Monday, April 30, 2007
The FT goes green
The Financial Times seems to have turned into the Big Issue. Its Saturday magazine was on the theme of “Can England’s middle classes save the planet?”. It started with a column by Falk Beyer, a man who survives by scavenging rubbish bins (I’m not making this up!). According to Beyer: “I am not a poor beggar. I eat food out of garbage containers to protest against overconsumption, the capitalistic society, and the exploitation and environmental destruction it causes.”
Clearly Beyer does not appreciate the irony of his statement. No previous type of society would be rich enough to provide sufficient waste food for his like to live on. His whinge sets the tone for the rest of the magazine including its interview with James Lovelock and a piece on the efforts of the village of Ashton Hayes to go carbon neutral.
Clearly Beyer does not appreciate the irony of his statement. No previous type of society would be rich enough to provide sufficient waste food for his like to live on. His whinge sets the tone for the rest of the magazine including its interview with James Lovelock and a piece on the efforts of the village of Ashton Hayes to go carbon neutral.
Labels: environment, finance
Sunday, April 29, 2007
On food and life expectancy
An astute point buried in the letters page of today’s (London) Sunday Times:
FOOD FOR THOUGHT: India Knight (Comment, last week) writes: “Our ancestors existed on red meat, and there is no evidence to show they all died of breast cancer.” But almost all of them died before the age of 30. Statistically, they would have had little risk of breast cancer relative to all life’s other dangers whether they ate red meat or not. Even by 1800 life expectancy was only about 35 years. She also says “organic food is the way forward”. Our ancestors only ate this along with fresh air and plenty of physical activity – and still died by 30. – Dr Ian Horman, co-author of 2 Million Years of the Food Industry, Blonay, Switzerland.
FOOD FOR THOUGHT: India Knight (Comment, last week) writes: “Our ancestors existed on red meat, and there is no evidence to show they all died of breast cancer.” But almost all of them died before the age of 30. Statistically, they would have had little risk of breast cancer relative to all life’s other dangers whether they ate red meat or not. Even by 1800 life expectancy was only about 35 years. She also says “organic food is the way forward”. Our ancestors only ate this along with fresh air and plenty of physical activity – and still died by 30. – Dr Ian Horman, co-author of 2 Million Years of the Food Industry, Blonay, Switzerland.
Happy Danes
Researchers in the economics faculty of the University of Cambridge have confirmed Denmark is the happiest place in the European Union. The research, led by Dr Luisa Corrado, is based on the European Social Survey into well-being, which began in 2002. To quote the press release:
“Women generally classed themselves as happier than men, while the old and young tended to be happier than people in their middle years.
“The Cambridge team has now begun to analyse what makes people in some countries happier than others. One of the most consistent trends is that those with the highest levels of happiness also reported the highest levels of trust in their governments, the police and the justice system, as well as those around them. Happier people also tended to have plenty of friends and acquaintances, as well as at least one very close friend, or a partner.”
A (highly mathematical) paper co-authored by Dr Corrado on the subject is available on the Cambridge University website.
For an earlier reference on Denmark and happiness see my post of 11 August 2006 and my spiked article of 7 August.
“Women generally classed themselves as happier than men, while the old and young tended to be happier than people in their middle years.
“The Cambridge team has now begun to analyse what makes people in some countries happier than others. One of the most consistent trends is that those with the highest levels of happiness also reported the highest levels of trust in their governments, the police and the justice system, as well as those around them. Happier people also tended to have plenty of friends and acquaintances, as well as at least one very close friend, or a partner.”
A (highly mathematical) paper co-authored by Dr Corrado on the subject is available on the Cambridge University website.
For an earlier reference on Denmark and happiness see my post of 11 August 2006 and my spiked article of 7 August.
Saturday, April 28, 2007
An authoritarian happy place
The 28 April issue of the Economist includes some inconvenient facts about
Bhatan. Inconvenient, that it, for those who praise the Himalayan kingdom for having Gross National Happiness, rather than GDP, as a national goal:
* The Bhutanese are obliged to wear knee-length tunics and full-length
dresses in public.
* It is run by a council of royally approved ministers.
* Parliament¹s members are either elected, Buddhist clergy or picked by the
king.
* The Nepali speaking and Hindu minority has suffered discrimination. They
were forced to wear Buddhist costume and prove their right to citizenship by
obeying strict rules.
Bhatan. Inconvenient, that it, for those who praise the Himalayan kingdom for having Gross National Happiness, rather than GDP, as a national goal:
* The Bhutanese are obliged to wear knee-length tunics and full-length
dresses in public.
* It is run by a council of royally approved ministers.
* Parliament¹s members are either elected, Buddhist clergy or picked by the
king.
* The Nepali speaking and Hindu minority has suffered discrimination. They
were forced to wear Buddhist costume and prove their right to citizenship by
obeying strict rules.
Labels: happiness
Friday, April 27, 2007
TV documentary on human footprint
I was planning to do a brief review of last night’s television programme on the human footprint. The programme reduces human life to consumption and waste. To quote the Channel 4 website: “From our babyhood – when we get through a massive 3,796 nappies and produce 254 litres of urine – through to our old age and death – by which time we will have had sex 4,239 times, eaten 10,866 carrots, taken 7,163 baths and done an average of 15 farts a day – this extraordinary film tells the story of an average life, the story of our human footprint.”
However, James Heartfield has saved me the trouble with an excellent review on spiked. He points out that humans have a productive and creative side rather than simply being consumers. It also includes a useful reference to his critique of Herbert Giradet on sustainability along with Giradet’s reply.
However, James Heartfield has saved me the trouble with an excellent review on spiked. He points out that humans have a productive and creative side rather than simply being consumers. It also includes a useful reference to his critique of Herbert Giradet on sustainability along with Giradet’s reply.
Labels: footprint, spiked, sustainability, television
Wednesday, April 25, 2007
Cato Unbound on happiness
The latest issue of Cato Unbound is on the theme of happiness. It has useful pieces from a variety of perspectives including articles by Darrin McMahon, Barry Schwartz, Ruut Veenhoven and Will Wilkinson.
Labels: happiness
New economics blog
Dani Rodrik, a professor of international political economy at Harvard, has set up a blog. Rodrik is one of the leading thinkers in what could be called the anti-globalisation or global justice movement. That is he is generally in favour of greater regulation of capitalism and supports such initiatives as fair trade.
In my 24 March 2007 post I outlined other useful economics blogs.
In my 24 March 2007 post I outlined other useful economics blogs.
Labels: economics, globalisation, trade
Tuesday, April 24, 2007
Book review on the new economics
There follows my latest book review for Fund Strategy. It is on Diane Coyle’s The Soulful Science.
Diane Coyle is annoyed. She argues with considerable justification that economics, the subject in which she has immersed herself for her entire adult life, is caricatured by critics. Those who attack the discipline often do so from a position of ignorance. They are unaware of the huge advances economics has made in the past 20 years.
The Soulful Science is Coyle's attempt to set the record straight. It is essentially an overview of the key developments in economic thought over the past two decades. With a PhD in economics from Harvard she has the theoretical background to understand often arcane debates. And as a former economics journalist she has the ability to translate them into lucid language.
