Friday, January 02, 2009
A narrow vision of development economics
A survey by the Economist of the “international bright young things” of economics, based on canvassing leading authorities in the field, shows how narrow the study of development has become. It seems that the leading young thinkers are focusing on relatively narrow micro questions rather than the big picture:
“Esther Duflo of the Massachusetts Institute of Technology (MIT) received more recommendations than any other economist. Some who didn’t nominate her thought she was too established to count as “new”.
“With her colleague, Abhijit Banerjee, Ms Duflo and Mr Kremer have remade development economics, nudging it away from its concern with policies, towards a preoccupation with projects. They study economic development as seen from the field, clinic or school, rather than the finance ministry. They might be called the “peace corps” of economists, bringing the blessing of their investigative technique to the neglected villages of India or the denuded farms of western Kenya.
“Ms Duflo has made her name carrying out randomised trials of development projects, such as fertiliser subsidies and school recruitment. In these trials, people are randomly assigned to a “treatment” group, which benefits from the project, and a “control” group, which does not. By comparing the average outcome of each group, she can establish whether the project worked and precisely how well.
“In one study, Ms Duflo and her colleagues showed that mothers in the Indian state of Rajasthan are three times as likely to have their children vaccinated if they are rewarded with a kilogram of daal (lentils) at the immunisation camp. The result is useful to aid workers, but puzzling to economists: why should such a modest incentive (worth less than 50 cents) make such a big difference? Immunisation can save a child’s life; a bag of lentils should not sway the mother’s decision either way.”
Academic economics is evidently narrow and technocratic rather than asking the big political questions about inequality and slow development.
“Esther Duflo of the Massachusetts Institute of Technology (MIT) received more recommendations than any other economist. Some who didn’t nominate her thought she was too established to count as “new”.
“With her colleague, Abhijit Banerjee, Ms Duflo and Mr Kremer have remade development economics, nudging it away from its concern with policies, towards a preoccupation with projects. They study economic development as seen from the field, clinic or school, rather than the finance ministry. They might be called the “peace corps” of economists, bringing the blessing of their investigative technique to the neglected villages of India or the denuded farms of western Kenya.
“Ms Duflo has made her name carrying out randomised trials of development projects, such as fertiliser subsidies and school recruitment. In these trials, people are randomly assigned to a “treatment” group, which benefits from the project, and a “control” group, which does not. By comparing the average outcome of each group, she can establish whether the project worked and precisely how well.
“In one study, Ms Duflo and her colleagues showed that mothers in the Indian state of Rajasthan are three times as likely to have their children vaccinated if they are rewarded with a kilogram of daal (lentils) at the immunisation camp. The result is useful to aid workers, but puzzling to economists: why should such a modest incentive (worth less than 50 cents) make such a big difference? Immunisation can save a child’s life; a bag of lentils should not sway the mother’s decision either way.”
Academic economics is evidently narrow and technocratic rather than asking the big political questions about inequality and slow development.
Labels: development, economics
Phoney ambition 2009
Andrew Simms, the policy director of the New Economics Foundation (NEF), provides a typical example of environmentalism’s phoney ambition in his New Year’s Day comment piece for Britain’s Guardian newspaper. In response to what he calls “climate upheaval” he urges readers to: “squeeze those eyes open to 2009, and history tells us great things are possible. We are still in control. We just need to build, rapidly, new energy and transport systems and change our behaviour.”
Simms is certainly right when he points to the great achievements of the Victorian engineers of the mid-nineteenth century. But their goal was to build huge amounts of railway track to enhance mobility. In contrast, he says in his article he wants to “get people out of their cars”. Although Simms says he supports cleaner transport as an alternative it is hard to avoid the conclusion that he is anti-mobility, or at least would like to see it restricted, given his opposition to cars along with the NEF’s emphasis on local communities. A similarly narrow attitude is apparent in the emphasis on renewable energy when more high technology sources are needed to provide the world with the energy it needs.
Simms is certainly right when he points to the great achievements of the Victorian engineers of the mid-nineteenth century. But their goal was to build huge amounts of railway track to enhance mobility. In contrast, he says in his article he wants to “get people out of their cars”. Although Simms says he supports cleaner transport as an alternative it is hard to avoid the conclusion that he is anti-mobility, or at least would like to see it restricted, given his opposition to cars along with the NEF’s emphasis on local communities. A similarly narrow attitude is apparent in the emphasis on renewable energy when more high technology sources are needed to provide the world with the energy it needs.
Labels: climate, economics, energy, environment, transport
Tuesday, December 30, 2008
Guides to China 2008
The China Digital Times, an excellent portal source for information on contemporary Chinese society, has produced a useful series of guides to China in 2008. Topics include China and the developing world, the environmental crisis, the global financial crisis and China’s domestic market. Links to each review are provided in the latest topic guide: on the contentious subject of food and product safety.
Labels: china, development, economics, environment, food
A defensive defence of capitalism 2008
A review of the Economist’s economic coverage of 2008 reminds its blog readers that the magazine often took a pessimistic stance even before the worst of the crisis broke. It also provides a useful reminder of one of its key articles of the year. In October it published a markedly defensive defence of capitalism. After setting itself up as “on the side of economic liberty” it went on to argue that:
“In the short term defending capitalism means, paradoxically, state intervention. There is a justifiable sense of outrage among voters and business people (and indeed economic liberals) that $2.5 trillion of taxpayers' money now has to be spent on a highly rewarded industry. But the global bail-out is pragmatic, not ideological. When François Mitterrand nationalised France’s banks in 1981 he did so because he thought the state would run them better. This time governments are buying banks (or shares in them) because they believe, rightly, that public capital is needed to keep credit flowing.”
It goes on to argue that Walter Bagehot, one of the early editor’s of the Economist, supported state intervention to prevent bank runs from damaging the real economy. The article concludes with the lines:
“Capitalism is at bay, but those who believe in it must fight for it. For all its flaws, it is the best economic system man has invented yet.”
It is true that the recent massive state intervention to bail out the financial system is pragmatic rather than ideological. Nevertheless it shows that the notion of a vibrant free market is a myth.
“In the short term defending capitalism means, paradoxically, state intervention. There is a justifiable sense of outrage among voters and business people (and indeed economic liberals) that $2.5 trillion of taxpayers' money now has to be spent on a highly rewarded industry. But the global bail-out is pragmatic, not ideological. When François Mitterrand nationalised France’s banks in 1981 he did so because he thought the state would run them better. This time governments are buying banks (or shares in them) because they believe, rightly, that public capital is needed to keep credit flowing.”
It goes on to argue that Walter Bagehot, one of the early editor’s of the Economist, supported state intervention to prevent bank runs from damaging the real economy. The article concludes with the lines:
“Capitalism is at bay, but those who believe in it must fight for it. For all its flaws, it is the best economic system man has invented yet.”
It is true that the recent massive state intervention to bail out the financial system is pragmatic rather than ideological. Nevertheless it shows that the notion of a vibrant free market is a myth.
Sunday, December 21, 2008
Be energised
Energise! (Beautiful Books) by James Woudhuysen and Joe Kaplinsky is finally out. The book’s starting point is the need to bolster the supply of energy if humanity is to meet its full potential. Not only does the content look excellent but the presentation and production quality look superb. A must read book.
Labels: book, economics, energy
Thursday, December 18, 2008
Economic history with sceptical tinge
Monthly Review, an American left wing publication, has an article by Immanuel Wallerstein, a senior research scholar at Yale, on “The Human Costs of Economic Growth” in its December issue. The title is misleading as the article is a review of Amiya Kumar Bagchi’s Perilous Passage: Mankind and the Global Ascendancy of Capital (Rowman & Littlefield, 2005). The most explicit reference to the headline states that Bagchi:
“wishes to center his attention on the degree to which economic growth under capitalism is very poorly correlated with human development, even in the West. His book is an attempt to analyze in detail the human suffering that has been at the basis of ‘the advantages reaped by the European ruling classes’”.
Most of the review focuses on different explanations for the relatively rapid economic growth of the world over the past two centuries. However, from Wallerstein’s account the book sounds highly sceptical of the benefits of economic growth:
“Bagchi analyzes this capitalist world not in terms of how much growth it made possible but how much human development it made possible, and in this regard he finds it very wanting. One of his principal services to readers is his pulling together of the demographic literature on life expectancy, the public health literature on disease prevention and cure, data on nutrition, income levels, and the various forms of labor coercion to give us a nuanced picture of human development over time and throughout the world, one that is differentiated by geography, age cohorts, and gender.”
“wishes to center his attention on the degree to which economic growth under capitalism is very poorly correlated with human development, even in the West. His book is an attempt to analyze in detail the human suffering that has been at the basis of ‘the advantages reaped by the European ruling classes’”.
Most of the review focuses on different explanations for the relatively rapid economic growth of the world over the past two centuries. However, from Wallerstein’s account the book sounds highly sceptical of the benefits of economic growth:
“Bagchi analyzes this capitalist world not in terms of how much growth it made possible but how much human development it made possible, and in this regard he finds it very wanting. One of his principal services to readers is his pulling together of the demographic literature on life expectancy, the public health literature on disease prevention and cure, data on nutrition, income levels, and the various forms of labor coercion to give us a nuanced picture of human development over time and throughout the world, one that is differentiated by geography, age cohorts, and gender.”
Labels: book, development, economics, growth
Tuesday, December 16, 2008
Call for debate on real economy
Frank Furedi has an important article on today’s spiked arguing it is time to have a debate on the real economy. For him this means discussing how it should be restructured and reorganised in contrast with the current narrow focus on financial problems.
