Tag: Economy

  • Reforming the World Bank

    In this brief published by the Center for Global Development, the authors discuss the calls for setting a reform agenda for the World Bank aimed at “enabling the institution to respond to today’s global development challenges.”

    “The reform agenda is being negotiated by representatives of World Bank shareholders and the institution’s management, which  put forward an evolution roadmap laying out key issues for discussion. Among these issues is whether the World Bank should take on a bigger and stronger role in addressing major global challenges. The United States has been a leading voice in the push for World Bank evolution […]. However, some shareholders have voiced concerns that the evolution agenda could detract from the bank’s core development mission or create financing trade-offs in the absence of significant new resources.”

    Read/download the full document here.

  • Free Downloads of Carl Menger's On the Origins of Money

    The Mises Institute provides (totally legal) free downloads of digital copies of Carl Menger’s book On the Origins of Money here.

    Carl Menger was the founder of the Austrian school of economics.

    About the book: 

    “Written in the same year that he testified before the Currency Commission in Austria-Hungary, and published in English in 1892, Carl Menger explains that it is not government edicts that create money but instead the marketplace. Individuals decide what the most marketable good is for use as a medium of exchange. “Man himself is the beginning and the end of every economy,” Menger wrote, and so it is with deciding what is to be traded as money.”

    About the Mises Institute: 

    “The Mises Institute, founded in 1982, teaches the scholarship of Austrian economics, freedom, and peace. The liberal intellectual tradition of Ludwig von Mises (1881-1973) and Murray N. Rothbard (1926-1995) guides us. Accordingly, we seek a profound and radical shift in the intellectual climate: away from statism and toward a private property order. We encourage critical historical research, and stand against political correctness. The Institute serves students, academics, business leaders, and anyone seeking better understanding of the Austrian school of economics and libertarian political theory.” 

    Find the download link of the book here.

  • Einstein on Socialism

    In this essay, titled “Why Socialism?,” Albert Einstein expressed his thoughts on socialism. The essay “was originally published in the first issue of Monthly Review (May 1949). It was subsequently published in May 1998 to commemorate the first issue of MR‘s fiftieth year.” 

    Monthly Review is “an independent socialist magazine” that started publication in New York City in May 1949. 

    A short excerpt from the essay: 

    “Production is carried on for profit, not for use. There is no provision that all those able and willing to work will always be in a position to find employment; an “army of unemployed” almost always exists. The worker is constantly in fear of losing his job. Since unemployed and poorly paid workers do not provide a profitable market, the production of consumers’ goods is restricted, and great hardship is the consequence. Technological progress frequently results in more unemployment rather than in an easing of the burden of work for all. The profit motive, in conjunction with competition among capitalists, is responsible for an instability in the accumulation and utilization of capital which leads to increasingly severe depressions. Unlimited competition leads to a huge waste of labor, and to that crippling of the social consciousness of individuals which I mentioned before. 

    This crippling of individuals I consider the worst evil of capitalism. Our whole educational system suffers from this evil. An exaggerated competitive attitude is inculcated into the student, who is trained to worship acquisitive success as a preparation for his future career. 

    I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals.” 

    Read the full essay here.

  • The Similarities Between India and China

    This piece in the Asian Labour Review compares the economic histories and current economic policies of India and China, arguing that the two countries are very much mirror images of each other. 

    Historically speaking, the author argues, the two countries have “more similarities than often acknowledged.” For instance: 

    “From inheriting largely rural, agrarian societies, to seeking similar goals for their population in terms of development and industrial modernisation or adoption of command planning strategies, there are striking patterns of convergence between India and China. 

    One prominent aspect in this comparison is the global neoliberal turn from the latter half of the 1980s and the restructuring of labour. 

    The advent of market reforms, along with the state’s retreat from an interventionist role, is predominant in labour relations for both India and China. Despite minor variations, the changing nature of the state-labour relations and the declining power of labour as a political subject is conspicuous across the spectrum.”

    The competition between the two countries is related to the larger global economic system: 

    “As transnational corporations outsourced their production, there has been tremendous competition among countries in the Global South to attract these investments. Governments in the Global South provide companies with infrastructure, resources and incentives to embed their production facilities in their territorial jurisdiction.”

    This is why we see (sometimes failed) “attempts to weaken labour protections for the sake of attracting transnational corporations” like trying “to extend working hours per day from 8 to 12.”