Summarising, what is itself, a summary of a huge range of ideas is a difficult task. But much of the book focuses on the core idea of "rational economic man". Neo-classical economy theory was based on the idea that humans were utility maximising, unremittingly rational and had access to perfect information. In other words, humans were assumed to be Vulcan - or at least half-Vulcan - like Star Trek's logical Mr Spock. Coyle explains how each of these core assumptions has come under attack in the new economics.
The idea of utility maximisation is an old one. It assumes that humans are motivated by a desire to maximise their wealth. As a result of this drive, it is argued, society benefits.
Coyle shows how this core assumption has come under attack in recent years. Environmentalists argue that measures such as GDP do not take into account environmental damage to the economy. Some economists, such as America's Robert Frank and Richard Layard in Britain, argue that rich countries should pursue happiness rather than further affluence. Others, such as Barry Schwartz, have argued that individuals suffer as a result of the vast amount of consumer choice available.
The idea of human rationality has also been called into question. Economists have increasingly drawn on insights from psychology which show that humans often do not behave rationally. This insight has opened up behavioural economics as an important new field of study with behavioural finance as a key sub-branch. In 2002, Daniel Kahneman and Vernon Smith were awarded the Nobel price for research in this area.
Research into the economics of information has also yielded Nobel prizes. In different ways Joseph Stiglitz, George Akerlof and Michael Spence examined the implications of some people having access to better information than others. Their insights have helped governments to create new markets, such as those involved in trading carbon.
While Coyle is right to argue that critics need to be aware of these developments, it does not follow that the discipline is beyond reproach. On the contrary, both the new-style economists and the old-style neo-classical economists share many key assumptions, despite their differences.
The idea of "economic man" illustrates this point. Both accept as a starting point the idea that the economy, and society more generally, is essentially an aggregate of individuals. Different generations of economists differ over the exact character of the individuals involved but all sides tend to be imbued with this individualistic starting point.
In contrast, classical political economy - including the likes of Adam Smith, Karl Marx and David Ricardo - had a much greater sense of the social. It viewed society as more than a collection of individuals - the human world had to be understood in terms of the web of social relations around which life is organised. For example, organising society around the principle of profitability had direct consequences for the operation of laws that govern social interaction.
The current generation of economists use the word "social" a lot, but the sense in which they use it is limited. In contemporary parlance the term "social" refers to interpersonal relations. For example, "social networks" means the personal relationships between individuals. In contrast, "social" in the older sense of the term referred to the set of relations around which production and consumption were organised.
This diminished sense of the social helps to explain why contemporary economics tends to be so ahistorical. Economists can happily make generalisations about the operation of institutions 10 years ago, 1,000 years ago - even 10,000 years ago. They fail to see what is specific to market relations and underestimate the importance of changes over time.
Coyle's discussion of utility is a perfect example of this lack of sensitivity to historical shifts. The shift away from emphasising utility to one focusing on happiness is not primarily the result of theoretical development by economists. The economists' discussion reflects a broader disaffection with economic growth and prosperity in society at large. Since the 1970s it has become increasingly common for the benefits of mass affluence to be called into question. This anxiety about popular prosperity then, itself, has to be explained in terms of broader social changes.
From this wider perspective it is clear that Coyle is wrong to portray the emphasis on happiness as more human than the focus on economic growth. On the contrary, the immense benefits of a society based on affluence have made it easier for humans to realise their potential. In contrast, the happiness agenda reduces humans to the level of cows chewing grass in a field. The advocates of happiness would have us pursue individual contentment in the narrowest sense of the term rather than more demanding objectives.
The Soulful Science should be read by anyone who wants a lucid and authoritative introduction to contemporary economic thought. But the limitations of the new economics have themselves to be fully investigated.
Diane Coyle is annoyed. She argues with considerable justification that economics, the subject in which she has immersed herself for her entire adult life, is caricatured by critics. Those who attack the discipline often do so from a position of ignorance. They are unaware of the huge advances economics has made in the past 20 years.
The Soulful Science is Coyle's attempt to set the record straight. It is essentially an overview of the key developments in economic thought over the past two decades. With a PhD in economics from Harvard she has the theoretical background to understand often arcane debates. And as a former economics journalist she has the ability to translate them into lucid language.
Summarising, what is itself, a summary of a huge range of ideas is a difficult task. But much of the book focuses on the core idea of "rational economic man". Neo-classical economy theory was based on the idea that humans were utility maximising, unremittingly rational and had access to perfect information. In other words, humans were assumed to be Vulcan - or at least half-Vulcan - like Star Trek's logical Mr Spock. Coyle explains how each of these core assumptions has come under attack in the new economics.
The idea of utility maximisation is an old one. It assumes that humans are motivated by a desire to maximise their wealth. As a result of this drive, it is argued, society benefits.
Coyle shows how this core assumption has come under attack in recent years. Environmentalists argue that measures such as GDP do not take into account environmental damage to the economy. Some economists, such as America's Robert Frank and Richard Layard in Britain, argue that rich countries should pursue happiness rather than further affluence. Others, such as Barry Schwartz, have argued that individuals suffer as a result of the vast amount of consumer choice available.
The idea of human rationality has also been called into question. Economists have increasingly drawn on insights from psychology which show that humans often do not behave rationally. This insight has opened up behavioural economics as an important new field of study with behavioural finance as a key sub-branch. In 2002, Daniel Kahneman and Vernon Smith were awarded the Nobel price for research in this area.
Research into the economics of information has also yielded Nobel prizes. In different ways Joseph Stiglitz, George Akerlof and Michael Spence examined the implications of some people having access to better information than others. Their insights have helped governments to create new markets, such as those involved in trading carbon.
While Coyle is right to argue that critics need to be aware of these developments, it does not follow that the discipline is beyond reproach. On the contrary, both the new-style economists and the old-style neo-classical economists share many key assumptions, despite their differences.
The idea of "economic man" illustrates this point. Both accept as a starting point the idea that the economy, and society more generally, is essentially an aggregate of individuals. Different generations of economists differ over the exact character of the individuals involved but all sides tend to be imbued with this individualistic starting point.
In contrast, classical political economy - including the likes of Adam Smith, Karl Marx and David Ricardo - had a much greater sense of the social. It viewed society as more than a collection of individuals - the human world had to be understood in terms of the web of social relations around which life is organised. For example, organising society around the principle of profitability had direct consequences for the operation of laws that govern social interaction.
The current generation of economists use the word "social" a lot, but the sense in which they use it is limited. In contemporary parlance the term "social" refers to interpersonal relations. For example, "social networks" means the personal relationships between individuals. In contrast, "social" in the older sense of the term referred to the set of relations around which production and consumption were organised.
This diminished sense of the social helps to explain why contemporary economics tends to be so ahistorical. Economists can happily make generalisations about the operation of institutions 10 years ago, 1,000 years ago - even 10,000 years ago. They fail to see what is specific to market relations and underestimate the importance of changes over time.
