Avaaz’s Climate Vanity

Upward gazing can be politically blinding

Patrick Bond

Who’s not heard the great African revolutionary Amilcar Cabral’s injunction, fifty years ago, “Tell no lies and claim no easy victories”? If, like me, you’re a petit bourgeois who is hopeful for social progress, then let’s be frank: this advice hits at our greatest weakness, the temptation of back-slapping vanity.

The leading framers for the 41-million strong clicktivist team from Avaaz need to remember Cabral. They over-reached ridiculously last week in praising the G7:

Bond Avaaz

Many told us it was a pipe dream, but the G7 Summit of leading world powers just committed to getting the global economy off fossil fuels forever!!! Even the normally cynical media is raving that this is a huge deal. And it’s one giant step closer to a huge win at the Paris summit in December – where the entire world could unite behind the same goal of a world without fossil fuels – the only way to save us all from catastrophic climate change… Our work is far from done, but it’s a day to celebrate – click here to read more and say congratulations to everyone else in this incredibly wonderful community!!

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Local Food and the CASTE Paradigm

Anita Dancs and Helen Scharber, Guest Bloggers

Anita Dancs is an associate professor of economics at Western New England University.

Helen Scharber is an assistant professor of economics at Hampshire College.

Food produced on small farms close to where it is consumed—or “local food” for short—accounts for only about 2% of all the food produced in the United States today, but demand for it is growing rapidly. According to the U.S. Department of Agriculture, sales of food going directly from farmers’ fields to consumer’s kitchens have more than tripled in the past twenty years. During the same period, the number of farmers’ markets in the United States has quintupled, and it’s increasingly easy to talk about “CSAs”—community-supported agriculture operations where consumers pay up front for a share in the season’s output—without explaining the acronym.

But as local food has grown, so have the number of critics who claim that locavores have a dilemma. The dilemma, prominently argued by Pierre Desrochers and Hiroko Shimizu in their 2012 book The Locavore’s Dilemma: In Praise of the 10,000-mile Diet, is that local food conflicts with the goal of feeding more people better food in an ecologically sustainable way. In other words, well-meaning locavores are inadvertently promoting a future characterized by less food security and greater environmental destruction. The critics are typically academics, and while not all of them are economists, they rely on economic arguments to support their claims that the globalized food chain has improved our lives.

Why are critics pessimistic about the trend toward local food? Their arguments hinge on what we call the CASTE paradigm—the idea that Comparative Advantage and economies of Scale justify global Trade and lead to greater Efficiency.

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What We’re Writing, What We’re Reading

What We’re Writing

Gerald Epstein, Achieving Coherence Between Macroeconomic and Development Objectives

Sunita Narain, How to Plant Trees for Development

Matias Vernengo, More on Currency Crises and the Euro Crisis

What We’re Reading

Isabel Ortiz, Matthew Cummins, and Kalaivani Karunanethy, Fiscal Space for Social Protection

Luis Inacio Lula da Silva, Freedom of Association and the Right to Strike

John Weeks, Asian Infrastructure Development Bank in Beijing: Now, That’s a Seriously Bad Idea

Triple Crisis welcomes your comments. Please share your thoughts below.

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Looking to the U.S.

C.P. Chandrasekhar and Jayati Ghosh

All eyes are focused on the US economy and its performance. The explanations as to what motivates this are residual. With growth in China slowing, India’s economic performance disappointing, Japan still in recession and the uncertainty in Europe resulting from EU brinkmanship with respect to Greece, growth in the US seems to be the only immediate hope for the long awaited recovery from the six years of sluggishness that have followed the 2009 crisis. So, only the US can help.

Chandrasekhar-Ghosh Chart 1

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From “Boring” Banking to “Roaring” Banking, Part 3

Gerald Epstein

This is the final installment of a three part interview with regular Triple Crisis contributor Gerald Epstein, of the Political Economic Research Institute (PERI) at the University of Massachusetts-Amherst. This part focuses on why there have not been more significant reforms since the financial crash and Great Recession, and on a reform agenda for today. Parts 1 and 2 are available here and here.

Dollars & Sense: Of course, bubbles burst and exacerbate the severity of downturns. One of the amazing things about the aftermath of the recent crisis has been the apparent imperviousness of the financial sector to serious reform—especially in contrast to the Great Crash of 1929 and the Great Depression. How do you make sense of that?

Gerald Epstein: You have to use a political economy approach to understand the sources of political support for finance. I call these multilayered sources of support the “bankers’ club.”

