September » 2011 » TripleCrisis

Spooked into austerity, we dig our own economic grave

The stupidity of the current macroeconomic stance in the UK is surprising in itself; but when combined with similar voices in Europe and the US, it is downright astonishing. Three years after the collapse of Lehman Brothers, the global economy is not going through a recovery from financial crisis, but simply entering act two after a brief intermission. On current form this play is a farce that will end in tragedy.

Policy discussion on both sides of the Atlantic is dominated by extreme fiscal hawks, who wrongly see public spending as the problem rather than at least part of the solution. The emphasis on fiscal rectitude is accompanied by the inability to rein in finance. All this condemns economies to financial instability, depressed and even contracting GDP and worsening conditions for ordinary citizens.

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The Global Crisis as a (Brothers) Grimm Story

Mark Blyth

I am currently writing a book about how austerity became the policy response to the crisis. One of the questions I struggle with in writing this book is how simple can you make the story without it becoming a children’s fable. In order to find out, I decided to write it up as a children’s fable (See below). I think it shows that when you strip it down to its essentials, it’s a pretty simple story, even if it’s a rather GRIMM (sic) tale.

The Global Crisis as a (Brothers) Grimm Story

Once upon a time in the land of US, the ‘job creators’ decided to send as many of the jobs they created as possible to THEM. THEM would make cheaper stuff to send back to US to buy, so more profits and cheaper stuff for US. Everyone wins! Yippee! So THEM made lots of stuff for US, and US sent THEM lots of cash to pay for the stuff they made.

But rather than spend the cash US sent THEM, THEM decided to give it back to US so US could buy even more stuff from THEM. THEM made even more money doing so, and sent it back to US!

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Obama Pushes NAFTA Style Trade Policy Despite 2008 Promise

Triple Crisis blogger Timothy A. Wise was recently interviewed by The Real News Network on President Obama’s Trans-Pacific Partnership Agreement (TPP), based on his recent LATN Brief, “U.S. Trade Policy: ‘Still Waiting for a “21st Century Trade Agreement’,” co-authored with Kevin P. Gallagher. He argues that the TPP is simply an extension of the failed NAFTA model that creates asymmetry between trading partners and primarily protects the rights of multinational firms.

Download the full LATN Brief, which is based on the Task Force on North American Trade Policy Report, now available in Spanish. Read Wise’s recent blog on the TPP.

U.S. Trade Policy: Moving backwards in the 21st century

Timothy A. Wise

Three years into the Obama Administration, progressives have no shortage of complaints about the president’s economic policies, which seem very much at odds with Candidate Obama’s soaring rhetoric. Economic policies have been centrist at best. Unfortunately, the President’s trade policies may be further to the right than that. He is now counting primarily on Republican votes to push three Bush-era trade agreements, with Korea, Colombia, and Panama. And his trade negotiators are in Chicago wrapping up a negotiating session on the Trans-Pacific Partnership Agreement (TPP), which he promised would be his signature “21^st century trade agreement,” unencumbered by Bush-era provisions.

Administration proposals, however, are very last-century, drawing more from the disastrous North American Free Trade Agreement (NAFTA) than they do from forward-looking reform proposals. On the campaign trail in 2008 Candidate Obama criticized NAFTA and other trade agreements for giving “broad rights to investors.” So what are his 21^st century TPP proposals? By all accounts, a broadening of rights for investors.

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South Africa’s coming fight over capital flight

The Triple Crisis Blog is pleased to welcome Patrick Bond as a regular contributor. He is a political economist and Director of the Centre for Civil Society at the University of KwaZulu-Natal School of Development Studies in Durban. His research focuses on political ecology (climate, energy and water), economic crisis, social mobilization, public policy and geopolitics.

At a time South African trade unions are under fierce attack from big business for winning above-inflation wage increases through strikes, and for opposing both informal labor outsourcing and a state-subsidized sub-minimum wage for youth, the sibling of former president Thabo Mbeki is helping restore balance.

According to businessman-intellectual Moeletsi Mbeki, speaking last week to the white-dominated opposition party, “Big companies taking their capital out of South Africa are a bigger threat to economic freedom than African National Congress Youth League president Julius Malema.” (The latter, a tycoon through crony deals, recently achieved notoriety for advocating the nationalization of mines.)

It is a ripe time for such in-your-face challenges to orthodoxy here, given the post-apartheid elites’ hostility to exchange controls.

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Grabbing Global Farmland

Jayati Ghosh

An extraordinary new process has been at work in the past few years: the aggressive entry of Indian corporations into the markets for agricultural land in Africa. At one level, this process is simply following the hoary old tradition in global capitalism, of firms (often supported by the governments of the originating countries) entering new areas in search of access to natural resources on preferential terms.

Several centuries ago, the growth of plantation agriculture in large parts of the western hemisphere was essentially the product of such a process. This was further facilitated by cross-border movements of labour (in the extreme case of African labour through slavery, then through indentured labour contracts largely from South Asia, then through supposedly more ”free” movements driven by lack of adequate income opportunities in the home countries). Together these flows generated production and trade patterns that were critical in shaping the international division of labour by the mid-twentieth century.

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Jobs, and Clean Air Too

The Triple Crisis Blog is pleased to welcome Elizabeth A Stanton as a regular contributor. She is a Senior Economist with the Stockholm Environment Institute-US Center, where her work focuses on environmental policy, economic inequality, and the interplay between climate protection and development.

What’s good for job growth, good for the environment, and good for public health? No, it’s not a trick question, but it is a reassessment of what passes for conventional wisdom in Washington these days. The answer is the Clean Air Act, the Clean Water Act, and other enormously popular environmental regulations enacted in the 1960s, 70s and 80s with strong bipartisan support.

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The false promise of Obama's trade deals

Kevin Gallagher and Timothy Wise

It is bad enough that President Obama is reversing his campaign pledge and supporting Bush-era trade deals with Korea, Colombia and Panama. Starting this week in Chicago, the US will be hosting the first major trade negotiations since the “Battle in Seattle” World Trade Organisation talks came here in 1999. This occasion is for the Trans-Pacific Partnership (TPP) with a wide range of industrialised and developing Pacific Rim countries.

As part of his plan to revive the US economy and create jobs, Obama claims he will be unveiling “a trade agreement for the 21st century”. Ironically, though, he will be pushing the same “Nafta-style” trade pacts he campaigned against, and to howls of protest from his own electoral base. Let us not forget what he said:

“I voted against Cafta, never supported Nafta, and will not support Nafta-style trade agreements in the future,” Obama told Ohio voters (pdf) in 2008. “While Nafta gave broad rights to investors, it paid only lip service to the rights of labor and the importance of environmental protection.”

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The false promise of Obama’s trade deals

Kevin Gallagher and Timothy Wise

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How Obama is to the Right of Reagan on Trade

Sarah Anderson, guest blogger

I hate to break it to the Tea Partiers, but their presidential idol was less of a free-market hardliner in trade negotiations than Barack Obama.

While doing some archaeological digging into old treaties, I discovered that the Reagan revolutionaries were relative softies on at least one issue — government meddling in capital markets.

The vast majority of the 52 existing U.S. trade agreements and bilateral investment treaties forbid governments from putting controls on capital flows. But buried in the annexes to four Reagan-era treaties, I found exemptions allowing trade partners to apply such controls during financial crises. Capital controls are various measures including (gasp!) taxes designed to prevent speculative bubbles or rapid capital flight.

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