In Memory of Fred Lee

Triple Crisis sadly reports the passing of economist Fred Lee, described by our regular contributor Matías Vernengo as “a tireless builder of institutions, an activist for Post Keynesian, and institutionalist economics, creating space for heterodox economists.” As Matías puts it, Fred Lee “will be sorely missed.”

See Matías’s blog post in tribute to Fred Lee at Naked Keynesianism, here. See Fred Lee’s own narrative of how he became a heterodox economist, here.

What We’re Writing

Jayati Ghosh and C.P. Chandrasekhar, The Cotton Conundrum

S. Ibi Ajayi and Leonce Ndikumana, Capital Flight from Africa: Causes, Effects, and Policy Issues; selected chapters available as Political Economy Research Institute (PERI) working papers.

What We’re Reading

Transnational Institute, Shifting Power: Critical Perspectives on Emerging Economies

Jeronim Capaldo, The Trans-Atlantic Trade and Investment Partnership: European Disintegration, Unemployment and Instability

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William K. Black, Guest Blogger

This interview with William K. Black (University of Missouri-Kansas City) appeared originally at The Real News Network. Prof. Black describes why the U.S. Department of Justice has failed to prosecute executives at financial institutions that helped to detonate the recent crisis. It is not, Black argues, that the bankers were engaged in “rocket science” too complex to prosecute, but that the lack of prosecutions is “a matter of will and a matter of ideology.” His writings on this and other subjects can be read at New Economic Perspectives.

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Erinç Yeldan

A. Erinç Yeldan, a regular Triple Crisis contributor, is Professor of Economics at the Bilkent University, Ankara. He holds a PhD from the University of Minnesota, and is one of the Executive Committee members of the International Development Economics Associates, IDEAs.

The above title is from the article “We Need System change to stop climate Change” from The Bullet, the online newsletter of the Socialist Project (Toronto, Canada). The call to “change the system” was made following UN Secretary General Ban-ki Moon’s initiation of a summit—to draw attention to the threat of global climate change—in late September.

The call was already resonated by similar pleas, in particular by the global labor movement. IndustriALL Global Union declared in May 2014, for instance, that “there will be no jobs on a dead planet.” “The same people that try to avoid action on climate change have repressed workers for decades,” the union continued. “A Just Transition into greener jobs is the key to unlock the door to a sustainable future.”

It is estimated that, since the industrial revolution, the surface temperature of our planet has increased by an average of 1.5 to 2.2°C. This is attributed mostly to the concentration of the CO2 and other greenhouse gases in the Earth’s atmosphere. World Wildlife Fund (WWF) warns that life forms on our planet can tolerate only up to an additional increase of 2°C until the end of the current century.

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Juliet Schor, Guest Blogger

Economist Juliet Schor is known worldwide for her research on the interrelated issues of work, leisure, and consumption. Her books on these themes include The Overworked American: The Unexpected Decline of Leisure, The Overspent American: Upscaling, Downshifting, and the New Consumer, and Plenitude: The New Economics of True Wealth (retitled True Wealth for its paperback edition). She is also a professor of sociology at Boston College.

I have a hard time thinking about the future without orienting all of my thinking about climate, because I just don’t see much of a positive future unless we can address climate change very significantly. And that means, for wealthy countries, pretty radical emissions cuts in a pretty short period of time. It actually means that for most countries.

So, as I think about the future, I think about what we could do that both addresses climate change through radical emissions reductions and also increases social justice, reduces inequality, and starts solving the enormous problems that we have in this country. My most recent book, True Wealth, is about how to do that. Obviously we need to get onto a renewable energy system, there’s no question about that. We need a carbon tax or carbon regulation, and that’s stuff that is very well known.

What is not understood, I don’t think, is that we can’t successfully address climate change with a model in which we continue to try to expand the size of the economy.

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Martin Khor

A controversy is brewing over a new cure for hepatitis C because it is extremely expensive and patients in middle-income countries like Malaysia will find it way beyond their budget.

There are an estimated 400,000 Malaysians with hepatitis C, but this is probably a significant under-estimate since many people are not aware that they have the virus.

Worldwide, 170 million people live with the hepatitis C virus (HCV), and every year three to four million more are infected, and there are around 350,000 deaths.

Hepatitis C is thus a major public health problem and called a “silent killer” because it can lead to serious liver ailments including cancer for those who are infected.

The good news is that a new drug, sofosbuvir, was approved last year by the American health authorities.

The medicine has an effective rate of around 90%, making it superior to the older medicines which have a lower success rate and some serious side effects.

The bad news is that the producer, the US firm Gilead, put a very high price tag of US$84,000 (RM274,428) for a 12-week course.

Each pill thus costs US$1,000 (RM3,267).

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Dear Triple Crisis reader,

You may have noticed some broken links and error messages on Triple Crisis. As we were recently executing a necessary update to the site’s underlying software, the entire site crashed. Fortunately, we were able to get it up and running again, and have been posting content as usual since then.

