Secret Climate Cost Calculations: the Sequel

Frank Ackerman

Three years later, it was time for a new episode.  Back in 2010, Congress listened to some climate-denial rants, counted votes, and decided to do absolutely nothing about climate change; this year on Capitol Hill, the magic continues.

Also in 2010, the Obama administration released an estimate of “the social cost of carbon”` (SCC) – that is, the value of the damages done by emission of one more ton of carbon dioxide. Calculated by an anonymous task force that held no public hearings and had no office, website, or named participants, the SCC was released without fanfare as, literally, Appendix 15A to a Department of Energy regulation on energy efficiency standards for small motors.

This year, the Obama administration updated the SCC calculation. The update was done by an anonymous task force that held no public hearings, and had no office, website, or named participants. It first appeared as – yes! – Appendix 16A to a Department of Energy regulation on energy efficiency standards for microwave ovens.

Read the rest of this entry »

Time for the US to rethink its LatAm Strategy

Kevin P. Gallagher

This week Chinese President Xi Jinping will make his first official visit to Latin America since taking office. Xi will visit Trinidad and Tobego, Costa Rica, and Mexico. In a scramble the United States has sent Vice President Joseph Biden to the region on a goodwill mission at the same time.

The two leaders will spar over the airwaves, web, and blogosphere offering different visions of cooperation. The US should use this opportunity to strengthen ties with the region and take advantage of the fact that Latin America’s love affair with China appears to be cooling.

Read the rest of this entry »

Nationalization is the sovereign right of nations, but is it sufficient?

Mehdi Shaffaedin

Mr. Morales, the president of Bolivia, has recently taken measures to nationalise the oil and gas industries of the country, following his nationalization of utilities. According to international law, nationalisation is regarded as the sovereign right of nations. But is it sufficient to contribute to diversification and development?

Dependence of developing countries on production and exports of primary commodities and the control/ownership of natural resources has been one influence of colonialism. The result: low return value and falling terms of trade against the host countries. Yet, developing countries have aspired to industrialization and rapid development since their independence. And some of them have nationalized their natural resource sector. One way to industrialize and accelerate development is to increase revenues and foreign exchange earned from the primary sector itself, to use them for diversification. Nevertheless, despite their nationalization, not only has the international market been dominated by TNCs, but also the contribution of the accrued revenues to diversification and development has not been significant.

Read the rest of this entry »

The Asian Housing Bubble Burst

C.P. Chandrasekhar and Jayati Ghosh

Everyone knows the role played by housing bubbles in the pre-crisis booms that ended in spectacular crashes in the United States in 2008, as well as in other countries like the UK and Ireland, and then Spain. But many commentators still persist in seeing this as more of a developed economy problem, which is less likely to become a concern in developing countries where excess demand for housing remains an issue.

In fact, however, it is just as possible for debt-driven private consumption bubbles to burst in developing countries – and several developing country financial crises have resulted from precisely that in the past. The experience of the Asian financial crisis in 1997-98, in which excess private indebtedness played a big role in causing the crisis in South Korea and Thailand, had provided a salutary lesson to most of developing Asia in the subsequent decade.

So it could have been expected that allowing excessive private credit expansion, especially for private retail credit for housing, automobiles and other consumption, is something that would be anathema to Asian countries, especially those that had already gone through one round of devastating financial crises. Yet, in the aftermath of the Great Recession of 2008, many Asian developing countries actually encouraged the growth of consumer credit bubbles as a means to more rapid recovery, accentuating a process that had already been eased by financial liberalisation from 1999 onwards.

Read the rest of this entry »

A Great Sucking Sound: Part 2

Sasha Breger, Guest Blogger

In my last post, I discussed the role of debt relationships and farmland acquisition in redistributing wealth from global agriculture to finance.  This post discusses another mechanism for such injustice: commodity hoarding by financial firms.  Over the last several years, as agricultural commodity prices rose, large financial institutions took the opportunity to speculate in both virtual commodities (via derivatives markets, to be addressed in part 3 of this post), and physical commodities. Speculating in physical commodities involves selectively storing and releasing food crops so as to profit from movements in price (and, sometimes to influence prices) over the time the crop is stored. Financial institutions factor into this dynamic in two ways: directly, as commodity hoarders; and, indirectly, as lenders to and shareholders in major global food trading companies that hoard commodities.

Despite reports that many prominent financial firms are exiting commodities markets (responding to public pressures to stop gambling on food, and higher regulatory costs), there is ample evidence to the contrary.  Global metals markets illustrate some new, scary methods for institutional hoarding and spot market speculation, methods that are likely to be transferred to food commodities moving forward.

Read the rest of this entry »

Solar Wars Threaten Climate Fight

Martin Khor

This source of clean and renewable energy is seen as one of the major saviours that could help power the world without emitting greenhouse gases.

The drawback is that solar energy has traditionally been more expensive to use carbon-intensive coal or oil.

But in recent years solar power has become much cheaper. Energy experts predict that its cost could match that of conventional fuels in the next few years in some areas.

