The global media has hyped the performance of the Brazilian economy as an example of successful economic development. The Economist magazine referred to it as Latin America’s big success story. Lula was seen as a positive left-of-center leader, in contrast to the negative leadership of Hugo Chávez and other lefties. Also, Goldman-Sachs lumped Brazil together with Russia, India and China into the so-called BRICs, a group that supposedly would take over the world economy by mid-century. Further, according to The Economist: “Unlike China, [Brazil] is a democracy. Unlike India, it has no insurgents, ethnic, religious or hostile neighbors. Unlike Russia, it exports more than just oil and arms, and deals with foreign investors with respect.” In other words, Brazil is in the best of all possible worlds! Or is it not?
Food Crisis Preceded the Financial Crisis
What are consequences of the implementation of Neo-liberal economic philosophy for industrialization and development of poor countries? The answer: de-industrialization of many low-income countries; destruction of their food production (influenced also by protectionist agricultural policies of developed countries), thus their heavy dependence on food imports. The boom in commodity prices had improved the balance of payments of some developing countries temporarily before the “busts” emerged. But even then, it had detrimental impact on some other developing countries, through the hike in food and fuel prices, which were influenced by speculative activities of the trans-national corporations.
Financial Transaction Tax Links
Here at the Triple Crisis blog we linked to the video and campaign surrounding a global financial transaction tax. The accompanying economists letter supporting the tax was signed by many of the economists who blog at Triple Crisis. Since then there has been a great deal of push back on the idea of such a tax. To aid those interested in examining in-depth arguments and analyses for and against the tax, Zachary Wermer, a student of Triple Crisis co-chair Kevin Gallagher, put together this fairly comprehensive bibliography (with links) of the pros and cons of such a tax.
Agribusiness and the Food Crisis: A new thrust at anti-trust
The food crisis has a new villain: agribusiness. A recent report by Olivier De Schutter, the UN Special Rapporteur on the Right to Food, on “Agribusiness and the Right to Food” takes a close look at the contribution of commodity buyers, food processors, and retailers to the food insecurity now plaguing over one billion people in the world.
Why agribusiness? Aren’t they driving prices down? Well, yes and no, and both are a problem. If they are so big they can exert monopoly control over key markets, they can raise prices for lack of competition, hurting all food consumers. And if they have excessive market power over suppliers – particularly farmers – they can exert monopsony control and force down crop prices. That can benefit food consumers if low prices are passed through to consumers, but monopoly can rear its head again there. In any case, the price squeeze puts smallholder farmers in a precarious position. That contributes to the global food crisis because the majority of the world’s hungry are small-scale farmers.
Obama’s New Trade Agenda: What happened to multilateralism and development?
The world has been holding its breath to see what Barack Obama’s campaign promise of a renewed multilateralism would bring to the world trading system. Global trade talks have soured since 2008 when the Bush administration refused to grant the developing countries the right to safeguard their farmers in the event of import surges.
After nearly a year in office, Obama finally unveiled his trade agenda just last week. Rather than bringing a breath of fresh air into the world trading system in a time of crisis, the administration’s agenda has brought gasps across the world—especially in developing countries.
Economists and the Financial Crisis: What were they thinking?
The role of ideas in promoting the financial crisis has been often disregarded. It seems as if the development of complex financial instruments and the deregulation of financial markets have taken place in an economic thinking vacuum. However, the opposite is the case, and modern finance developed and taught in the finance and economic departments, particularly of business schools, has been central for creating the conditions for the current crisis. Esteban Pérez-Caldentey and I deal with the issue in a recent paper published in the Real World Economic Review.
The Demand for Economic Recovery: Looking for new sources of growth in the developing world
It is fairly obvious that in the immediate future, and probably for some time to come, the United States cannot continue to be the engine of growth for the world economy. For various reasons, consumption demand (especially that emanating from wage incomes broadly defined) is likely to remain suppressed for some time, and this will prevent a more balanced recovery. Household savings rates have already started rising from their very low levels. It was expected that increased public spending would substitute for the repairing of private balance sheets, and that has actually been the case in the past year. However, the remarkably rapid political backlash against “excessive” government spending – even though it has little validity within a Keynesian macroeconomic framework – seems to have already affected the ability and the willingness of the US government to engage in further spending to ward off potential recession. The dangers of early withdrawal of stimulus measures are thus very high.
Clear Economics
The United States Congress is expected to take up the Carbon Limits and Energy for America’s Renewal (CLEAR) Act in the coming months. The bill – a potential breakthrough in U.S. climate policy – was proposed in December by Senators Maria Cantwell of Washington and Susan Collins of Maine. In preparation for that debate, Matthew E. Riddle and I have analyzed the household-level impacts of the bill’s cap-and-dividend climate policy and how these differ across the income spectrum and across the states.
A new report, Clear Economics, shares our findings that the CLEAR Act delivers positive net benefits to the majority of households in every state: what these households will receive in dividends exceeds what they will pay as a result of higher fossil fuel prices. We also suggest ways in which the interstate differences in impacts could be further reduced or eliminated altogether, and assess state-by-state job creation that will result from public investments in the clean energy transition.
Macroeconomic Policy: The Elephant in the Room
International conferences on poverty and the environment come and go. There’s always a big pachyderm in the meeting room. It’s got the words “macroeconomic policy” written on its forehead. Nobody wants to talk about it.
Consider the following. The Millennium Development Goals were debated in many conferences, but nobody spoke about the macroeconomic policy framework needed to achieve them. As if reducing hunger and extreme poverty, generating employment and providing health services and education had nothing to do with fiscal policy, monetary policy and financial deregulation. Aside from some pious words about financing and overseas development assistance, the implicit message was to carry on with the same macroeconomic policies. That could only have been based on faith in the trickle-down potential of neo-liberal globalization.
Financing the fight against climate change: Where are the governmental shareholders?
According to UNDP, limiting global warming to less than 2° Celsius above the pre-industrial era is estimated to require about $250 billion a year in additional investment to “green” the world economy in 2010-2015. Governments would be wise to meet this target by investing in low-carbon development – particularly since the cost of the alternative is much more expensive. However, high and rising government debts will significantly preclude this path.