A Great Sucking Sound: Part 1

Sasha Breger, Guest Blogger

If you hear a kind of whooshing, rushing noise, don’t worry—it’s not US jobs moving to China. Today’s great sucking sound is the sound of agricultural wealth being siphoned off into the global financial system.  Dragging poverty and insecurity in its wake, this broad movement of wealth from agriculture into finance is enriching and empowering finance capital at the expense of farmers, traders, consumers, rural communities and the earth. In fact, that sucking sound is really the sound of injustice.

Finance capital globally deploys a huge variety of methods and techniques that generally serve to redistribute wealth from agriculture to finance.  These include debt, farmland acquisition, commodity hoarding, and derivative and insurance markets. In the following posts, I outline the wealth transfer mechanism in each of these contexts, focusing largely on new data and evidence from the past several years.

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Hunger and the Post-2015 Development Agenda

Jennifer Clapp

This post introduces some of the points raised in a discussion document entitled Framing Hunger that was recently presented to the FAO by a group of experts coordinated by Frances Moore Lappé of the Small Planet Institute. Three Triple Crisis Bloggers – Robin Broad, Timothy Wise and Jennifer Clapp – took part in the preparation of the document, which offers a detailed critique of the FAO’s “State of Food Insecurity 2012.” This post originally appeared on the Ottawa Citizen Aid and Development Blog.

As the 2015 deadline for meeting the Millennium Development Goals (MDGs) nears, the pressure is on to define what will replace those goals as we move forward. World progress on addressing hunger, a key aspect of the first MDG – to eradicate extreme poverty and hunger – has been mixed at best.

The United Nations launched a series of processes last year and is now seeking to finalize recommendations for a Post-2015 Development Agenda. The Report of UN Secretary General Ban Ki Moon’s High Level Panel on the topic is due to be released on May 31. Food security experts are anxious to see how world hunger will be addressed within that agenda.

It is important to ensure that any new hunger agenda take into account key lessons from the MDG experience. Indeed, as pointed out in a recent communication from a group of hunger experts addressed to the Food and Agriculture Organization (FAO), the ways in which we measure hunger, and the goals we set for reducing it, matter a great deal. Current indicators are too narrow, and a broader conceptualization of hunger is sorely needed.

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Apple and tax justice

Ilene Grabel

The US Senate’s investigation into the tax avoidance strategies of Apple has helped to cast a light on the very practices that international tax justice activists have highlighted for years (see, e.g., the work of the Tax Justice Network and these videos). Apple’s strategies, which resulted in tax avoidance on the order of several billions of dollars, exemplify the kind of the transfer pricing and other strategies so long perfected by other multinational and large national firms.

The Apple case also highlights the self-defeating nature of the strategies used by states (in this case Ireland) that compete with one another to attract foreign firms by giving them the keys to the Treasury. These corporate giveaways hollow out the state revenue base precisely at a time when tax revenues are falling because of the global recession.  While these lost tax revenues are always costly to states, they are especially costly now that governments in the grips of austerity fervor are slashing social spending when it is most needed. Of course, it is far easier politically to enforce “discipline” by retracting social spending and raising taxes that fall on struggling households and small businesses than on large, footloose and politically powerful corporations.  And then there is the matter that many of these firms are simply taking advantage of the tax rules that governments have created for them, and so it becomes difficult to imagine states going after these same firms.  Nevertheless it bears noting that austerity-induced expenditure cuts might be avoided altogether were states to cooperate on closing tax loopholes and ending race to the bottom forms of international and domestic tax competition.

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Poor Empiricism: The "Middle Income" Trap

C.P. Chandrasekhar

Increasing evidence that the era of high growth in Asia may be nearing its end has triggered speculation on ways to revive growth in the region. It has also challenged the belief that more developing countries would like the first generation new industrialisers in Asia (South Korea, Singapore, Taiwan and Hong Kong) transit to developed country status in a relatively short period of time. This has spawned a new industry involving the use of multi-country, inter-temporal GDP numbers to identify the countries that have escaped being stuck in the so-called “middle income trap” and the lessons that can be learned from them. Academic economists (Barry Eichengreen, Donghyun Park, and Kwanho Shin, 2013) and international institutions like the IMF (Regional Economic Outlook: Asia and Pacific, April 2013) and the ADB (Jesus Felipe, March 2012) have jumped on to the bandwagon.

A typical analysis would first use the data to say something of the following kind: Growth slowdowns are more likely to occur when countries reach income levels (measured in PPP terms) that identify them as being in the “middle income range”. But some countries, such as the first tier new industrialisers in Asia, managed to escape this middle income trap. Examining their experience (even though they are few in number) points to what needs to be done if others such as China, India, Indonesia, Malaysia, and Vietnam are to ensure sustained growth that takes them to developed-country status.