Labels: economics, finance, spiked
Monday, December 15, 2008
Downturn stems from fear and green growth
The following comment by me appeared in the latest Fund Strategy (15 December).
As the days go by explanations for the economic crisis pile up. Initially the favoured explanation was a combination of greedy bankers and irresponsible borrowers. Others added to the list since include insufficient state intervention and timeless financial euphoria.
This column has argued instead that other factors are key. It can be seen as a crisis of green capitalism and of risk aversion.
Green capitalism is key because it means that the growth in productive capacity is being slowed by subjective limits. There is a widespread fear of growth and innovation. As a result a disparity arose between the scale of production and that of consumption. In that sense it can be called a crisis of underproduction.
Risk aversion also plays a role. As the financial sector has swollen it has been shaped by risk aversion. Many key financial instruments that have played a large role in the crisis - including credit derivatives and securitised mortgage products - are essentially mechanisms for transferring risk. Yet, contrary to what their creators intended, they have created the basis for "contagion" as financial problems have spread.
On reflection there is also another important factor to consider. It could indicate the decline in importance of a one-off boost to the global economy.
With the end of the Cold War a huge new labour force became more closely integrated to the global economy. China and India boomed and the world economy enjoyed a strong growth spurt as a result.
Clearly China, India and other emerging economies will still continue to exist and, hopefully, to grow. But it is hard to see any equivalent additional boost to the global economy of the scale of the addition of these countries.
In the past two decades the world has enjoyed an unprecedented period of extensive growth. The scale of involvement in the global economy has grown hugely and many millions of people have benefited as a result.
This boom is entirely different in character to that which followed the end of the second world war. That was much more characterised by intensive investment in technology and machinery.
Experience provides little guide to the character of the economic crisis. Its roots in green capitalism, risk aversion and extensive growth make it unlike any other.
As the days go by explanations for the economic crisis pile up. Initially the favoured explanation was a combination of greedy bankers and irresponsible borrowers. Others added to the list since include insufficient state intervention and timeless financial euphoria.
This column has argued instead that other factors are key. It can be seen as a crisis of green capitalism and of risk aversion.
Green capitalism is key because it means that the growth in productive capacity is being slowed by subjective limits. There is a widespread fear of growth and innovation. As a result a disparity arose between the scale of production and that of consumption. In that sense it can be called a crisis of underproduction.
Risk aversion also plays a role. As the financial sector has swollen it has been shaped by risk aversion. Many key financial instruments that have played a large role in the crisis - including credit derivatives and securitised mortgage products - are essentially mechanisms for transferring risk. Yet, contrary to what their creators intended, they have created the basis for "contagion" as financial problems have spread.
On reflection there is also another important factor to consider. It could indicate the decline in importance of a one-off boost to the global economy.
With the end of the Cold War a huge new labour force became more closely integrated to the global economy. China and India boomed and the world economy enjoyed a strong growth spurt as a result.
Clearly China, India and other emerging economies will still continue to exist and, hopefully, to grow. But it is hard to see any equivalent additional boost to the global economy of the scale of the addition of these countries.
In the past two decades the world has enjoyed an unprecedented period of extensive growth. The scale of involvement in the global economy has grown hugely and many millions of people have benefited as a result.
This boom is entirely different in character to that which followed the end of the second world war. That was much more characterised by intensive investment in technology and machinery.
Experience provides little guide to the character of the economic crisis. Its roots in green capitalism, risk aversion and extensive growth make it unlike any other.
Labels: china, economics, environment, finance, Fund Strategy, india
Saturday, December 13, 2008
Video of my session at Battle of Ideas
Highlights of my appearance at the Battle of Ideas 2008 can now be viewed on the latest Worldbytes programme (see 30 October 2008 post). I appeared on a panel on “Growing pains: the pros and cons of economic dynamism” alongside, among others, Martin Wolf of the Financial Times and Ha-Joon Chang of Cambridge University.
Labels: development, economics, growth, media appearances, speeches, Worldwrite
Friday, December 12, 2008
The growth sceptic mindset
A particularly interesting insight into the logic of growth scepticism from Philip Stephens, an associate editor of the Financial Times, in a piece in today’s newspaper entitled: “Global warming: the way not to mobilise the masses”.
He first acknowledges that anti-growth sentiment of the type favoured by protestors against Stansted airport is unlikely to win popular support”
“In this mindset saving the planet demands that people give up their foreign holidays, abandon their cars, turn down the heating and clean their teeth in the dark. Through this prism, pain is a virtue and the halting global warming metamorphoses into a much broader attack on consumerism, materialism and, at the extreme, anything that smacks of the market.
“Whatever one makes of the intent, such zealotry is doomed to failure. Self-flagellation does not sell. If keeping the planet cool is seen to be the project of affluent middle-class do-gooders the masses will mobilise all right – against it.”
The wording in the second paragraph should be carefully noted. He does not object to the intent of the protestors but simply the zealotry with which they publicise their case. Stevens favours putting the argument in a positive form:
`’The case must be framed as an opportunity rather than a burden. Technological innovation – in automobile design, energy efficiency, renewable energy and the rest – is more than a useful adjunct to an austere low carbon lifestyle. It is a vital pillar of any plan to reduce the build-up of CO2. Bluntly stated, unless we find a way to capture emissions from coal-fired power stations, the game will be lost.”
For him technological innovation - of a low horizons, low carbon kind - needs to accompany the austere low carbon lifestyle. They are not an alternative.
He first acknowledges that anti-growth sentiment of the type favoured by protestors against Stansted airport is unlikely to win popular support”
“In this mindset saving the planet demands that people give up their foreign holidays, abandon their cars, turn down the heating and clean their teeth in the dark. Through this prism, pain is a virtue and the halting global warming metamorphoses into a much broader attack on consumerism, materialism and, at the extreme, anything that smacks of the market.
“Whatever one makes of the intent, such zealotry is doomed to failure. Self-flagellation does not sell. If keeping the planet cool is seen to be the project of affluent middle-class do-gooders the masses will mobilise all right – against it.”
The wording in the second paragraph should be carefully noted. He does not object to the intent of the protestors but simply the zealotry with which they publicise their case. Stevens favours putting the argument in a positive form:
`’The case must be framed as an opportunity rather than a burden. Technological innovation – in automobile design, energy efficiency, renewable energy and the rest – is more than a useful adjunct to an austere low carbon lifestyle. It is a vital pillar of any plan to reduce the build-up of CO2. Bluntly stated, unless we find a way to capture emissions from coal-fired power stations, the game will be lost.”
For him technological innovation - of a low horizons, low carbon kind - needs to accompany the austere low carbon lifestyle. They are not an alternative.
Labels: climate, consumption, economics, environment, growth, technology
Thursday, December 11, 2008
A growth sceptic classic
Yesterday I went to the launch of the International Growth Centre at the London School of Economics (LSE). The international network of scholars is a joint venture between LSE and Oxford University with funding of £42m from Britain’s Department for International Development (DFID).
Superficially the tone was incredibly pro-growth. This was reflected in a DFID booklet (PDF) handed out at the event called Growth: Building Jobs and Prosperity in Developing Countries. It opens with the sentence: “Economic growth is the most powerful instrument for reducing poverty and improving the quality of life in developing countries”. Much of the rest of the text is in a similar vein.
However, numerous caveats to the initially upbeat assessment of growth are subtly introduced including:
* An emphasis on “poverty reduction” rather than all-rounded development.
* An emphasis on the importance of climate change.
* References to “environmental sustainability” and “low carbon” growth.
The whole approach is also technocratic. It emphasises “growth diagnostics” - experts identifying the barriers to growth - rather than mass participation in development. Although it discusses “ownership” of projects by third world nations this conception only seems to take in a narrow elite of government officials, business leaders and non-governmental organisations (“civil society”).
I also notice that Paul Collier, one of the directors of the centre and a speaker at yesterday’s event, has a forthcoming book, Wars, Guns and Votes (Bodley Head), out on development. It evidently extends his call for United Nations intervention in troubled areas (see 14 May 2007 post) - an initiative that can only make matters worse for the world’s poorest countries.
Superficially the tone was incredibly pro-growth. This was reflected in a DFID booklet (PDF) handed out at the event called Growth: Building Jobs and Prosperity in Developing Countries. It opens with the sentence: “Economic growth is the most powerful instrument for reducing poverty and improving the quality of life in developing countries”. Much of the rest of the text is in a similar vein.
However, numerous caveats to the initially upbeat assessment of growth are subtly introduced including:
* An emphasis on “poverty reduction” rather than all-rounded development.
* An emphasis on the importance of climate change.
* References to “environmental sustainability” and “low carbon” growth.
The whole approach is also technocratic. It emphasises “growth diagnostics” - experts identifying the barriers to growth - rather than mass participation in development. Although it discusses “ownership” of projects by third world nations this conception only seems to take in a narrow elite of government officials, business leaders and non-governmental organisations (“civil society”).
I also notice that Paul Collier, one of the directors of the centre and a speaker at yesterday’s event, has a forthcoming book, Wars, Guns and Votes (Bodley Head), out on development. It evidently extends his call for United Nations intervention in troubled areas (see 14 May 2007 post) - an initiative that can only make matters worse for the world’s poorest countries.
