How to Reinvent the Sanitation Wheel

Sunita Narain

Swachh Bharat Mission, the government’s much-needed flagship programme, is not just about building toilets. It is about building toilets that people can use, and most importantly, are linked to the waste disposal and treatment systems. This much is clear. But how will this be done? This is still a million dollar question. The reason is that we do not even know where our waste comes from and where it goes.

My colleagues studied the excreta sums of different cities. The city “shit-flow” diagram shows that the situation is grim as all cities either do not treat or safely dispose the bulk of the human excreta. This is because we often confuse toilets with sanitation. But the fact is that toilets are mere receptacles to receive waste; when we flush or pour water, the waste flows into a piped drain, which could be either connected, or not, to a sewage treatment plant (STP). This STP could be working, or not. In this case, the faecal sludge- human excreta-could be conveyed, but not safely disposed as it would be discharged into the nearest river, lake or a drain. All this will pollute.

In most cities, this connection from the flush to the STP does not exist. According to Census 2011, the flush water of some 30 per cent of urban India is connected to a piped sewer. But our survey found that in most cases, these underground drains have either lost their connections-they need repair—or are not connected to STPs.

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Structural Reforms Are Not the Answer: Expansionary Fiscal Policy Is

Philip Arestis and Malcolm Sawyer

The recovery from the global financial crisis has been a slow and protracted one, with output levels in many industrialised countries having only recently regained the pre-global financial crisis levels of 2007. Unemployment, and particularly youth unemployment, remains high in many countries and the prospects for growth remain sluggish. The prospects for growth, particularly among the BRICS countries (Brazil, Russia, India, China, and South Africa), are not looking rosy, with a slowdown in growth in China and Brazil into decline.

The central banks’ responses to the global financial crisis and the great recession were to sharply reduce interest rates, and maintain them at very low levels by historic standards, and have tended to move lower and in some cases into negative territory in the past years (the Fed rate rise in December 2015 being an exception). “Unconventional monetary policy” and quantitative easing became widely used, and its intensification in the past few years has pushed actual interest rates even lower. It is now clear that quantitative easing has been ineffectual and has now largely run its course.

Many have spoken of a “savings glut.” Others talk of secular stagnation in terms of the “natural rate of interest” having moved into very low or negative range which in their theoretical framework means the tendency to save falls short of the tendencies to invest. The obvious response to an excess of savings over investment is to run a corresponding budget deficit which enables the savings to be realised and supports aggregate demand. Some, such as Germany and the Netherlands are able to combine high savings with low investment through a current account surplus, but others need a budget deficit.

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Robust Global Economic Recovery Needs Coordinated Policy Response

Anis Chowdhury and Jomo Kwame Sundaram

In the wake of releasing the IMF’s latest assessment of the global economy, Chief Economist Maurice Obstfeld noted in his blog, “Global growth continues, but at an increasingly disappointing pace that leaves the world economy more exposed to negative risks. Growth has been too slow for too long.”

The IMF anticipates 3.2% global economic growth this year, down from 3.4% predicted in January, 3.6% last October and 3.8% last April. Nonetheless, this continuously downward revised forecast is still higher than the United Nations global growth forecast of 2.9% and 3.2% in 2016 and 2017 respectively early this year.

‘Solution’ is the problem
The United Nations has been warning against early fiscal consolidation and austerity since 2009 before G20 leaders retreated, in mid-2010, from their earlier commitment, at their April 2009 London Summit, to coordinate their responses involving large fiscal stimulus packages to prevent the global financial crisis from becoming a depression. In effect, Gordon Brown, the host, considerably strengthened the IMF, ostensibly to better support affected countries, to ensure a coordinated and balanced global recovery.

But the first ‘green shoots of recovery’ provided the pretext for a policy U-turn once powerful financial interests had been saved. Rapid ‘fiscal consolidation’ through budgetary austerity measures, it was claimed, would restore investor confidence, thus ensuring higher investment and growth. Even though much cited research justifying ‘fiscal austerity’ was discredited as flawed, and the IMF admitted that such advice was based on erroneous ‘back of the envelope’ estimates, leaders in Europe have stuck to their contractionary fiscal policy stance.

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From Heat Wave to Global Hothouse

Martin Khor

The heat wave in Malaysia has continued relentlessly for the past few weeks. There are reports of the heat affecting fish farms and livestock, resulting in a lot of losses.

As the water level drops in most dams, the water supply situation is also causing concern.

Schools in some northern states closed again for a few days when the temperatures crossed the danger level.

Last week, haze caused by open burning and forest and peat fires on Sabah’s west coast added to the people’s misery.

