Whose country is it? Wall Street occupies the regulatory agencies

Steve Suppan, Guest Blogger

The occupation of Wall Street by protestors against financial “innovations,” such as mortgage derivatives, which have devastated the real economy and its people, is beginning its fourth week; the Wall Street occupation of U.S. regulatory agencies, which are supposed to ensure fair and transparent markets, is into its ninth decade.  A vote tomorrow by the Commodity Futures Trading Commission (CFTC) on a weakened rule to reduce bank and hedge fund control of agriculture and energy markets will likely confirm the continued occupation by Wall Street.

Market deregulation, lubricated by a $5 billion lobbying budget from 1998 to 2008, according to Wall Street Watch, is a major cause of the economic crisis from which we are trying to recover. As CFTC Chairman Gary Gensler noted in an October 3 speech, the unregulated market now is seven times the size of the regulated market.

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The self-inflicted wound of US foreign aid cuts

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It’s not every day that foreign aid is front page news in the United States, but it is because slashing foreign aid has become one of the few areas of bipartisanship in the US Congress. Such an act of retreat is short-sighted. Given that China and other emerging markets are ramping up their overseas development assistance, the US should be revamping and increasing aid, not cutting.

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Spotlight G20: Tax "Bads" and not "Goods"

Edward B. Barbier

A fundamental problem impeding global economic progress, growth and job creation is that all economies base their tax systems on raising revenues from “goods”, such as income, wealth and employment of labor.  And, perversely, governments rarely tax, and in fact often subsidize, “bads”, such as natural resource use, pollution and financial speculation.

The result is two major distortions in the world economy.  First, investment, innovation and job employment are discouraged, while pollution, environmental degradation, and financial speculation are encouraged.  Second, these perverse incentives perpetuate the “no win” political stalemate over whether additional taxes on income, wealth and labor should be used either to reduce chronic budget deficits or boost public spending and aggregate demand in economies.  As I argue in a recent article in the UN’s sustainable development journal, Natural Resources Forum, this policy failure is also inhibiting the long-run transition to more sustainable and “greener” economies.

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Spotlight G20: Tax “Bads” and not “Goods”

Edward B. Barbier

A fundamental problem impeding global economic progress, growth and job creation is that all economies base their tax systems on raising revenues from “goods”, such as income, wealth and employment of labor.  And, perversely, governments rarely tax, and in fact often subsidize, “bads”, such as natural resource use, pollution and financial speculation.

The result is two major distortions in the world economy.  First, investment, innovation and job employment are discouraged, while pollution, environmental degradation, and financial speculation are encouraged.  Second, these perverse incentives perpetuate the “no win” political stalemate over whether additional taxes on income, wealth and labor should be used either to reduce chronic budget deficits or boost public spending and aggregate demand in economies.  As I argue in a recent article in the UN’s sustainable development journal, Natural Resources Forum, this policy failure is also inhibiting the long-run transition to more sustainable and “greener” economies.

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Occupy Wall Street: All the Power To Them, But Get the Targets Right

Kevin P. Gallagher and Mark Blyth

Last week we paid a visit to the Occupy Boston outpost of the Occupy Wall Street Movement.  The group has pretty much taken over Dewey Square in front of the Federal Reserve.  They had a couple hundred people there, but the numbers seem to be growing by the day. We liked what we felt, though not always what we saw and heard.

What we felt was a brewing angst among activists, working people, and students that something is fundamentally wrong with the way the economy is ‘delivering the goods’ and to whom in the US. They may not know what they are for, but they do know who they are for: who they call the “99 percent”—those of us in the US who are not millionaires, and whose jobs and livelihoods are increasingly threatened.

Also admirable is that they have set up a “Free School University” to educate themselves. And that is where we came in. We were asked to lecture on the “first day of classes.”

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New Website on International Investment Arbitration

Researchers at the Osgoode Hall Law School of York University have launched a new website, International Investment Arbitration + Public Policy. This website, www.iiapp.org, launched last month, aims to showcase research on international investment arbitration in a way that is accessible, independent, and relevant. It was motivated by past questions from governments, businesses, NGOs, and the media related to the rise in so-called investor-state disputes allowed by some trade and investment agreements.

