The IMF needs to change, whoever becomes its next chief

Triple Crisis Blogger Jayati Ghosh published this article in The Guardian, which emphasizes the need for the new IMF chief to change the institution’s approach and orientation.

European governments have quickly rallied around the candidacy of Christine Lagarde, finance minister of France, for the top job at the IMF. For obvious reasons, this is not popular in the capital cities of major developing countries playing a more important role on the world stage.

For more than 60 years now convention, rather than any written rules, has dictated that the appointment of heads of the Bretton Woods institutions has been controlled by the traditional global powers. The US has provided the chief of the World Bank and Europe has provided the head of the IMF. These “conventions” emerged and were entrenched during a period when these two broad groupings controlled the global economy, and polity.

That is much less clear today. The medium-term future of the world economy is unlikely to be scripted only by these two players. Before the emergency exit of Dominique Strauss-Kahn had rendered the choice of the next head of the IMF an urgent matter, it was common to hear voices from developed countries suggesting that the next person to be in charge could and should be someone from the developing world. There is certainly no shortage of suitable candidates with sufficient international experience and knowledge of the workings of international finance.

Read the full article at The Guardian.

Foreign banks or foreign capital?

C.P. Chandrasekhar

One less emphasised lesson from the global financial crisis was that developing countries that are successful in attracting foreign financial investors take a hit when such a crisis occurs because of a reverse flow of capital. Foreign financial firms needing to cover losses or meet commitments at home withdraw their capital generating a credit crunch in emerging market economies.

It is to be expected, therefore, that the crisis-induced debate on regulating finance should revisit not just policies with regard to capital flows into these economies, but also policies with regard to the entry and operation of foreign financial firms. This is particularly important because since the 1980s and especially after the series of currency and financial crises in emerging markets starting in the late 1990s, the presence of foreign financial firms, especially foreign banks, in developing countries has increased substantially.

Read the rest of this entry »

The Age of Greed: Opposing Tax Cuts

Tripple Crisis Blogger Jeff Madrick published the following piece in the Schwartz Center for Economic Policy Analysis Blog, a Triple Crisis Partner. Madrick discusses various  proposed budget plans that seek to reduce the budget deficit but will not consider raising taxes.

The current public discourse over cutting the federal budget is not about economics, but politics. Nothing is so striking as the fact that those seriously disturbed by a rising budget deficit and a growing debt-to-GDP level have so little to say about raising taxes—or if they do, it is with little conviction.

To the contrary, most of the officially sanctioned plans include tax cuts as a major component. How can this be? Surely, the great advocates of reducing budget deficits, such as the Committee for a Responsible Federal Budget, should be highly visible advocates of tax increases. If they are not—and they are not—they should justify their position.

The main exception is the refreshing budget recently released by the Congressional Progressive Caucus, a truly enlightened effort to raise taxes judiciously, reform healthcare, and increase public investment.

Read the full post at the SCEPA Blog.

Doha Demands May Kill WTO Agreement: Wise interview on The Real News Network

Triple Crisis Blogger Timothy A Wise was interviewed by The Real News Network on his work on the Doha trade negotiations and his Triple Crisis posts, Doha Goes on Life Support and The Hypocrisy Clause.  In this interview, Wise explains how the US is making excessive demands on developing nations to open their markets to US products, which has brought negotiations to a standstill.  Watch the full interview:

More on the Doha negotiations from other Triple Crisis Bloggers:
Jayati Ghosh, Food insecurity means few would mourn the death of Doha
Martin Khor, Crunch time arrives for WTO talks

Watch more interviews at the GDAE Globalization Multimedia page.

The Climate Justice Imperative

James K. Boyce

It is time for a new strategy for climate policy in America – a strategy founded on climate justice.

Climate justice has four pillars:

  • Action: Climate change will affect us all, but its heaviest costs will fall upon low-income people who live closest to the margin of survival and are least able to afford air conditioners, sea walls, and other types of insurance. Climate inaction is climate injustice.
  • Adaptation for all: We cannot prevent climate change altogether. Investments in adaptation are necessary, but how should these be allocated? The conventional economists’ prescription is that investments should be guided by “willingness to pay,” which of course depends on ability to pay. The implications of this logic were spelled out two decades ago in the Summers memorandum that purported to make the case for dumping toxic waste in low-wage countries. Climate justice requires that investment in adaptation should be guided by human needs, not by the distribution of purchasing power.

Read the rest of this entry »

Wise interviewed by The Real News Network on High Farm Prices: Do family farmers benefit?

Timothy A Wise recently sat down for an interview with The Real News Network to talk about his  recent work on the “Farm Boom,” including a policy brief, Still Waiting for the Farm Boom: Family Farmers Worse off Despite High Crop Prices, and from a previous post on the Triple Crisis Blog, High Food Prices: Do Family Farmers Benefit?  