Read the rest of this entry »

A Great Sucking Sound: Part 1

Sasha Breger, Guest Blogger

If you hear a kind of whooshing, rushing noise, don’t worry—it’s not US jobs moving to China. Today’s great sucking sound is the sound of agricultural wealth being siphoned off into the global financial system.  Dragging poverty and insecurity in its wake, this broad movement of wealth from agriculture into finance is enriching and empowering finance capital at the expense of farmers, traders, consumers, rural communities and the earth. In fact, that sucking sound is really the sound of injustice.

Finance capital globally deploys a huge variety of methods and techniques that generally serve to redistribute wealth from agriculture to finance.  These include debt, farmland acquisition, commodity hoarding, and derivative and insurance markets. In the following posts, I outline the wealth transfer mechanism in each of these contexts, focusing largely on new data and evidence from the past several years.

Read the rest of this entry »

Hunger and the Post-2015 Development Agenda

Jennifer Clapp

This post introduces some of the points raised in a discussion document entitled Framing Hunger that was recently presented to the FAO by a group of experts coordinated by Frances Moore Lappé of the Small Planet Institute. Three Triple Crisis Bloggers – Robin Broad, Timothy Wise and Jennifer Clapp – took part in the preparation of the document, which offers a detailed critique of the FAO’s “State of Food Insecurity 2012.” This post originally appeared on the Ottawa Citizen Aid and Development Blog.

As the 2015 deadline for meeting the Millennium Development Goals (MDGs) nears, the pressure is on to define what will replace those goals as we move forward. World progress on addressing hunger, a key aspect of the first MDG – to eradicate extreme poverty and hunger – has been mixed at best.

The United Nations launched a series of processes last year and is now seeking to finalize recommendations for a Post-2015 Development Agenda. The Report of UN Secretary General Ban Ki Moon’s High Level Panel on the topic is due to be released on May 31. Food security experts are anxious to see how world hunger will be addressed within that agenda.

It is important to ensure that any new hunger agenda take into account key lessons from the MDG experience. Indeed, as pointed out in a recent communication from a group of hunger experts addressed to the Food and Agriculture Organization (FAO), the ways in which we measure hunger, and the goals we set for reducing it, matter a great deal. Current indicators are too narrow, and a broader conceptualization of hunger is sorely needed.

Read the rest of this entry »

Apple and tax justice

Ilene Grabel

The US Senate’s investigation into the tax avoidance strategies of Apple has helped to cast a light on the very practices that international tax justice activists have highlighted for years (see, e.g., the work of the Tax Justice Network and these videos). Apple’s strategies, which resulted in tax avoidance on the order of several billions of dollars, exemplify the kind of the transfer pricing and other strategies so long perfected by other multinational and large national firms.

The Apple case also highlights the self-defeating nature of the strategies used by states (in this case Ireland) that compete with one another to attract foreign firms by giving them the keys to the Treasury. These corporate giveaways hollow out the state revenue base precisely at a time when tax revenues are falling because of the global recession.  While these lost tax revenues are always costly to states, they are especially costly now that governments in the grips of austerity fervor are slashing social spending when it is most needed. Of course, it is far easier politically to enforce “discipline” by retracting social spending and raising taxes that fall on struggling households and small businesses than on large, footloose and politically powerful corporations.  And then there is the matter that many of these firms are simply taking advantage of the tax rules that governments have created for them, and so it becomes difficult to imagine states going after these same firms.  Nevertheless it bears noting that austerity-induced expenditure cuts might be avoided altogether were states to cooperate on closing tax loopholes and ending race to the bottom forms of international and domestic tax competition.

Read the rest of this entry »

Poor Empiricism: The “Middle Income” Trap

C.P. Chandrasekhar

Increasing evidence that the era of high growth in Asia may be nearing its end has triggered speculation on ways to revive growth in the region. It has also challenged the belief that more developing countries would like the first generation new industrialisers in Asia (South Korea, Singapore, Taiwan and Hong Kong) transit to developed country status in a relatively short period of time. This has spawned a new industry involving the use of multi-country, inter-temporal GDP numbers to identify the countries that have escaped being stuck in the so-called “middle income trap” and the lessons that can be learned from them. Academic economists (Barry Eichengreen, Donghyun Park, and Kwanho Shin, 2013) and international institutions like the IMF (Regional Economic Outlook: Asia and Pacific, April 2013) and the ADB (Jesus Felipe, March 2012) have jumped on to the bandwagon.

A typical analysis would first use the data to say something of the following kind: Growth slowdowns are more likely to occur when countries reach income levels (measured in PPP terms) that identify them as being in the “middle income range”. But some countries, such as the first tier new industrialisers in Asia, managed to escape this middle income trap. Examining their experience (even though they are few in number) points to what needs to be done if others such as China, India, Indonesia, Malaysia, and Vietnam are to ensure sustained growth that takes them to developed-country status.

Read the rest of this entry »