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On the Rocky Road to Paris

Martin Khor

One of the biggest global events this year is the United Nations Climate Conference in Paris in December.

A new agreement to tackle climate change is expected, but there are many hurdles to overcome first.

Negotiations for the Paris agreement are now taking place in Bonn. Old unresolved issues have re-surfaced, with sharp divisions between developed countries (the North) and developing countries (the South).

It’s hard to see how they can be settled in the remaining three meetings, including the Paris conference.” But a deal in Paris is a political necessity, so somehow the differences have to be bridged, or else papered over.

There are two requisites for a good climate deal. It has to be environmentally ambitious, meaning that it leads the world to reduce emissions so that the average global temperature does not increase by more than 2°C (or 1.5°C, according to some) above the pre-industrial period.

That present temperature has now exceeded by 0.8°C. With global emissions increasing by about 50 billion tonnes a year, the remaining “space” in the atmosphere to absorb more emissions (before the 2°C limit is reached) will be exhausted in three decades or so.

The deal also has to be fair and equitable. The North, having been mainly responsible for the historical emissions and being more economically advanced, has to take the lead in cutting emissions as well as transferring funds and technology to the South to help it switch to low-carbon sustainable development pathways.

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From “Boring” Banking to “Roaring” Banking, Part 2

Gerald Epstein

This is the second part of a three part interview with regular Triple Crisis contributor Gerald Epstein, of the Political Economic Research Institute (PERI) at the University of Massachusetts-Amherst. This part focuses on the performance of the financial sector, against the key claims that are made by mainstream economists about its socially constructive role, during the era of “roaring” banking. Part 1 is available here.

Dollars & Sense: How does the performance of the financial sector measure up, during this most recent era of deregulated finance?

Gerald Epstein: If you look at the textbook description of the positive roles that finance plays, basically it comes down to six things: channel savings to productive investment, provide mechanisms for households to save for retirement, help businesses and households reduce risk, provide stable and flexible liquidity, provide an efficient payments mechanism, and come up with new financial innovations, that will make it cheaper, simpler, and better to do all these other five things. If you go through the way finance operated in the period of “roaring” banking, one can raise questions about the productive role of banking in all of these dimensions.

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Why it would be good for the IMF if Greece stopped repaying the IMF loans

Bodo Ellmers, Guest Blogger

The creditor community has another shock and awe moment this week, as more and more influential actors argue that Greece should stop repaying the International Monetary Fund (IMF) loans and instead use scarce public resources to tackle its economic and humanitarian crisis. While Prime Minister Tsipras still tries to ease the creditors, the idea is here to stay. And it is a good one: Greece should not just postpone loan repayments but default on them – stopping payments to the IMF for good. This would help to finally reform the IMF from the political puppet that it is now into a real and effective crisis response instrument.

Risk-free lending can quickly become irresponsible lending

Whoever loses in a debt crisis – and usually there are many losers – the IMF is always off the hook. It is common practice that borrowers grant preferred creditor status to the IMF, and pay off the IMF loans in full and in a timely manner. While it isn’t written down anywhere in international law that there’s such a thing as an IMF preferred creditor status – not even in the IMF’s own Articles of Agreements – all countries traditionally stick to this practice. This even goes for countries such as Argentina, which have been branded recalcitrant debtors by US judges and have no intention of maintaining good relations with the IMF.

Repaying the IMF often comes at high opportunity costs for borrower countries’ development, and for the other creditors who do have to take a haircut, and a larger one if the IMF does not participate in a debt restructuring. The fact that everyone’s repaying the IMF means that lending is essentially risk-free for them. And as in all other cases when lending is considered risk-free, the lender is encouraged to act irresponsibly, and to do really stupid things.

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China’s One Belt One Road: Globalization 3.0

Sara Hsu

China’s One Belt One Road initiative is becoming increasingly better financed, expanding China’s reach into Europe, Asia and Africa. The $50 billion Silk Road Fund and the $100 billion Asian Infrastructure Investment Bank are to back the program, while the China Development Bank will invest over $890 billion into over 900 projects in 60 countries. The projects will build up infrastructure, increase trade and finance, and boost connectivity across Europe, Asia and Africa.

The One Belt One Road initiative will jump start China’s foreign policy agenda, which has been relatively low key up until this point. In fact, the plan is so ambitious that it has the potential to boost China’s political and economic power to predominant status in the East.   This type of far-reaching foreign policy focuses on soft power rather than military might or economic coercion, and is arguably a part of a more diverse Globalization 3.0.

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