Beyond Keynes: An interview with Justin Yifu Lin

The following interview with new World Bank Chief Economist Justin Yifu Lin is re-posted from the World Policy Institute’s World Policy Journal, a Triple Crisis partner. We periodically cross-post items of interest.

In May 1979, Justin Yifu Lin—a 26-year-old company commander in the army of the Republic of China and a recent graduate of the MBA program at National Chengchi University—defected from Taiwan to mainland China by swimming across the straits to Fujian Province, leaving behind his pregnant wife and three-year-old child.

Seven years later, after obtaining a Master’s degree in Marxist political economy from Peking University, he became one of the first citizens of the People’s Republic of China to receive a PhD in economics from the University of Chicago. Reunited with his family, and returning to China, he became a professor of economics at Peking University and founded the Beijing-based China Center for Economic Research. In June 2008, he became the chief economist of the World Bank, the first ever from a developing country. In a conversation with World Policy Journal editor David A. Andelman and managing editor Justin Vogt, Lin explained his vision of the global recovery and the role of the World Bank in helping developing nations grow and prosper.

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Food Price Volatility: What Was and Wasn’t Said in the Leaked Report to the G-20

Jennifer Clapp

Triple Crisis is pleased to welcome Jennifer Clapp as a regular blogger.

Despite the slight dip in the FAO food price index in March, global food prices still remain 37 percent higher than they were at this time last year. In this context, eyes are fixed on the upcoming G­20 meetings where France, as host, has pledged global leadership on the issue of commodity price volatility.

A confidential draft report prepared by 9 international organizations for the G­20, leaked in late March, gives us a glimpse into the analysis on volatility in food and agricultural markets that informs the G­20.

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High Food Prices: Do family farmers benefit?

Timothy A. Wise

Farm prices are up again, so farmers must be getting rich, right? The U.S. Department of Agriculture sure thinks so, projecting that U.S. farmers will see record net cash farm income of $99 billion in 2011. The media follows the government’s lead, offering interviews with farmers gushing about their new-found prosperity. Are things really so great down on the U.S. farm?

They may be for the big guys, but they’re not for many family farmers. My recent study, “Still Waiting for the Farm Boom: Family Farmers Worse Off Despite High Prices,” shows that the largest farms were capturing a remarkable 88% of all net cash farm income. Meanwhile, small-to-mid-scale family farmers had lower farm incomes in 2009 than they did earlier in the decade when prices were lower, and their household incomes were down as well thanks to the Great Recession. The data reveal a lot about the precarious nature of family farming, even in a resource-rich country like the United States.

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New battle lines in climate talks

Triple Crisis blogger Martin Khor published the following opinion article at Third World Network on the North-South debate over the Kyoto Protocol, which resumed last week at the global climate talks in Bangkok.

The United Nations’ climate talks resumed last week in Bangkok.  There was a lot of drama, with developing countries throwing a challenge to the developed countries to proclaim themselves once and for all, whether they intend to continue with the Kyoto Protocol or to kill it.

This North-South battle had already been boiling the whole of last year.  Especially at the big climate conference in Cancun in December, when Japan brazenly stated it had no intention to join a second period of the protocol, after its first period expires in 2012.

Japan’s announcement had evoked outrage among the developing countries, especially since the country had hosted the meeting that created the Kyoto Protocol.  The KP is the main pillar of the UN Climate Convention; all the developed countries (except the United States) have made legal commitments under it to cut their emissions of Greenhouse Gases.

Read the full article at Third World Network.

Think energy efficiency isn’t working? Think again

Triple Crisis blogger Frank Ackerman published the following opinion article in Grist on the media’s misleading reports on the recent release of the first half of the Energy Information Administration’s (EIA) Residential Energy Consumption Survey.

Imagine a press release with this message: We’re not using more household energy than we used to — and the latest data won’t be available until next year. If you read that, I’m guessing you would join me in yawning and moving on to the next story.

That is what the Energy Information Administration (EIA), the federal agency that tracks our energy usage, just said — but it said it in a confusing way that sounded like a much bigger story, and was almost designed to mislead readers. Jess Zimmerman, writing in Grist, was among those whom they succeeded in misleading. Zimmerman’s article, “How Americans defeated efficiency with consumerism,” says that average household energy use has remained stable even as appliances have become more efficient, because we all have more appliances now.

