A group of economists, including many from the Triple Crisis blog, convened in São Paulo and crafted ten theses toward a “New Developmentalism” – the tenets of a new approach to economic theory and policy that nations could embark upon in the aftermath of the current economic crisis. View the “ten theses” and the list of initial signatories at Ten Theses on New Developmentalism.
Downward to Stagnation: Wage policies in times of crisis
The Triple Crisis Blog is pleased to welcome Janine Berg, Senior Labour Economist at the International Labour Office in Brasilia, Brazil, as a regular contributor.
Not surprisingly wages have fallen during the economic crisis. A new report produced by the ILO, Wage Policies in Times of Crisis, provides evidence on the decline in wage growth during the crisis, and highlights the particularly severe reductions that have occurred in industrialized countries.
The world’s salaried employees suffered a decline in real wage growth from 2.2 percent in 2007 to 0.8 percent in 2008 and 0.7 percent in 2009 (excluding China, due to difficulties with the data). Real wages fell in 12 of 28 industrialized countries in 2008, including Australia (-0.9%), Germany (-0.4%), Italy (-0.7%), Japan (1.9%), Mexico (-2.6%), S. Korea (-1.5%) and the U.S (-1.0%). And although some countries recovered in 2009 (in some cases due to the fall in inflation), real wage growth continued to be negative in Germany (-0.4%), Mexico (-5.0%), Japan (-1.9%), and S. Korea (-3.3%), whilst France (-0.8%), the U.K (-0.5%), and Russia (-3.5%), also entered into negative territory. Moreover, these figures likely over-represent real wage growth, as job losses have been more concentrated on low-wage workers, who by no longer working are no longer considered in the sample. By 2009, the ranks of the unemployed had reached 210 million, a global unemployment rate of 6.4 percent.
Academic Economists to Consider Ethics Code
As economists arrive in Denver, Colorado this week to participate in the annual meeting of the American Economics Association, they will be asked to consider an economist’s code of ethics. This effort is discussed in the following New York Times article by Sewell Chan, and highlights the work of Triple Crisis blogger Gerald Epstein as well as a new book by George F. DeMartino, who will author a guest blog on this subject in 2011.
Excerpt from “Academic Economists to Consider Ethics Code,” by Sewell Chan:
“When the Stanford business professor Darrell Duffie co-wrote a book on how to overhaul Wall Street regulations, he did not mention that he sits on the board of Moody’s, the credit rating agency.
As a commentator on the economy, Laura D’Andrea Tyson, a former adviser to President Bill Clinton who teaches in the business school at the University of California, Berkeley, does not usually say that she is a director of Morgan Stanley.
And the faculty Web page of Richard H. Clarida, a Columbia professor who was a Treasury official under President George W. Bush, omits that he is an executive vice president at Pimco, the giant bond fund manager.
Academic economists, particularly those active in policy debates in Washington and Wall Street, are facing greater scrutiny of their outside activities these days. Faced with a run of criticism, including a popular movie, leaders of the American Economic Association, the world’s largest professional society for economists, founded in 1885, are considering a step that most other professions took a long time ago — adopting a code of ethical standards.”
Academic Economists to Consider Ethics Code
As economists arrive in Denver, Colorado this week to participate in the annual meeting of the American Economics Association, they will be asked to consider an economist’s code of ethics. This effort is discussed in the following New York Times article by Sewell Chan, and highlights the work of Triple Crisis blogger Gerald Epstein as well as a new book by George F. DeMartino, who will author a guest blog on this subject in 2011.
Excerpt from “Academic Economists to Consider Ethics Code,” by Sewell Chan:
“When the Stanford business professor Darrell Duffie co-wrote a book on how to overhaul Wall Street regulations, he did not mention that he sits on the board of Moody’s, the credit rating agency.
As a commentator on the economy, Laura D’Andrea Tyson, a former adviser to President Bill Clinton who teaches in the business school at the University of California, Berkeley, does not usually say that she is a director of Morgan Stanley.
And the faculty Web page of Richard H. Clarida, a Columbia professor who was a Treasury official under President George W. Bush, omits that he is an executive vice president at Pimco, the giant bond fund manager.
Academic economists, particularly those active in policy debates in Washington and Wall Street, are facing greater scrutiny of their outside activities these days. Faced with a run of criticism, including a popular movie, leaders of the American Economic Association, the world’s largest professional society for economists, founded in 1885, are considering a step that most other professions took a long time ago — adopting a code of ethical standards.”