According to USDA officials, boom times continue for US farmers. The USDA’s chief economist claimed that in the last decade, farmers have “seen the highest net cash farm income numbers since the nineteen-seventies.”   Yet a recent GDAE Policy Brief by Timothy A Wise examines this “farm boom” and asks the question: who is really benefitting? Among Wise’s findings is the fact that small-to-mid scale family farmers are not benefitting from the boom, and they have actually seen a decline in net farm income with high prices.  Watch the interview:

Watch more interviews with The Real News Network on GDAE’s Globalization Multimedia page.

The Pain in Spain

By Borja Bergareche, re-posted from the World Policy Institute’s World Policy Blog, a Triple Crisis partner. In this post Bergareche addresses the recent protests  in Spain and the country’s impact on Europe’s overall economic health.

Antonio de la Calle, a 46-year-old priest who runs the church of the Patrocinio del Señor in the Vallecas neighborhood, has been playing God to avoid his neighbors’ descent into hell. In this working-class neighborhood of more than 300,000 people, the most extreme consequences of the economic crisis roiling Spain are transforming day-to-day life. The door of the church is never locked.

Last Easter, a man came in, heated and nervous. “Antonio, I can’t stand it any more. You have to help me. For two months I have heard my kid complaining that he is hungry. I’ve been unemployed for a year and a half. I’m no longer entitled to unemployment payments and my wife isn’t eligible for the emergency subsidy. Either you help me or I will start selling drugs at the corner. I cannot take it any longer.”

For weeks, Father Antonio used his own cash to keep this father of a hungry child away from crime. A few months ago, the man found a temporary job.

“It’s been a tough winter,” the priest explains. “People can’t get enough to eat. The worst is seeing kids evicted because their parents can no longer pay their rent.”

In Spain, 4.69 million people—20.3 percent of the workforce—were unemployed in 2010, according to figures published by the National Statistics Institute. The December 2010 average for the European Union was 9.6 percent, just above the 9.4 percent posted in the United States. Spain, with a population of 46 million, has lost more than 2 million jobs in the last two years— 623,000 in 2008, 1.21 million in 2009, and 238,000 in 2010, according to government statistics. Most of these losses occurred in the Spanish construction sector, which was largely responsible for the country’s financial and labor boom—and the subsequent bust.

Read the full post at the World Policy Blog.

Are the Latin American economies overheating?

Matias Vernengo

The International Monetary Fund (IMF) in spite of all the talk about reform is pushing for fiscal adjustment around the world.   The IMF argues overheating in the developing world, particularly in China and Latin America, and excessive debt accumulation in the developed world requires fiscal adjustment to reduce the risks of inflation and debt default.

The IMF has suggested in their last Regional Economic Outlook Report that the Latin American economies that have recovered swiftly from the global financial crisis may be at risk of overheating.  According to the report: 

“Overheating risks stand out in much of Latin America. Growth is moderating from fast rates last year, but remains above trend. Domestic demand has been growing even faster, pushed not only by favorable external conditions but also by macroeconomic policies that have been quite stimulative and are only gradually normalizing. Early signs of overheating pressures and possible excesses are appearing in several realms.”

Read the rest of this entry »

Changes needed at IMF

Triple Crisis blogger Martin Khor published the following opinion article in The Star on the IMF’s search for a new managing director and why the way its chief is selected and its policies have to be changed.

Changes needed at IMF

Last week’s arrest of Dominique Strauss-Kahn on charges of sexual assault was followed by his resignation as managing director of the International Monetary Fund (IMF).

This quickly sparked a race for his successor in the most important position in finance among international organisations.

European leaders were quick off the mark, arguing that the post should again be taken by a European, as according to the old but discredited tradition.

It has been increasingly recognised that the convention that the IMF chief must be a European while the World Bank president should be an American can no longer be justified.

The two leaders should be selected from persons from any country according to merit, and not on the basis of their being European or American, which is a colonial or neo-colonial principle.

Read the full article at The Star.

The IMF, Capital Controls and Developing Countries

Triple Crisis blogger Kevin Gallagher published the following opinion article in Economic and Political Weekly on the IMF’s new stance on capital controls, developing countries’ reactions, and how the IMF might devote more effort to the issue of managing global capital flows.

Continuing with its rethink on capital controls, the International Monetary Fund has now formally suggested that there may be situations when developing countries can gain from placing regulations on the inward low of foreign capital. However, the new “advice” comes with so many conditions and guidelines that the developing countries have rejected the recommendations and sent the IMF back to the drawing board. Rather than telling developing countries what to do and when, the IMF should perhaps focus more on helping governments enforce capital controls and it should stress the need for the global coordination of those controls.

Read the full article at Economic and Political Weekly.