Coyle's discussion of utility is a perfect example of this lack of sensitivity to historical shifts. The shift away from emphasising utility to one focusing on happiness is not primarily the result of theoretical development by economists. The economists' discussion reflects a broader disaffection with economic growth and prosperity in society at large. Since the 1970s it has become increasingly common for the benefits of mass affluence to be called into question. This anxiety about popular prosperity then, itself, has to be explained in terms of broader social changes.
From this wider perspective it is clear that Coyle is wrong to portray the emphasis on happiness as more human than the focus on economic growth. On the contrary, the immense benefits of a society based on affluence have made it easier for humans to realise their potential. In contrast, the happiness agenda reduces humans to the level of cows chewing grass in a field. The advocates of happiness would have us pursue individual contentment in the narrowest sense of the term rather than more demanding objectives.
The Soulful Science should be read by anyone who wants a lucid and authoritative introduction to contemporary economic thought. But the limitations of the new economics have themselves to be fully investigated.
Labels: book, economics, review
America’s economic decline becomes clear
On Monday Fund Strategy published a comment by me on the idea that America is “decoupling” from the rest of the world economy. I argued instead that America’s relative economic decline is becoming increasingly apparent.
The increasingly popular idea that the world is "decoupling" from America is misleading. It is not that the integration of the world economy is lessening in any way. The real trend is for a decline in the relative importance of America in the global economy.
Proponents of the decoupling thesis argue that the world is becoming less dependent on America. Two weeks ago the International Monetary Fund argued that Asia could weather an American soft landing. Last week Merrill Lynch went even further and argued that Asia could ride an American recession without any significant problems.
Their evidence is essentially that Asia in particular, and the rest of the world in general, is already weathering an American slowdown. In addition, both Asia and Europe are becoming more integrated regions in trade terms. China is becoming central to the new Asian economy while Europe is becoming increasingly integrated between its East and West.
This misses the fact that the world is still closely linked to America in other ways. Most notably there are huge capital flows between America and the rest of the world.
More importantly, America's relative decline should have already been apparent before its recent slowdown. As Fund Strategy has previously argued the idea that America was the locomotive of global growth earlier this decade was always misleading. It was primarily Asian production that was subsidising American consumption. Asia has long been the engine driving the world economy (see Fund Strategy book review, February 6, 2006).
What has happened recently is that the declining relative importance of America has simply become more obvious. Although America is still the world's largest economy it no longer has the overwhelming weight it once enjoyed. The balance is shifting towards Asia while the developing world is growing in relative importance compared with the advanced nations.
As a result of these shifts a new world economy is emerging. China is taking a far larger role than in the past. Asia and Europe are both becoming more internally integrated regions. The developing countries have more weight in global economic affairs. And America, increasingly in hock to the rest of the world, is moving towards losing its pre-eminent position.
The increasingly popular idea that the world is "decoupling" from America is misleading. It is not that the integration of the world economy is lessening in any way. The real trend is for a decline in the relative importance of America in the global economy.
Proponents of the decoupling thesis argue that the world is becoming less dependent on America. Two weeks ago the International Monetary Fund argued that Asia could weather an American soft landing. Last week Merrill Lynch went even further and argued that Asia could ride an American recession without any significant problems.
Their evidence is essentially that Asia in particular, and the rest of the world in general, is already weathering an American slowdown. In addition, both Asia and Europe are becoming more integrated regions in trade terms. China is becoming central to the new Asian economy while Europe is becoming increasingly integrated between its East and West.
This misses the fact that the world is still closely linked to America in other ways. Most notably there are huge capital flows between America and the rest of the world.
More importantly, America's relative decline should have already been apparent before its recent slowdown. As Fund Strategy has previously argued the idea that America was the locomotive of global growth earlier this decade was always misleading. It was primarily Asian production that was subsidising American consumption. Asia has long been the engine driving the world economy (see Fund Strategy book review, February 6, 2006).
What has happened recently is that the declining relative importance of America has simply become more obvious. Although America is still the world's largest economy it no longer has the overwhelming weight it once enjoyed. The balance is shifting towards Asia while the developing world is growing in relative importance compared with the advanced nations.
As a result of these shifts a new world economy is emerging. China is taking a far larger role than in the past. Asia and Europe are both becoming more internally integrated regions. The developing countries have more weight in global economic affairs. And America, increasingly in hock to the rest of the world, is moving towards losing its pre-eminent position.
Labels: America, Asia, economics, Fund Strategy
Monday, April 23, 2007
Migration plays key role in development
Yesterday’s New York Times magazine makes an important point on the key role of migration in the development process. Although much of the piece is about the pain of separated families it points out that:
“Migrants worldwide sent home an estimated $300 billion last year — nearly three times the world’s foreign-aid budgets combined. These sums — “remittances” — bring Morocco more money than tourism does. They bring Sri Lanka more money than tea does.
“The numbers, which have doubled in the past five years, have riveted the attention of development experts who once paid them little mind. One study after another has examined how private money, in the form of remittances, might serve the public good. A growing number of economists see migrants, and the money they send home, as a part of the solution to global poverty.”
This point is alluded to in my 17 April post on the globalisation of labour chapter in the latest World Economic Outlook from the International Monetary Fund. It is examined in more detail in an essay in chapter two (PDF) of the April 2005 World Economic Outlook.
“Migrants worldwide sent home an estimated $300 billion last year — nearly three times the world’s foreign-aid budgets combined. These sums — “remittances” — bring Morocco more money than tourism does. They bring Sri Lanka more money than tea does.
“The numbers, which have doubled in the past five years, have riveted the attention of development experts who once paid them little mind. One study after another has examined how private money, in the form of remittances, might serve the public good. A growing number of economists see migrants, and the money they send home, as a part of the solution to global poverty.”
This point is alluded to in my 17 April post on the globalisation of labour chapter in the latest World Economic Outlook from the International Monetary Fund. It is examined in more detail in an essay in chapter two (PDF) of the April 2005 World Economic Outlook.
Labels: development, economics, globalisation
Sunday, April 22, 2007
Inequality fear in Latin America
Inequality is probably the greatest risk to Latin America according to the latest Latin America@Risk report from the World Economic Forum. Interestingly the report seems to express as much fear about perceived inequality as actual inequality. To quote the press release on the document:
“Perhaps the region’s greatest ongoing concerns are social and economic inequalities – which remain the most significant in the world. Globalization continues to drive both real inequalities, via income stratification within the region, and perceived inequalities, as local populations observe fast growth elsewhere. Many Latin Americans continue to suspect that global prosperity is leaving them behind, a perception seemingly resistant to decreases in absolute poverty. Political reform, the encouragement of small and medium enterprises and, crucially, education, remain the region’s best mitigators of inequality-driven populist backlash.”
The report echoes a discussion organised by the Organisation of American States held earlier this year. See my 13 March post.
“Perhaps the region’s greatest ongoing concerns are social and economic inequalities – which remain the most significant in the world. Globalization continues to drive both real inequalities, via income stratification within the region, and perceived inequalities, as local populations observe fast growth elsewhere. Many Latin Americans continue to suspect that global prosperity is leaving them behind, a perception seemingly resistant to decreases in absolute poverty. Political reform, the encouragement of small and medium enterprises and, crucially, education, remain the region’s best mitigators of inequality-driven populist backlash.”