Labels: Africa, book, climate, development, economics, environment, growth
Tuesday, December 09, 2008
Microfinance loan sharks
Saturday’s FT Weekend magazine had an article by Tim Harford, a senior columnist at the Financial Times, on microfinance. The most interesting point in made was on the split in the ranks of those providing microfinance:
“The commercialisation of microfinance has sparked a fierce debate between profit advocates such as Carlos Danel and Carlos Labarthe, the founders of Compartamos, and traditionalists such as Muhammad Yunus, who see microfinance lenders such as Compartamos as indistinguishable from the moneylenders he set out to replace in 1976. Between these two poles lie the majority of microfinance practitioners, eager to gain access to capital and commercial expertise, but concerned that competitive market forces may not help the poorest.”
It also pointed out that microfinance arguments can charge interest rates with an annual percentage rate of over 100%. Harford argues that this “is not as usurious as it might seem” as the overheads are so high. Sounds more like glorified loan sharks to me!
“The commercialisation of microfinance has sparked a fierce debate between profit advocates such as Carlos Danel and Carlos Labarthe, the founders of Compartamos, and traditionalists such as Muhammad Yunus, who see microfinance lenders such as Compartamos as indistinguishable from the moneylenders he set out to replace in 1976. Between these two poles lie the majority of microfinance practitioners, eager to gain access to capital and commercial expertise, but concerned that competitive market forces may not help the poorest.”
It also pointed out that microfinance arguments can charge interest rates with an annual percentage rate of over 100%. Harford argues that this “is not as usurious as it might seem” as the overheads are so high. Sounds more like glorified loan sharks to me!
Labels: development, economics, finance
Monday, December 08, 2008
A production dearth not consumer binge
The following comment by me appeared in the latest Fund Strategy (8 December).
In this upside down version of events, the fundamental problem was cheap credit fuelling extravagant purchases of houses and consumer goods. Feckless consumers and reckless lenders are the villains in this sordid morality tale.
What this scenario misses is that it is necessary to produce before you can consume. Production is a logical pre-condition for consumption and everything that is consumed has to be produced first.
This means that consumption cannot be considered in isolation from production. The myth of the overconsumption binge is hopelessly one-sided.
It would be more accurate to say that the fundamental problem was one of underproduction. Insufficient real value was being produced in the developed western economies. Often paper wealth – such as bonds and equities – was confused with real productive capacity.
The British housing market provides a prime example of this trend. One reason that British house prices rose so much was the artificial constraint on the supply of new homes by “green belt” legislation. As a result of such archaic rules few new houses were built – with the bulk of the population condemned to live in antiquated dwellings. If house building was easier and more efficient it is doubtful that such a large bubble would have developed.
Of course it is true that credit fuelled economic expansion during the relatively good years. But that was a result of economic weakness rather than its cause. The authorities, most notably the Federal Reserve in America, encouraged cheap credit as a way of offsetting a tendency to economic stagnation. It would have been far better if the American authorities had encouraged real productive investment.
The problem of underproduction was exacerbated by the prevailing bias against production in western societies (see the comment in last week’s quarterly review). Attempts to bolster production were viewed with suspicion or hindered by bureaucratic delays.
In contrast projects that squandered individual’s most valuable resource – their time – were lauded. If the effort used to keep turning lights on and off or stop water taps running was used more productively, the economy would have benefited. Instead, society got caught up in a wasteful cycle of mind-numbing rationing.
In this upside down version of events, the fundamental problem was cheap credit fuelling extravagant purchases of houses and consumer goods. Feckless consumers and reckless lenders are the villains in this sordid morality tale.
What this scenario misses is that it is necessary to produce before you can consume. Production is a logical pre-condition for consumption and everything that is consumed has to be produced first.
This means that consumption cannot be considered in isolation from production. The myth of the overconsumption binge is hopelessly one-sided.
It would be more accurate to say that the fundamental problem was one of underproduction. Insufficient real value was being produced in the developed western economies. Often paper wealth – such as bonds and equities – was confused with real productive capacity.
The British housing market provides a prime example of this trend. One reason that British house prices rose so much was the artificial constraint on the supply of new homes by “green belt” legislation. As a result of such archaic rules few new houses were built – with the bulk of the population condemned to live in antiquated dwellings. If house building was easier and more efficient it is doubtful that such a large bubble would have developed.
Of course it is true that credit fuelled economic expansion during the relatively good years. But that was a result of economic weakness rather than its cause. The authorities, most notably the Federal Reserve in America, encouraged cheap credit as a way of offsetting a tendency to economic stagnation. It would have been far better if the American authorities had encouraged real productive investment.
The problem of underproduction was exacerbated by the prevailing bias against production in western societies (see the comment in last week’s quarterly review). Attempts to bolster production were viewed with suspicion or hindered by bureaucratic delays.
In contrast projects that squandered individual’s most valuable resource – their time – were lauded. If the effort used to keep turning lights on and off or stop water taps running was used more productively, the economy would have benefited. Instead, society got caught up in a wasteful cycle of mind-numbing rationing.
Labels: consumption, economics, environment, finance
Sunday, December 07, 2008
Guide to sustainable development
The Organisation for Economic Co-operation and Development (OECD) – the rich nations’ club – has produced a PDF guide to sustainable development. It looks like a clear summary of one of the prevailing dogmas of our time.
Labels: economics, environment, sustainability
Thursday, December 04, 2008
Credit crunch Christmas
I was saddened but not surprised that my local Borders bookshop is cashing in this Christmas with a section promoting books related to the credit crunch. All of the books look like they have either been rebranded or recycled for the section.
Among the most heavily promoted titles are Delia’s Frugal Food and Save Cash & Save the Planet. Other topics including debt management, DIY, making your own clothes and holidays (either in Britain or camping).
Meanwhile, the cover story in this week’s New Scientist magazine is on “how to unplug from the grid”. It examines how to live unconnected to the power grid or water, gas and sewerage supplies.
Unfortunately these examples seem to indicate that the trend for green austerity is becoming stronger rather than weaker. As long as growth scepticism remains unchallenged the possibility of resisting green austerity will be diminished.
Among the most heavily promoted titles are Delia’s Frugal Food and Save Cash & Save the Planet. Other topics including debt management, DIY, making your own clothes and holidays (either in Britain or camping).
Meanwhile, the cover story in this week’s New Scientist magazine is on “how to unplug from the grid”. It examines how to live unconnected to the power grid or water, gas and sewerage supplies.
Unfortunately these examples seem to indicate that the trend for green austerity is becoming stronger rather than weaker. As long as growth scepticism remains unchallenged the possibility of resisting green austerity will be diminished.
Labels: consumption, economics, environment, food, science
Wednesday, December 03, 2008
FT on climate change economics
The Financial Times published the third in its series of special magazines on climate change yesterday (“in association with GE”). It dealt with business after earlier issues tackled science and politics.
Its most striking feature is its conventional character. Although climate change is often portrayed as a “right on” radical issue the daily business paper thoroughly endorses the mainstream view.
The magazine includes an interview with Lord Nicholas Stern - arguably the doyen of climate change economics. There is also a roundtable with a group of economists including Martin Wolf, Jeffrey Sachs and David Henderson (a rare critical voice). The debate can be heard here.
Its most striking feature is its conventional character. Although climate change is often portrayed as a “right on” radical issue the daily business paper thoroughly endorses the mainstream view.
The magazine includes an interview with Lord Nicholas Stern - arguably the doyen of climate change economics. There is also a roundtable with a group of economists including Martin Wolf, Jeffrey Sachs and David Henderson (a rare critical voice). The debate can be heard here.
Labels: climate, economics, environment
Tuesday, December 02, 2008
Ditch green dogma for real growth ethos
The following comment by me appeared in the latest Fund Strategy Quarterly Review of World Markets (1 December).
Governments around the world have announced measures to bolster liquidity in their financial systems and fiscal packages to boost consumption. Yet none of them seems to be getting to grips with the real problems facing their economies.
There is a need to support liquidity in the short term. The supply of credit to the economy is being constrained. To an extent this problem can be addressed by government-backed liquidity packages.
Bolstering consumption is more questionable. Tax cuts may get people consuming more in the short term but it will not address the weaknesses of the world's economies. It will also be bought at the expense of greater austerity in the medium and longer term.
A programme of public spending is more desirable. Even the developed countries, particularly Britain, need better infrastructure. More airports, roads and power stations would be a good start. It would create jobs and the basis for raising productivity. Small increases in personal consumption, in contrast, only have a fleeting effect.
But suggestions for an ambitious programme of public works raise a broader problem of contemporary attitudes to the economy. There seems to be a reluctance to invest in productive capacity. The sphere of production has become stigmatised.
This is a particular problem as the key underlying weakness of the economy is that consumption has moved out of line with production. In the short term this problem was dealt with by the creation of credit but, as the world has seen over the past quarter, reality has a nasty way of biting back.
Rather than reduce consumption growth, the solution is to increase productive capacity. Yet production nowadays is often seen, literally as well as figuratively, as dirty. Just think about the way productive areas of the economy are portrayed. Factories are seen as polluting. Roads are portrayed as producing more congestion. Projects for power stations are subject to protests and strangled by bureaucratic delays. Airports are seen as damaging the planet.
Instead we live in a world where the small-scale and worthless gestures are celebrated. Recycling. Micro-generation of power by mini-windmills on top of houses. The creation of brands and logos.
The fundamental solution to today's economic problems is a reinvigorated culture of production. Environmentalist dogma needs to be ditched in favour of a genuine growth culture. Productive capacity needs to be raised rather than consumption curbed. The anti-growth and anti-industrial ethos needs to be reversed.
Governments around the world have announced measures to bolster liquidity in their financial systems and fiscal packages to boost consumption. Yet none of them seems to be getting to grips with the real problems facing their economies.
