Sophia Murphy, Guest Blogger
The 36th meeting of the FAO’s Committee on Food Security (CFS) concluded in archetypal UN fashion: one and a half hours of apparently aimless milling about followed by a call to order, a ten minute exchange during which it becomes clear that the milling about was actually about last – very last – minute negotiations, and, finally, adoption of the report by acclamation. So ended the first meeting of a revamped piece of the UN system — a small but fascinating piece.
Security – protection from natural and accidental disasters as well as from deliberate efforts to inflict harm – is a basic human need. To a large extent it is a public good: when provided to one it is provided to all. Security is one reason for the existence of governments.
Those who want to play the role of daddy in a daddy state peddle the illusion that security can be entrusted to government alone. But real security requires more than government agencies. On the economic front, it requires infrastructure built for resilience. On the political front, it requires citizens to shoulder responsibilities. And on the moral front, it requires respect for others.
Security – protection from natural and accidental disasters as well as from deliberate efforts to inflict harm – is a basic human need. To a large extent it is a public good: when provided to one it is provided to all. Security is one reason for the existence of governments.
Those who want to play the role of daddy in a daddy state peddle the illusion that security can be entrusted to government alone. But real security requires more than government agencies. On the economic front, it requires infrastructure built for resilience. On the political front, it requires citizens to shoulder responsibilities. And on the moral front, it requires respect for others.
For those of us advocating change in the global financial architecture, the last few months have been fairly exhilarating. Let’s recap…
Capital controls, as I’ve written previously, have become the ‘new normal’ in the developing world. It’s hard to keep up with developments in countries that have introduced or tightened existing controls since I last wrote about them here (see below). IMF staff now write about capital controls with a taken-for-granted attitude (see even the institution’s October 2010 Global Financial Stability Report, which contains the by now customary bland language on the role and efficacy of capital controls, e.g. p. 28).
Paul Krugman has drawn attention to the plight of Ecuador, noting that, since the country does not have an exchange rate policy (and hence a monetary policy), it stood deprived of a variety of policy instruments to face the crisis. With tied hands it resorted to the expedient of restricting imports.
Dollarization was no doubt a straightjacket. Ecuador nonetheless worked against the current and found policy space in a two pronged strategy to strengthen the financial system under threat of runaway deposits; and to provide support for domestic agriculture and industry.
Even the Queen of England could see that the economics profession messed up big time in the lead up to the financial meltdown. On a visit to the London School of Economics in 2009 she asked why economists’ failed to foresee the crisis. After a “serious” study, a group of eminent economists’ said economists had a “failure of imagination”, suggesting, perhaps, the need for more envisioning courses in Economics PhD programs. Paul Krugman pinned it mostly on economic theorists’ obsession with mathematical beauty and elegance at the expense of true understanding, what he called “mistaking beauty for truth”.
In an interview with the Institute for Agriculture and Trade Policy (IATP), GDAE’s Timothy Wise discusses the implications of U.S. agricultural dumping in Mexico. Wise’s comments are based on his paper on agricultural dumping under NAFTA, which is part of the Woodrow Wilson International Center for Scholars’ current project on Mexican agricultural policies, “Subsidizing Inequality“, now available in Spanish and in English in late 2010. For more on this project, see Wise’s latest Triple Crisis piece on agricultural dumping and his recent op-eds in El Universal and La Jornada.
Mark Blyth, faculty fellow at the Watson Institute for International Studies at Brown University, illustrates the flawed logic behind public austerity measures governments are adopting in the wake of the financial crisis and the consequences such measures would have on the poor. Blyth will be joining Triple Crisis as a regular contributor later this month.
Timothy A. Wise sat down with Triple Crisis blogger Mehdi Shafaeddin of the Institute of Economic Research at the University of Neuchatel, Switzerland, to discuss the political and economic challenges the Least Developed Countries (LDCs)are facing in the wake of the global economic crisis. Based on his South Centre report , Shafaeddin explains the potential negative impact of Europe’s Economic Partnership Agreements on LDCs’ policy space to respond to the crisis.
Even as governments in individual countries are struggling to move forward on post-crisis financial reform aimed at preventing another crisis, the G20 seems to be settling for marginal modifications of the pre-existing framework for global regulation– at the centre of which are the Basel norms. The Basel norms in their various versions essentially require banks to hold capital amounting to a certain proportion of their risky assets in forms that are available and easily accessed to cover losses. Capital that was free of encumbrances and liquid to different degrees was ranked Tier I or Tier II, with each Tier required to be kept at a certain proportion of the value of risk-weighted assets.