Read the full article at Grist.

New Financial Architecture: Towards a “Beijing Consensus”?

C.P. Chandrasekhar

Joseph Stiglitz has written an article in the Financial Times dated April 1, 2011, arguing that a substantially enhanced issue of Special Drawing Rights (SDRs)by the IMF should be the first step in the reform of the international monetary system. The article is of special significance because it is based on a statement issued by 18 leading economists from across the globe calling themselves the Beijing Group, which includes nine known Chinese figures.

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The IMF's welcome rethink on capital controls

Triple Crisis blogger Kevin Gallagher co-authored the following opinion article with José Antonio Ocampo in the Guardian on the IMF’s formal recognition of capital controls as a vital policy tool for regulating destabilizing capital flows in developing countries.

In contrast to most western governments, over the past two years, the International Monetary Fund (IMF) has boldly conducted one of the most honest self-assessments of its actions leading up to the financial crisis, has become somewhat critical of inflation-targeting and has endorsed the use of capital controls. In March of this year, the IMF held a full conference on rethinking macroeconomics where its organisers concluded that the crisis has shattered the economic orthodoxy behind the fund’s previous policies.

In preparation for its annual meetings next week, on Tuesday the IMF took its work on capital controls a step further by issuing two reports (one official report and one staff discussion paper) outlining when nations should use capital controls, and what types of capital controls should be used under the proper circumstances. The new reports amount to yet another big step forward for the IMF – though there is still a long way to go.

Read the full article at the Guardian.

The IMF’s welcome rethink on capital controls

Triple Crisis blogger Kevin Gallagher co-authored the following opinion article with José Antonio Ocampo in the Guardian on the IMF’s formal recognition of capital controls as a vital policy tool for regulating destabilizing capital flows in developing countries.

In contrast to most western governments, over the past two years, the International Monetary Fund (IMF) has boldly conducted one of the most honest self-assessments of its actions leading up to the financial crisis, has become somewhat critical of inflation-targeting and has endorsed the use of capital controls. In March of this year, the IMF held a full conference on rethinking macroeconomics where its organisers concluded that the crisis has shattered the economic orthodoxy behind the fund’s previous policies.

In preparation for its annual meetings next week, on Tuesday the IMF took its work on capital controls a step further by issuing two reports (one official report and one staff discussion paper) outlining when nations should use capital controls, and what types of capital controls should be used under the proper circumstances. The new reports amount to yet another big step forward for the IMF – though there is still a long way to go.

Read the full article at the Guardian.

The EU Debt Crises: Three weaknesses of the European Stability Mechanism

Daniela Schwarzer

The latest meeting of the European Council on March 24-25 was supposed to settle the economic governance reform of the EU. It did indeed agree on a so-called “Comprehensive Package”, including the terms of reference of the future European Stability Mechanism (ESM) to solve sovereign debt crises as well as a so-called “Pact for the Euro Plus”. Two years back, hardly anyone would have expected such progress. But in particular the ESM may prove insufficient both for the prevention and resolution of debt crises.

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The Boom in Capital Flows to Developing Countries in Historical Perspective: Going for a Bust– Again?

Yılmaz Akyüz, Guest Blogger

The post-war period has seen three generalized boom-bust cycles in private capital flows to developing countries (DCs) and we now appear to be in the boom phase of the fourth cycle.  All these booms started under conditions of global liquidity expansion and low US interest rates, and all previous ones ended with busts.  The first one ended with a debt crisis in the 1980s when US monetary policy was tightened, and the second one with a sudden shift in the willingness of lenders to maintain exposure in East Asia as financial conditions tightened in the US and macroeconomic conditions of recipient countries deteriorated because of the effects of capital inflows.  The third boom developed alongside the subprime bubble and ended with the collapse of Lehman Brothers and flight to safety in late 2008.

Unlike previous episodes, the Lehman reversal did not cause serious and widespread dislocations in DCs because of generally strong payments and reserve positions, reduced mismatches in balance sheets and, above all, the short-duration of the downturn.  Indeed, it was soon followed by a rapid recovery in 2009 as major advanced economies (AEs) responded to the crisis caused by excessive liquidity and debt by creating still larger amounts of liquidity to bail out troubled banks and governments, lift asset prices and lower interest rates.

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