The combination of heatwaves caused by El Niño, made worse by climate change, forest fires and haze, must be causing residents to feel like they are in hell-like conditions, having to suffer the heat, air pollution and breathing difficulties all at the same time.

There are now predictions that rain will soon fall and put an end to the scorching heat. The bad news is that the rains may be so heavy as to cause floods in parts of the country.

These extreme weather events are no longer temporary irritations that will soon go away and are thus tolerable.

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TSCG Fiscal Rules: EU Mandate for Bad Policies

John Weeks

The EU: Hold Your Nose and Vote “Stay”

Most Americans and many U.S. progressives hold a favorable view the European Union. This positive assessment persists despite the crushing of the Greek challenge to austerity conditionalities set by the European Commission and European Central Bank aided and abetted by the International Monetary Fund.

The primary basis for pro-EU sentiments may be that Americans consider the European Union a bastion of social democracy in contrast to the neoliberal ideology of the Republican and Democratic parties, which Bernie Sanders has so eloquently attacked. However, the institutions of the European Union, especially its executive the European Commission practice a neoliberal ideology and pro-business policies as aggressive as counterparts in the United States.

This is not a recent change, but a long-maturing trend going back at least to when Helmut Kohl of the right-wing Christian Democratic Union replaced the Social Democrat Helmut, Schmidt, as chancellor of Germany. The misplaced belief that Jacques Delors, EC president for ten years, was committed to social democracy perpetuated the illusion of a progressive EU. While no reactionary like Kohl, the French socialist politician supported market oriented “reform” of the European Union’s economic policies.

By the 2000s neoliberals had taken firm control of the European Commission, manifested most obviously in the 1992 Maastricht Treaty. The step-by-step legal codification of EU reactionary economic policies goes far beyond legislation enacted in the United States. As a result, it should surprise no one that in Britain and on the continent support for membership in the European Union splits progressives. In Britain the issues looms large, with a referendum on continued membership scheduled for 23 June.

The progressive case of membership is a hard row to hoe.

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No Country for Old People

David Bacon

Is there a human right to age in dignity? Some countries think so. Unfortunately, the United States isn’t one of them.

The Organization of American States (OAS) recently adopted the first international convention on the human rights of older people (though the United States did not endorse it). The Organization of African Unity (OAU) is debating its own convention, and is expected to adopt it next year.

It is ironic that the world’s poorer countries, presumably those with the fewest resources to deal with aging, are in the vanguard of establishing this set of rights. Meanwhile, the richest countries with the most resources, including the United States and members of the European Union, are arguing against applying a human-rights framework to aging. In part, their contrarian stance reflects the dominance of market ideology. In a corporate economy, people lose their social importance and position when they are not working and producing value. In the United States, the resulting set of priorities has a devastating impact on older people.

While some countries are creating a new definition of human rights to include aging, and passing conventions that incorporate it, millions of seniors in the United States live in very vulnerable and precarious conditions, which are violations of their human rights as viewed in this context.

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China-Latin America Economic Bulletin 2016

Rebecca Ray, Kevin Gallagher, and Rudy Sarmiento

Chinese lending to Latin America more than doubled in 2015, rising to $29.1 billion USD. Meanwhile, China-Latin America trade stagnated, as the commodity boom of the last decade continued to cool. Overall, last year saw the China-Latin America relationship shift toward finance, especially finance for large infrastructure and energy projects in Latin America. Activity continued —albeit at an early stage — in several large developments such as the Nicaragua Canal and Twin Ocean Railway. Meanwhile, other Chinese-financed projects such as the Coca Codo Sinclair dam neared completion.

These are the main findings of the 2016 China-Latin America Economic Bulletin, the third annual brief on developments in trade, investment, and finance between China and Latin America. These bulletins are designed to provide analysts and observers handy reference to the ever-changing landscape of China-Latin America economic relations, a landscape where data is not always as readily accessible.

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Paul Krugman Crosses the Line

Gerald Epstein

In his recent New York Times opinion column, “Sanders Over the Edge” (4/8/16), economist Paul Krugman offers his readers a basketful of misinformation on important economic matters about which he should – and probably does – know better. The column contains a large number of snipes and a great deal of innuendo against Bernie Sanders and his supporters, but here I focus on his claims about “Too Big To Fail” (TBTF) banks, their role – non-role, according to Krugman –  in the financial crisis, and Sanders’ understanding of the policy tools available to deal with them. Krugman’s claims about these issues are misleading, almost certainly wrong, and, in my view, call into question the credibility of his New York Times column as a source of economic information and analysis.

Krugman starts here:

“Bernie is becoming a Bernie Bro.” I’ll leave it to others to dissect this one. Moving on:

“Let me illustrate the point … by talking about bank reform.

