Redistribution is trickier than we thought [via Andrea Franco]
Redistribution is trickier than we thought [via Andrea Franco]
"Instead of asking: what benefits [has] this project yielded, it would almost be more pertinent to ask: how many conflicts has it brought in its wake? How many crises has it occasioned and passed through?"
Albert O. Hirschman (1915 – 2012). Mr. Hirschman was an economist who had a profound impact on economic thought and practice around the world. He authored several books on political economy and political ideology.
"Some would like to turn the debunking of the fiscal event horizon claim into a cautionary tale about macroeconomic policy advice in general. They would throw up their hands, saying macroeconomic analyses either inherently depend upon too little data to have reliable results, or inevitably will be selectively picked up by ideologues and opportunistic politicians to suit their purposes.
Perhaps both: there will always be some willing economist who can play with the data to provide credible-seeming study to support any given politically influential point of view. This, however, is far too defeatist, if not craven, a conclusion to draw."
Adam Posen – President of the Peterson Institute for International Economics.
You can almost feel the intensifying and clangorous clash of two economic policy paradigms. The question is: what is the best policy response to high indebtedness by countries especially after the global financial crash of 2008? Some economists say stimulate the economy now even if it means taking on more debt, pursue growth and then deal with deficits once the economy is robust. Others say you have to deal with deficits now by imposing serious, often crippling austerity programs. The bloodless phrase for this: fiscal consolidation. Who is right and who is wrong? Unfortunately for many citizens, this is not an argument that can be settled in a science lab, perhaps by testing the theories on some unfortunate rats or monkeys. Entire countries are the laboratories for the testing of these rival policy paradigms.
I use the phrase ‘policy paradigms’ advisedly because I have been reading the notable political scientist Peter A. Hall who wrote the classic piece ‘Policy Paradigms, Social Learning, and the State: The Case of Economic Policymaking in Britain’ for the journal of Comparative Politics in 1993. I went back to the piece after reading the April 2013 special issue of the journal, Governance, which is entirely about the politics of policy paradigms. In that compelling issue, a salute to Hall’s classic essay, he himself has an op-ed titled ‘Brother, Can You Paradigm?’ Hall restates the view that policy paradigms shift, for example from Keynesian policies to monetarist ones, but in order for this to happen ‘each of these transitions required a motivation, means, and motor’.
Having had my professional and political interests shaped during the somewhat heady days of the 1980s in Sandinista Nicaragua, I’ve long been interested in the potential and limits of collective action—of people organizing and mobilizing through associations, unions, cooperatives, community organizations, fairtrade networks and so on. The Sandinista “revolution” soon gave way to the “neoliberal” 1990s. As in much of the world, collective action went on the backburner or assumed new forms via NGO networks and identity politics. Fast forward two decades and we are witnessing a significant rebound in collective action associated with workers, producers and consumers. Whether in response to global crises (finance and food), the structural conditions of precarious employment or new opportunities for cultural expression and social interaction afforded by the internet age, old and new forms are on the rise.
The term social and solidarity economy (SSE) is increasingly being used to refer to a broad range of organizations that are distinguished from conventional for-profit enterprise, entrepreneurship and informal economy by two core features. First, they have explicit economic AND social (and often environmental) objectives. Second, they involve varying forms of co-operative, associative and solidarity relations. They include, for example, cooperatives, mutual associations, NGOs engaged in income generating activities, women’s self-help groups, community forestry and other organizations, associations of informal sector workers, social enterprise and fair trade organizations and networks.
“Right at the heart of market thinking is the idea that if two consenting adults have a deal, there is no need for others to figure out whether they valued that exchange properly. It’s the non-judgmental appeal of market reasoning that I think helped deepen its hold on public life and made it more than just an economic tool; it has elevated it into an unspoken public philosophy of everything.”
Of the big reports that spew forth from the multilateral system, some break new ground in terms of research or narratives, while others usefully recap the latest thinking on a given issue. The recently launched 2013 Human Development Report, The Rise of the South: Human Progress in a Diverse World, falls into the latter category, pulling together the evidence for a tectonic North-South shift in global economic and political affairs, summarizing new thinking on inequality, South in the North etc and asking what happens next. If you’re currently sunk in the depths of Europessimism or US political stalemate, you may find such an upbeat story refreshing (or even disturbing). You can read the exec sum online, but it doesn’t seem to allow you to cut and paste (v annoying for lazy bloggers like me).
Some useful numbers to demonstrate the extent of the shift: From 1980 to now, developing countries’ share of global GDP rose from 33% to 45%, their share of world goods trade from 25% to 45%, and South-South trade as a % of the world total rose from 8% to 26%.
“My own working assumption is that the Europeans are learning the hard way that to run a single currency, you have to have not only a monetary union but also effective governance of the economic union."
--Jean-Claude Trichet. As quoted in the Financial Times, July 6, 2012. Lunch with the FT: Jean-Claude Trichet, by Martin Wolf.
Elinor Ostrom, the only woman to be awarded the Nobel Prize for Economics died on June 12 in Indiana. According to various press reports, Ostrom shocked her peers when she was catapulted to fame, because, in a field mostly dominated by men, she reached well beyond the usual mathematical modeling of economists.
Ostrom’s best-known research was on the management of the commons. As noted in Slate, “Standard economic thinking about commons focuses on the idea of a ‘tragedy of the commons’…” According to many economists, individuals acting in their own self-interest, would ultimately deplete a resource like a common pasture, which is open to everyone. This idea was used to demonstrate the need for government regulation or control by private industry.
There’s a clutch of different research initiatives trying to understand Africa’s political economy and its impact on development and aid. Often, the tone of the political economists can be quite discouraging – Alex Duncan gives a tongue-in-cheek definition of a political economist as ‘someone coming to explain why your aid programme doesn’t work’. There are few practical ‘take aways’ either for large bilateral aid agencies, or NGOs other than ‘give up and become a researcher’.
And that’s pretty much the tone of a logotastic ‘joint statement’ from 5 research programmes based (loosely) in the UK, Denmark, and the Netherlands (The Africa Power and Politics Programme, Developmental Leadership Programme, Elites, Production and Poverty: A Comparative Analysis, Political Economy of Agricultural Policy in Africa, Tracking Development). Here’s some highlights: