The G20 has served its purpose and should be replaced with a Global Economic Council on a firmer constitutional foundation

Robert Wade and Jakob Vestergaard, Guest Bloggers

In 1999, in the wake of the East Asian financial crisis, the US Treasury and the German finance ministry chose another 12 states to join the existing G7 as a new G20 of “systemically important” countries to forge agreements on global economic and financial issues. Otherwise, the G7 states calculated, they would be like the captain of a ship who stands at the wheel moving it from side to side, knowing that the wheel was not connected to the rudder. Of the newcomers, 11 were developing countries.   So the formation of the G20 represented a significant expansion of country representation at the top table of global economic governance.

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Featured Event: A National Teach-in and Press Conference on Economic Inequality

All day today, noted economists including Triple Crisis Blogger Jeff Madrick, Michael Hudson, Dean Baker and more are holding a live webinar called “Solutions to America’s Critical Inequality Crisis.” The conference was organized as part of the action events surrounding the first anniversary of the Occupy Wall Street protests, which sounded the alarm regarding growing economic injustice inside and outside the United States. The panelists will discuss both the causes of rising economic inequality and policies that could help mitigate it.

Audiences anywhere in the world can register online to join the conference call and ask questions to directly to the scholars by clicking here:

http://myaccount.maestroconference.com/conference/register/EU2CN2XB458KHF

Or go to http://ows20.nycga.net/ for more information.

The Triple Crisis Blog welcomes your comments. Please share your thoughts below.

September 17, 2012 | Posted in: Uncategorized | Comments Closed

Future of the Euro: The Elephants in the Room

Robert Wade, Guest Blogger

In all the debate about the future of the euro two big, obvious points are often overlooked. I was reminded of them reading Financial Times columnist John Plender, “Only the weakest will triumph in euro battle”,  September 8th 2012. He said, rightly, “We forget the mutual nature of the creditor-debtor relationship at our peril.” But he went on to obscure this mutuality by focussing only on the transfers from Germany/North  to southern Europe to keep the euro going.

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Development Economics: And the Winners of the 2013 Leontief Prize Are …

Timothy A. Wise

My institute has just announced the winners of its 2013 Leontief Prize for Advancing the Frontiers of Economic Thought, and I’m proud to announce that the winners are (…drumroll…) Albert Hirschman and Frances Stewart. There is exciting and renewed attention to development economics in the wake of the global financial crisis, as developing countries pick through the rubble of orthodoxy in the hopes of rescuing something of value. Albert Hirschman and Frances Stewart have certainly given us all much of value, and the current prize is a fitting tribute to another great development economist, Alice Amsden, one of our previous Leontief laureates who passed away earlier this year. (See Kevin Gallagher’s lovely tribute to Alice on Triple Crisis.) As Global Development and Environment Institute co-director, Neva Goodwin, said, “A serious return to development theory must start with the work of Albert Hirshman, one of the early leaders in the field. Frances Stewart’s practical and theoretical work on the challenges of modern development further advances such interdisciplinary approaches to international development.”

Read the announcement of the awards and more on the Leontief Prize, including last year’s event featuring lectures by Peter Timmer and Michael Lipton and interviews with each.

Triple Crisis Welcomes Your Comments. Please Share Your Thoughts Below.

The Dangers of Pseudo Fiscal Union in the EMU

Philip Arestis and Malcolm Sawyer

We write this as people who have long argued that a currency union such as the Economic and Monetary Union (EMU) would need to be accompanied by what could be termed a fiscal union (see, for example, Arestis, P., McCauley, K. and Sawyer, M. (2001), “An Alternative Stability and Growth Pact for the European Union,” Cambridge Journal of Economics, Vol. 25, No. 1, pp. 113-130.)

It would then seem that we should be celebrating the proposed moves in EMU towards what is termed fiscal union; we rather, however, write of the dangers of the proposed fiscal union. The fiscal union, which we would view as required, would be one where there are substantial tax raising powers at the EMU level, say of the order of 10 per cent of EMU GDP (compare this with the Federal government in the USA raises taxes of the order of 20 per cent of GDP).

This fiscal union would involve a significant amount of fiscal transfer from richer countries to poorer countries: a proportional tax regime would raise absolutely more money in richer countries than in poorer countries, and a progressive one also relatively more. Provided that public expenditure did not exactly match tax revenue in a particular region, but rather was to some degree related to population size and to need, there would be transfer of resources from rich to poor.

Another key element of such a fiscal union would be the ability of the relevant Federal authority (Ministry of Finance) to operate a fiscal policy with deficits and surpluses as appropriate for the state of the economy. Further it would require the support of the European Central Bank in the operation of fiscal policy and willingness to buy where the bonds issued by that Federal authority.

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The Summit that Revitalised the Non-Aligned Movement

Martin Khor

The Summit of the Non-Aligned Movement, held last week in Tehran, was held in high spirits, with leaders calling for a new multi-polar world with developing countries having their proper say in decision-making

The Summit of the Non Aligned Movement concluded in Tehran on 31 August in high spirits with the political leaders adopting several declarations and action plans, and many of them calling for a revival of the importance of NAM, especially to protect the countries from foreign intervention and to build a new multi-polar world.

The Summit was already notable for the presence about 25 Presidents and Prime Ministers, and the Vice Presidents, Ministers and other senior officials of another 95 member states, and representatives of 16 observer and guest countries.

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Going Off the Grid

Sunita Narain

Supply issues comprise one part of the energy conundrum, as we discussed last fortnight. The cost of energy and our ability to pay for it is the other. The matter gets vexed because the rise in price of raw material of all energy sources is accompanied by huge inefficiency in distribution and accounting. But importantly, we remain a poor country where cost of energy is a factor in its availability and accessibility for all.

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September 10, 2012 | Posted in: Uncategorized | Comments Closed