“The easy slogan here is ‘Break up the big banks.’ It’s obvious why this slogan is appealing from a political point of view: Wall Street supplies an excellent cast of villains. But were big banks really at the heart of the financial crisis, and would breaking them up protect us from future crises? Many analysts concluded years ago that the answers to both questions were no.”

As you can see by following Krugman’s link here, this is not, what Krugman suggests it is: it is not a link to an article quoting multiple analysts presenting strong arguments with evidence that large banks were not responsible for the crisis. It is a link to an opinion piece by Paul Krugman himself. Period.

And, moreover, in this linked piece, Krugman is far more circumspect and uncertain of the answers than if implied in his statement “that many analysts concluded years ago.” So, who are these “many analysts”? On what basis did they reach their conclusions?

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The WSJ and NYT Spin Elite Tax Fraud as “Good News”

William K. Black

A single Panamanian law firm—one of many hundreds of such firms in the world that specialize in aiding tens of thousands of elites to evade taxes—has had over a million of its documents leaked to a consortium of investigative journalists.  Neither the New York Times nor the Wall Street Journal are part of that consortium, and neither seems embarrassed about that failure.  Instead, they have filled their pages with pieces about the Panama leaks that are spun so brazenly and bizarrely that as a reader even I was shocked at their audacity.

The New York Times was late to the story, but its April 5, 2016, analytical piece Peter Eavis that bore this astonishing title:  “In Panama Papers, Finding the Good News in Widespread Tax Cheating.”  The Wall Street Journal, despite its less bizarre titles managed to surpass the NYT with the volume and the blatancy of its spin.  In an April 5, 2016, article entitled “Panama Papers: Hiding Cash Has Become Crummy Business.”  The thrust of that story is that laundering money and tax evasion is a “crummy business” not because it is immoral and destructive, but because it is purportedly experiencing reduced profitability.

But the WSJ’s editorial pages always trounce the increasing lunacy of their news pages.  News of endemic fraud by elites is simply an opportunity to attack the paper’s enemies.  Bret Stephens’ op ed has a title that exemplifies this attack syndrome: “‘C’ Is for Corruption: The Clintons are the Brazilianization of American politics.”  A reader might wonder what all of this had to do with the Panamanian leak.

This is Stephens’ explanation.

“China: A leak of 11.5 million documents from Panama-based law firm Mossack Fonseca—instantly dubbed ‘the Panama Papers’—implicate relatives of President Xi Jinping along with other top officials of sheltering fortunes in offshore tax havens. Mr. Xi is supposed to be leading an anti-corruption campaign.

“The Panama Papers have also exposed billions in assets belonging to close friends of Vladimir Putin …

“But nobody can be surprised by any of this. And nobody should look away from the central lesson of the scandal, though they’re trying. To wit, the story here isn’t about tax evaders and offshore accounts, deplorable as they may be. It’s about public policies and incentives that make a career in politics an expedient route to personal enrichment.”

See, the story isn’t really about corrupt private elites—it’s about corrupt government elites.  Except that from Murdoch’s perspective this means a chance to take a shot at the likely Democratic presidential nominee.

Fortunately, the WSJ’s entire editorial staff served the nation by putting “The Panama Papers in Perspective.”  The WSJ is shocked and distressed that the public is focusing on the wealthy engaging in tax abuse, including tax fraud.  The WSJ wants us to adopt the “perspective” that this is merely a “distraction” foisted by “the political class” from the real issue that government is corrupt.

“That’s not stopping the media from jumping to conclusions, and many are oddly focusing on tax avoidance. The claim is that these leaks show how easily wealthy individuals have been able to use Panamanian bank-secrecy laws—long a target of global tax campaigners—to ‘conceal’ their wealth.

“The ICIJ solicited comment from Gabriel Zucman, a student of left-wing economist Thomas Piketty who last year published a book decrying offshore tax havens, and he dutifully opined, ‘These findings show how deeply ingrained harmful practices and criminality are in the offshore world.’

“The Organization for Economic Cooperation and Development described Panama as the ‘last, ultimate tax haven’ and clearly hopes these reports will force the Central American country to abandon its secrecy laws.

“The far more important question is how so many public officials in so many governments managed to accumulate so much money.

“The mistake now would be to narrow the focus prematurely, zeroing in on tax avoidance that is a hobbyhorse of the political class but in this case is a distraction. The real news here are the incomes and far-flung bank accounts of the political class.”

See, we all have it all wrong.  We all need to read the WSJ and the NYT and celebrate the good news of massive tax fraud by business elites and join together to denounce government.  Ignore the tens of thousands of wealthy men behind the screen of bank secrecy evading taxes.  They are a “distraction.”

William K. Black is Associate Professor of Economics and Law, University of Missouri-Kansas City.

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