James Boyce: The GDP is the most commonly cited economic metric but it doesn’t tell us what we need to know.
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Two new trade agreements involving the two economic giants, the United States and European Union, are leading a charge against the role of the state in the economy in developing countries.
Attention should be paid to this initiative as it has serious repercussions on the future development plans and prospects of the developing countries.
The role of the state, or of government, in development is a subject of long-standing and important discussion.
SEOUL, the capital of the Republic of Korea, is now one of the “happening” cities of Asia. Psy’s “Gangnam style” (the pop music video that has gone viral online with more than 6 billion hits) that somewhat randomly celebrates the posh modern district of Gangnam is only one of various ways in which the city is supposed to reflect the new cool. There is growing recognition that this city is both vibrant and livable, with its vertiginous high-rise buildings coexisting with clean streets, fine new museums and spots that combine the natural beauty of its forested hills with carefully preserved (or reconstructed) palaces of the Joseon dynasty.
The evident sophistication and confidence of this capital city are relatively recent, indicating the material successes brought about by the much acclaimed and analysed “Korean economic miracle” that lifted a relatively poor economy into developed country status over the course of a generation. It is now recognised that this miracle was not a result of the operation of unfettered market forces. Rather, it was based on active state involvement in shaping the way private agents behaved. This economic success also had its dark side in the brutal dictatorship of Park Chung-hee (whose daughter Park Gyeun-hye was recently elected President). And both of these were enabled by the active support of Western (specifically United States) political and economic power.
This exemplifies the extent to which Korea’s turbulent and frequently tragic history has encapsulated the pulls and pushes of external forces, which outsiders frequently do not recognise. Korea’s history has been significantly driven from without, from the 7th century attempts at domination by the T’ang emperors of China to the Ming takeover of the 15th century to the tug of war between the Qing rulers of China and newly expansionist Japan in the 19th century. The subsequent 20th century division of the country into northern and southern sections was a reflection of the Cold War’s hottest moment. The Korean War in the 1950s, which split the country, was less an internally generated civil war and more the result of the desire of the conflicting foreign powers to maintain their own areas of strategic domination.
What We’re Reading
South Centre Global Value Chains and Development
Prabhat Patnaik The Fall of the Rupee
Robert Pollin Beyond Debt and Growth
Michael Ash The Top 100 Greenhouse Gas Polluters Uncovered
Jeannette Wicks Lim and Robert Pollin Economists Support $10.50 Minimum Wage
What We’re Writing
Leonce Ndikumana and Lynda Pickbourn Impact of Sectoral Allocation of Foreign Aid on Gender Equality and Human Development
Jayati Ghosh Korea’s Debt Mountain
Jeff Madrick Toward Reglobalization
Sunita Narain, Gas, Found and Lost
One day in May, climate change got a lot more expensive. The price tag on emissions – the value of the damages done by one more ton of CO2 in the air – used to be a mere $25 or so, in today’s dollars, according to ananonymous government task force that met in secret in 2009-2010. Now it’s $40, according to an anonymous government task force that met in secret in early 2013.
Anyone who cares about combating climate change would have to applaud the result: a higher carbon price means that cost-benefit analyses will place a greater value on policies that reduce emissions.
And anyone who cares about democracy should be appalled at the process: are we entering an era in which major regulatory decisions are made anonymously, in secret, with no opportunity for review?
The nature and effects of free trade agreements has become a topic of public discussion, especially with the round of talks of the Trans-Pacific Partnership Agreement (TPPA) about to take place in Malaysia.
Not much is known about the TPPA drafts. But with some of its chapters leaked and available on the internet, and since much of the TPPA is likely to be similar to bilateral FTAs that the United States has already signed, we can have a good idea of its main points.
As can be expected, there are many contentious issues to consider, especially for developing countries like Malaysia.
By Bruce Rich, Guest Blogger
In 2011 UN Secretary General Ban Ki-Moon shocked an audience of bankers and corporate executives in Davos Switzerland when he declared that the current economic system was “a recipe for disaster” and “a global suicide pact.” Over the last two decades the world’s institutions have largely failed to deal with the ecological crises of climate change, destruction of species, and pollution of fresh water and oceans. These failures have been accompanied by growing economic inequality in many nations.
The vast majority of the world’s economic growth, as well as ecological destruction, is now occurring in developing countries, and it is largely in these countries where the environmental and economic future of the world will be decided. No institution has played a more influential role in this arena than the World Bank Group.
The World Bank Group proudly proclaims “our dream is a world without poverty.” It claims to be a leader in promoting environmental standards for development, as well as in finance for environmental purposes, such as mitigating climate change. In reality it is a microcosm of the failures of its 188 member countries to address the challenges of economic development.
Malcolm Sawyer and Philip Arestis
The general response to the financial crisis of 2007 onwards by central banks included large cuts to the policy interest rate and then adoption of ‘quantitative easing’ alongside many other policies of bail-outs. The low interest rate regime aided the government’s budget position by enabling borrowing at low rates. But they did little to aid recovery as economies continued to dip into and out of recession. Central Banks started to engage in ‘quantitative easing’.
‘Quantitative easing’ has been an unorthodox piece of policy comprising of two elements: the ‘conventional unconventional’ measures: whereby central banks purchase financial assets, such as government securities or gilts, that boosts the stock of money in the form of M0; and ‘unconventional unconventional’ measures: in this way central banks buy high-quality, but illiquid corporate bonds and commercial paper. In this way the stock of money is expected to increase.
We are economists who think that the economy should serve people, the planet, and the future.
Some politicians and economists still cling to the old claims that bigger is better, greed is good, a fossil-fueled economy is inevitable, and inequality is efficient. A growing body of evidence has shown this model to be bankrupt.
Instead of prosperity, it is feeding ever-wider inequalities of wealth and power that erode our health and economic well-being.
Instead of full employment, it is generating monthly job growth that fails to match labor force growth.
Instead of a sustainable future for our children and grandchildren, it has brought us to the brink of an unprecedented environmental crisis, consistently overstating the costs of actions to protect our climate while understating their benefits.
Instead of a competitive and resilient economy, it has fostered the growth of too-big-to-fail banks and corporations whose political power threatens the integrity of our democracy itself.
We call for a new economy founded on the building blocks of a level playing field, true-cost pricing, resilience, and real democracy.
In addition to new and effective policies in the critical arenas of job creation, housing, health care and regulation, we call for support for 21st century alternatives to the centralized, unfair, and unsustainable economy of the 20th century.
If you’re an economist and would like to add your name to this statement, please send an email to Econ4 by clicking here (info@econ4.org).
Triple Crisis Welcomes Your Comments. Please Share Your Thoughts Below.
What We’re Reading
Tom Palley Coordinate Currencies or Stagnate
Nils Pratley Now Lock up the Bankers
Richard Eskow Thirteen Facts About Tax Dodging US Corporations
IMF IMF Launches New Sovereign Debt Restructuring Discussion
What We’re Writing
Jennifer Clapp and Sophia Murphy The G20 and Global Food Security
Jennifer Clapp, Tim Wise, et. al. How We Count Hunger Matters
Matias Vernengo, Bernanke on Fiscal Policy: Keynesian Ma Non Troppo
Martin Khor Climate Crisis Effects Already Upon Us
Jayati Ghosh The Employment Bottleneck
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