Jayati Ghosh, Triple Crisis blogger and co-chair, received the International Labor Organization’s Decent Work Prize on November 11. The prize recognizes major contributions to the analysis of decent work, labour law and social justice. Watch a video of her remarks at the award ceremony below and read a full transcript here. Also see her recent ILO interview on what developing countries should do to ensure that employment generation accompanies economic growth.
David McNair, guest blogger, part of our 2011 Spotlight G20 Series
Back in September I was sitting in the salubrious office of an official from one of International Financial Institutions – when he slouched back in his chair, sighed and said ‘I can’t even bear to read those G20 communiqués – they are so vacuous.’ That evening, I found myself at a dinner hosted by DC law firm Jones Day where former Mexican President Zedillo branded the G20 ‘a disappointment.’
But last week Christian Aid welcomed the G20’s bold pronouncements on tax havens, financial transparency and development. President Sarkozy went as far as to say that havens that didn’t comply would be excluded from the international community. A whole programme of work on tax and development was agreed.
This was a major coup for organisations like Christian Aid and the Tax Justice Network that just three years ago were struggling to garner political support for these issues.
The social and economic system that has powered global economic relations in the past two decades is clearly in crisis. We now know only too well that periods of “rapid growth” have been based on unsustainable bubbles; that such growth has contributed little in terms of generating more decent work and has significantly increased inequality; and that people will no longer accept these unfair outcomes, as shown by the waves of protest in many countries.
We need a completely different approach to economic policy making, one that will provide for a more just and equitable society and be more compatible with the aspirations and expectations of citizens. This means that decent employment and better living conditions cannot be seen only as potential byproducts of income growth – or even as ends in themselves – but as a means to sustainable growth.
In this context, an important new report, Social protection floor: for a fair and inclusive globalisation (pdf), from the Social Protection Advisory Group, chaired by Michelle Bachelet for the International Labour Organisation (ILO) and World Health Organisation, (WHO) has just been released. The report provides a key element of the economic blueprint for forward-looking economic policy, by emphasising the role of social protection measures in cushioning the impact of the crisis among vulnerable populations, serving as a macroeconomic stabiliser fuelling demand and enabling people to better overcome poverty and social exclusion in both developing and developed countries.
Louka T. Katseli, guest blogger, part of our 2011 Spotlight G20 Series
While markets expect eurozone leaders to exercise effective leadership and take action to resolve the eurozone’s sovereign debt crisis, citizens in peripheral European countries are trying to make ends meet under drastic cuts in wages and pensions, rising taxes and massive layoffs.
While the public debate and the media focus their attention either on European banks and their recapitalization needs or on the planned rescheduling of private bond holdings and the future capital needs and powers of the European Financial Stability Facility– the euro zone’s rescue fund– the anxious voices of impoverished families in Greece, Ireland, Portugal , Italy or Spain are not even recorded.
While the future of the euro hinges on the collective capacity of member countries to safeguard financial stability and avoid further contagion, the future of decent jobs for young Europeans is under threat, fueling massive protests by angry youth in most European countries.
While talks in academic circles focus on the exigency of further deepening European integration via a fiscal union, European solidarity and the legitimacy of the European social model are questioned in the streets and squares of several European capitals.
Economic analysis has become increasingly central to the climate policy debate, but the models and assumptions of climate economics often lag far behind the latest developments in this fast-moving field. That’s why Elizabeth Stanton and I have written Climate Economics: The State of the Art, an in-depth review of new developments in climate economics and science since the Stern Review (2006) and the Intergovernmental Panel on Climate Change’s Fourth Assessment Report (2007), with more than 500 citations to the recent research literature.
Bhumika Muchhala, guest blogger, part of our 2011 Spotlight G20 Series
Yet again, the G20 Summit, held in Cannes last week, yielded insipid communiqués that merely rehashed past commitments, outlined policies the G20 countries are already doing, and reiterated the EU’s party line to assuage markets on the eurozone debt crisis. The FT reports that the G20 has once again proved meager results despite lofty promises, casting its own irrelevance against the gloomy realities of the world economy.