However, some software modules (or “plug-ins”) remain inoperative, and this interferes with components of the site like the authors list and links to author bios. We’re working on getting these fixed, and getting the site fully restored. We hope you will bear with us as we complete this process.

Best,

The Editors

Matias Vernengo

More on the IMF and fiscal policy and Blanchard’s rethinking of macroeconomics

wrote a few days ago on the IMF’s persistent views on fiscal policy, and how these views are rooted in an unchanged perception of how the macroeconomy works.  The new Fiscal Monitor tends to support my previous position. The policy recommendations, in the case of advanced economies, suggest that:

“Fiscal efforts in the last five years have stabilized the average debt-to-GDP ratio. Nevertheless, it is still expected to exceed 100 percent of GDP at the end of the decade. It is important to continue to reduce debt to safer levels and rebuild fiscal buffers.

Further fiscal adjustment is needed in most advanced economies to bring down debt ratios to safer levels… reining in age-related Debt (percent of GDP) spending could reduce longer-term fiscal risks.”

Why debt ratios have to fall is an incognita, given that we now know that there is no evidence for a 100 percent, or any other for that matter, threshold that leads to lower growth. And it’s really annoying that they still want to cut spending on pensions, and perhaps push for privatization (even Chile’s famous case now is not an example anymore). For developing economies:

“the time has come to rebuild the fiscal buffers used during the crisis, and to strengthen the institutional fiscal policy framework.”

In this case, the notion is that inflation is around the corner, and, hence, that ‘emerging’ markets are close to full employment. In sum:

“Fiscal consolidation is called for in many economies, advanced and emerging, to reduce high public debt ratios and rebuild fiscal buffers used during the crisis.”

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Sunita Narain

One item on the agenda of the much-discussed Narendra Modi-Barack Obama meeting that has Indian commentators flummoxed is hydrofluorocarbons (HFCs). The joint statement issued after the meeting of the two heads of states says rather ambiguously that the two sides agreed to cooperate on “next steps to tackle the challenge posed by HFCs to global warming.”

HFC has been a bugbear in the India-US relationship. The US wants to begin negotiations for the phase-out of HFC—a chemical used in a wide range of industrial and household products like refrigerators, air-conditioners and solvents—under the UN’s Montreal Protocol. India argues that the Montreal Protocol is for protecting the world from ozone layer depletion and HFC is harmful because it contributes to climate change, so discussions should take place under the UN’s climate convention (UNFCCC).

In fact, HFC is the chemical that the world introduced to phase out hydrochlorofluorocarbon (HCFC), an interim substitute for chlorofluorocarbon (CFC). Both HCFC and CFC were indicted for damaging the stratospheric ozone layer that blocks harmful ultraviolet rays.

Seemingly, the US is driven by green concerns, as HFCs are greenhouse gases 2,000 times more potent than carbon dioxide. But the outcome depends on the alternative the world chooses. When this chemical was introduced it was understood that it would be bad for the climate. The world decided to solve one problem by creating another.

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James K. Boyce

This interview with regular Triple Crisis contributor James K. Boyce (Political Economy Research Institute, University of Massachusetts-Amherst) appeared originally at The Real News Network. Prof. Boyce describes the findings from his recent study showing that, in the United States, inequality in exposure to air pollution is even more unequal than inequality in income. The study, issued by the Institute for New Economic Thinking, was co-authored by Boyce with Klara Zwickl and Michael Ash.

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Timothy A. Wise and Kristin Sundell

Regular Triple Crisis contributor Timothy A. Wise (Global Development and Environment Institute (GDAE), Tufts University) and Kristin Sundell (ActionAid USA) are the co-authors of the ActionAid report “Rising to the Challenge: Changing Course to Feed the World in 2050.”

The 2008 global food price spikes were a wake-up call to global policymakers, shaking them from the lethargic slumber of the overfed. The rhetorical responses were swift, but policies and practices have changed little. That is in part because they relied on the tried-and-failed solution of increasing commodity food production.

Agribusiness led the charge, with dire warnings about unsustainable population growth and looming resource constraints. How can we produce enough food to feed this growing population?

“Between now and 2050, we need to double the food supply,” said Dr. Robert Fraley, Executive Vice President and Chief Technology Officer of Monsanto, during an interview withNational Public Radio’s Takeaway host John Hockenberry.“That’s probably the greatest challenge facing mankind.”

Indeed, that is the theme of this year’s World Food Prize event, taking place October 15-17 in Des Moines, Iowa. This event promises more of the same solutions.

The panic is not warranted, the claims about the need to double food production are unfounded. According to ActionAid’s report, “Rising to the Challenge: Changing Course to Feed the World in 2050,” the solutions lie not in the rush to increase industrial food production but in supporting sustainable and productive farming practices among small-scale farmers – particularly women – in developing countries while halting the diversion of food to biofuels and reducing the obscene levels of waste and spoilage that keep one-third of the world’s food from nourishing anyone.

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