Its purposes are to:

  • provide open access to research on investment arbitration;
  • identify options for governments in responding to investor lawsuits;
  • shed light on the role of investment arbitrators in policy-making; and
  • highlight the case for more openness, independence, and public accountability in the system.

Visit www.iiapp.org for more information.

The Dragon’s Shadow: China’s banking system

Jayati Ghosh

On October 10, the Chinese government announced that it will increase its stakes in the four largest commercial banks, which are already largely public-owned. The move is designed to “support the healthy operations and development of key state-owned financial institutions and stabilise the share prices of state-owned commercial banks”.

But why was this move considered necessary at all? Recently, investors have been dumping Chinese bank shares, anticipating a slowing down not just of the economy as a whole, but in particular the property market, which had experienced a bubble of massive proportions. But the underlying concern about the health of Chinese banks reflects a deeper concern, about the extent of entanglement of these commercial banks with the growing “shadow banking sector”.

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Coal ash regulation would create 28,000 jobs

Frank Ackerman

Does environmental protection destroy jobs? That may be the strongest argument that the pro-pollution lobby has going for it. No one wants to endorse dirty air and water in so many words, but hey, we’re just trying to save jobs at a time when millions are out of work. In one of the latest reincarnations of this idea, the electric utility industry claims that regulating the disposal of coal ash could eliminate up to 316,000 jobs.

Ever sensitive to industry’s needs and wishes, Republicans in the House of Representatives have drafted a bill to ban federal regulation of coal ash, H.R. 2273. It’s expected to reach the floor of the House for a vote this week. Lobbyists supporting H.R. 2273 helpfully point out that it will stop the destruction of 316,000 jobs.

A quick reality check: regulating coal ash disposal means using earth-moving equipment, which doesn’t drive itself, constructing new facilities which don’t build themselves, and so on. Close your eyes and try to picture this, and you may see some workers on the premises. Environmental regulation generally creates jobs, including lots of blue-collar jobs in construction and manufacturing.

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Key Resources on Flawed U.S. Trade Deals

As the U.S. Congress prepares to vote Wednesday, October 12, on free trade agreements with Korea, Colombia, and Panama, Triple Crisis notes below several important critiques from bloggers. All point to the limited reforms to the “NAFTA template” made by the Obama Administration. The scheduling of the votes on the anniversary of Columbus’s “discovery” of the Americas is an irony apparently lost on congressional leaders.

Reports

Timothy A. Wise and Kevin P. Gallagher, U.S. Trade Policy: Still Waiting for a ’21st Century Trade Agreement’
Kevin P. Gallagher, Trading  Away Financial Stability in Colombia: Capital Control and the US-Colombia Free Trade Agreement
Kevin P. Gallagher, Trading Away Stability and Growth: United States Trade Agreements in Latin America
GDAE’s research on the Lessons from NAFTA

Blog Posts

Kevin P. Gallagher, Trading Away Development: The US-Colombia Free Trade Agreement
Matías Vernengo, The Colombia FTA: Only Corporations Win
Timothy A. Wise, U.S. Trade Policy: Moving Backwards in the 21st Century
Kevin P. Gallagher and Timothy A. Wise, The false promise of Obama’s trade deals
Sarah Anderson, How Obama is to the Right of Reagan on Trade

Interview

Timothy A. Wise, Obama Pushes NAFTA-style trade policy despite 2008 promise

The Continuing Heartbreak of Jobless ‘Recoveries’ and Jobless Growth

Arjun Jayadev

The Triple Crisis blog is pleased to welcome Arjun Jayadev as a regular contributor. Jayadev is Assistant Professor of Economics at the University of Massachusetts, Boston. His research focuses on international and macro economics, development, political economy and economics of distribution.

In The European Economy Between the Wars, a passage describes the experience of an unemployed English mechanic during the last depression. After seventeen weeks of being unemployed, the worker describes his desperation:

“It isn’t the hard work of tramping about so much, although that is bad enough. It’s the hopelessness of every step you take when you go in search of a job you know isn’t there”.

And in this recession, the despair of joblessness is equally palpable in the voices of those searching hopelessly for work. A long-term unemployed woman from Maryland reports:

“I have only had 2 interviews in the last 2 years out of hundreds of applications and postings of resumes. I have now gone 3 months without any income at all. I don’t know what to do now….It just seems to me that our Government and society is not recognizing us and really doesn’t care. What kind of people have we become?”

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