In India, where I live and work, the environmental issue is at an important juncture, which has important lessons for the world, if we care to listen.
Today, all over the country, there are growing protests against what are considered development and infrastructure projects. At the site of the coal power plant in Sompeta in Andhra Pradesh, the police opened fire on some 10,000 protesters, killing two. People were fighting against the takeover of their water bodies by the thermal power project. In the alphonso mango-growing Konkan region farmers are up in arms against a 1,200 megawatt thermal plant, which, they say, will damage their crops because of pollution. In Chhattisgarh, people are fighting against scores of such projects, which will take away their land or water. I have just written about yet another such fight, where farmers told me that the proposed cement factory, being built in their watershed, can only be built after killing them.
Triple Crisis bloggerJayati Ghosh published the following opinion article in Boston Review as part of the forum Back to Full Employment, in which Robert Pollin urges the Obama Administration and Congress to put full employment back on the agenda. Her article responds to Pollin’s piece and highlights how developing countries have struggled with the policy challenge of full employment over the past 20 years.
Full Employment For Growth
Robert Pollin has identified the central challenge of economic policy today: how to sustain high employment levels and jobs with decent wages and conditions. This argument is relevant not only for the U.S. economy, but also for much of the developing world, including its “successful” countries in which large increases in GDP have not translated into high-quality employment.
Over the past two decades, most developing countries have relied on an economic strategy focused almost exclusively on exports to rich markets. This strategy delivered rapid growth in a few countries, such as China, but failed to do so in most others. Furthermore, countries that rely on exports for growth need to prioritize competitiveness in global markets, which means low wages and a currency kept cheap relative to the dollar, euro, yen, and British pound. This is why, even in the economies that showed great success as exporters, levels of consumption by the overwhelming majority of working people have largely remained stagnant.
On Monday, we reported on a letter signed by more than 250 prominent economists, including many Triple Crisis bloggers, which was delivered to Secretary of State Hillary Clinton, Treasury Secretary Timothy Geithner, and US Trade Representative Ron Kirk, urging the Obama Administration to remove restrictions in its trade agreements with developing countries that limit the use of capital controls. The story was featured in the Wall Street Journal, Bloomberg, BNA Trade Daily (subscription only), and it was picked up on Naked Capitalism blog and the NY Times Dealbook blog among others. Kevin Gallagher, one of the letter’s initiators with Sarah Anderson of the Institute for Policy Studies, wrote his monthly column on the topic in the Guardian. Gallagher and Anderson were also interviewed by the Real News Network to explain why capital controls are an important policy tool developing countries can use to prevent financial instability.
Read the full letter and press coverage here. (The letter is also available in Spanish.) Read more on Gallagher’s work on capital controls.
In the effort to restore economic optimism and talk up global growth, the favourite phrase doing the rounds today is “multispeed recovery”. Unevenness in growth, which was earlier seen as a sign of global imbalance, is now being celebrated as cause for optimism.
World Bank President Robert Zoellick speaking on global economic prospects, and business leaders and experts debating in Davos, have recently argued that all segments of the global economy are on a highway to recovery, even if on lanes that permit different speeds. There are at least three speeds at which the recovery is expected to proceed during 2011: 6 per cent in the emerging economies led by China and India, 3 per cent in the US and less than 2 per cent in the euro area. Put together, these are presented as a significantly positive rate for the global economy as a whole. While the working people in a host of countries, developed and developing, may be short of jobs and incomes, a truly global perspective seems to provide cause for optimism.
The Financial Crisis Inquiry Commission (FCIC) released its report last week, and concluded that the crisis was foreseeable and avoidable. The FCIC argues that authorities were permissive and that: “the prime example [of permissiveness] is the Federal Reserve’s pivotal failure to stem the flow of toxic mortgages, which it could have done by setting prudent mortgage-lending standards.” The report is right to emphasize that failures of regulation and supervision were crucial to the eventual collapse, which by the way is a fitting indictment of Geithner, Bernanke and several other policy-makers still in key positions.