There is a need to support liquidity in the short term. The supply of credit to the economy is being constrained. To an extent this problem can be addressed by government-backed liquidity packages.
Bolstering consumption is more questionable. Tax cuts may get people consuming more in the short term but it will not address the weaknesses of the world's economies. It will also be bought at the expense of greater austerity in the medium and longer term.
A programme of public spending is more desirable. Even the developed countries, particularly Britain, need better infrastructure. More airports, roads and power stations would be a good start. It would create jobs and the basis for raising productivity. Small increases in personal consumption, in contrast, only have a fleeting effect.
But suggestions for an ambitious programme of public works raise a broader problem of contemporary attitudes to the economy. There seems to be a reluctance to invest in productive capacity. The sphere of production has become stigmatised.
This is a particular problem as the key underlying weakness of the economy is that consumption has moved out of line with production. In the short term this problem was dealt with by the creation of credit but, as the world has seen over the past quarter, reality has a nasty way of biting back.
Rather than reduce consumption growth, the solution is to increase productive capacity. Yet production nowadays is often seen, literally as well as figuratively, as dirty. Just think about the way productive areas of the economy are portrayed. Factories are seen as polluting. Roads are portrayed as producing more congestion. Projects for power stations are subject to protests and strangled by bureaucratic delays. Airports are seen as damaging the planet.
Instead we live in a world where the small-scale and worthless gestures are celebrated. Recycling. Micro-generation of power by mini-windmills on top of houses. The creation of brands and logos.
The fundamental solution to today's economic problems is a reinvigorated culture of production. Environmentalist dogma needs to be ditched in favour of a genuine growth culture. Productive capacity needs to be raised rather than consumption curbed. The anti-growth and anti-industrial ethos needs to be reversed.
Labels: economics, environment, finance
Monday, December 01, 2008
Lost decade points to need for tough action
The following is my latest comment from Fund Strategy.
Although the West's current predicament differs in some respects from Japan after the collapse of the baburu keiki (bubble economy) of the 1980s there are many similarities.
For those who are not old enough to remember, or who have not read the history, the Japanese economy was growing at a relatively healthy average rate of 4% in the 1980s. But the expansion was artificially inflated by surging equity and property prices. At the end of the decade asset prices crashed and the economy entered a period of slow growth. The average growth rate in the 1990s was only 1.7%.
The similarities between Japan in the 1990s and the West today are fairly apparent. In both cases the economy suffered as a result of the bursting of an artificially inflated asset price boom. And in both cases an indecisive and often gormless political leadership made the crisis worse than it needed to be. Rather than address the fundamental problem of a lack of growth in real productive capacity they simply attempted a fiscal stimulus.
There are also differences. Japan's problems were partly centred on the industrial sector. Manufacturing in particular had reached a stage where it needed to restructure to be able to achieve a new round of investment. After spectacular economic growth in the 1950s and 1960s its once mighty industrial sector needed to be revamped. In contrast, the West's downturn is focused on the consumption side of the economy. Manufacturing is now being hit but it was consumption that suffered first.
The situation also differs because the emerging economies play a far more important role in the world economy than they did in 1990. It is China, rather than America, that has become the largest source of economic growth globally.
If there is a lesson to be learned from Japan's "lost decade" it is that decisive political action is a key part of solving the crisis. It is not enough just to spend money. Resources should be devoted to bolstering productive capacity. It is also necessary to involve emerging economies in the recovery process by acknowledging their increasing importance in the global economy
Although the West's current predicament differs in some respects from Japan after the collapse of the baburu keiki (bubble economy) of the 1980s there are many similarities.
For those who are not old enough to remember, or who have not read the history, the Japanese economy was growing at a relatively healthy average rate of 4% in the 1980s. But the expansion was artificially inflated by surging equity and property prices. At the end of the decade asset prices crashed and the economy entered a period of slow growth. The average growth rate in the 1990s was only 1.7%.
The similarities between Japan in the 1990s and the West today are fairly apparent. In both cases the economy suffered as a result of the bursting of an artificially inflated asset price boom. And in both cases an indecisive and often gormless political leadership made the crisis worse than it needed to be. Rather than address the fundamental problem of a lack of growth in real productive capacity they simply attempted a fiscal stimulus.
There are also differences. Japan's problems were partly centred on the industrial sector. Manufacturing in particular had reached a stage where it needed to restructure to be able to achieve a new round of investment. After spectacular economic growth in the 1950s and 1960s its once mighty industrial sector needed to be revamped. In contrast, the West's downturn is focused on the consumption side of the economy. Manufacturing is now being hit but it was consumption that suffered first.
The situation also differs because the emerging economies play a far more important role in the world economy than they did in 1990. It is China, rather than America, that has become the largest source of economic growth globally.
If there is a lesson to be learned from Japan's "lost decade" it is that decisive political action is a key part of solving the crisis. It is not enough just to spend money. Resources should be devoted to bolstering productive capacity. It is also necessary to involve emerging economies in the recovery process by acknowledging their increasing importance in the global economy
Labels: Asia, economics, growth
Wednesday, November 26, 2008
Critique of Obama’s Green New Deal
A critique of Barack Obama’s “Green New Deal” from a free market perspective from junkscience.com. I do not agree with all of it but it makes some valid points.
Monday, November 24, 2008
Protectionism could trigger global conflict
The following is my latest comment from Fund Strategy.
The proposed bail-out of Detroit's big three car manufacturers raises several potential problems.
For a start it raises the question of what capitalism means. Generally market economies are characterised by substantial private sectors. The state usually plays a role in the economy but its ownership of business assets is limited. Now it seems that even in America, generally seen as the world's pre-eminent market economy, key parts of the financial and auto sectors could soon be in state hands.
This in turn raises the question of the soundness of state finances. The more governments spend rescuing troubled companies the more their finances are likely to suffer. At some point they are likely to have to pay a high price in terms of higher taxes, reduced public spending or a combination of the two. They may be able to postpone the day of reckoning by increasing public borrowing but at some point their time will come.
But perhaps the biggest problem, and probably the least understood, is that of protectionism. Rescuing, say, General Motors (GM) raises the question of public money for other car makers such as Fiat, Toyota or Renault. Each could make a case to their own national governments that GM has an unfair advantage owing to its access to Federal funding. To make matters worse Barack Obama, the president-elect, has shown leanings towards protectionism with his criticisms of the North American Free Trade Association.
Protectionism is often wrongly understood as simply relating to tariffs. Yet there are many ways that states can back their own home-based companies besides tariffs. Providing subsidies of various sorts is probably the most important.
The rise of protectionism could easily undermine international cooperation. As economic circumstances get harder it could become increasingly difficult for countries to cooperate. The recent row between European Union countries over guarantees for retail bank depositors could be a sign of things to come. And the spat between Britain and Iceland could be a forewarning of larger-scale conflicts.
Of course all countries maintain some interest in international cooperation. Nobody is likely to benefit from all-out economic conflict. But the more protectionism takes hold the harder it will become to resist the forces pushing the world towards international rivalry.
The proposed bail-out of Detroit's big three car manufacturers raises several potential problems.
For a start it raises the question of what capitalism means. Generally market economies are characterised by substantial private sectors. The state usually plays a role in the economy but its ownership of business assets is limited. Now it seems that even in America, generally seen as the world's pre-eminent market economy, key parts of the financial and auto sectors could soon be in state hands.
This in turn raises the question of the soundness of state finances. The more governments spend rescuing troubled companies the more their finances are likely to suffer. At some point they are likely to have to pay a high price in terms of higher taxes, reduced public spending or a combination of the two. They may be able to postpone the day of reckoning by increasing public borrowing but at some point their time will come.
But perhaps the biggest problem, and probably the least understood, is that of protectionism. Rescuing, say, General Motors (GM) raises the question of public money for other car makers such as Fiat, Toyota or Renault. Each could make a case to their own national governments that GM has an unfair advantage owing to its access to Federal funding. To make matters worse Barack Obama, the president-elect, has shown leanings towards protectionism with his criticisms of the North American Free Trade Association.
Protectionism is often wrongly understood as simply relating to tariffs. Yet there are many ways that states can back their own home-based companies besides tariffs. Providing subsidies of various sorts is probably the most important.
The rise of protectionism could easily undermine international cooperation. As economic circumstances get harder it could become increasingly difficult for countries to cooperate. The recent row between European Union countries over guarantees for retail bank depositors could be a sign of things to come. And the spat between Britain and Iceland could be a forewarning of larger-scale conflicts.
Of course all countries maintain some interest in international cooperation. Nobody is likely to benefit from all-out economic conflict. But the more protectionism takes hold the harder it will become to resist the forces pushing the world towards international rivalry.
Labels: America, economics, trade
Sunday, November 23, 2008
Insights from the Economist
A couple of particularly interesting pieces in this week’s Economist (22 November):
* An article on the creation of a Committee on Climate Change, chaired by the ubiquitous Adair Turner, modelled on the Bank of England’s Monetary Policy Committee. In other words it will give Britain’s green pledges the force of law. They will be enforced by an unelected committee with no popular accountability.
* An economic focus on the relationship between economic growth and health. The piece looks at whether healthier populations lead to more economic growth rather than the other way round. Daron Acemoglu and Simon Johnson of the Massachusetts Institute of Technology. After a review of the discussion the Economist does not reach a definite conclusion but one passage is worth quoting:
“Beginning in the 1940s, several medical innovations involving penicillin, streptomycin and DDT made it easier to treat diseases—such as tuberculosis, malaria and yellow fever—that disproportionately affected people in developing countries. Because these ideas originated in the rich world and were spread by organisations such as the WHO, any improvements in health they led to would have been unconnected with prior improvements in the economic circumstances of poor countries.