The report echoes a discussion organised by the Organisation of American States held earlier this year. See my 13 March post.
Labels: development, inequality, Latin America
Friday, April 20, 2007
Newsweek balanced on climate change
The current international edition of Newsweek (16 April) has an unusually balanced cover story on climate change for a mainstream publication. It points out that, other things being equal, there will be winners as well as losers as a result of global warming:
“Fairly or not, the tilt is destined to favor the countries of the rich North, to the detriment of the poorer South. Within a few decades or so, a balmy Greenland may again deserve its name.
“Russia, long a half-frozen terra incognita, will find its interior frontiers thrown wide open as the Siberian tundra turns to fertile prairie. Scorching heat and drought may devastate agriculture along the equator. The rain forests of the Amazon could be savanna by 2100, according to Brazilian researchers. The vast Sahara will grow ever larger. But America and other rich nations will be left relatively unscathed, because they are removed from equatorial regions that will be hardest hit, and wealthy enough to adapt.”
The newsmagazine also alludes to the possibility that the developing world could adapt to climate change if it has the necessary resources. “The problem is poverty, not climate,” it says. Even the most vulnerable countries, such as Bangladesh, can cope with climate change if they develop fast enough.
“Fairly or not, the tilt is destined to favor the countries of the rich North, to the detriment of the poorer South. Within a few decades or so, a balmy Greenland may again deserve its name.
“Russia, long a half-frozen terra incognita, will find its interior frontiers thrown wide open as the Siberian tundra turns to fertile prairie. Scorching heat and drought may devastate agriculture along the equator. The rain forests of the Amazon could be savanna by 2100, according to Brazilian researchers. The vast Sahara will grow ever larger. But America and other rich nations will be left relatively unscathed, because they are removed from equatorial regions that will be hardest hit, and wealthy enough to adapt.”
The newsmagazine also alludes to the possibility that the developing world could adapt to climate change if it has the necessary resources. “The problem is poverty, not climate,” it says. Even the most vulnerable countries, such as Bangladesh, can cope with climate change if they develop fast enough.
Labels: climate, environment
Tuesday, April 17, 2007
Globalised labour is great benefit to all
My comment from Monday's Fund Strategy on the globalisation of labour is published below. It is based on a chapter in the latest World Economic Outlook from the International Monetary Fund (IMF). As always there is much else in the Outlook for those interested in contemporary trends in the world economy.
One of the most important but least discussed topics in understanding the world economy is the globalisation of labour. It is therefore welcome that the International Monetary Fund has included a chapter on the subject in its key twice-yearly World Economic Outlook.
The IMF estimates that the effective global labour force has risen fourfold over the past quarter century. Most of this increase has taken place since 1990.
There are several channels through which this globalisation process occurs. Increasing trade, offshoring of production and migration all contribute to a more global role for labour.
The objections to this process are unconvincing. Labour's globalisation should be supported as an unqualified good. Many of the objections are based on the common misconception that economics is a zero-sum game. In other words, one person's gain is - erroneously - seen as another person's loss.
In reality the globalisation of labour represents a more efficient allocation of resources in the global economy. The size of the world economic pie can grow larger because labour is distributed where it is needed. Everyone can benefit from the growth this process generates.
Critics who attack globalised labour for resource shortages blame the wrong people for such problems. For instance, it is not immigrants who are to blame for the chronic shortage of reasonable housing in the south east of England. Successive governments have discouraged housebuilding through excessive regulation. Often this takes the form of defending the "green belt" around London and other environmental regulations. In the name of defending the planet both migrant workers and the indigenous population have to rely on a stock of ageing and excessively expensive homes.
Another objection to globalised labour is cultural. The charge is that high levels of migrant labour will undermine the integrity of national cultures. Such views are insufferably parochial. The mixing of people from different backgrounds is a positive development. In any case, the similarities between people are far more important than the differences.
It should also be remembered that the globalisation of labour is immensely beneficial to developing countries. Remittances from overseas workers and the proceeds of international trade play a key role in the development process.
One of the most important but least discussed topics in understanding the world economy is the globalisation of labour. It is therefore welcome that the International Monetary Fund has included a chapter on the subject in its key twice-yearly World Economic Outlook.
The IMF estimates that the effective global labour force has risen fourfold over the past quarter century. Most of this increase has taken place since 1990.
There are several channels through which this globalisation process occurs. Increasing trade, offshoring of production and migration all contribute to a more global role for labour.
The objections to this process are unconvincing. Labour's globalisation should be supported as an unqualified good. Many of the objections are based on the common misconception that economics is a zero-sum game. In other words, one person's gain is - erroneously - seen as another person's loss.
In reality the globalisation of labour represents a more efficient allocation of resources in the global economy. The size of the world economic pie can grow larger because labour is distributed where it is needed. Everyone can benefit from the growth this process generates.
Critics who attack globalised labour for resource shortages blame the wrong people for such problems. For instance, it is not immigrants who are to blame for the chronic shortage of reasonable housing in the south east of England. Successive governments have discouraged housebuilding through excessive regulation. Often this takes the form of defending the "green belt" around London and other environmental regulations. In the name of defending the planet both migrant workers and the indigenous population have to rely on a stock of ageing and excessively expensive homes.
Another objection to globalised labour is cultural. The charge is that high levels of migrant labour will undermine the integrity of national cultures. Such views are insufferably parochial. The mixing of people from different backgrounds is a positive development. In any case, the similarities between people are far more important than the differences.
It should also be remembered that the globalisation of labour is immensely beneficial to developing countries. Remittances from overseas workers and the proceeds of international trade play a key role in the development process.
Labels: development, economics, Fund Strategy, globalisation
Sachs sucks on Arts & Letters
Sachs Sucks, my review of the first BBC Reith lecture by Jeffrey Sachs, has appeared on the Arts & Letters website today.
Labels: media appearances
Monday, April 16, 2007
Global growth reducing extreme poverty
The latest World Development Indicators from the World Bank show the enormous benefits of economic growth in poverty reduction. The total number of people living in extreme poverty - defined as less than $1 a day - fell to 985 million in 2004 (the latest available figures) compared with 1.25 billion in 1990. It should also be remembered that the world population has grown substantially during that time so, in relative terms, the drop was even sharper.
The number of people living below the $2 a day threshold is also falling. However, at 2.6 billion people it still accounts for almost half the population of the developing world.
Two related factors seem to be behind the drop in extreme poverty. First, the rapid rate of growth in developing countries overall in recent years. On average the rate of GDP growth per head has average 3.9% a year since 2000. Second, the spectacular growth of East Asia and China in particular.
Interestingly the World Bank seems keen to emphasise that other factors besides economic growth also play a role in poverty reduction. However, part of this discussion seems to be on relative inequality - a different although related question - rather than absolute living standards.
The number of people living below the $2 a day threshold is also falling. However, at 2.6 billion people it still accounts for almost half the population of the developing world.
Two related factors seem to be behind the drop in extreme poverty. First, the rapid rate of growth in developing countries overall in recent years. On average the rate of GDP growth per head has average 3.9% a year since 2000. Second, the spectacular growth of East Asia and China in particular.
