Why the Global Economic Crisis is Here to Stay

Edward B. Barbier

In his article published on 5 August 2012, “Three myths that sustain the economic crisis.” Larry Elliott, Economics Editor of the British newspaper The Guardian, suggests that there are three myths that are prolonging the current world economic crisis:

  • The Anglo-Saxon myth that big finance is “a force for good,” rather than “rent-seeking and corrupt.”
  • The German myth that “you can solve a problem of demand deficiency with belt tightening and export growth”.
  • The “old model” myth that there was not much wrong with the global economy in 2007, before the advent of the financial crisis that initiated the Great Recession, even though  “the old model was financially flawed as it operated with high levels of debt, socially flawed in that the spoils of growth were captured by a small elite, and environmentally flawed in that all that mattered was ever-higher levels of growth.”

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Tunisia leading the fight against ‘odious debts’

Leonce Ndikumana

Tunisia in the headlines… again

Tunisia has featured perennially in the headlines in economic development reports as one of the African leading economies in terms of economic performance and political stability over the past decades. It has consecutively ranked among the most competitive and diversified economies in the continent.1 It enjoyed moderate but steady growth (averaging 4.5% over the last ten years), which is a major achievement in a continent where growth is highly volatile. Poverty rates are low, education levels high, infrastructure and services are plentiful and of good quality. To most external observers, there was also substantial agreement that Tunisia enjoyed political stability under the last two regimes (under Habib Burguiba and Zine El-Abidine Ben Ali).

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Don’t Pay Polluters

James Boyce

A little known greenhouse gas called HFC-23 made the news recently. Also called fluoroform, it’s a waste gas generated in the manufacture of refrigerants. Compared to carbon dioxide (CO2), HFC-23 is a minor greenhouse gas. Pound-for-pound, however, it traps more than 10,000 times as much heat.

The UN’s Clean Development Mechanism (CDM), set up under the Kyoto accord as a way for industrialized countries to “offset” their own CO2 emissions by paying for comparable actions in developing countries, counts destruction of one pound of HFC-23 as equivalent to prevention of 11,700 pounds of CO2 emissions.

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Hunting the Auctioneer

Alejandro Nadal

“For the Snark’s a peculiar creature, that won’t / Be caught in a commonplace way./ Do all that you know, and try all that you don’t: / Not a chance must be wasted today!

Lewis Carroll, The Hunting of the Snark

Of all the assumptions of general equilibrium theory, the Walrasian auctioneer may very well be the most important one. Because macroeconomics has been absorbed by neoclassical microeconomics, today the role of the auctioneer is also embedded in macro models. For example, the work of Lucas and Kydland and Prescott relies heavily on the presence of an auctioneer. It is therefore no exaggeration to say that this assumption runs through the spinal chord of orthodox economic theory, both micro and macro.

Although everyone seems to agree that this is not a good assumption, the auctioneer is also one of orthodoxy’s less well-understood figures. Both friend and foe repeatedly misunderstand its role and its intimate relation to stability theory in general equilibrium models.

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Courage Wins Over Poison

Sunita Narain

I want to tell you today a true story of extraordinary courage, not of one, but of many.

This past fortnight I was in Kasargod, a district in Kerala, splendid in beauty and natural resources, but destroyed by one toxic chemical: endosulfan.

The pesticide was aerially sprayed over cashew plantations for 20 years, in complete disregard for the fact that there is no demarcation between where plantations end and habitation begins. Moreover, it is a high-rainfall region. Thus, once sprayed, the pesticide leached into the ground and flowed downstream. The poison contaminated water and food. It ultimately harmed human beings.

This story is known. What is not known is the human endeavour and personal battles that make up the story of this poisoned land and its diseased people. More importantly, what is not asked is: where does this story end?

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Can clean energy campaigns stop climate change?

Frank Ackerman

Can we protect the earth’s climate without talking about it – by pursuing more popular policy goals such as cheap, clean energy, which also happen to reduce carbon emissions? It doesn’t make sense for the long run, and won’t carry us through the necessary decades of technological change and redirected investment. But in the current context of climate policy fatigue, it may be the least-bad short-run strategy available.

You may have lost interest in climate change, but the climate hasn’t lost interest in you. Once-extraordinary heat waves are becoming the new normal. Recent research demonstrates that by now someone “old enough to remember the climate of 1951–1980 should recognize the existence of climate change, especially in summer.”

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