effect of automation a developed economy and published as a working paper for Baker Institute of Public Policy. It includes two main types of calculation: 1. two folders with “workup” in the title containing the conversion of the works of others into the parameters needed for the other calculations. 2. three folders containing programs and results of calculations. The computer language chosen for all calculations is Mathematica. The paper itself is published by the Baker Institute.Item Pipelines and the Exploitation of Gas Reserves in the Middle East(James A. Baker III Institute for Public Policy) Brito, Dagobert L.; Sheshinkski, Eytan; James A. Baker III Institute for Public PolicyThe Middle East is endowed with approximately 20 percent of the worldメs proven reserves of natural gas in the world. The cost of transporting Middle Eastern gas, however, is so high that it is difficult to exploit it commercially outside the region. The European market for gas can be supplied in the foreseeable future from North Africa, Russia, the Transcaucaus region, and the North Sea. These suppliers have a significant locational advantage that dominates any edge that Middle Eastern gas may have in the cost of production. The high cost of transporting liquefied natural gas also limits the amount of Middle Eastern gas that can be sold to the Far East. Gas can be transported by pipeline or liquefied and then shipped by sea on special liquefied natural gas carriers. The cost of transporting 1000 cubic feet of gas 1000 miles by pipeline is approximately $.50. The cost of transporting 1000 cubic feet of LNG a distance of 1000 miles by sea is approximately $.30. However, the cost of liquefaction and regasification is approximately $1.40 per 1000 CF. Thus, for natural gas, transporting the energy equivalent of one barrel of oil a distance of 1000 miles costs $3.00 by pipeline and $10.20 if it is liquefied and transported by sea. By contrast, the cost of transporting a barrel of crude oil is approximately $.10 per thousand miles. Natural gas and oil are not perfect substitutes. Gas has environmental advantages and natural gas is a more efficient fuel in electricity generation. However, this advantage has been reduced by new oil fired combined cycle technologies; it is unlikely that in the long run the cost per kilowatt generated with gas can deviate far from the cost per kilowatt generated with oil. Natural gas and oil compete in the energy market. Thus Middle Eastern countries that produce oil are competing with their oil when they export gas. Selling gas reduces the market for oil. Producing LNG or producing middle level distillates at a cost of $10 to $20 a barrel does not make economic sense when the marginal cost of crude oil is under $1 a barrel. These activities can be way to avoid OPEC restrictions on crude production. Exceptions may be countries like Qatar, that have large endowments of natural gas and limited endowments of oil. It is not difficult to show that a rationalization of the OPEC cartel structure and some side payments within would lead to dominant strategies that would eliminate the export of gas from the Middle East to many markets. Paradoxically, the difficulty of exporting natural gas outside the Middle East creates an opportunity for the economic development of the region. Abundant energy at a very low cost would provide a stimulus for economic growth if the appropriate institutional and economic infrastructure can be developed.Item Pricing Natural Gas in Mexico: an Application of the Little-Mirrlees RuleBrito, Dagobert L.; Rosellón, Juan; James A. Baker III Institute for Public PolicyThe Comisión Reguladora de Energía has implemented a netback rule for linking the Mexican market for natural gas with the North American market. This paper describes the economic analysis that supported this policy. We show that the netback rule is the efficient way to price natural gas and it is in fact an application of the Little-Mirrlees Rule. We also study the implications of this new regulatory framework on Pemex’s marketing activities in the forward market for gas. We argue that PEMEX should be permitted to enter into spot contracts or future contracts to sell gas, however, the price of gas should always be the net back price based on the Houston Ship Channel at the time of delivery. This arrangement is transparent, it is easy to enforce and does not eliminate any legitimate market options for any of the parties involved. PEMEX or consumers of gas can use the Houston market for hedging of speculative transactions.Item Revisiting Alternatives to the Straight of HormuzBrito, Dagobert L.; James A. Baker III Institute for Public PolicyItem Rules of origin and negotiations of preferential trade agreements: The domestic preparations(1993) Rosellon Diaz, Juan de Dios Enrique; Brito, Dagobert L.The first part of the thesis addresses the effect of rules of origin regulations on the use of domestic factors of production in the country of