"Budgetary Wishful Thinking" by Jeffrey Frankel Exit from comment view mode. Click to hide this space CAMBRIDGE – Why do many countries find it hard to control their budgets? Concern about budget deficits has become a burning political issue in the United States; helped to persuade the United Kingdom to enact stringent cuts, despite a weak economy; and is the proximate cause of the Greek sovereign-debt crisis, which has grown to engulf the entire eurozone. Indeed, among industrialized countries, hardly anyone is immune from fiscal woes. Clearly, part of the blame lies with voters who don’t want to hear that budget discipline means cutting programs that matter to them, and with politicians who tell voters only what they want to hear. Such forecasts underlie governments’ failure to take advantage of boom periods to strengthen their finances, including running budget surpluses. European countries behaved similarly, running up ever-higher debts. Other countries have also adopted fiscal rules, most of which fail.
Using U.S. Dollars, Zimbabwe Finds a Problem - No Change But these days, Robson Madzumbara spends a lot of time quite literally waiting around for change. Pocket change, that is. He waits for it at supermarkets, on the bus, at the vegetable stall he runs and just about anywhere he buys or sells anything. “We never have enough change,” he said, manning the vegetable stall he has run for the past two decades. For years, Zimbabwe was infamous for the opposite problem: mind-boggling inflation. But since Zimbabwe started using the United States dollar as its currency in 2009, it has run into a surprising quandary. “For your average Zimbabwean, a dollar is a lot of money,” said Tony Hawkins, an economist at the University of Zimbabwe. Zimbabweans call it “the coin problem.” Still, the new predicament is an improvement. Zimbabweans have devised a variety of solutions to get around the change problem, none of them entirely satisfactory. “I already had to buy clothespins I don’t need today,” Ms. “I won’t accept any Zimbabwean money,” said Ms.
Recovered Sustainable Means Bunkty to Me 1977 views this month; 1977 overall What? Don’t know what bunkty means? Now you know how I feel about the word “sustainable.” My paper towels separate into smaller segments than they once did. I think most would agree that the rapid depletion we currently witness in natural resources and services, climate stability, water availability, soil quality, and fisheries—to name a few—suggests that we do not live sustainably at present. Sustainability, in Numbers I have made the case in the past that growth—either in physical measures like population, energy use, etc., or in economic terms—cannot continue indefinitely in our finite world. If we think about the fact that growth must one day end, we realize that an ultimate steady state would tend to reduce income inequalities. Our dream is that the poor of the world can improve their standard of living toward first-world norms. You may object that Americans don’t eat five times more food than the average Earthling today. Why Now is Special
Misplaced faith It’s time to let austerity go out of style A poster promoting the virtues of austerity. But who really benefits? Photo: Flickr Creative Commons Austerity isn’t working. From the Bundesbank to 11 Downing Street, in Ireland, Spain, Italy, and Greece, expensively educated men in suits are telling the rest of us that we have been living large for too long. It is counter-intuitive but essential to remember that our current economic travails are caused by lack of demand, nothing else. Instead, austerity-inspired spending cuts ripple through the economy, further lowering demand, reducing any incentive for private firms to invest, trapping the economy indefinitely below its productive potential. Austerity has always been the ideology of creditors. No longer. The Achilles heel of capitalism, the opposite of every other economic system, is overproduction. But the ship still gets unloaded, the steel still gets made. The second world war proved him right. Here is the mechanism. Sound complicated?
Colonized by Corporations May 15, 2012 | Like this article? Join our email list: Stay up to date with the latest headlines via email. In Robert E. Illustration by Mr. Gamer and many others who study the nature of colonial rule offer the best insights into the functioning of our corporate state. A change of power does not require the election of a Mitt Romney or a Barack Obama or a Democratic majority in Congress, or an attempt to reform the system or electing progressive candidates, but rather a destruction of corporate domination of the political process—Gamer’s “patron-client” networks. The danger the corporate state faces does not come from the poor. This is why the Occupy movement frightens the corporate elite.
Galactic-Scale Energy Since the beginning of the Industrial Revolution, we have seen an impressive and sustained growth in the scale of energy consumption by human civilization. Plotting data from the Energy Information Agency on U.S. energy use since 1650 ( 1635-1945 , 1949-2009 , including wood, biomass, fossil fuels, hydro, nuclear, etc.) shows a remarkably steady growth trajectory, characterized by an annual growth rate of 2.9% (see figure). It is important to understand the future trajectory of energy growth because governments and organizations everywhere make assumptions based on the expectation that the growth trend will continue as it has for centuries—and a look at the figure suggests that this is a perfectly reasonable assumption. (See this update for nuances.) Total U.S. Growth has become such a mainstay of our existence that we take its continuation as a given. This post provides a striking example of the impossibility of continued growth at current rates—even within familiar timescales.
