Will the ECB QE Save the Euro?

Philip Arestis and Malcolm Sawyer

The international financial crisis of 2007-2008 and the subsequent “Great Recession” have added to the problems of the euro area, which had long suffered from a poor design and inadequate policy framework. These problems have been faced in a number of ways—many, such as the Fiscal Compact which replaced the Stability and Growth Pact, distinctly unhelpful.

The European Union (EU) summit meeting, June 28-29, 2012, took a number of decisions: banking licence for the European Stability Mechanism (ESM) that would give it access to ECB funding and thus greatly increase its firepower; banking supervision by the ECB; a “growth pact,” which would involve issuing project bonds to finance infrastructure. Two long-term solutions were proposed: one, a move towards a banking union and a single euro-area bank deposit-guarantee scheme; another, the introduction of euro bonds and euro bills. Germany resisted the latter, arguing that it would only contemplate such action under a full-blown fiscal union. Not much has been implemented in any case.

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What We’re Writing, What We’re Reading

What We’re Writing

Jayati Ghosh, North Cyprus: Complicated, Contradictory, Charismatic

Sunita Narain, The Earth for You

What We’re Reading

Jeronim Capaldo, Overcooked Free-Trade Dogmas in the Debate on TTIP, Global Development and Environment Institute (GDAE)

Edward A. Cunningham, The State and the Firm: China’s Energy Governance in Context, Global Development and Environment Institute

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The Economic Legacy of China’s One-Child Policy

Sara Hsu

China’s One-Child policy, which limited urban families to having one child, was relaxed in late 2013 to allow urban families to have two children if one parent is an only child, but has left a deep imprint in the nation’s social fabric. The economic legacy of the One-Child policy is an aging population that has reduced the productive base, as fewer working-age individuals are available to support an increasing number of dependents.

The One-Child policy has been enforced since 1979, often involving abortion, forced abortion, and infanticide. The killing of girl fetuses and infants in particular has left China with an uneven gender ratio, reaching a level of 121 males to 100 females in 2004. Disabled babies are also far more likely to be killed. Recently, activist Chen Guangcheng referred to implementation of the policy as “genocide.”

Brutal in practice, the One-Child policy has left a lasting impression. Even though many families are now allowed to have another child, they have been loath to do so, as couples adjusted to smaller families, higher levels of consumption, and urban living. The cost of living has risen dramatically in many urban areas, making it difficult to raise a larger family.

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On Free Trade and Economics Consensus

A Response to Mankiw

Matías Vernengo

Mankiw tells us in his most recent NYTimes column that economists agree that Free Trade is good. He links to a poll in which, essentially, mainstream economists of different persuasions, some Keynesian and some not, and different political views, some liberal and some conservative, say that trade agreements are good. He backs his argument by suggesting that theoretically the argument is at the heart of the economics profession since the beginning; I guess an argument of authority.

And no better authority than Adam Smith. Mankiw says:

“The economic argument for free trade dates back to Adam Smith, the 18th-century author of ‘The Wealth of Nations‘ and the grandfather of modern economics. Smith recognized that the case for trading with other nations was no different from the case for trading with other individuals within a society.”

And it is true, Adam Smith was for laissez-faire, in general, and thought that less intervention in trade would be good. But there is in Mankiw’s argument an implication that does not follow from careful analysis of Smith’s doctrines, namely: that Adam Smith can be seen as a forerunner of modern neoclassical trade theory based on the Heckscher-Ohlin-Samuelson (HOS) comparative advantage argument (for the limitations of that theory go here).

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Towards a Better Food System

Empowering Communities and Regulating Corporations

Nora McKeon, Guest Blogger

How we have landed ourselves with a global food system that generates hunger alongside of obesity, and what can we do about it? The universal EXPO 2015 that opened in Milan on May 1 with the theme of “Feeding the Planet, Energy for Life” is placing its bets on “best technologies” and “free trade” to do the job. The US Pavilion’s sponsors include technology vendors like Dow and 3M and proponents of the Transatlantic Trade and Investment Partnership (TTIP) like the U.S. Dairy Export Council, which is seeking to lower EU barriers to antibiotic-plumped U.S. products.

But the problem really lies elsewhere: over the past three decades, public responsibility for food security has been sold out to markets and corporations while the frontline actors—families, communities and small-scale food producers—have been disempowered. Unprotected by governments, smallholder family farmers are being driven off their land and out of their markets with the allegation that they are inefficient and archaic. Yet, it is they who produce some 70% of the food consumed in the world.

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What’s We’re Writing/What We’re Reading

What We’re Writing

Sunita Narain, How Power Can Be Cleaned

Rebecca Ray, Kevin P. Gallagher, Andres Lopez, and Cynthia Sanborn, China in Latin America: Lessons for South-South Cooperation and Economic Development

Alejandro Reuss, Climate Change: What Is It? What Causes It? What Can We Do About It?

What We’re Reading

Deepankar Basu and Debarshi Das, Profitability in India’s Organized Manufacturing Sector: The Role of Technology, Distribution, and Demand

Nancy Folbre, Accounting for Care: A Research and Survey Design Agenda

Esteban Pérez Caldentey, Miguel Torres and Romain Zivy, Interview on Neo-Structuralism

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