“This international revolution in public health did lead to substantial increases in life expectancy in poor countries by the 1950s.”
To me this shows that economic growth, along with the associated development of technology, helps the poorer countries. This can happen even when the poorer countries do not become richer themselves – although of course it is better if they do.
* An article on the creation of a Committee on Climate Change, chaired by the ubiquitous Adair Turner, modelled on the Bank of England’s Monetary Policy Committee. In other words it will give Britain’s green pledges the force of law. They will be enforced by an unelected committee with no popular accountability.
* An economic focus on the relationship between economic growth and health. The piece looks at whether healthier populations lead to more economic growth rather than the other way round. Daron Acemoglu and Simon Johnson of the Massachusetts Institute of Technology. After a review of the discussion the Economist does not reach a definite conclusion but one passage is worth quoting:
“Beginning in the 1940s, several medical innovations involving penicillin, streptomycin and DDT made it easier to treat diseases—such as tuberculosis, malaria and yellow fever—that disproportionately affected people in developing countries. Because these ideas originated in the rich world and were spread by organisations such as the WHO, any improvements in health they led to would have been unconnected with prior improvements in the economic circumstances of poor countries.
“This international revolution in public health did lead to substantial increases in life expectancy in poor countries by the 1950s.”
To me this shows that economic growth, along with the associated development of technology, helps the poorer countries. This can happen even when the poorer countries do not become richer themselves – although of course it is better if they do.
Labels: climate, development, economics, health
Support for a "green new deal"?
An article in the Christian Science Monitor (19 November) on how an opinion poll in 21 countries shows support for more use of renewable energy sources even if it means higher prices in the short term. It talks favourably of President-elect Barack Obama’s plans to create jobs through the development of “clean technology” as well as the idea of a “green new deal”.
It is probably not yet clear to people that such a plan will mean substantially higher energy prices and the imposition of austerity.
It is probably not yet clear to people that such a plan will mean substantially higher energy prices and the imposition of austerity.
Labels: America, climate, economics, energy, environment, work
An absurd claim to heresy
A thick, glossy magazine caught my eye in the newsagent. The winter 2008 Davos Edition of The New Economy has a polar bear on the front cover along with a main cover line proclaiming: “Standing on the edge: Why economic growth is bad for the planet. The cover section includes articles by Herman Daly (veteran ecological economist), Tim Jackson (adviser to the British government on sustainability), Gus Speth (a former adviser to American President Jimmy Carter) and Susan George (veteran political campaigner).
Perhaps the strangest aspect of the whole thing was the claim on the contents page that: “The tenet that economic growth is essential to global stability and prosperity has long remained unchallenged”. Such claims, although often made, are absurd. The benefits of growth are constantly being questioned. Indeed the authors of the cover story are among many who have long questioned the benefits of growth. I should probably start collecting examples of this claim to alleged heresy.
Perhaps the strangest aspect of the whole thing was the claim on the contents page that: “The tenet that economic growth is essential to global stability and prosperity has long remained unchallenged”. Such claims, although often made, are absurd. The benefits of growth are constantly being questioned. Indeed the authors of the cover story are among many who have long questioned the benefits of growth. I should probably start collecting examples of this claim to alleged heresy.
Labels: economics, environment, growth
Wednesday, November 19, 2008
Yet more Green New Dealers.
Evidently an influential group of American business leaders is also backing what is essentially part of the “Green New Deal”. It believes that cutting carbon emissions can be combined with investment in new technology and infrastructure to create jobs and revenue.
The US Climate Action Partnership includes: Alcoa, AIG, Boston Scientific, BP America, Caterpillar, ConocoPhillips, Chrysler, John Deere, Dow, Duke Energy, DuPont, Environmental Defense Fund, Exelon, Ford, FPL Group, GE, GM, Johnson & Johnson, Marsh, National Wildlife Federation, Natural Resources Defense Council, The Nature Conservancy, PepsiCo, PG&E, PNM Resources, Rio Tinto, Shell, Siemens, World Resources Institute and Xerox.
The US Climate Action Partnership includes: Alcoa, AIG, Boston Scientific, BP America, Caterpillar, ConocoPhillips, Chrysler, John Deere, Dow, Duke Energy, DuPont, Environmental Defense Fund, Exelon, Ford, FPL Group, GE, GM, Johnson & Johnson, Marsh, National Wildlife Federation, Natural Resources Defense Council, The Nature Conservancy, PepsiCo, PG&E, PNM Resources, Rio Tinto, Shell, Siemens, World Resources Institute and Xerox.
Labels: America, climate, economics, environment
Tuesday, November 18, 2008
Sachs joins Green New Dealers
Jeffrey Sachs’ call for a government bail-out of General Motors, the most troubled of America’s car-makers, in yesterday’s Washington Post is in line with the drive for a “green new deal” (see 7 November 2008 post). He concludes his article by arguing:
“We face an unprecedented financial calamity, energy crisis and environmental threat. A vibrant, growing U.S. automobile industry should play an essential role in solving all three. The technologies that will win the day are in sight; industry has already made important advances. A partnership with government is vital and should begin this week.”
“We face an unprecedented financial calamity, energy crisis and environmental threat. A vibrant, growing U.S. automobile industry should play an essential role in solving all three. The technologies that will win the day are in sight; industry has already made important advances. A partnership with government is vital and should begin this week.”
Labels: America, economics, energy, environment, technology
Real Clear Markets picks up my cover
Real Clear Markets has picked up my Fund Strategy cover story on the global financial crisis.
Labels: economics, finance, Fund Strategy, media appearances
Monday, November 17, 2008
U-turn leaders treat us with contempt
The following is my latest comment from Fund Strategy. I have also written the cover story which reviews the financial crisis so far
Another day, another U-turn. Western politicians seem to be in a competition over who can do the most. Unfortunately it is the rest of us who suffer as a result of their policy gymnastics.
Henry Paulson, the American Treasury secretary, was the latest culprit - at least at the time of writing. At the end of September he led a charge demanding that a $700 billion (£478 billion) programme to buy up troubled mortgage assets be passed. If it failed it would, we were told, lead to disaster.
Eventually, after an initial rejection by the House of Representatives, it was passed. But last week Paulson gave a speech saying the programme would not be used for its original purpose (see page 10). Instead its main focus would be to purchase equities directly from banks.
It is not that the first plan was necessarily right and the new scheme wrong. It is rather that politicians feel comfortable making U-turns without properly accounting for their actions. A particular course of action is first deemed essential and not long afterwards portrayed as unimportant.
The problem with such an approach is that it undermines confidence in markets and the economy still further. Rather than offering decisive leadership the politicians simply react to the latest news story. Their response is inherently short-termist.
Nor is such short-termism unique to Paulson or even America. Gordon Brown is a past master. It was he who for many years propounded fiscal "golden rules", which he has now broken with a fiscal stimulus. He claims that circumstances have changed but this begs the question: why have such rigid rules in the first place? He cannot have it both ways.
Brown also is now trumpeting the need for international economic cooperation. Yet Britain refused to join the euro when it had the chance.
Again, the point is not that one course of action is necessarily right and the other wrong. It is that politicians feel no need for consistency or accountability. They treat the electorate with contempt and then wonder why they are viewed with cynicism.
Politicians bear a large share of the blame for the severity of the current crisis. What we need is decisive action rather than leaders with the backbone of a jellyfish.
Another day, another U-turn. Western politicians seem to be in a competition over who can do the most. Unfortunately it is the rest of us who suffer as a result of their policy gymnastics.
Henry Paulson, the American Treasury secretary, was the latest culprit - at least at the time of writing. At the end of September he led a charge demanding that a $700 billion (£478 billion) programme to buy up troubled mortgage assets be passed. If it failed it would, we were told, lead to disaster.
Eventually, after an initial rejection by the House of Representatives, it was passed. But last week Paulson gave a speech saying the programme would not be used for its original purpose (see page 10). Instead its main focus would be to purchase equities directly from banks.
It is not that the first plan was necessarily right and the new scheme wrong. It is rather that politicians feel comfortable making U-turns without properly accounting for their actions. A particular course of action is first deemed essential and not long afterwards portrayed as unimportant.
The problem with such an approach is that it undermines confidence in markets and the economy still further. Rather than offering decisive leadership the politicians simply react to the latest news story. Their response is inherently short-termist.
Nor is such short-termism unique to Paulson or even America. Gordon Brown is a past master. It was he who for many years propounded fiscal "golden rules", which he has now broken with a fiscal stimulus. He claims that circumstances have changed but this begs the question: why have such rigid rules in the first place? He cannot have it both ways.
Brown also is now trumpeting the need for international economic cooperation. Yet Britain refused to join the euro when it had the chance.
Again, the point is not that one course of action is necessarily right and the other wrong. It is that politicians feel no need for consistency or accountability. They treat the electorate with contempt and then wonder why they are viewed with cynicism.
Politicians bear a large share of the blame for the severity of the current crisis. What we need is decisive action rather than leaders with the backbone of a jellyfish.
Labels: America, economics, finance, Fund Strategy
Linking aid to military intervention
William Easterly, a professor at New York University and one of the world’s leading conservative development economists, has done a belated review (PDF) of Paul Collier’s The Bottom Billion ( “Foreign aid goes military”, New York Review of Books 55(19), 4 December 2008). Easterly looks at the increasing trend to link development to calls for Western military intervention. He also argues Collier is guilty of statistical fallacies such as confusing correlation with causation.