Interestingly the World Bank seems keen to emphasise that other factors besides economic growth also play a role in poverty reduction. However, part of this discussion seems to be on relative inequality - a different although related question - rather than absolute living standards.
Labels: Asia, china, development, economics, growth, inequality
Sunday, April 15, 2007
Tom Friedman calls for green patriotism
Tom Friedman, a foreign affairs columnist for the New York Times, has a cover story in the newspaper’s Sunday magazine today calling for a new green patriotism in America ("The Power of Green"):
“Well, I want to rename “green.” I want to rename it geostrategic, geoeconomic, capitalistic and patriotic. I want to do that because I think that living, working, designing, manufacturing and projecting America in a green way can be the basis of a new unifying political movement for the 21st century. A redefined, broader and more muscular green ideology is not meant to trump the traditional Republican and Democratic agendas but rather to bridge them when it comes to addressing the three major issues facing every American today: jobs, temperature and terrorism.”
The underlying theme in Friedman’s piece is that environmentalism can be a unifying ideology for America: “a new green ideology, properly defined, has the power to mobilize liberals and conservatives, evangelicals and atheists, big business and environmentalists around an agenda that can both pull us together and propel us forward. That’s why I say: We don’t just need the first black president. We need the first green president. We don’t just need the first woman president. We need the first environmental president. We don’t just need a president who has been toughened by years as a prisoner of war but a president who is tough enough to level with the American people about the profound economic, geopolitical and climate threats posed by our addiction to oil — and to offer a real plan to reduce our dependence on fossil fuels.”
He concludes by calling for what he calls “an ethic of stewardship”: “Stewardship is what parents do for their kids: think about the long term, so they can have a better future. It is much easier to get families to do that than whole societies, but that is our challenge. In many ways, our parents rose to such a challenge in World War II — when an entire generation mobilized to preserve our way of life. That is why they were called the Greatest Generation. Our kids will only call us the Greatest Generation if we rise to our challenge and become the Greenest Generation.”
Friedman has a related documentary on "Green: The New Red, White and Blue" on the Discovery Channel and article in Foreign Policy on “the first law of petropolitics”.
“Well, I want to rename “green.” I want to rename it geostrategic, geoeconomic, capitalistic and patriotic. I want to do that because I think that living, working, designing, manufacturing and projecting America in a green way can be the basis of a new unifying political movement for the 21st century. A redefined, broader and more muscular green ideology is not meant to trump the traditional Republican and Democratic agendas but rather to bridge them when it comes to addressing the three major issues facing every American today: jobs, temperature and terrorism.”
The underlying theme in Friedman’s piece is that environmentalism can be a unifying ideology for America: “a new green ideology, properly defined, has the power to mobilize liberals and conservatives, evangelicals and atheists, big business and environmentalists around an agenda that can both pull us together and propel us forward. That’s why I say: We don’t just need the first black president. We need the first green president. We don’t just need the first woman president. We need the first environmental president. We don’t just need a president who has been toughened by years as a prisoner of war but a president who is tough enough to level with the American people about the profound economic, geopolitical and climate threats posed by our addiction to oil — and to offer a real plan to reduce our dependence on fossil fuels.”
He concludes by calling for what he calls “an ethic of stewardship”: “Stewardship is what parents do for their kids: think about the long term, so they can have a better future. It is much easier to get families to do that than whole societies, but that is our challenge. In many ways, our parents rose to such a challenge in World War II — when an entire generation mobilized to preserve our way of life. That is why they were called the Greatest Generation. Our kids will only call us the Greatest Generation if we rise to our challenge and become the Greenest Generation.”
Friedman has a related documentary on "Green: The New Red, White and Blue" on the Discovery Channel and article in Foreign Policy on “the first law of petropolitics”.
Labels: America, environment, sustainability
Twenty years of sustainababble
John Elkington, writing in Open Democracy, reminds us that the idea of sustainable development became mainstream at least 20 years ago. It was spelt out in the landmark Brundtland report, officially known as Our Common Future, in 1987. Elkington gives a useful chronological history of the development of the idea of sustainability in four “waves”. The first is in the 1960s (including the publication of Silent Spring and the formation of the World Wildlife Fund) and the current, fourth, wave focuses on climate change.
Labels: environment, sustainability
Anti-corruption hurts poor countries
Developing countries will suffer as a result of the corruption allegations around Paul Wolfowitz. The World Bank president (and former US defence secretary) is accused of helping his partner win promotion and a pay rise. Critics accuse Wolfowitz of hypocrisy because he has led an anti-corruption drive against third world nations (following on from his predecessor, James Wolfensohn). But such charges only strengthen the pernicious hand of anti-corruption.
There are several reasons to object to anti-corruption. It strengthens Western interference in the affairs of poorer countries. It distracts from the need to find ways to promote economic development. And it encourages a corrosive climate of distrust.
There are several reasons to object to anti-corruption. It strengthens Western interference in the affairs of poorer countries. It distracts from the need to find ways to promote economic development. And it encourages a corrosive climate of distrust.
Labels: corruption, development
Thursday, April 12, 2007
Reith lecture review published
Spiked has published my review of the first of this year’s BBC Reith lectures by Jeffrey Sachs.
Labels: Africa, development, economics, environment, spiked
Wednesday, April 11, 2007
Protectionist threat to global growth
The following is a comment by me from the 9 April issue of Fund Strategy.
The past few days have seen mixed news on the world economy. The bad news emanates from America while good news originates in emerging markets.
Probably the worst news is America's decision to impose tariffs on imports of "coated free sheet paper" from China. The Commerce Department has deemed that China is providing unfair subsidies to this industry. Therefore, so the argument goes, America needs to take action to level the playing field between the two sides.
Clearly America's move is symbolic. It is concerned about China's huge trade surplus with the US. The tariffs on paper are therefore designed to encourage China to curb its exports to the US or buy more American goods.
Some might argue America's recently announced free trade agreement with South Korea to an extent offsets its protectionist measures against China. But this is the wrong way to look at the move. The bilateral deal with Korea, giving it preferential access to the American market, is another form of protectionism. America rewards some countries and penalises others as part of a concerted trade policy.
It would be far better if America lived up to its rhetoric of free trade. In principle trading relations between different countries have the potential to benefit all parties in the relationship. Living standards can rise as each country focuses on what it can produce most efficiently.
In contrast, protectionism threatens to fracture the world economy. It could lead to a situation in which there is less trade, not more. As a result everyone, particularly the poorer countries, could suffer.
Fortunately some good news has offset the bad. Figures from the Asian Development Bank, in its annual Asian Development Outlook, forecasts GDP growth in developing Asian at 7.6% in 2007 and 7.7% in 2008. The two demographic giants of the region, China and India, together account for much of this growth.
Even better news is the expansion of the African economies. The continent looks set to grow by 5.8% in 2007 after its 5.7% in 2006, according to the United Nations' Economic Report on Africa 2007. It is growing from a meagre base but the trajectory is hopeful. The main worrying sign is its continuing dependence on primary commodity exports.
If only America, and the West in general, allows the emerging economies to continue to grow then everyone could benefit.
The past few days have seen mixed news on the world economy. The bad news emanates from America while good news originates in emerging markets.
Probably the worst news is America's decision to impose tariffs on imports of "coated free sheet paper" from China. The Commerce Department has deemed that China is providing unfair subsidies to this industry. Therefore, so the argument goes, America needs to take action to level the playing field between the two sides.
Clearly America's move is symbolic. It is concerned about China's huge trade surplus with the US. The tariffs on paper are therefore designed to encourage China to curb its exports to the US or buy more American goods.
Some might argue America's recently announced free trade agreement with South Korea to an extent offsets its protectionist measures against China. But this is the wrong way to look at the move. The bilateral deal with Korea, giving it preferential access to the American market, is another form of protectionism. America rewards some countries and penalises others as part of a concerted trade policy.
It would be far better if America lived up to its rhetoric of free trade. In principle trading relations between different countries have the potential to benefit all parties in the relationship. Living standards can rise as each country focuses on what it can produce most efficiently.
In contrast, protectionism threatens to fracture the world economy. It could lead to a situation in which there is less trade, not more. As a result everyone, particularly the poorer countries, could suffer.
Fortunately some good news has offset the bad. Figures from the Asian Development Bank, in its annual Asian Development Outlook, forecasts GDP growth in developing Asian at 7.6% in 2007 and 7.7% in 2008. The two demographic giants of the region, China and India, together account for much of this growth.
Even better news is the expansion of the African economies. The continent looks set to grow by 5.8% in 2007 after its 5.7% in 2006, according to the United Nations' Economic Report on Africa 2007. It is growing from a meagre base but the trajectory is hopeful. The main worrying sign is its continuing dependence on primary commodity exports.
If only America, and the West in general, allows the emerging economies to continue to grow then everyone could benefit.
Labels: development, economics, Fund Strategy, growth, trade
Tuesday, April 10, 2007
Urbanisation benefits the poor
A new paper (PDF) by three World Bank poverty experts seems to suggest that urbanisation benefits the poor (it is summarised here). Martin Ravallion, Shaohua Chen and Prem Sangraula estimate that the rural poverty rate of 30% - using the $1 a day threshold - is more than twice the urban rate. In addition, 70% of the rural population lives on less than $2 a day, while the comparable proportion in urban areas is less than half that. To me this suggests that people migrate to cities from rural areas because they think they are likely to be better off.
It is true that an increasing proportion of the world’s poor are living in urban areas. But this trend is likely to be because of the growth of cities in absolute terms. About three-quarters of the developing world’s poor still live in rural areas.
The paper also looks at national and regional differences in patterns of poverty. It looks like it should repay closer examination.
It is true that an increasing proportion of the world’s poor are living in urban areas. But this trend is likely to be because of the growth of cities in absolute terms. About three-quarters of the developing world’s poor still live in rural areas.
The paper also looks at national and regional differences in patterns of poverty. It looks like it should repay closer examination.
Labels: cities, development, inequality
Monday, April 09, 2007
Response to my blog?
Any responses to my blog? I welcome praise, criticism and suggestions. Evidently I have written 200 posts since I started on 16 July last year. It is a useful exercise and reference source for me but it would be good to know who else is using it. I can be emailed from HERE.
Jeffrey Sachs over lunch
Jeffrey Sachs, probably the world’s most influential development economist, has lunch with the Financial Times (FT) as a prelude to his BBC Reith lectures starting this week. The FT lunch article provides a useful taster to Sachs’ ideas for those unfamiliar with them. These include an opportunity for him to rebut criticisms of his advocacy of “shock therapy” in Eastern Europe during their post-Soviet transition and his attacks on his views on development.
It was also striking to read that the BBC is expecting an audience of 150 million for the lectures. They are broadcast on BBC Radio 4, the BBC World Service and over the internet.
More comment on the lectures will follow as I get a chance to listen to them.
It was also striking to read that the BBC is expecting an audience of 150 million for the lectures. They are broadcast on BBC Radio 4, the BBC World Service and over the internet.
More comment on the lectures will follow as I get a chance to listen to them.
Labels: development, economics
Another climate change report
Yet another report on climate change. The second of four to be issued this year by the Intergovernmental Panel on Climate Change (IPCC) was published in Brussels on Friday. There is so much material on this topic I will not go into it in detail but it is worth noting the Christian Science Monitor has just launched a dedicated website on the subject.
It was also striking that a New York Times leader followed the example of Britain’s Stern Review in arguing there is a choice between doing nothing – or “denial” – and an approach centred on managing energy demand. The Times argued that following last week’s supreme court decision and the publication of the new IPCC report: “One would hope that these events would shake President Bush out of his state of denial and add his authority to the chorus of governors, legislators and business leaders calling for an aggressive regulatory and technological response to the dangers of global warming.” The idea that there might be other ways to tackle climate change, notably bolstering energy supply, is not even considered.
It was also striking that a New York Times leader followed the example of Britain’s Stern Review in arguing there is a choice between doing nothing – or “denial” – and an approach centred on managing energy demand. The Times argued that following last week’s supreme court decision and the publication of the new IPCC report: “One would hope that these events would shake President Bush out of his state of denial and add his authority to the chorus of governors, legislators and business leaders calling for an aggressive regulatory and technological response to the dangers of global warming.” The idea that there might be other ways to tackle climate change, notably bolstering energy supply, is not even considered.
Labels: America, climate, environment
Saturday, April 07, 2007
On hedonic adaptation
It is not worth striving to make yourself better off materially. That at least is an implicit message than can be gleaned from a piece on “hedonic adaptation” in Scientific American. Lottery winners, for example, tend to return to their normal levels of happiness within a year of their windfall according to a classic 1970s study.
There is nothing wrong with psychologists studying human happiness. But those who see happiness as a goal for humans to pursue are wrong. Many important and worthwhile enterprises – such as bringing up a family or learning another language – do not necessarily bring happiness. And the emphasis on individual contentment tends to downgrade the importance of prosperity to human welfare.
There is nothing wrong with psychologists studying human happiness. But those who see happiness as a goal for humans to pursue are wrong. Many important and worthwhile enterprises – such as bringing up a family or learning another language – do not necessarily bring happiness. And the emphasis on individual contentment tends to downgrade the importance of prosperity to human welfare.
Labels: happiness
Noise and stench in Olde England
Emily Cockayne’s Hubbub: Filth, Noise and Stench in England, 1600-1770 (Yale UP) gives a graphic view of what English streets were like before the Industrial Revolution, according an article in Literary Review by Christopher Hart:
“The personal liberty of every freeborn Englishman and woman to spit, dump and defecate meant considerable misery for everyone. In the streets of London you would stumble over ‘the disagreeable Objects of bleeding Heads, Entrails of Beasts, Offals, raw Hides, and the Kennels flowing with Blood and Nastiness’. I never knew that ‘Mount Pleasant’, near Gray’s Inn, was actually a bitterly ironic name for a huge man-made heap of the most nauseous offal and ordure. It is now, of course, home to the Guardian newspaper.”
