John Hammock, Guest Blogger
The Oxford Poverty and Human Development Initiative (OPHI) has developed a new international measure of poverty – the Multidimensional Poverty Index or MPI – for the 20th Anniversary edition of the United Nations Development Program’s flagship Human Development Report. The new innovative index goes beyond a traditional focus on income to reflect the multiple deprivations that a poor person faces with respect to education, health and living standards. The new index has generated some controversy as to its merits.
Poverty is traditionally measured by income. And yet the poor are poor not just because of low income. They are poor because they have no access to health care, to education, to good nutrition. But income has been used for some time now as a proxy for poverty. And yet, it is not a sufficient proxy. OPHI has now developed a simple, robust, user-friendly multidimensional approach to measuring poverty.
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Bina Agarwal, Guest Blogger
Environmental governance as a field is increasingly engaging economists, especially those interested in institutional analysis. The 2009 Nobel Prize in Economics to Elinor Ostrom for her pioneering work on governing the commons is one indicator of this engagement. However, neither economists, nor typically political scientists studying environmental collective action and governance, have paid much attention to gender. At the same time, research in other disciplines which brings a gender perspective to these issues has focused mainly on women’s relative absence from governance institutions and the factors underlying that absence.
But suppose we turned this focus on its head to ask: what difference would women’s presence make in these institutions? How would that affect institutional functioning?
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Steve Suppan, Guest Blogger
Wheat prices had been climbing prior to the August 5 announcement of a Russian wheat export ban. Kansas Board of Trade wheat futures contracts had gone from $4.92 a bushel on June 10 to spike at $7.95 a bushel on August 5, prompting a reporter to ask, “How could a Russian drought in the age of instant information escape the world’s notice until the country’s wheat crop was devastated?” This excellent question does not yet have a clear answer.
The wheat price crisis has led the press and even policymakers to focus almost exclusively on the traditional supply-demand fundamentals that ostensibly set prices. It’s as if the press were relieved to point to that old standby, weather, as the culprit for a 50 percent increase in wheat futures prices in a few weeks. For a change from the last three years, excessive speculation in commodities by financial institutions would not be accused of driving price volatility. Furthermore, according to the U.S. Department of Agriculture, unlike 2007-2008, global grain stocks were high enough to supply countries that could afford them. Maybe the specter of speculators increasing hunger might be eluded.
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Mark Blyth, Guest Blogger
As George Soros noted in his recent NY Review of Books piece, before the recent G20 meeting in Toronto, Germany’s deflationist stance was the minority position. By the end of the meeting the American reflationary stance was the minority position. Abruptly, and against the apparent ‘we are all Keynesians now (again)’ love-fest of 2008-2009, the G20 signed up to halve their budget deficits by 2013. Government spending, it seems, has to stop.
Now the G20 does have a point. There is too much debt in the system, from consumers, to corporations, banks, and sovereigns. But as I blogged in a recent piece for Foreign Affairs, the G20’s endorsement of “growth friendly fiscal consolidation” relies on the same fallacy of composition that brought on the banking crisis. Back in the glow of the ‘Great Moderation’ regulators assumed that by making individual banks safe you make the system as a whole safe. Unfortunately, as the world discovered through learning terms like ‘CDS daisy-chains’ and ‘serial correlation,’ that turned out to be a really bad assumption. Now, in a re-run worthy of Nick-at-Night, we are about to simultaneously retrench in the middle of a recession in order to restore growth.
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Responding to Jeff Madrick’s recent post on the US financial regulation legislation, Triple Crisis guest blogger Robert Wade argues for the need to consider “external” causes of the global financial crisis.
I agree with and admire the lucidity of Jeff Madrick’s post — as far as it goes. But (for understandable reasons) it keeps the spotlight trained on microeconomic financial regulation, as does most of the debate. My concern is that the focus on financial regulation obscures the important role of “external” causes in contributing to financial instability (external to national financial systems), and obscures the pressing need for policy reforms to curb these external causes. I highlight two external causes: (1) national income inequality; and (2) international payments imbalances. I argue that if high income inequality and large international payments imbalances are not curbed, we run a serious risk of repeat crises – because the microeconomic efforts to re-regulate and re-structure national financial systems will be eroded or swamped by the force of these more macroeconomic external causes.
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Robert Wade, guest blogger
What should we make of the financial reform laid out in the Congress’ bill? The approach is based on the assumption that the financial system is basically sound but needs “more government” in the form of more regulation — as distinct from structural change (for example, to downsize very large banks or to separate deposit-taking banks from investment banks). The Democrat who shepherded the legislation through the Senate, Christopher Dodd, said that improving regulation made more sense than restraining an industry that was critical to the American economy and that faced fierce competition from foreign banks which would not be placed under similar restrictions.
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Miquel Muñoz
Guest Blogger
It is increasingly evident that a comprehensive climate change agreement is unlikely at the next climate change meeting (COP 16) in Cancún, Mexico, on December 2010. Finance – that is how much money will be provided, where will it come from, how will it be used, and who will hold the strings of the purse – is one of the main obstacles to agreement, compounded by deep distrust between developing and developed countries. While a comprehensive deal is unlikely, there are financing instruments that could conceivably be agreed upon in Cancún; for example, an International Climate Change Lottery.
The idea of an international goal-driven lottery has been regularly raised since the 1970’s. A good starting point is work by Addison and Chowdhury in 2003 analyzing the prospects of harnessing the world lottery market (worth US$126 billion and generating US$62bn in gross profits) for the purposes of development.
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Andong Zhu
Guest Blogger, Tsinghua University, Beijing, China
After the biggest, multi-trillion dollar stimulus plan in human history was implemented by the governments of many countries, financial indicators, world trade volume and industrial production all show positive signs. According to a recent calculation by American economist Barry Eichengreen, world equity markets, world trade, and world industrial production all recovered from the trough (50%,20%,13% below the previous peak, respectively) to the current situation (25%,8%,6% below the previous peak, respectively). The latest World Bank forecasts of world GDP growth in 2010 and 2011 are 2.7% and 3.2%, after a decline of 2.2% in 2009.
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