Labels: aid, book, development, economics, inequality
Monday, November 10, 2008
Why Britain's plight is Brown's fault too
The following is my latest comment from Fund Strategy.
Gordon Brown persists in presenting Britain as simply a victim of the global financial crisis. Such an approach conveniently absolves him of any responsibility for the mess. But it is becoming clear that Britain’s position is particularly precarious.
The idea of a uniform global crisis certainly does not square with the revised growth forecasts published by the International Monetary Fund last week. While Britain’s GDP is projected to fall 1.3% in 2009 that of China is expected to rise by 8.5%. Even Africa is expecting growth of 4.7%.
Perhaps it is unfair to compare Britain with emerging economies. But the average GDP fall for advanced economies is forecast to be 0.3% next year. Britain is likely to be the worst performer next year with the exception of disaster areas such as Zimbabwe.
Britain is particularly vulnerable thanks to its large financial sector and correspondingly small industrial sector. Industry as a share of GDP has fallen to about 23% compared with 43% in 1971. Much of Britain’s wealth comes from financial services, which are in turn heavily dependent on real economic production in other parts of the world. Britain is the consummate coupon clipper economy.
If there is an anomaly, it is not Britain’s current position but its relatively buoyant growth since the 1990s. The City of London benefited from the growth of global capital flows and the general trend towards increasing financial activity worldwide. As such activity has diminished, the British economy has been hard hit.
To an extent these are long-term trends that would have existed regardless of who was in office. But, in a desperate attempt to distance himself from Labour’s state socialist past, Brown has made frequent displays of public obsequiousness to the City.
It is not a question of blaming the City for Britain’s economic problems. On the contrary, the rising importance of financial markets is largely a symptom of the decline of the real economy. The challenge, which Brown has failed to meet, was to regenerate Britain’s productive base.
Britain’s economy is more like a geriatric than the dynamic “Cool Britannia” the government likes to portray. Brown should not bear all the blame, but he should certainly take a share of the responsibility.
Gordon Brown persists in presenting Britain as simply a victim of the global financial crisis. Such an approach conveniently absolves him of any responsibility for the mess. But it is becoming clear that Britain’s position is particularly precarious.
The idea of a uniform global crisis certainly does not square with the revised growth forecasts published by the International Monetary Fund last week. While Britain’s GDP is projected to fall 1.3% in 2009 that of China is expected to rise by 8.5%. Even Africa is expecting growth of 4.7%.
Perhaps it is unfair to compare Britain with emerging economies. But the average GDP fall for advanced economies is forecast to be 0.3% next year. Britain is likely to be the worst performer next year with the exception of disaster areas such as Zimbabwe.
Britain is particularly vulnerable thanks to its large financial sector and correspondingly small industrial sector. Industry as a share of GDP has fallen to about 23% compared with 43% in 1971. Much of Britain’s wealth comes from financial services, which are in turn heavily dependent on real economic production in other parts of the world. Britain is the consummate coupon clipper economy.
If there is an anomaly, it is not Britain’s current position but its relatively buoyant growth since the 1990s. The City of London benefited from the growth of global capital flows and the general trend towards increasing financial activity worldwide. As such activity has diminished, the British economy has been hard hit.
To an extent these are long-term trends that would have existed regardless of who was in office. But, in a desperate attempt to distance himself from Labour’s state socialist past, Brown has made frequent displays of public obsequiousness to the City.
It is not a question of blaming the City for Britain’s economic problems. On the contrary, the rising importance of financial markets is largely a symptom of the decline of the real economy. The challenge, which Brown has failed to meet, was to regenerate Britain’s productive base.
Britain’s economy is more like a geriatric than the dynamic “Cool Britannia” the government likes to portray. Brown should not bear all the blame, but he should certainly take a share of the responsibility.
Labels: economics, finance, Fund Strategy
Friday, November 07, 2008
Needed: critique of green recovery
The idea of a “green new deal” or “green recovery” is in desperate need of a critique. Such initiatives generally involve combining a shift to a low carbon economy with more “green collar” jobs. Proponents include the Center for American Progress, Britain’s New Economics Foundation and the United Nations Environment Programme. I do not have time to produce such a critique at present but the sooner one is done the better.
Labels: climate, economics, energy, environment
Key report on cities
The latest annual World Development Report from the World Bank is about “reshaping economic geography” and specifically the role of cities (see 30 December 2007 post).
Labels: cities, development, economics
Tuesday, November 04, 2008
When “broadening” is a step back
Some useful references on Duncan Green’s blog for Oxfam. He point to what looks likely to be a key paper by Paul Shaffer of the University of Toronto on the “broadening” of the definition of poverty from the Real-World Economics Review (formerly the Post Autistic Economics Review). As I have alluded to in the past (see 27 September 2008 post), and I will expand on in the future, this represents a retrograde step. Green also points to another paper on the increasingly influential “growth diagnostics” approach to development favoured by Dani Rodrik of Harvard and others.
Labels: development, economics, inequality
An exciting challenge ahead
The best thing about last weekend’s Battle of Ideas festival was the large number of young people looking for answers to economic questions. At least the financial crisis has had some benefits! The challenge now is to develop a rigorous understanding of recent economic developments.
Thursday, October 30, 2008
Be careful what you wish for
“Be careful what you wish for” is going to be the theme of my introduction to the session on “growing pains” at this coming weekend’s Battle of Ideas.
For a long time growth sceptics have expressed concern about the rising affluence of places such as China and India. They have argued, at least implicitly, for a cut in their economic growth. Now, with the global financial crisis, they could get what they wish for. If they do it will be a tragedy as billions of people will not be in a position to benefit from rising prosperity.
There are already signs that instability is spreading to developing economies. This was discussed in last week’s Economist (25 October) as well as by such luminaries as Paul Krugman of Princeton and Dani Rodrik of Harvard.
Over the past couple of days the authorities (the International Monetary Fund, America’s Federal Reserve and the European Union) have offered financial help to emerging economies in a bid to stabilise them. The catch is, according to a report by Capital Economics, that they are offering help to those countries that need it least. Those which most need help are unlikely to qualify.
For a long time growth sceptics have expressed concern about the rising affluence of places such as China and India. They have argued, at least implicitly, for a cut in their economic growth. Now, with the global financial crisis, they could get what they wish for. If they do it will be a tragedy as billions of people will not be in a position to benefit from rising prosperity.
There are already signs that instability is spreading to developing economies. This was discussed in last week’s Economist (25 October) as well as by such luminaries as Paul Krugman of Princeton and Dani Rodrik of Harvard.
Over the past couple of days the authorities (the International Monetary Fund, America’s Federal Reserve and the European Union) have offered financial help to emerging economies in a bid to stabilise them. The catch is, according to a report by Capital Economics, that they are offering help to those countries that need it least. Those which most need help are unlikely to qualify.
Labels: development, economics, finance, speeches
Monday, October 27, 2008
Put politics back into economics
The following comment by me was published in this week’s Fund Strategy.
Mervyn King, the governor of the Bank of England, has stated that he would like to see economics become boring again. Although his instinct is understandable it is profoundly mistaken.
It is easy to look back with nostalgia at those halcyon days - just a few weeks ago - when stockmarkets seemed to go up most of the time. No doubt everyone in the investment industry, except perhaps short sellers, is yearning for such happy times to return.
But King's oft-repeated desire for economics to be boring means something different. What he is really saying is that economics should be left to clever chaps like himself. It should not be the subject of debate by the mass of the population. In other words, he is saying economics should be apolitical. In his view the masses cannot be trusted.
Leave aside for a moment the fact that such a conception of economics is undemocratic. That it disenfranchises the mass of the population and leaves important decisions in the hands of unelected technocrats such as King. It is also the wrong approach to economic decision-making.
Although Britain has its particular institutional structures, the same argument applies worldwide. Economics should be taken out of the hands of the technocrats and once again become a subject for popular debate.
What is needed now more than ever is a debate about how to deal with economic problems. It is necessary to discuss how to respond to recent volatility in the short term. Over the longer term it is also vital to work out strategic priorities.
The truth is best achieved through rational debate. Each side can put its case and the one which is right should be the most convincing.
Such a procedure also ensures that the right questions are asked. Technocrats tend to get too bogged down in technical detail. They easily lose sight of the bigger picture. Having a broader debate among the public ensures that questions that are important to most, such as raising popular prosperity, receive a proper airing.
A good first step would be to abolish the independence of the Bank of England. New Labour's move to make it independent in the first place was always anti-democratic. Now the downside of taking politics out of economics should also be apparent.
Mervyn King, the governor of the Bank of England, has stated that he would like to see economics become boring again. Although his instinct is understandable it is profoundly mistaken.
It is easy to look back with nostalgia at those halcyon days - just a few weeks ago - when stockmarkets seemed to go up most of the time. No doubt everyone in the investment industry, except perhaps short sellers, is yearning for such happy times to return.
But King's oft-repeated desire for economics to be boring means something different. What he is really saying is that economics should be left to clever chaps like himself. It should not be the subject of debate by the mass of the population. In other words, he is saying economics should be apolitical. In his view the masses cannot be trusted.
Leave aside for a moment the fact that such a conception of economics is undemocratic. That it disenfranchises the mass of the population and leaves important decisions in the hands of unelected technocrats such as King. It is also the wrong approach to economic decision-making.
Although Britain has its particular institutional structures, the same argument applies worldwide. Economics should be taken out of the hands of the technocrats and once again become a subject for popular debate.