    The author makes this interesting observation about China: “‘Socialism with Chinese Characteristics’ may continue to hold ground as a political-ideological euphemism, but capitalism is living reality in China’s economic transformation.” Recently, “[i]n response to rising labour costs, supply chain disruption and labour unrest, Apple and Foxconn have tried to diversify their manufacturing facilities to other geographies away from heavy dependency on China.” India is very much “in the race to parallel China, if not completely eclipse it,” with Indian policymakers “increasingly looking to copy the China playbook to shape the country’s growth and development.”

    The following lines perfectly sum up the central argument of the piece:

    “The nation-state narratives about India and China, centering on their geopolitical competition and itinerant border tensions, tend to emphasize differences and divergences more than convergences and parallels. There are admittedly vast differences in their political and social systems. But recognising points of convergence allows us to more fully explore their trajectories in all their complexities.”

    Read the full article here.

  • Buying Russian Oil with Chinese Currency: Pakistan Flirts with De-dollarisation

    As widely reported, including in this report in The Cradle, “Pakistan paid for its first imports of discounted Russian crude oil in Chinese currency.”

    As the report goes on to point out, this is significant because:

    “Pakistan’s purchase takes advantage of new opportunities arising from the war between Russia and Ukraine. Due to western sanctions, Moscow lost its European markets for oil and natural gas exports and has instead redirected its sales toward other nations, notably India and China.

    Large quantities of oil paid for in non-US denominated currency and at reduced prices comes at a crucial time for Pakistan, which suffers from a balance of payments problem that risks the country defaulting on its external debt. The Pakistan central bank’s foreign exchange reserves are currently only sufficient to cover a month of controlled imports.”

    Read the full report here.

  • The Importance of David Graeber's Work

    In this tribute to the late David Graeber, leftist magazine Red Pepper asked activists and academics “what David Graeber’s work meant to them.”

    The responses make for interesting reading. Like: 

    “As David wrote: ‘The difference between a debt and an obligation is that a debt can be precisely quantified.’ Whereas debts are impersonal financial instruments, obligations trigger a chain of generosity: gifts and favours of similar, but not identical value, to be granted, not immediately, but at some appropriate time in the future, according to the needs of the recipient and resources of the obliged. Obligations bring us together; debts divide us. Systems of credit and debt have been used to manage our economic affairs for millennia. But David showed us that we are perhaps the first civilisation to orgy in the credit system without having in place the checks and balances that protect the poor from catastrophe.”

     and 

    “The English word ‘free’ derives from a Germanic term meaning ‘friend’— unlike free people, slaves cannot have friends, because the enslaved cannot make commitments or promises. One of the earliest words for ‘freedom’ recorded in any human language is the Sumerian term ama(r)-gi, which literally means ‘return to mother’ – because Sumerian kings would periodically issue decrees of debt freedom. They would cancel all non-commercial debts and in some cases allow those held as debt peons in their creditors’ households to return home to their kin.” 

    Read all the responses in full here.

  • Degrowth and the UK Economy

    This article in The Conversation discusses the current state of the UK economy and the idea of degrowth that has been gaining traction around the world in the recent past. 

    The author points out that the two main political parties of the UK are presenting economic growth as a solution to the country’s current economic problems based on “conventional economic wisdom that “growth, growth, growth” increases incomes and standards of living, employment and business investment.” But according to the author, “economic growth on its own is not going to solve these multiple and intersecting crises.” 

    The article goes over some of the main ideas behind the degrowth movement, like “abandoning our obsession with growth at all costs” and instead “orienting the economy towards social equality and wellbeing, environmental sustainability and democratic decision making.” 

    The author argues that while “for many people the word smacks of misery and the type of frugality they are trying to escape from during the cost of living crisis,” actually “degrowth, if successfully achieved, would arguably feel better than a recession or a cost-of-living crisis.” 

    Importantly, “degrowth is not the same as negative GDP growth”: 

    “Instead, degrowth envisions a society in which wellbeing does not depend on economic growth and the environmental and social consequences of its pursuit. Degrowth proposes an equitable, voluntary reduction of overconsumption in affluent economies.

    Equally important is to shift the economy away from the ecologically and socially harmful idea that producing more stuff is always good.” 

    Read the full article here.