Beyond Rebalancing: The collapse of Chimerica
In 2006 Niall Ferguson and Moritz Schularick invented the term ‘Chimerica’ to illustrate the economic linkages that connected China and the United States. The new term summarized the fact that the world economic order was dominated by the combination of these two giants. Ferguson and Schularick also used the notion to explain the evolution of the asset price bubble in the US between 2002-2006. Their conclusion was that this new entity was an unsustainable chimera that should one day disappear. The time for this may be here.
The Christmas Bonus is Not What You Expect: 2011 Outlook After Financial Crisis
One of the downsides of being a triple-crisis blogger is that you are always on the lookout for crises. It’s not a role I particularly enjoy, but it is what it is. So as the markets wind down for the year and the illusion of calm falls over us like a blanket of denial (yes, keep positive folks), I thought I’d write a piece about what I see as, perhaps, the emerging story of 2011. Its one that comes from reading the New York Times and the Financial Times yesterday morning, while thinking about two pieces I have read this year: one by Andy Haldane back in July and one by John Cassidy in late November.
The story in both papers, in case you missed it, was about how for many Wall Street and City of London bankers, the traditional Christmas bonus dished out this year would, for some, contain lots of zeros, and not much else. Its not so much that profits are down (they are), so the story went, but because the perception of ‘the bonus culture’ as creating excessive risk taking has led to higher base salaries and escrow-type arrangements at many US banks, while in the UK and Europe many mid-tier bankers are about to be eliminated from the bonus pool altogether, with talented juniors and senior executives being protected.
The Kingston coal ash spill: two years later, EPA still can’t do the math
Two years ago, on December 22, 2008, a dike broke at an ash pond near the Tennessee Valley Authority’s Kingston (Tennessee) coal plant, releasing a billion gallons of coal ash slurry. Some 300 acres were inundated, twelve houses were flooded, and local rivers were contaminated with high levels of lead and other toxic heavy metals.
Each year, U.S. power plants produce more than 100 million tons of coal combustion residues. Much of that waste is mixed with water and kept in clay-lined ponds, like the one that failed at Kingston. You’d think that ash disposal was carefully regulated, wouldn’t you? That is, unless you remembered that coal ash is produced by a very powerful industry.
Since 1980, coal ash has been excluded from regulation as a hazardous waste – although EPA is mandated to study the risks associated with coal ash. EPA found that coal ash wasn’t hazardous in 1993, and again in 2000. But the Kingston spill occurred just as the Obama administration was starting up, and EPA Administrator Lisa Jackson decided to try again.
Ethics and Credibility at the American Economics Association
In a few weeks, Economists will gather in Denver at the annual meeting of the American Economics Association (AEA) in a ritualized search for truth, jobs, fame and even romance. Economists have never been held in the highest regard but, recently, they have come under increased scrutiny and some scorn for their failure to predict the financial crisis or to shape an adequate response to the worst economic crisis since the Great Depression.
Still, Economists can take heart. There is something fairly simple they can do at their annual meeting to enhance the credibility and status of the economics profession: adopt a code of ethics to reduce economists’ conflicts of interest. Indeed, I am among some economists who are proposing that the AEA do just that.
Capital Controls to Deter Hot Money Can Help the World Economy
Stephany Griffith-Jones and Kevin P. Gallagher
The following letter from Triple Crisis bloggers Griffith-Jones and Gallagher, drawing on their earlier Guardian article, appeared in the Financial Times today.
Sir, In your December 14 article “Capital inflows to Turkey spur plan to cut interest rates”, you point out that the Turkish central bank is considering cutting interest rates even though its economy is growing very fast, which would rather suggest the need to raise interest rates. This is the dilemma facing many emerging economies – and even poorer countries such as Uganda.
With low interest rates in the industrialised world, nations such as Turkey could get swamped with hot money via the carry trade in the event that they raise rates to cool their economies.
The influx of hot money may accentuate the very problem the nation is trying to alleviate by raising rates.
The Emerging Financial Architecture: A New Take on Decoupling
Think back to the good old days just before the world financial system exploded. Remember all the talk then of “decoupling”? What advocates of the decoupling thesis had in mind was very simple: the world economy had changed in such a way that the growth trajectory (and business cycles) of developing countries had separated from the economic fortunes of the U.S. The strong performance of rapidly growing developing countries, not least the BRICs (Brazil, Russia, India and China), was seen as evidence that substantial parts of the global economy had broken free of the U.S. iceberg and were now floating in distinct economic currents. Decoupling advocates cited much evidence to support their claims—most importantly, they focused on the fact that export and GDP growth in large developing countries was smartly outpacing that of the U.S.