What is needed now more than ever is a debate about how to deal with economic problems. It is necessary to discuss how to respond to recent volatility in the short term. Over the longer term it is also vital to work out strategic priorities.
The truth is best achieved through rational debate. Each side can put its case and the one which is right should be the most convincing.
Such a procedure also ensures that the right questions are asked. Technocrats tend to get too bogged down in technical detail. They easily lose sight of the bigger picture. Having a broader debate among the public ensures that questions that are important to most, such as raising popular prosperity, receive a proper airing.
A good first step would be to abolish the independence of the Bank of England. New Labour's move to make it independent in the first place was always anti-democratic. Now the downside of taking politics out of economics should also be apparent.
Labels: economics, finance, Fund Strategy
Sunday, October 26, 2008
Collier for agricultural development
Paul Collier¸ professor of economics and director of the Centre for the Study of African Economies at Oxford University, has expanded on his arguments on the need to develop agriculture (see posts of 15 April 2008 and 22 August 2008) in an article in the latest issue of Foreign Affairs (November / December). I have previously criticised Collier in my review of his book, The Bottom Billion (see link on the left hand side of the homepage), but on this topic he talks much sense. His latest arguments summarises his argument as follows:
“The real challenge is not the technical difficulty of returning the world to cheap food but the political difficulty of confronting the lobbying interests and illusions on which current policies rest. Feeding the world will involve three politically challenging steps. First, contrary to the romantics, the world needs more commercial agriculture, not less. The Brazilian model of high-productivity large farms could readily be extended to areas where land is underused. Second, and again contrary to the romantics, the world needs more science: the European ban and the consequential African ban on genetically modified (GM) crops are slowing the pace of agricultural productivity growth in the face of accelerating growth in demand. Ending such restrictions could be part of a deal, a mutual de-escalation of folly, that would achieve the third step: in return for Europe's lifting its self-damaging ban on GM products, the United States should lift its self-damaging subsidies supporting domestic biofuel.”
“The real challenge is not the technical difficulty of returning the world to cheap food but the political difficulty of confronting the lobbying interests and illusions on which current policies rest. Feeding the world will involve three politically challenging steps. First, contrary to the romantics, the world needs more commercial agriculture, not less. The Brazilian model of high-productivity large farms could readily be extended to areas where land is underused. Second, and again contrary to the romantics, the world needs more science: the European ban and the consequential African ban on genetically modified (GM) crops are slowing the pace of agricultural productivity growth in the face of accelerating growth in demand. Ending such restrictions could be part of a deal, a mutual de-escalation of folly, that would achieve the third step: in return for Europe's lifting its self-damaging ban on GM products, the United States should lift its self-damaging subsidies supporting domestic biofuel.”
Labels: development, economics, food
Monday, October 20, 2008
Chaos theory against growth
I have unwittingly gone straight from one anti-growth BBC television documentary to another. “High Anxieties: The Mathematics of Chaos”, a one-off documentary by David Malone, achieves this effect by muddying the difference between the natural world and the social world. It starts by outlining how the Newtonian worldview was a relatively simply linear one which allowed for human beings to increase their control over nature. But the development of what later became known as chaos theory from Henri Poincaré (1854-1912), a French mathematician, onwards showed the world was both more complex than previously assumed and non-linear. This set up a phoney debate between environmentalists who recognised the need for caution and limits and economists who believed in growth. It ended with James Lovelock, a veteran environmentalist, arguing that with climate change we could, metaphorically speaking, be at the edge of a cliff and unable to return to normality.
Chaos theory may well be a good way to understand non-linear natural systems such as climate. But the social world is fundamentally different from the natural one. Society is composed of human beings with the potential to act consciously to mould the world around them.
Chaos theory may well be a good way to understand non-linear natural systems such as climate. But the social world is fundamentally different from the natural one. Society is composed of human beings with the potential to act consciously to mould the world around them.
Labels: economics, environment, growth, science, television
Sunday, October 19, 2008
A revisionist history of American plenty
Have just caught up with the first episode of Simon Schama’s BBC television documentary series on “The American Future: A History”. It might more accurately be called “reinterpreting American history to fit today’s culture of low expectations”.
The episode on “American plenty” focused on how America has, sensibly in Schama’s view, come to accept the need for limits. It starts symbolically with the Colorado river and expresses the view that “the land of plenty is running dry”. The building of the Hoover Dam and Lake Mead was basically presented as an act of hubris. Although it enabled the irrigation of several states and the creation of cities such as Las Vegas it was running dry as a result of over-use and climate change. The message was clear: America has to learn to live with fewer resources.
Schama presented the debate between expansion and restraint as a constant theme of American history. Expansion might have brought some short term gains in living standards but it was also responsible for such acts as the “ethnic cleansing” of native Americans. He also presented the 1980 American presidential election as a contest between the calls for restraint of Jimmy Carter and the drive for expansion by Ronald Reagan. He ended with the correct point that both main candidates this time around accept the need for restraint.
Schama’s history is a classic piece of growth scepticism. It downplays the huge benefits of economic growth and exaggerates the scale of problems that need to be overcome.
The episode on “American plenty” focused on how America has, sensibly in Schama’s view, come to accept the need for limits. It starts symbolically with the Colorado river and expresses the view that “the land of plenty is running dry”. The building of the Hoover Dam and Lake Mead was basically presented as an act of hubris. Although it enabled the irrigation of several states and the creation of cities such as Las Vegas it was running dry as a result of over-use and climate change. The message was clear: America has to learn to live with fewer resources.
Schama presented the debate between expansion and restraint as a constant theme of American history. Expansion might have brought some short term gains in living standards but it was also responsible for such acts as the “ethnic cleansing” of native Americans. He also presented the 1980 American presidential election as a contest between the calls for restraint of Jimmy Carter and the drive for expansion by Ronald Reagan. He ended with the correct point that both main candidates this time around accept the need for restraint.
Schama’s history is a classic piece of growth scepticism. It downplays the huge benefits of economic growth and exaggerates the scale of problems that need to be overcome.
Labels: America, economics, environment, growth, television, water
Friday, October 17, 2008
Appearance on Al Jazeera television news
This evening I was interviewed by Al Jazeera on this week’s market and economic developments.
Labels: economics, film, media appearances, television
Thursday, October 16, 2008
New Scientist against growth
Just as the world appears to be on the edge of an economic downturn New Scientist (18 October) comes along with a special issue on “The folly of growth”. Its online edition edition is even bleaker with a headline of “How our economy is killing the earth”. It seems to be based on the hoary old argument that the economy is growing exponentially in a finite world. Contributors include many of the usual suspects such as Herman Daly, Susan George, Tim Jackson and Andrew Simms. Along with the customary references to books by Herman Daly, Paul Ehrlich, Al Gore and Jeffrey Sachs are others by Peter Dauvergne, Herve Kempf and James Gustave Speth.
If only the magazine would stick to science rather than recycling dodgy economics.
If only the magazine would stick to science rather than recycling dodgy economics.
Labels: book, economics, environment, growth, science
Tuesday, October 14, 2008
Reference catch-up
A couple of belated references I have only just got round to adding in:
*The Economist (11 October) and Financial Times (10 October) have both published their annual surveys on the world economy to coincide with the IMF / World Bank meeting.
*Tim Worstall had a useful piece on the Guardian Comment is Free site making the basic but important point that environmentalists do not value the most precious resource of all: human time. It focused on the discussion of recycling in Britain.
*The Economist (11 October) and Financial Times (10 October) have both published their annual surveys on the world economy to coincide with the IMF / World Bank meeting.
*Tim Worstall had a useful piece on the Guardian Comment is Free site making the basic but important point that environmentalists do not value the most precious resource of all: human time. It focused on the discussion of recycling in Britain.
Labels: economics, environment
Bear article picked up
Real Clear Markets and Times Comment Central have picked up my article on yesterday’s spiked.
Labels: economics, finance, media appearances, spiked
Monday, October 13, 2008
Spiked article on market meltdown
Spiked has published my latest article on the financial crisis. It looks at “why the bear markets are talking bull”.
Labels: economics, finance, spiked
Sunday, October 12, 2008
My session at the Battle of Ideas
Just a reminder I will be speaking in the session growing pains: the pros and cons of economic dynamism at the Battle of Ideas festival at the Royal College of Art, London on 1-2 November. Other speakers in that session include Martin Wolf of the Financial Times, Paul Mason of BBC Newsnight and Ha-Joon Chang of Cambridge University.
Labels: development, economics, growth, speeches
Saturday, October 11, 2008
Media appearances
This week my recent Fund Strategy news analysis on the market meltdown (see 6 October post) was reproduced on Real Clear Markets while spiked ran an updated version of my review of Robert Reich’s Supercapitalism. I was also invited to appear on the Al Jazeera English TV station and Sky News but could not do either as I was in Dubai. It seems that I am at my most popular during a global financial crisis!
Labels: book, economics, finance, Fund Strategy, media appearances, review, spiked, television
Back from Dubai
I have not posted for a few days because I’ve been at a conference in Dubai and have also had to follow the market mayhem. I hope to write a piece about recent market developments over the weekend – arguing that share price movements are a poor indicator of economic health – but in the meantime a quick thought on Dubai.
Before visiting the emirate I was struck by how many people – most of whom have never been there – told me it was awful. No doubt there are genuine grounds for criticism. For example, its lack of democracy and its unequal treatment of migrant workers. But what most people seem to dislike is precisely what is good about it: its modernity. The critics seem to hate the fact that it has created gleaming, modern buildings out of what was until recently desert. In other words they are criticising precisely what is the best thing about Dubai. It is akin to an aristocrat, who perhaps is not as affluent as he once was, sneering at what they regard as the vulgarity of the new rich.