It should complement other books I have previously cited to help show how living conditions have improved enormously over the years. These include Judith Flanders’ Consuming Passions (Harper Press) on how few consumer goods we used to have (see 14 August 2006 post) and Lawrence Keeley’s War Before Civilization (Oxford UP 1997) on how murder was rife before modern times (see 30 July 2006 post).
“The personal liberty of every freeborn Englishman and woman to spit, dump and defecate meant considerable misery for everyone. In the streets of London you would stumble over ‘the disagreeable Objects of bleeding Heads, Entrails of Beasts, Offals, raw Hides, and the Kennels flowing with Blood and Nastiness’. I never knew that ‘Mount Pleasant’, near Gray’s Inn, was actually a bitterly ironic name for a huge man-made heap of the most nauseous offal and ordure. It is now, of course, home to the Guardian newspaper.”
It should complement other books I have previously cited to help show how living conditions have improved enormously over the years. These include Judith Flanders’ Consuming Passions (Harper Press) on how few consumer goods we used to have (see 14 August 2006 post) and Lawrence Keeley’s War Before Civilization (Oxford UP 1997) on how murder was rife before modern times (see 30 July 2006 post).
Friday, April 06, 2007
America’s disappearing “middle class”?
Nick Gillespie, the editor-in-chief of Reason, points out that the debate on American inequality often takes the form of discussing the middle class as an endangered species. Since most people identify themselves as middle class and inequality is seen to be widening it follows that the middle class must be disappearing. Gillespie gives Lou Dobbs, Senator James Webb and even George W Bush as examples of people who have made statements consistent with this view. Dobbs, a CNN host, has written a whole book on the subject while George W has simply fretted about income inequality and attacked corporate fat cats. Gillespie’s rejoinder is that absolute living standards are rising for all while social mobility remains high.
Labels: America, inequality
Africa update
Recent news on developments related to Africa.
* Economic growth. Africa grew by 5.7% in 2006 after a 5.3% increase in 2005, according to the United Nations’ Economic Report on Africa 2007. Although this growth is relatively strong it should be noted that African economies are starting from an exceedingly low base. The report also makes the point that Africa still depends heavily on the export of primary commodities such as crude oil, metals and minerals.
* Aid. Aid to Africa was static last year and overall aid spending fell according to the Organisation for Economic Cooperation and Development. This is despite the fanfare around the Gleneagles G8 summit in 2005 when Tony Blair, the British prime minister, extracted pledges from governments to boost aid spending. Although the European Union, including Britain, increased spending both America and Japan spent much less.
It would be naïve to rely on Western governments to promote African government. However, these figures do show the hollowness of their promises on aid.
* Book. On Wednesday evening attended a University of Westminster seminar on The State They’re In given by Matthew Lockwood. The book is ostensibly an attack on the prevailing consensus on African development held by the likes of the British government and aid agencies. It argues that it is in the interests of the West to promote African developmental states, following the East Asian model, to help develop Africa.
Although the book is presented as a critique its conclusions are remarkably similar to the mainstream view. Lockwood sees African corruption as a big problem while ignoring the low horizons embodied in notions such as sustainable development. His book is also endorsed by the likes of Bob Geldof, Duncan Green (the head of research at Oxfam) and Shriti Vadera (an adviser to the British Chancellor).
* Economic growth. Africa grew by 5.7% in 2006 after a 5.3% increase in 2005, according to the United Nations’ Economic Report on Africa 2007. Although this growth is relatively strong it should be noted that African economies are starting from an exceedingly low base. The report also makes the point that Africa still depends heavily on the export of primary commodities such as crude oil, metals and minerals.
* Aid. Aid to Africa was static last year and overall aid spending fell according to the Organisation for Economic Cooperation and Development. This is despite the fanfare around the Gleneagles G8 summit in 2005 when Tony Blair, the British prime minister, extracted pledges from governments to boost aid spending. Although the European Union, including Britain, increased spending both America and Japan spent much less.
It would be naïve to rely on Western governments to promote African government. However, these figures do show the hollowness of their promises on aid.
* Book. On Wednesday evening attended a University of Westminster seminar on The State They’re In given by Matthew Lockwood. The book is ostensibly an attack on the prevailing consensus on African development held by the likes of the British government and aid agencies. It argues that it is in the interests of the West to promote African developmental states, following the East Asian model, to help develop Africa.
Although the book is presented as a critique its conclusions are remarkably similar to the mainstream view. Lockwood sees African corruption as a big problem while ignoring the low horizons embodied in notions such as sustainable development. His book is also endorsed by the likes of Bob Geldof, Duncan Green (the head of research at Oxfam) and Shriti Vadera (an adviser to the British Chancellor).
Labels: Africa, aid, book, development, economics
Wednesday, April 04, 2007
Organisation for Happiness Development?
The Organisation for Economic Cooperation and Development (OECD) has held an international forum in Rome on whether happiness is measurable and what this means for policy. Speakers included Ed Diener (University of Illinois), Alois Stutzer(University of Basel), Ruut Veenhoven (Erasmus University Rotterdam), Johan Norberg (free market critic of the happiness consensus) and David Halpern (UK prime minister strategy unit). Some of the presentations are available on the organisation¹s website. Perhaps the OECD should change its name to the Organisation for Happiness Development?
Tuesday, April 03, 2007
US supreme court backs climate consensus
America’s supreme court ruled yesterday that carbon dioxide is a pollutant and the federal government has a right to regulate emissions. The New York Times welcomed the verdict saying:
“It is a victory for a world whose environment seems increasingly threatened by climate change. It is a vindication for states like California that chose not to wait for the federal government and acted to limit emissions that contribute to global warming. And it should feed the growing momentum on Capitol Hill for mandatory limits on carbon dioxide, the principal greenhouse gas.”
In contrast the Wall Street Journal condemned what it called he “jolly green justices”:
“[I]sn't this something for Congress to decide? Global warming was already a hot topic in 1990, when Congress last amended the Clean Air Act. Yet it declined to enact amendments that would have forced the EPA [Environmental Protection Agency] to set CO2 emissions standards. The Members have since been engaged in periodic brawls over whether and how to regulate CO2, but, voila, the High Court has now declared that it shall be so.”
In my view the Journal is closer to the truth. Political decisions on how to react to climate change should be a matter for political debate. Science is best left to the scientists. Leaving such decisions to judges is the worst possible outcome.
“It is a victory for a world whose environment seems increasingly threatened by climate change. It is a vindication for states like California that chose not to wait for the federal government and acted to limit emissions that contribute to global warming. And it should feed the growing momentum on Capitol Hill for mandatory limits on carbon dioxide, the principal greenhouse gas.”
In contrast the Wall Street Journal condemned what it called he “jolly green justices”:
“[I]sn't this something for Congress to decide? Global warming was already a hot topic in 1990, when Congress last amended the Clean Air Act. Yet it declined to enact amendments that would have forced the EPA [Environmental Protection Agency] to set CO2 emissions standards. The Members have since been engaged in periodic brawls over whether and how to regulate CO2, but, voila, the High Court has now declared that it shall be so.”