  • FAO Facilitates Japanese Aid to Boost Paddy Production in Sri Lanka

    According to this report, the Government of Japan, “through the Food and Agriculture Organization of the United Nations (FAO),” is to provide $ 4.6 million “to strengthen the production capacity of smallholder paddy farmers in identified districts of the Dry and Intermediate Zones of Sri Lanka.” Reportedly, “[s]mallholder farmers are amongst the most vulnerable rural communities, predominantly cultivating rice for self-consumption.” 

    This comes in the wake of recent food shortages in Sri Lanka. According to the report: 

    “Together with its partners, FAO in Sri Lanka is addressing urgent food security needs, protecting the livelihoods of vulnerable farmers and fishers in the most affected districts while promoting agriculture, including in urban settings.”

    Read the full report here.

  • Making the Case for Reforming the IMF

    This article in Phenomenal World, “a publication focused on political economy,” juxtaposes “the rigidity and discipline enforced in IMF loan programs” with the “elasticity in liquidity and legal constraints” and “expedited financing” that is provided to financial institutions in the North Atlantic like Silicon Valley Bank and Credit Suisse at times of crises.

    The author makes the case that “[s]urveying the contemporary landscape of sovereign debt and IMF lending programs reveals pervasive inequalities in the Bretton Woods system.” Such inequalities disproportionately impact low- and middle-income economies because “if countries fail to meet the structural reforms spelled out in the IMF’s program review, lending can come to a halt.”

    Busting a popular myth, the author writes that “[f]or many developing countries, the problem is not over-indebtedness per se” as “[m]ost governments pay back their external loans, often at the expense of imposing austerity on citizens.” Much like Credit Suisse, “the problem that most sovereigns face today is a liquidity constraint.” 

    Not only do “[p]rohibitively high interest rates make it difficult to access new financing and roll over existing loans” but high interest rates and debt servicing costs have led to central banks in some developing countries “selling part of their dollar stockpiles to buy—and thereby bolster—their own currencies.” Reportedly, the IMF does not seem to approve of this: 

    “Recently, IMF economists have criticized central banks that accumulate hard currency reserves to bypass interest rate hikes. But using foreign exchange reserves to purchase and thereby bolster the value of domestic currencies enables central banks to dampen some of the inflation. Given the inherent asymmetry in the international monetary system, hard currency war chests empower countries lower in the monetary hierarchy to cope with financial shocks.” 

    Between 2013 and now, the IMF’s own assessments have concluded that “IMF-imposed austerity mandates incur more damage to economic growth than previously calculated” and that “on average, fiscal consolidation does not lower debt-to-GDP ratios.” 

    The author makes a detailed argument that unless there are fundamental reforms in existing IMF lending policies and the Bretton Woods institutions are modernised, “the IMF’s future as the preferred lender for countries in crisis” is itself not secure: 

    “Much has changed since the initial drafting of the IMF Articles of Agreement in 1944. The Articles have been amended seven times, most recently in 2010. Shifts in the global financial system justify revisiting the Articles as a living document.”

    Read the full article here.

  • Ireland Considering Starting a Sovereign Wealth Fund

    According to this report by CNBC, “Ireland is considering funneling some of the bumper tax income it’s receiving from the many multinationals based in the country into a new sovereign wealth fund.”

    Ireland is one of the few countries worldwide to have a budget surplus and “[p]revious reports have suggested the new fund would be used to continue to pay down debt as well as on pensions and health care spending.” 

    Read the full report here.

  • Bernie Sanders Calls for A Reduced Workweek

    In this piece for Leftist magazine Jacobin, philosophy professor and author, Ben Burgis argues in support of Bernie Sanders renewing “his long-standing call to reduce the workweek to thirty-two hours.” 

    Burgess discusses state-level efforts in California and the federal attempt in Congress to make this reduced workweek a reality. “Right now, these efforts face an uphill battle to say the least.”

    Burgis writes: 

    “There was a 299 percent increase in labor productivity from 1950 to 2020. As Senator Sanders rightly suggests, the benefits of that increase largely went to the top of society. It certainly didn’t automatically generate a shorter workweek.”

    and

    “Technology and productivity have advanced to an astonishing degree since President Franklin Roosevelt signed the Fair Labor Standards Act. But the limitation on how many hours workers can be made to spend on the job if they want to be able to make a living has stayed in place.” 

    Read the full article here.