Drawing a parallel between the ineffectual coordination in the G20 forum with that of the EU’s internal faultlines and lack of democratic policymaking, analysts have remarked that the G20 is a microcosm of the multitude of global malaise: persistent imbalances, the failure of democratic and collective action, and the lack of structural reforms.
At the core of the G20’s macro-policy agenda is an elite consensus that there is too much sovereign debt in the world and so governments have to reign in public budgets through fiscal austerity. As both Paul Krugman and Gerry Epstein have pointed out, this was the case in last year’s Seoul summit, which called for ‘fiscal consolidation programmes’ in developed countries despite massive levels of unemployment.
Matías Vernengo, part of our 2011 Spotlight G20 Series
Central Banks have been at the epicenter of the current crisis, and have been, for good and for bad, fundamental for the policy response mounted to avoid a new Great Depression. Recently Christina Romer argued that the Fed should start targeting nominal Gross Domestic Product (GDP) instead of inflation. As I noted previously (see here), this is strange since it is far from clear that the Fed actually targets just inflation, or that targeting nominal output would make any significant difference.
Further, the idea that a central bank has the ability to actually hit a targeted level of output, or inflation for that matter, under the current circumstances in particular, is wishful thinking. Central banks can ease the credit conditions by reducing interest rates, a range of rates from the short to the long, to stimulate spending, and pump money into the system, fundamentally to avoid systemic crisis caused by bankruptcies. The ability of Ben Bernanke or Mario Draghi, the newly appointed head of the European Central Bank (ECB) that reduced the rate of interest in Europe as his first measure (see here), to further reduce interest rates and with that help the staggering recovery in the US or the free fall in the periphery of Europe is very limited.
Martin Khor, part of our 2011 Spotlight G20 Series
Last week saw pure drama on an epic scale as the Eurozone plan to exit its debt and currency crisis almost crumbled when the Greek Prime Minister announced he needed a national referendum to approve a bailout programme.
This bombshell came last Monday on the very eve of the G20 Summit in Cannes which had been expected to cheer the European leaders for finally getting their act together.
Instead, the G20 Summit became another new act in the Greek and Euro tragedy.
The summit concluded last Friday without any concrete results. “Global recession grows closer as G20 summit fails,” warned the London Guardian.
Kevin P. Gallagher, part of our 2011 Spotlight G20 Series
The absence of a global regime to prevent and mitigate financial crises and a reluctance to resort to the International Monetary Fund for assistance has led emerging market and developing countries to accumulate vast sums of foreign reserves as an act of ‘self-insurance’. If a nation has a backstop of foreign reserves and an external shock such as a financial crisis results in capital flight from such a country, the nation can use those reserves to stabilize the currency.
The insurance incentive was acute in the run up to the crisis, but the incentive to accumulate reserves in the wake of the global financial crisis has been even stronger given the scale of the crisis and the lack of an adequate response to it in terms of global economic governance. Not surprisingly then, reserve accumulation in developing countries has not only continued to increase in the wake of the crisis, but has increased at a faster rate than previous to the crisis. What is more, excess reserve accumulation has been costly at both the national and global levels. Nationally, because the opportunity cost of accumulating reserves can be high, globally because of the global imbalances created by surplus and deficit nations.
Frequent Triple Crisis contributor Sophia Murphy analyses the G20’s chilling effect on strong initiatives at the UN level to address food security issues, in a new commentary from the Institute for Agriculture and Trade Policy. It builds on Jennifer Clapp’s recent blog post and the recent interview with Clapp and Timothy A. Wise:
ROME, OCTOBER 2011 – Multilateralism is in crisis. It is perhaps most evident in the painful and truly frightening failure of governments to come to grips with the implications of climate change. But it was also evident on a much less well-publicized stage in mid-October in Rome, where governments were gathered at the U.N. Committee on Food Security (CFS) to discuss food price volatility…