Lynn Fries of The Real News Network continues her interview with regular Triple Crisis contributor Yilmaz Akyüz about the current global economic crisis. Akyüz here discusses both the over-reliance on monetary policy in the United States and elsewhere, and the over-reliance on exports and on international capital flows in developing economies. This is the second in a two-part series. You can see the first part here.
Observing the Centennial of 1914
This year we are observing the hundredth anniversary of the eruption of the First World War. One hundred years ago, one June morning, the Archduke of Austria, Franz Ferdinand, was assassinated in Sarajevo. This event sparked a flame that would plunge the whole of continental Europe into warfare, leaving 40 million dead, a landscape torn to pieces, and a series of economic and social problems that would eventually lead to the rise of fascist dictatorships in the years ahead.
What are the lessons that we can distill 100 years later?
Malawi's Paradox: Filled With Both Corn and Hunger
Cross-posted from Global Post.
LILONGWE, Malawi — Visit this small, landlocked country in late January and you will have a hard time believing its people often go hungry.
It is mid-rainy season, and in and around the capital city the landscape is lush and green.
Look more closely and you’ll notice that nearly every inch of unpaved space seems planted with maize (corn); the green stalks rise up to five feet above moist, rich soil. Outside of the city, along the road leading south toward the former colonial capital of Zomba, the hills roll with maize, not in vast tracts reminiscent of Iowa but in small, neatly bordered plots.
It certainly doesn’t seem like a land that cannot feed itself. But until recently, that is what Malawi has been.
Droughts often threaten the country’s one rainy season, and with per capita incomes at around $900 per year, hunger, and even starvation, stalk the countryside. The World Food Program has permanent offices here, and for good reason.
Even this season, when the rains have come strong but late, more than 10 percent of the country’s 16 million people face severe food insecurity. According to news reports, some have starved.
It is paradoxical only to outsiders that this greenest of seasons is also the hungriest. By planting time late in the year, many peasant farmers have consumed the last of their saved grain, even following a decent harvest like they had last year. Until the new crop comes in late March or April they have to rely on meager cash income to feed themselves and their families.
Malawi’s Paradox: Filled With Both Corn and Hunger
Cross-posted from Global Post.
LILONGWE, Malawi — Visit this small, landlocked country in late January and you will have a hard time believing its people often go hungry.
It is mid-rainy season, and in and around the capital city the landscape is lush and green.
Look more closely and you’ll notice that nearly every inch of unpaved space seems planted with maize (corn); the green stalks rise up to five feet above moist, rich soil. Outside of the city, along the road leading south toward the former colonial capital of Zomba, the hills roll with maize, not in vast tracts reminiscent of Iowa but in small, neatly bordered plots.
It certainly doesn’t seem like a land that cannot feed itself. But until recently, that is what Malawi has been.
Droughts often threaten the country’s one rainy season, and with per capita incomes at around $900 per year, hunger, and even starvation, stalk the countryside. The World Food Program has permanent offices here, and for good reason.
Even this season, when the rains have come strong but late, more than 10 percent of the country’s 16 million people face severe food insecurity. According to news reports, some have starved.
It is paradoxical only to outsiders that this greenest of seasons is also the hungriest. By planting time late in the year, many peasant farmers have consumed the last of their saved grain, even following a decent harvest like they had last year. Until the new crop comes in late March or April they have to rely on meager cash income to feed themselves and their families.
When "Forecasts" Are Not Really Forecasts
I have written about the deep and misleading flaws inherent in Congressional Budget Office (CBO) forecasts before. But given last week’s projections of job losses due to a proposed minimum wage hike, the inadequacy and misleading character of CBO pronouncements needs addressing again.
What particularly provokes me now is a quasi-debate between economist Jared Bernstein, former economic adviser to Vice President Joseph Biden, and Republican economist Douglas Holtz-Eakin, former head of the CBO, on CNBC. The CBO had issued its customary over-simplified statement that “Once fully implemented in the second half of 2016, the $10.10 [per hour minimum wage] option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects.” They next point out that this is merely the midpoint of a range of possibilities they derive from existing research on the relationship between the minimum wage and jobs.
But why make the declarative statement in the first place? The damage is done. Politicians and the media pick it up as if it is a forecast, not a midpoint based on a wide range of conflicting research.
When “Forecasts” Are Not Really Forecasts
I have written about the deep and misleading flaws inherent in Congressional Budget Office (CBO) forecasts before. But given last week’s projections of job losses due to a proposed minimum wage hike, the inadequacy and misleading character of CBO pronouncements needs addressing again.
What particularly provokes me now is a quasi-debate between economist Jared Bernstein, former economic adviser to Vice President Joseph Biden, and Republican economist Douglas Holtz-Eakin, former head of the CBO, on CNBC. The CBO had issued its customary over-simplified statement that “Once fully implemented in the second half of 2016, the $10.10 [per hour minimum wage] option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects.” They next point out that this is merely the midpoint of a range of possibilities they derive from existing research on the relationship between the minimum wage and jobs.