  • Cryptocurrency in Africa

    This article in Rest of World looks at the decline of crypto in Africa in the aftermath of the FTX collapse. The author quotes reports that talked of the “tens of millions of Africans who bought into the cryptocurrency frenzy over the last few years” and how “[b]lockchain startups and businesses on the continent raised $474 million in 2022, a 429% increase from the previous year.” 

    Now, however, “crypto-related startups across the African continent have been struggling to survive.” 

    Regulatory pushbacks have been seen around the world, including by African governments. But “[s]ome industry stakeholders believe crypto is too important to just be a bubble in Africa, and that the current troubles aren’t unique to this industry. Some industry insiders claim that “several African crypto startups still seem to be doing well, and that stablecoins are a great alternative to Africa’s cross-border remittance restrictions.” 

    Read the full report here.

  • Rising Debt Servicing Costs Eating into Government Revenues in Poorest Countries

    This piece in the Financial Times reports how studies from across the ideological spectrum, by Debt Justice campaign and the IMF, show that “[l]ow-income countries will face their biggest bills for servicing foreign debts in a quarter of a century this year, putting spending on health and education at risk.”

    The report says: “The figures — the highest since 1998 — follow a steep rise in global borrowing costs last year, when central banks sought to counter high inflation with rapid rate rises.”

    Some argue that this may call for debt relief at a large scale like when “[m]ultilateral lenders and foreign governments led by the IMF and the World Bank delivered far-reaching debt relief around the turn of the millennium.” The argument goes that this may even require “changes to laws governing bond contracts in England and the state of New York to force private creditors to take part in debt cancellation.”

    Sri Lanka, having been in the news for some time now due to its financial troubles, “faces the steepest schedule of external repayments, equal to 75 per cent of government revenues this year. The country is unlikely to meet those payments following a default on its external debts last year.”

    Read the full report here.

  • San Francisco After the Silicon Valley Bank Collapse

    This piece on Bloomberg takes a look at San Francisco in the wake of the Silicon Valley Bank collapse. While all the usual issues that come up when talking about San Francisco – the city’s fiscal deficit, cost-of-living, tech slump, post-pandemic economic recovery, layoffs, vacant offices, homelessness, drug use, etc. – are touched upon in the article, it doesn’t give a conclusive picture on whether or not there is any cause for optimism in the sombre picture that the quoted figures paint. Even as the mayor of the city is said to have “pointed to cataclysms from the 1906 earthquake to the bursting of the dot-com bubble that brought in a spate of naysayers, only to have the city rebound stronger than ever”, an investor at a venture capital firm is quoted as having said that “the renewed interest in San Francisco is more in spite of the city, not aided by it”. 

    Read the full article here.

  • Windowless Housing

    In this post on his Substack, The Column, Adam H. Johnson discusses the problems with real estate developers building windowless housing under the guise of solving the homelessness crisis. Johnson points out that over the last few years “calls for gutting regulations” in construction have become “not only mainstream, they’re elite conventional wisdom in Democratic-aligned media circles.”

    Importantly, this is not something new. “Real estate interests have said regulations stand in the wage of housing supply, and kept rents artificially high, since the dawn of government regulation.”

    One such regulation that seems to have become a target is the requirement for windows in bedrooms. Windowless abodes are passed off as necessary to solve the housing shortage. As Johnson writes:

    “Like much of the housing discourse, one is baffled by how quickly the discussion goes from the perfectly sensible—albeit generic—axiom of “we need more housing” to the idea that maintaining standards for windows in bedrooms is a pro-homelessness policy.

    The whole thing feels like a hostage situation, and in many ways it is. Taken to its logical end point, this reasoning means any housing standard that is a notch above homelessness would therefore be acceptable so long as it drove down development cost for real estate interests.”

    Read the full article here.

  • The Concentration of Innovation Across US Cities

    Writing for the MIT Sloan School of Management website, Dylan Walsh discusses the findings of various studies on the concentration of innovation across various US cities.

    The issue at hand: 

    “The most technologically productive places in the country also have some of the highest labor and real estate costs. Startups deciding where to locate as well as established companies opening new offices must actively weigh the benefits of productivity in a given location against the costs of doing business there.” 

    Importantly, the findings of such studies “hold particular relevance as the federal government redefines its role as an investor in innovation.” 

    The article makes the interesting suggestion that “building lots of mid-sized hubs for innovation would not only be good economics — there are lots of positive effects and social gains that flow from knowledge creation — but also good politics.” 

    Read the full article here.