In my view the Journal is closer to the truth. Political decisions on how to react to climate change should be a matter for political debate. Science is best left to the scientists. Leaving such decisions to judges is the worst possible outcome.
Labels: America, climate, environment
Panic attacks “neo-liberal” model
Yesterday’s Financial Times included a comment by Mica Panic, a fellow of Selwyn College, Cambridge, attacking the Anglo-Saxon “neo-liberal” economic model. In his view the European model, and Scandinavia in particular, as offering the highest levels of well-being. He also argues for a separation of well-being from growth. To quote his article:
“The importance of these comparisons is that they consistently show that countries with social democratic or corporatist models of capitalism have markedly higher levels of social well-being than those, such as the US and UK, with a liberal free-market model.
“Equally important, the reason for this is not that they have higher gross domestic product per head but that their social attitudes, objectives and policies are very different. Unlike the US and, since 1979, the UK, these countries attach great importance to social cohesion and, therefore, to equality of opportunity.”
It seems to me what Panic is missing is the need to raise the living standards of the poor in America and Britain still further. The need is for more growth rather than less. It is also striking that much of the discussion of well-being is underpinned by a fear of social breakdown.
“The importance of these comparisons is that they consistently show that countries with social democratic or corporatist models of capitalism have markedly higher levels of social well-being than those, such as the US and UK, with a liberal free-market model.
“Equally important, the reason for this is not that they have higher gross domestic product per head but that their social attitudes, objectives and policies are very different. Unlike the US and, since 1979, the UK, these countries attach great importance to social cohesion and, therefore, to equality of opportunity.”
It seems to me what Panic is missing is the need to raise the living standards of the poor in America and Britain still further. The need is for more growth rather than less. It is also striking that much of the discussion of well-being is underpinned by a fear of social breakdown.
Labels: economics, Europe, happiness, inequality
Monday, April 02, 2007
American campuses go green
Sadly it seems that America’s college campuses are going green. According to an article in Business Week Bill McKibben, a prominent environmentalist, is spearheading a virtual march on Washington on 14 April called Step It Up. Over 1,100 campuses have signed up to the campaign to cut carbon emissions by 80% by 2050. The piece also draws a useful comparison with activism of the past:
“Unlike the Earth Day kids of the 1970s, climate activists who belong to the 80 million-strong demographic bulge known as the Millennials aren't hard left or anti-business. Sometimes called Gen Y (teens to mid-20s), they wield a tool kit that includes Excel spreadsheets, administrators' numbers on cell-phone speed dials, and blogs. And their ranks represent a wide swath of disciplines and beliefs, from the 3,000-member Engineers for a Sustainable World to the Evangelical Youth Climate Initiative to Net Impact, a green business school network with 130 chapters. Student groups at 570 schools signed up to take part this year in the Campus Climate Challenge, a campaign sponsored by 30 environmental groups.”
“Unlike the Earth Day kids of the 1970s, climate activists who belong to the 80 million-strong demographic bulge known as the Millennials aren't hard left or anti-business. Sometimes called Gen Y (teens to mid-20s), they wield a tool kit that includes Excel spreadsheets, administrators' numbers on cell-phone speed dials, and blogs. And their ranks represent a wide swath of disciplines and beliefs, from the 3,000-member Engineers for a Sustainable World to the Evangelical Youth Climate Initiative to Net Impact, a green business school network with 130 chapters. Student groups at 570 schools signed up to take part this year in the Campus Climate Challenge, a campaign sponsored by 30 environmental groups.”
Labels: America, climate, environment
Sunday, April 01, 2007
Microfinance – a crack in the consensus
It seems there is a crack in the near universal consensus in favour of microcredit (extending tiny loans to third world entrepreneurs). Newsweek reports that a backlash is growing:
“Critics on the left charge that micro-finance privatizes social safety networks, while conservatives dismiss it as charity disguised as enterprise. Wonks weigh in with studies like "The Myths and Magic of Microcredit" and "Money Is Not Enough." Insiders turn on the industry. Loïc Sadou-let, a former World Bank economist who worked in microfinance in Guatemala, estimates that only about 300 of nearly 25,000 microlenders have reached financial "sustainability," meaning they are able to cover all costs.”
A critical essay by Thomas Dichter, an international aid expert, is also available on the Cato Institute website. In his view most such credit is likely to be use to fund consumption rather than investment.
“Critics on the left charge that micro-finance privatizes social safety networks, while conservatives dismiss it as charity disguised as enterprise. Wonks weigh in with studies like "The Myths and Magic of Microcredit" and "Money Is Not Enough." Insiders turn on the industry. Loïc Sadou-let, a former World Bank economist who worked in microfinance in Guatemala, estimates that only about 300 of nearly 25,000 microlenders have reached financial "sustainability," meaning they are able to cover all costs.”
A critical essay by Thomas Dichter, an international aid expert, is also available on the Cato Institute website. In his view most such credit is likely to be use to fund consumption rather than investment.
Labels: consumption, debt, development, finance
Poverty debate in Britain – and more on US
While I was away with the ultra-rich in Switzerland it seems a new row broke out over poverty in Britain. It was sparked off by a report on trends in inequality from the Institute for Fiscal Studies. What caught the media’s attention was the news that New Labour is evidently failing to meet its much-hyped target of halving child poverty by 2010.
Polly Toynbee, Guardian columnist and alleged expert on poverty, wrote a column complaining that too little attention is paid to poverty. What she missed is the fact that, as I have written previously on spiked, the poverty debate has not disappeared but recast in different terms.
The Economist wrote that the bargain that has existed for the past 20 years has to be failing. The rich are getting richer but the poor are not becoming better off too. It also quoted the Tories as saying that Britain is getting a more American pattern of income distribution without a corresponding rise in philanthropy.
On Spiked Rob Lyons pointed out that absolute living standards are rising even if relative ones are not. He also argued that the discussion of poverty has taken a more moral tone than in the past.
Meanwhile, the New York Times carried an article this week on a new analysis showing that the American income gap widened in 2005. The piece was based on a study of Internal Revenue Service data by Professor Emmanuel Saez, an economist at the University California, Berkeley, and Professor Thomas Piketty of the Paris School of Economics. The two authors have also done longer-term studies on income inequality in America.
Polly Toynbee, Guardian columnist and alleged expert on poverty, wrote a column complaining that too little attention is paid to poverty. What she missed is the fact that, as I have written previously on spiked, the poverty debate has not disappeared but recast in different terms.
The Economist wrote that the bargain that has existed for the past 20 years has to be failing. The rich are getting richer but the poor are not becoming better off too. It also quoted the Tories as saying that Britain is getting a more American pattern of income distribution without a corresponding rise in philanthropy.
On Spiked Rob Lyons pointed out that absolute living standards are rising even if relative ones are not. He also argued that the discussion of poverty has taken a more moral tone than in the past.
Meanwhile, the New York Times carried an article this week on a new analysis showing that the American income gap widened in 2005. The piece was based on a study of Internal Revenue Service data by Professor Emmanuel Saez, an economist at the University California, Berkeley, and Professor Thomas Piketty of the Paris School of Economics. The two authors have also done longer-term studies on income inequality in America.
Labels: America, economics, inequality