But why make the declarative statement in the first place? The damage is done. Politicians and the media pick it up as if it is a forecast, not a midpoint based on a wide range of conflicting research.
Why Is the 2008 Crisis Taking So Long to Resolve? (Part 1)
Lynn Fries of The Real News Network interviews regular Triple Crisis contributor Yilmaz Akyüz about the intractability of the current global economic crisis. Akyüz traces this to “underconsumption,” which he attributes to the falling wage share of GDP in many countries. This is the first in a two-part series. You can see a related The Real News Network interview with Akyüz here.
The Chulha Politics
Cross-posted from Centre for Science and Environment.
Chulhas—cookstoves of poor women who collect sticks, twigs and leaves to cook meals—are today at the centre of failing international action. Women are breathing toxic emissions from stoves and these emissions are also adding to the climate change burden. The 2010 Global Burden of Disease established that indoor air pollution from stoves is a primary cause of disease and death in South Asia. As many as 1.04 million pre-mature deaths and 31.4 million disability adjusted life years (DALYs)—measure of years lost due to ill-health, disability or early death—are related to exposure to biomass burning in poorly ventilated homes.
But what has spurred action is the science that there is a connection between local air and global air pollution. The particles formed during incomplete combustion—in diesel cars and cookstoves—are seen as powerful “climate forcers” because they absorb light and convert it into heat. It is also found that these particles or aerosols interact with clouds and affect rain pattern. They also fall on snow or ice surfaces and make them melt faster.
Global Dollar-Based Financial Fragility in the 2000s, Part 4 (Conclusion)
This is the final installment of a four-part series excerpted from the Political Economy Research Institute (University of Massachusetts-Amherst) working paper “The Endogenous Finance of Global Dollar-Based Financial Fragility in the 2000s: A Minskian Approach,” by Junji Tokunaga and Gerald Epstein. Tokunaga is an Associate Professor in the Department of Economics and Management, Wako University, Tokyo. Gerald Epstein is a Professor in the Department of Economics, University of Massachusetts-Amherst, and Co-Director of the Political Economy Research Institute (PERI). See Part 1, Part 2, Part 3, and the full paper.
Junji Tokunaga and Gerald Epstein
The Nature of the Global Financial Crisis
The Endogenously Dynamic Process of Balance Sheet Expansion at LCFSs
In this section, we show how our approach is much better for understanding the nature of the global financial crisis than the arguments of the global imbalance view that many mainstream economists, policymakers, and even heterodox economists advocate.
Firstly, we argue that the global financial crisis was inherently caused by the dynamic process of balance sheet expansion at large complex financial institutions (LCFIs), driven by the elastic growth of global dollar in the global shadow banking system. … The global imbalances view attributes the emergence of global financial crisis to an excess of saving over investment in emerging market countries. According to that view, the financial crisis was triggered by an external and exogenous shock that resulted from excess saving in emerging market countries, not the shadow banking system in advanced countries which were the epicenter of the financial crisis.[43] In this view, LCFIs have a negligible role in the global financial crisis in the 2000s.
Recall our discussion of the endogenously dynamic process of balance sheet expansion, which, driven by the endogenously elastic finance of global dollar supplies in the global shadow banking system, contributed to the buildup of global financial fragility that led to the global financial crisis. Accordingly, it is clear that the global financial crisis is strongly affected by the endogenous dynamics of balance sheet in the global shadow banking system, rather than the emergence of excess savings in emerging market countries, as the global imbalances view stresses.
Undoing the Damage in Chile
Cross-posted from International Development Economics Associates (IDEAs) (networkideas.org). This article was originally published in the Frontline, January 24, 2014.
It was no surprise to anyone in Chile or outside when Michelle Bachelet romped home convincingly in a landslide victory in the run-off for the Presidential election in December. Indeed, the only surprise was that while she took 62 per cent of the vote, the voting rate itself fell to only 44 per cent of the electorate.
Bachelet, the pediatrician mother of four who was also among the students persecuted by the military dictatorship in the 1970s, has already served as President once. She completed her first term with an incredible 84 per cent popularity rating, which must be a record for any democratically elected leader after four years in office. But the current Chilean Constitution does not allow consecutive terms as President, so she could not contest again. In the interim, between 2011 and 2013, she was the first Secretary General of the newly founded international organization UN Women, but resigned from that position earlier this year to run for President again.
This time around she campaigned on the basis of a more explicitly progressive and transformative agenda, leading a coalition (Nueva Mayoría or New Majority) that includes a wide spectrum of political orientation, from the Christian Democratic Party in the centre to Bachelet’s own socialist-leaning Concertacion to the Communist Party and an array of even more radical student leaders on the left. The very emergence of this coalition and its electoral success suggests that Chile has is finally shaking off some of the torpor induced by the acceptance of neoliberal economic policies by both centre-right and centre-left parties over the past decades.