The Economy of Gross National Happiness by Sabina Alkire Exit from comment view mode. Click to hide this space OXFORD – On April 2, the United Nations hosted a High-Level Meeting on Happiness and Well-Being in New York. The meeting was called to catalyze mounting efforts to create a new economic paradigm grounded in sustainability and dedicated to human well-being, building on Bhutan’s innovative approach, which aims not for GDP growth, but for gains in gross national happiness (GNH). Indeed, Bhutan’s example gives the international community a unique opportunity to reconsider the path of economics in order to facilitate human flourishing on a shared planet. First, the focus must be on the big picture. This in no way undercuts the priority that must always be given to eradicating poverty and destitution. The economist and philosopher Amartya Sen has long argued that markets, trade, and economic growth should be designed explicitly to advance human well-being. Above all, ordinary people must call for systemic change.
A Short History of Neoliberalism (And How We Can Fix It) As a university lecturer I often find that my students take today’s dominant economic ideology – namely, neoliberalism – for granted as natural and inevitable. This is not surprising given that most of them were born in the early 1990s, for neoliberalism is all that they have known. In the 1980s, Margaret Thatcher had to convince people that there was “no alternative” to neoliberalism. For most of the 20th century, the basic policies that comprise today’s standard economic ideology would have been rejected as absurd. So how did things change? Neoliberalism in the Western Context The story begins with the Great Depression in the 1930s, which was a consequence of what economists call a “crisis of overproduction.” This economic model is known as “embedded liberalism” – it was a form of capitalism that was embedded in society, constrained by political concerns, and devoted to social welfare. They got their solution in the form of the “Volcker Shock.” Figure 1. Source: R. Figure 2.  U.S.
Growth thumbnail from NYT As a rejoinder to my piece a couple weeks ago (not really), the New York Times published an article on population growth, and why we need not worry. The problem—and solution—is all in our head. Clearly there is a misunderstanding, but I’ll side with the natural scientists, naturally. Continue reading Sometimes considered a taboo subject, the issue of population runs as an undercurrent in virtually all discussions of modern challenges. The subject is taboo for a few reasons. Recently, participating in a panel discussion in front of a room full of physics educators, I made the simple statement that “surplus energy grows babies.” So in the spirit of looking at the numbers, let’s explore in particular various connections between population and energy. Continue reading I’ll cheat on my bi-weekly posting plan and slip in this podcast conversation between Chris Martenson and myself, covering many of the topics I have written about in the last year. Continue reading What?
"A World of Convergence" by Kemal Derviş Exit from comment view mode. Click to hide this space WASHINGTON, DC – For almost two centuries, starting around 1800, the history of the global economy was broadly one of divergence in average incomes. In relative terms, rich countries got even richer. This “divergence” was very pronounced in colonial times. This has been a revolutionary change, but will this 20-year-old trend continue? Long-term projections based on short-term trends have often been mistaken. Later, in the 1980’s, Japan’s spectacular growth led some to predict that it would overtake the US, not only in per capita terms, but even in terms of some measures of “economic power.” These kinds of projections have often been based on simple extrapolations of exponential trends. Will the recent predictions of rapid ongoing global convergence similarly turn out to be wrong, or will most of the emerging countries sustain a large positive growth differential and get much closer to the advanced economies’ income levels?
Facebook and the 100 Billion Investors that shoot for IPO allocations needn’t worry that a high stock price overvalues the company if they are confident they can find a ‘greater fool’ willing to pay more.Wall Street Journal, May 21, 2012. With cult-like projections, Mark Zuckerberg’s face was beamed across a screen at Hacker Square. Facebook was, after all, having its heralded float as a public company, though the occasion could not cease but be a social event of some magnitude. That, and the fact of its founder’s marriage, which received the usual empty adulation that such a network facilitates. The shares in the company’s shares finished at $38.37, though at one point stocks were trading at $42 a share. The question then is whether such a value is not just a touch exaggerated, something which might be said of the entire social media experiment. With Facebook, we are in a curious situation of producing what we consume in one act. Its value, like its functionality, is fictitious or better still, virtual.