Shanghai Free Trade Zone and Offshore Banking

Sara Hsu

The Shanghai Free Trade Zone was incorporated on September 29, 2013, with the aim of testing some liberalization measures, including financial liberalization. Although the zone is currently moving at a glacially slow pace in terms of liberalizing interest rates and financial flows, there are plans to allow funds to be transferred offshore. If and when this occurs, some financial flows moving offshore may be legitimate—going to real investment in countries like the United States, Japan, and Australia—while others may move truly offshore to known tax havens.

China has already been in the news recently, due to an exposé on offshore accounts held by members of the Chinese leadership. About 22,000 mainland Chinese and Hong Kong citizens were revealed to have accounts in tax havens in the Caribbean and South Pacific. The money is associated with hidden wealth. Some of this is suspected to stem from transactions that may not have been entirely above board. A current anticorruption campaign is attempting to eliminate some of the worst abuses.

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On the State of the Worldly Philosophy

Matías Vernengo

Originally posted at Naked Keynesianism.

I am pessimist by nature (or nurture), I guess. So I never thought that the current crisis would lead to a collapse of mainstream economics.

As I often point out to my students, in the U.S., it was the Great Depression, and the rise of the Neoclassical Synthesis that made Marginalism dominant. Up to that point the profession was dominated by an eclectic group that included many institutionalists, like Commons or Seligman, a non-Marxist defender of an economic interpretation of history, both of whom were presidents of the American Economic Association (AEA). Mitchell, another institutionalist that was president of the AEA, was the head of the National Bureau of Economic Analysis (NBER). And the administration was full of institutionalist economists during the New Deal. So a crisis might actually lead to the consolidation of a paradigm that was actually contradicted by the facts (yes, full employment of factors of production is hard to defend if you have 25% unemployment, but blame it on rigid wages and you’re fine).
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When Planting Trees is a Curse

Sunita Narain

Previously published by Centre for Science and Environment.

Forests have been blacked out in the economic assessment of the country. The Economic Survey does not even list forestry as a sector, for which accounts are prepared. Instead it is lumped together with agriculture and fisheries. In other words, there are no estimates of the productivity of this sector, which encompasses over 20 per cent of the country’s land area.

This is because the focus of forest managers is on conservation and forest productivity is nobody’s business. The forest survey report says forest cover in the country is stable but growing stock of forests has decreased between 2005 and 2009. Currently, we import more and more of forest produce, from pulp to timber. It is for this reason that revenues from forests are declining in state budgets, which creates pressure for their diversion to more productive uses.

This is clearly untenable. We need forests to be used for productive purposes. But we need to ensure that this time, unlike in the past, it does not lead to rampant deforestation and over-extraction.

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