Before visiting the emirate I was struck by how many people – most of whom have never been there – told me it was awful. No doubt there are genuine grounds for criticism. For example, its lack of democracy and its unequal treatment of migrant workers. But what most people seem to dislike is precisely what is good about it: its modernity. The critics seem to hate the fact that it has created gleaming, modern buildings out of what was until recently desert. In other words they are criticising precisely what is the best thing about Dubai. It is akin to an aristocrat, who perhaps is not as affluent as he once was, sneering at what they regard as the vulgarity of the new rich.
Labels: development, economics, modernity, technology
Monday, October 06, 2008
Growth belies hysteria over downturn
The following is my news analysis from the latest Fund Strategy. It is an attempt to develop a framework to understand the current crisis
Given the pervasive sense of doom about the global economy at present it is worth taking a step back to work out what is really happening. In all the hysteria about plunging stockmarkets and failing financial institutions it is easy to lose a sense of perspective.
In broad terms there are several ways in which the impact of the market turmoil can be assessed. There are quantitative measures - the hard numbers so beloved of economists - and more qualitative ones. The latter involve asking what is the precise character of the problems.
It is also important to distinguish between what has already happened and what could happen. This may seem obvious but they are often muddled together in the anxious discussion.
In terms of economic indicators the striking thing is that, so far at least, the impact of the financial turmoil has been muted. Although the credit crunch started back in August 2007 the main developed economies are still - just about - growing.
The only significant developed country in technical recession - defined as two consecutive quarters of falling output - is Ireland. Denmark was in recession but has recently started to grow again.
This is not to say that the textbook definition of a recession is perfect or that things cannot get worse. It is likely that both the eurozone and Japan will soon be in recession.
But what is happening is that growth in many of the developed countries has fallen to about zero rather than there being a sharp drop in output. America is doing relatively well with GDP growth at an annual rate of 2.8% in the second quarter of 2008, although it did suffer a 0.2% fall in the final quarter of 2007.
In contrast, it is worth remembering that America's GDP fell by 30% and industrial output fell by 47% during the Great Depression of the 1930s. Even in the recession of 1981-2 America's output fell by 2%.
Nor are the forecasts for global growth in the coming period that bad. The official International Monetary Fund (IMF) forecasts for the world economy are not out till this week. But last week Michael Mussa, a former IMF chief economist, published economic forecasts last week on behalf of the highly respected Peterson Institute for International Economics in Washington DC.
Overall he forecasts 1.2% growth for the industrial countries in 2009 compared with 1.5% in 2008 and 2.5% in 2007. This is hardly rapid growth but it is a long way from a severe downturn.
The outlook for emerging economies, which today account for almost half of the world economy, is much better although they are expected to slow. Overall emerging economies are forecast to expand by 5.7% in 2009 compared with 6.4% this year and 7.4% in 2007.
Of course the forecasts for future growth could be wrong. To get a better idea of what is going on it is necessary to look more closely at the character of the slowdown. Often conventional economists rely too much on the numbers and appreciate too little the peculiar character of the economic situation. In this respect there are several factors to consider.
This is a consumption-led downturn. What is happening is that people's disposable income is being squeezed by rising energy and food prices while credit is becoming more expensive as a result of the financial turmoil. This is the reverse of a "classic" recession in which problems tend to start in the industrial sector and then spread to the rest of the economy.
In this context it is worth remembering how the Great Depression of the 1930s developed. The initial decline in America's economic output was already apparent in the summer of 1929 - that is before the stockmarket crash. The crash itself started in October 1929 while banking panics did not begin for another year, in the autumn of 1930.
In contrast the banking crisis this time around started about a year ago, stocks have suffered more recently and a fall in output is still not certain. Not only is the magnitude of the downturn not comparable but the character of the crisis was entirely different.
A risk-based financial system. The financial system has been reforged as more of a mechanism for transferring risk than a channel for capital flows. Under the old model if a mortgage lender suffered bad debt problems it could go under.
Under the new model of finance the mortgage lender will have most likely repackaged its debt and passed it on to other institutions. This means the lender is less exposed to risk but there is a greater chance of "contagion" when things go wrong. Such developments as the rise of derivatives and securitisation help to diversify risk but they can also mean problems can spread more easily.
Lack of political leadership. A chronic lack of leadership on both sides of the Atlantic has exacerbated the crisis. In Britain it was most apparent with Alistair Darling, the chancellor, saying the economy was facing its worst crisis for 60 years then backtracking.
In America it was even more glaring with the House of Representatives voting against the first attempt to pass the bail-out plan.
Strong emerging economies. On the positive side, the strong growth of the developing countries gives added resilience to the global economy.
Even though their growth looks set to slow it is still moving forwards at a reasonable pace. Developing economies are also less dependent on the industrial world than in previous slowdowns.
Overall the world economy looks set for a slow, painful squeeze rather than a violent downturn. Financial markets are likely to continue to be volatile but, unless the credit markets seize up in panic, the real economy should continue to move forward, if at a slow pace. Developing countries should outperform the advanced economies by a wide margin.
Given the pervasive sense of doom about the global economy at present it is worth taking a step back to work out what is really happening. In all the hysteria about plunging stockmarkets and failing financial institutions it is easy to lose a sense of perspective.
In broad terms there are several ways in which the impact of the market turmoil can be assessed. There are quantitative measures - the hard numbers so beloved of economists - and more qualitative ones. The latter involve asking what is the precise character of the problems.
It is also important to distinguish between what has already happened and what could happen. This may seem obvious but they are often muddled together in the anxious discussion.
In terms of economic indicators the striking thing is that, so far at least, the impact of the financial turmoil has been muted. Although the credit crunch started back in August 2007 the main developed economies are still - just about - growing.
The only significant developed country in technical recession - defined as two consecutive quarters of falling output - is Ireland. Denmark was in recession but has recently started to grow again.
This is not to say that the textbook definition of a recession is perfect or that things cannot get worse. It is likely that both the eurozone and Japan will soon be in recession.
But what is happening is that growth in many of the developed countries has fallen to about zero rather than there being a sharp drop in output. America is doing relatively well with GDP growth at an annual rate of 2.8% in the second quarter of 2008, although it did suffer a 0.2% fall in the final quarter of 2007.
In contrast, it is worth remembering that America's GDP fell by 30% and industrial output fell by 47% during the Great Depression of the 1930s. Even in the recession of 1981-2 America's output fell by 2%.
Nor are the forecasts for global growth in the coming period that bad. The official International Monetary Fund (IMF) forecasts for the world economy are not out till this week. But last week Michael Mussa, a former IMF chief economist, published economic forecasts last week on behalf of the highly respected Peterson Institute for International Economics in Washington DC.
Overall he forecasts 1.2% growth for the industrial countries in 2009 compared with 1.5% in 2008 and 2.5% in 2007. This is hardly rapid growth but it is a long way from a severe downturn.
The outlook for emerging economies, which today account for almost half of the world economy, is much better although they are expected to slow. Overall emerging economies are forecast to expand by 5.7% in 2009 compared with 6.4% this year and 7.4% in 2007.
Of course the forecasts for future growth could be wrong. To get a better idea of what is going on it is necessary to look more closely at the character of the slowdown. Often conventional economists rely too much on the numbers and appreciate too little the peculiar character of the economic situation. In this respect there are several factors to consider.
This is a consumption-led downturn. What is happening is that people's disposable income is being squeezed by rising energy and food prices while credit is becoming more expensive as a result of the financial turmoil. This is the reverse of a "classic" recession in which problems tend to start in the industrial sector and then spread to the rest of the economy.
In this context it is worth remembering how the Great Depression of the 1930s developed. The initial decline in America's economic output was already apparent in the summer of 1929 - that is before the stockmarket crash. The crash itself started in October 1929 while banking panics did not begin for another year, in the autumn of 1930.
In contrast the banking crisis this time around started about a year ago, stocks have suffered more recently and a fall in output is still not certain. Not only is the magnitude of the downturn not comparable but the character of the crisis was entirely different.
A risk-based financial system. The financial system has been reforged as more of a mechanism for transferring risk than a channel for capital flows. Under the old model if a mortgage lender suffered bad debt problems it could go under.
Under the new model of finance the mortgage lender will have most likely repackaged its debt and passed it on to other institutions. This means the lender is less exposed to risk but there is a greater chance of "contagion" when things go wrong. Such developments as the rise of derivatives and securitisation help to diversify risk but they can also mean problems can spread more easily.
Lack of political leadership. A chronic lack of leadership on both sides of the Atlantic has exacerbated the crisis. In Britain it was most apparent with Alistair Darling, the chancellor, saying the economy was facing its worst crisis for 60 years then backtracking.
In America it was even more glaring with the House of Representatives voting against the first attempt to pass the bail-out plan.
Strong emerging economies. On the positive side, the strong growth of the developing countries gives added resilience to the global economy.
Even though their growth looks set to slow it is still moving forwards at a reasonable pace. Developing economies are also less dependent on the industrial world than in previous slowdowns.
Overall the world economy looks set for a slow, painful squeeze rather than a violent downturn. Financial markets are likely to continue to be volatile but, unless the credit markets seize up in panic, the real economy should continue to move forward, if at a slow pace. Developing countries should outperform the advanced economies by a wide margin.
Labels: economics, finance, Fund Strategy
# posted by Daniel Ben-Ami @ 18:34
