U.S. Export Strategy: The Saudi Arabia of Coal?

Frank Ackerman

The United States has been called “the Saudi Arabia of coal” since the energy crises of the 1970s; politicians of both parties have embraced this metaphor. It’s certainly true that both countries have more fossil fuel reserves than they can use for decades to come, located in their remote, empty regions; we call ours Wyoming.

Fossil fuel exports are also becoming a potential growth sector of the American economy. As in Saudi Arabia, energy export earnings can be used to pay for high-technology imports from more advanced economies. (And the parallels don’t stop there: does energy production somehow go along with politics based on fundamentalist religion, committed to restricting the lives of women? Let’s leave that for another day; today’s topic is economics.)

Coal use in the United States – almost exclusively for electricity production – is declining, thanks to competition from natural gas and wind power, along with stricter environmental regulation. This might seem like good news for the environment, but to the coal industry, it’s a looming disaster that can only be prevented by increased exports. Five new coal export terminals have been proposed in Oregon and Washington, leading to intense battles over the local and global impacts of increased coal shipments.

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What to expect when you are electing

Matías Vernengo

Today, the United States will choose between a moderate Republican, with a pro-business agenda, or Mitt Romney. Yes President Obama has saved the economy from a 1930s-like catastrophe with a smaller than necessary, but still very effective, fiscal package, and monetary easing has prevented a collapse of the banking and financial sector like the Great Depression one. Yet, his economic views and policies remain to the right of Richard Nixon. Obama agreed with Mr. Romney that government does not create jobs, and has accepted the anti-Keynesian rhetoric regarding the need of reducing the fiscal deficit, even though the recovery has been very slow.

If Obama wins (and I do believe that Nate Silver is right and his chances are greater than Romney’s) we should not simply expect a continuation of the current policies. Yes, Ben Bernanke will maintain interest rates close to zero in nominal terms and continue the gradual Quantitative Easing which, precluding a collapse of the euro and the flight to dollar denominated bonds, will lead to a more depreciated dollar. But the US cannot expect to grow through exports, particularly to developing countries like China (China bashing was one the silliest and most disingenuous issues raised during the campaign).

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Triple Crisis Roundup: Hurricane Sandy

Eli Epstein-Deutsch, Triple Crisis Assistant Editor

It was as though the world had gone off its tilt. Half of Manhattan skyline lay dark, giving the island the appearance of Two-Face, when viewed from the borough of  Brooklyn, where many the downtown gentry had taken refuge from the blackout. Across New York City, casual social gatherings turned into week-long campouts. Meanwhile, residents of housing projects in the Lower East Side, many unable to evacuate, have struggled with the lack of food, water, and electricity. The impromptu community, the forced immobility, and the humanitarian demand posed by Hurricane Sandy have all combined to make the period one of introspection and reflection.

The disaster leaves behind disquieting thoughts and hard questions. Even the most affluent have been shown their precariousness; a major financial center lay paralyzed in a fashion associated with developing world cities. At the same time, the extremes of economic inequality were visible in the outcomes, with the poorest areas especially ill-equipped to respond to the disaster. The  island of Haiti, whose agricultural production was devastated by flooding, faced by far the highest death toll and still suffers an ongoing food crisis. If anything is really to be salvaged from the  destruction, it will be if the sense of temporary solidarity grows into a real reckoning with challenges that face us from here: of creating a safe and stable supply of energy in the era of catastrophic climate change, and  of confronting the widening social disparities that make some of us much more vulnerable than others to the consequences of that change.

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Romney’s Latin American Trade Plan: The Devil is in the Details

Kevin Gallagher

During the last presidential debate, Mitt Romney put the spotlight on an aspect of his five-point economic plan that has received little scrutiny.  Romney said forging trade deals with Latin American nations would be a cornerstone of his plan to revitalize the U.S. economy. “The opportunities for us in Latin America we have just not taken advantage of fully. As a matter of fact, Latin America’s economy is almost as big as the economy of China,” he said.

Like the other parts of the plan, Romney’s Latin American trade plan is short on details. There are two details that should make Americans think twice about whether more trade deals with Latin America can lead to prosperity.  First, the U.S. already has trade deals with most of the major Latin American countries. Second, the outstanding countries, most notably Brazil, would likely not negotiate a trade deal on Romney’s terms.

If any U.S. president wants to significantly increase trade with Latin America, he will have to change the template for U.S. trade deals so that they can truly make the U.S. and its trading partners better off.  Time is running out.  China has quickly become the largest trading partner for many South American nations and Chinese trade deals are much more amenable to Latin Americans.

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Romney's Latin American Trade Plan: The Devil is in the Details

Kevin Gallagher

During the last presidential debate, Mitt Romney put the spotlight on an aspect of his five-point economic plan that has received little scrutiny.  Romney said forging trade deals with Latin American nations would be a cornerstone of his plan to revitalize the U.S. economy. “The opportunities for us in Latin America we have just not taken advantage of fully. As a matter of fact, Latin America’s economy is almost as big as the economy of China,” he said.

Like the other parts of the plan, Romney’s Latin American trade plan is short on details. There are two details that should make Americans think twice about whether more trade deals with Latin America can lead to prosperity.  First, the U.S. already has trade deals with most of the major Latin American countries. Second, the outstanding countries, most notably Brazil, would likely not negotiate a trade deal on Romney’s terms.

