For more than a quarter century now, most emerging market and developing nations have been integrating themselves with the world economy. Some of these globalizers have done fairly well in terms of per capita income, but not Mexico. All of a sudden, Mexico is seen as one of the most promising destinations for emerging market trade and investment. Has Mexico learned the lessons of the past or will this spurt of attention be squandered like so many times in the recent past?
Finance Resurgent: Out-of-Control Banking Threatens Us More Than Ever
Eli Epstein-Deutsch
After the world economy nearly imploded in 2008, we all supposedly learned hard lessons about unregulated markets, greedy traders, “too-big-to-fail,” opaque credit instruments, and shadow financial institutions. Surely, bankers are contrite, regulators are vigilant, and we’re at least headed for a few decades of recovery and relative safety like those that followed World War II? Not necessarily, argue several leading economists in interviews on the Real News Network. Shadow banking and the sprawling, unregulated derivative market are thriving again. Moreover, the longer trendline, which extends back to the late 19th Century, reveals a striking story: that of finance’s ever growing dominance within the global capitalist economy, and the diversion of more and more resources towards itself at the expense of other sectors. Watch the videos below to learn more.
Peter Spiegler on “Economics-Made-Fun”
I normally blog about issues related to finance or distribution, but this time I thought I might try something somewhat different. I’m not particularly expert at questions of economic methodology, but found this paper to appear in the latest Journal of Economic Methodology by my very smart colleague at UMass Boston Peter Spiegler to be really interesting.
Over the last decade or so we have all had to endure (I use the term advisedly) what may be termed the ‘economics made fun’ (EMF) genre of books. The bestseller Freakonomics for example has had enormous success, selling over 5 million copies to date and launching a whole cottage industry of books (some better and some worse that blended pop culture, armchair theorizing and quantitative economic methods to come up with surprising and ‘fun’ (counterintuitive or shocking) conclusions.
Peter Spiegler on "Economics-Made-Fun"
I normally blog about issues related to finance or distribution, but this time I thought I might try something somewhat different. I’m not particularly expert at questions of economic methodology, but found this paper to appear in the latest Journal of Economic Methodology by my very smart colleague at UMass Boston Peter Spiegler to be really interesting.
Over the last decade or so we have all had to endure (I use the term advisedly) what may be termed the ‘economics made fun’ (EMF) genre of books. The bestseller Freakonomics for example has had enormous success, selling over 5 million copies to date and launching a whole cottage industry of books (some better and some worse that blended pop culture, armchair theorizing and quantitative economic methods to come up with surprising and ‘fun’ (counterintuitive or shocking) conclusions.
Featured Event: A National Teach-in and Press Conference on Economic Inequality
All day today, noted economists including Triple Crisis Blogger Jeff Madrick, Michael Hudson, Dean Baker and more are holding a live webinar called “Solutions to America’s Critical Inequality Crisis.” The conference was organized as part of the action events surrounding the first anniversary of the Occupy Wall Street protests, which sounded the alarm regarding growing economic injustice inside and outside the United States. The panelists will discuss both the causes of rising economic inequality and policies that could help mitigate it.
Audiences anywhere in the world can register online to join the conference call and ask questions to directly to the scholars by clicking here:
http://myaccount.maestroconference.com/conference/register/EU2CN2XB458KHF
Or go to http://ows20.nycga.net/ for more information.
The Triple Crisis Blog welcomes your comments. Please share your thoughts below.
Future of the Euro: The Elephants in the Room
Robert Wade, Guest Blogger
In all the debate about the future of the euro two big, obvious points are often overlooked. I was reminded of them reading Financial Times columnist John Plender, “Only the weakest will triumph in euro battle”, September 8th 2012. He said, rightly, “We forget the mutual nature of the creditor-debtor relationship at our peril.” But he went on to obscure this mutuality by focussing only on the transfers from Germany/North to southern Europe to keep the euro going.
The Dangers of Pseudo Fiscal Union in the EMU
Philip Arestis and Malcolm Sawyer
We write this as people who have long argued that a currency union such as the Economic and Monetary Union (EMU) would need to be accompanied by what could be termed a fiscal union (see, for example, Arestis, P., McCauley, K. and Sawyer, M. (2001), “An Alternative Stability and Growth Pact for the European Union,” Cambridge Journal of Economics, Vol. 25, No. 1, pp. 113-130.)
It would then seem that we should be celebrating the proposed moves in EMU towards what is termed fiscal union; we rather, however, write of the dangers of the proposed fiscal union. The fiscal union, which we would view as required, would be one where there are substantial tax raising powers at the EMU level, say of the order of 10 per cent of EMU GDP (compare this with the Federal government in the USA raises taxes of the order of 20 per cent of GDP).
This fiscal union would involve a significant amount of fiscal transfer from richer countries to poorer countries: a proportional tax regime would raise absolutely more money in richer countries than in poorer countries, and a progressive one also relatively more. Provided that public expenditure did not exactly match tax revenue in a particular region, but rather was to some degree related to population size and to need, there would be transfer of resources from rich to poor.
Another key element of such a fiscal union would be the ability of the relevant Federal authority (Ministry of Finance) to operate a fiscal policy with deficits and surpluses as appropriate for the state of the economy. Further it would require the support of the European Central Bank in the operation of fiscal policy and willingness to buy where the bonds issued by that Federal authority.
Why the Global Economic Crisis is Here to Stay
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.”
Poor Representation in the World Bank
Shelley Marshall and Sanjay Pinto, guest bloggers
On Friday, August 10, 2012, in a move that can be seen at least in part as an attempt to counterbalance the selection of an American, Jim Yong Kim, as head of the Word Bank, Jin-Yong Cai, a Chinese national, was announced as the CEO and Executive Vice President of the International Finance Corporation, the Bank’s private lending arm. Two strong developing country contenders—Jose Antonio Ocampo of Colombia, and Ngozi Okonjo-Iweala of Nigeria—had been in the running for the Bank’s top leadership post, and President Obama had earlier mentioned former Brazilian President “Lula” as a strong potential candidate. Many were critical, then, when the US monopoly over the position was maintained.
Financialized Agriculture: The New Realm of Social Activism
In August, two European banks announced that they would be scaling back investment in agricultural commodities. Germany’s Commerzbank and Austria’s Volksbanken both removed agricultural products from their index fund products. Several months earlier, similar moves were made by three other German banks, including Deutsche Bank.