origin. In the case of a firm that is a perfect competitor in the final product market these regulations have two effects: first there is a direct substitution effect due to the regulation that will increase the use of the domestic factor and second, there is an indirect output effect due to the increased cost that will reduce the demand for the domestic factor. In the case of a firm that has a monopoly power in the final product market, the declining marginal revenue curve faced by the firm causes the reallocation of output between domestic and foreign plants. This reallocation may further decrease the demand for the domestic factor of production. The second part of the thesis addresses the problem of a government trying to maximize welfare through use of rules of origin regulations when there is conflict among various domestic interests. Numerical computations using this model showed that the optimal rule of origin was very sensitive to the technical parameters of the model which suggests that policy decisions with respect to rules of origin should be made at the greatest level of disaggregation that is feasible.Item The Case for Submarine Launched Non-Nuclear Ballistic Missiles(James A. Baker III Institute for Public Policy) Brito, Dagobert L.; de Mesquita, Bruce Bueno; Intriligator, Michael D.; James A. Baker III Institute for Public PolicyItem The Economics of Disengagement(James A. Baker III Institute for Public Policy) Brito, Dagobert L.; James A. Baker III Institute for Public PolicyThis proposal would enable Israel to disengage from the Palestinians without creating a Palestinian state that is the economic equivalent of Haiti. The essential idea is to augment Gaza by approximately 4,000 square kilometers by adding part of the Negev desert that is essentially uninhabited and to transfer 500 million cubic meters of desalinated water and water from the Mountain Aquifer to the Palestinians. This would make it possible to develop an industrial and service economy in Palestine that could support four million people and allow Palestinian refugees to return to an economically viable Palestinian State. Extending Gaza so that it is economically viable and able to support a Palestinian population would permit a two-stage implementation of the Road Map to Peace. The first stage would turn the governance of this territory over to the Palestinian Authority and give it the opportunity to create the necessary institutions while the Gordian knot of Israeli settlements in the West Bank was being disentangled. In the second stage, at the conclusion of the peace negotiations, the Palestinian Authority would take control of those portions of the West Bank that will become part of the Palestinian State but are not already under its control.Item The Political Economy of Solar Energy(James A. Baker III Institute for Public Policy) Brito, Dagobert L.; Rosellón, Juan; James A. Baker III Institute for Public PolicyAt the present time, solar power is not a competitive fuel for supplying electricity to the grid in the United States. However, an economic model developed by the U.S. National Renewable Energy Laboratory (NREL) forecasts that solar power production costs could drop twenty percent every time output doubles. Commercial demand for solar cells in the United States has been increasing at a rate of twenty-five percent a year. Such cost projections, if accurate, imply that solar power could be a competitive source of power to the U.S. grid by 2010. Eventually, technical progress and falling production costs will render solar power an important source of energy in the future. As technology improves, it may be possible to supply a substantial part of the nation with solar power from sites in the southwest of the United States and Mexico. Scientists believe that the cost of solar power will drop approximately two cents a kilowatt-hour or perhaps even one cent per kilowatt-hour. If there is enough foresight to develop the technology, then solar-derived hydrogen would become a competitive feedstock in petrochemicals. This would be a dramatic shift that would revolutionize economic development, much like the shift from hunting and gathering to agriculture. However, without government leadership, this process of change could take fifty years. With proper leadership, it could be realized in less than ten to fifteen years. Removing the world’s dependence on Middle Eastern oil has major implications for the stability of the international order. Leadership to push the large scale study of solar power must come from an important institution such as the National Academy of Science. Economists, engineers, and scientists should conduct an investigation to see what technologies—such as nano-technology for storage and transmission—need to be developed to facilitate the widespread adoption of solar power. It may be that the problems of Middle Eastern oil dependence and global warming can be solved at a cost no higher than the current subsidies of ethanol.