If any U.S. president wants to significantly increase trade with Latin America, he will have to change the template for U.S. trade deals so that they can truly make the U.S. and its trading partners better off.  Time is running out.  China has quickly become the largest trading partner for many South American nations and Chinese trade deals are much more amenable to Latin Americans.

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Africa’s $1.3 Trillion Gone “Missing”

Léonce Ndikumana

News about Africa’s economic prospects has been quite upbeat recently. Now seen as a “continent on the rise“, Africa has earned the labels of “an economic dynamo” and the next “global growth pole“. Investors see it as the next investment frontier and believe it’s now “Africa’s turn“. It is indeed true that the continent has been able to attract higher volumes of investments especially since the turn of the century, which have contributed to its recent growth acceleration.  Paradoxically, the growth surge and the increase in private capital inflows have accompanied an upswing in capital flight from the continent. As Africa has received more capital, its political and economic elites have siphoned more capital out towards safe havens.

Over the last four decades between 1970 and 2010, the continent has lost an estimated $1.3 trillion from capital flight (in constant 2010 dollars). Our new report on Capital Flight from North African Countries finds that net unrecorded capital outflows from four North African (Algeria, Egypt, Morocco and Tunisia) exceeded $450 billion. This is equivalent to 87.9 percent of their combined GDP in 2010. With a combined population of 159 million, this translates into a capital loss of $2851 per capita. Over the same period, capital flight from 33 sub-Saharan African countries amounted to $814 billion. This exceeds official development aid ($659 billion) and foreign direct investment ($306 billion) received by these countries.

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Africa’s $1.3 Trillion Gone "Missing"

Léonce Ndikumana

News about Africa’s economic prospects has been quite upbeat recently. Now seen as a “continent on the rise“, Africa has earned the labels of “an economic dynamo” and the next “global growth pole“. Investors see it as the next investment frontier and believe it’s now “Africa’s turn“. It is indeed true that the continent has been able to attract higher volumes of investments especially since the turn of the century, which have contributed to its recent growth acceleration.  Paradoxically, the growth surge and the increase in private capital inflows have accompanied an upswing in capital flight from the continent. As Africa has received more capital, its political and economic elites have siphoned more capital out towards safe havens.

Over the last four decades between 1970 and 2010, the continent has lost an estimated $1.3 trillion from capital flight (in constant 2010 dollars). Our new report on Capital Flight from North African Countries finds that net unrecorded capital outflows from four North African (Algeria, Egypt, Morocco and Tunisia) exceeded $450 billion. This is equivalent to 87.9 percent of their combined GDP in 2010. With a combined population of 159 million, this translates into a capital loss of $2851 per capita. Over the same period, capital flight from 33 sub-Saharan African countries amounted to $814 billion. This exceeds official development aid ($659 billion) and foreign direct investment ($306 billion) received by these countries.

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La Via Campesina: Food Sovereignty and the Global Feminist Struggle

Esther Vivas, Guest Blogger

La Via Campesina

Via Campesina is the world’s foremost international movement of small farmers. It promotes the right of all peoples to food sovereignty. Via Campesina was established in 1993 at the dawn of the anti-globalization movement, and gradually became one of the major organizations in the critique of neoliberal globalization. Its ascent is an expression of peasant resistance to the collapse of the rural world caused by neoliberal policies, and the intensification of those policies as embodied in the World Trade Organization (Antentas and Vivas, 2009a).

Since its founding, Via Campesina has promoted a “female peasant” identity that is politicized, linked to land, food production and the defense of food sovereignty—built in opposition to the current agribusiness model (Desmarais, 2007). Via Campesina embodies a new kind of “peasant internationalism” (Bello, 2009), that can be viewed as a “peasant component” of the new international resistance presented by the anti-globalization movement (Antentas and Vivas, 2009).

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Misleading Orthodoxy: Barter and the Origin of Money

Alejandro Nadal

Economic theory has a serious and embarrassing problem: it does not appear to have a rigorous and well-defined concept of money. This is why orthodox textbooks, when introducing money have to resort to a descriptive sleight of hand and state that “money is what money does”. They typically go on to say that it is the unit of account, the means of exchange and a reserve of value. But they fail to add that these functions are not exclusive of money.

That money poses a serious problem for mainstream economic theory is best exemplified by the fact that the most sophisticated account of interdependent markets (general equilibrium theory) does not tolerate the introduction of money (Hahn 1982). That’s an amazing headline story, one that should be taught in Economics 101.

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The Walmart Strikes

Barry Eidlin, Guest Blogger

For the past two decades, retail giant Walmart has served as a model for corporate America to emulate. Now, by forcing unions to break out of old habits, its workers might be showing the way forward for labor.

Walmart stores and critical parts of its distribution chain have been hit by a series of strikes in recent weeks. These strikes are remarkable for three reasons. First, the workers involved have no union protection. While their strikes are technically legal, they are taking huge risks by walking out. Second, many are not technically employed by Walmart. Rather, they work for a variety of sub-contractors that Walmart can replace at will. Third, despite items one and two, these workers are winning, and the strikes seem to be spreading.

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