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Poor Empiricism: The “Middle Income” Trap

C.P. Chandrasekhar

Increasing evidence that the era of high growth in Asia may be nearing its end has triggered speculation on ways to revive growth in the region. It has also challenged the belief that more developing countries would like the first generation new industrialisers in Asia (South Korea, Singapore, Taiwan and Hong Kong) transit to developed country status in a relatively short period of time. This has spawned a new industry involving the use of multi-country, inter-temporal GDP numbers to identify the countries that have escaped being stuck in the so-called “middle income trap” and the lessons that can be learned from them. Academic economists (Barry Eichengreen, Donghyun Park, and Kwanho Shin, 2013) and international institutions like the IMF (Regional Economic Outlook: Asia and Pacific, April 2013) and the ADB (Jesus Felipe, March 2012) have jumped on to the bandwagon.

A typical analysis would first use the data to say something of the following kind: Growth slowdowns are more likely to occur when countries reach income levels (measured in PPP terms) that identify them as being in the “middle income range”. But some countries, such as the first tier new industrialisers in Asia, managed to escape this middle income trap. Examining their experience (even though they are few in number) points to what needs to be done if others such as China, India, Indonesia, Malaysia, and Vietnam are to ensure sustained growth that takes them to developed-country status.

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Big news, maybe very big, in alternative energy sources

Matias Vernengo

I have taken to calling my beliefs on the future of energy sources “weird energy.” Why? Because the sources I am most interested in seem to violate the Second Law of Thermodynamics. Notice: this is so inviolable, we capitalize it. But they don’t.

Why am I so interested in other energy sources? The obvious reason is a quest for zero carbon intensity, so getting rid of the big greenhouse gas. The other one is that the correlation between energy consumption and economic output, no matter how you measure it, and probably no matter when in history you look, is so tight that you could hang wallpaper by it. Some folks think I am weird because of this but, ya’ know, data are data when used wisely. And this is really important.

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Austerity's Scottish Ghosts Haunt the Modern Economic Mind

Mark Blyth

“Growth in a Time of Debt,” the much-touted paper by economists Carmen Reinhardt and Kenneth Rogoff, that suggested economic growth stalls once a nation’s debt hits 90 percent of its gross domestic product, has been debunked. But the austerity policies that this research helped undergird are still alive and well. Despite the on-going austerity-driven economic meltdown in Europe, and despite the International Monetary Fund’s recanting of the supposedly positive benefits of cuts, austerity continues, as John Maynard Keynes once put it, “to dominate the economic thought, both practical and theoretical, of the governing and academic classes of this generation.” Why is it so hard to shuck this notion that governments should cut spending and/or raise taxes in times of economic slack?

Two answers present themselves to us.

The first is politics. Few of the Republicans who fret so much about today’s allegedly crushing debt burden did so in 2006, at the height of the boom, when the U.S. debt to GDP ratio was steadily climbing above 60 percent and the deficit was at then-all-time high – and when a Republican was in the White House.

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Austerity’s Scottish Ghosts Haunt the Modern Economic Mind

Mark Blyth

“Growth in a Time of Debt,” the much-touted paper by economists Carmen Reinhardt and Kenneth Rogoff, that suggested economic growth stalls once a nation’s debt hits 90 percent of its gross domestic product, has been debunked. But the austerity policies that this research helped undergird are still alive and well. Despite the on-going austerity-driven economic meltdown in Europe, and despite the International Monetary Fund’s recanting of the supposedly positive benefits of cuts, austerity continues, as John Maynard Keynes once put it, “to dominate the economic thought, both practical and theoretical, of the governing and academic classes of this generation.” Why is it so hard to shuck this notion that governments should cut spending and/or raise taxes in times of economic slack?

Two answers present themselves to us.

The first is politics. Few of the Republicans who fret so much about today’s allegedly crushing debt burden did so in 2006, at the height of the boom, when the U.S. debt to GDP ratio was steadily climbing above 60 percent and the deficit was at then-all-time high – and when a Republican was in the White House.

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No Solution Yet As Climate Threshold Crossed

Martin Khor

A key threshold measuring the march of global warming was crossed recently, when the concentration of carbon dioxide in the atmosphere topped 400 parts per million.

On 10 May scientists announced that 400.03ppm had been measured at a climate-observing station in Hawaii that is often used as a benchmark. The global average is expected to cross the 400ppm mark in the next year.

This means that there in for every one million molecules in the Earth’s atmosphere, there are 400 molecules of carbon dioxide.

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The Great Jobs Disaster

C.P. Chandrasekhar and Jayati Ghosh

In the desperate search for evidence that the global recession has bottomed out and the recovery has arrived, the story told by the long-term trend in unemployment levels and rates is being missed.

Early this year, the International Labour Organisation (ILO) had noted that the global unemployment rate was close to 6 per cent, implying that 197 million people were unemployed, even ignoring the 39 million who had dropped out of the workforce, discouraged by persistent failure in job search.

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