Category Archive: Sources

  1. 2 Red Rocks 3

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    THE CHILEAN COUP

    On September 11, 1973, the Chilean military, led by General Augusto Pinochet, and with support from the CIA, overthrew the socialist government of President Salvador Allende. The fiftieth anniversary of the coup has occasioned several reflections on the impact of Pinochet’s neoliberal reforms.

    In a recent book, SEBASTIAN EDWARDS, who briefly worked with Allende’s government, and then fled the military regime, examines Pinochet’s “Chilean Miracle.” 

    From the text:

    “In a speech delivered on September 11, 1979—the sixth anniversary of the coup—Pinochet announced a program called the Siete Modernizaciones (Seven Modernizations). The goal was to expand market relations everywhere in order to change Chile’s values and character. As part of the new labor law, the Plan Laboral, approved in late 1979 by the junta, union membership became voluntary, and unions could not join forces across firms in order to negotiate at the industry or national levels. Firms could impose lockouts and temporarily lay off workers. The 1981 social security reform replaced a traditional pay-as-you-go system, in which active workers’ contributions were used to pay pensions for retired workers, with a system based on individual retirement accounts. The new pension system was seriously flawed; pensions rarely surpassed 25 percent of preretirement wages. Schools were transferred to municipalities as a way of weakening the national teachers’ union. In 1981 a higher-education law was passed, allowing the creation of new private universities. There were no subsidies to higher education, and every university or technical institute, public or private, charged a market-determined tuition. The health reform of 1981 allowed workers to use the health tax (7 percent of wages) to finance the purchase of private insurance. For all practical purposes this was a voucher system, in which members of the professional and managerial class were able to get around public health provision. Therefore, a dual health care system was created. The well-to-do had health care close to that of the First World, while the poor had mediocre medical services and were subject to long waiting lists for surgeries.” 

    +  “After 1973, around one-third of the land expropriated by Presidents Frei and Allende was returned to former owners and close to another one-third was auctioned to non-rural dwellers. Barely one-third of the area was allocated to peasants.” By Ricardo Ffrench-Davis. Link. 

    +  “After the coup, agriculture became highly insecure in Chile, as the permanent work campesinos had formerly enjoyed in state-managed farms gave way to seasonal jobs lasting between three and six months.” By Heidi Tinsman. Link. 

    +  “One of the longest-standing movements, which had been active since the time of the dictatorship, was the campaign for a constituent assembly.” An interview with Camila Vergara on drafting of Chile’s new constitution. Link. 

    NEW RESEARCHERS

    Colonial concessions

    SARA LOWES is an assistant professor of economics at the University of California, San Diego. A recent paper coauthored with Eduardo Montero explores the present-day legacies of colonial concessions in the Democratic Republic of Congo.  

    From the abstract: 

    “All colonial powers granted concessions to private companies to extract natural resources during the colonial era. Within Africa, these concessions were characterized by indirect rule and violence. We use the arbitrarily defined borders of rubber concessions granted in the north of the Congo Free State to examine the causal effects of this form of economic organization on development. We find that historical exposure to the concessions causes significantly worse education, wealth, and health outcomes. To examine mechanisms, we collect survey and experimental data from individuals near a former concession boundary. We find that village chiefs inside the former concessions provide fewer public goods, are less likely to be elected, and are more likely to be hereditary. However, individuals within the concessions are more trusting, more cohesive, and more supportive of sharing income.”

    + + +

    +  “Defying the conventional development narrative, increased investment in the agricultural sector has not automatically led to industrial development or increased employment.” New on PW, Shreya Sinha on investment and agriculture in Punjab. Link.

    +  “If pension funds do not proactively address the risks of climate change, it is those same workers—the current and future beneficiaries of pension funds—who will bear the burden.” Also new on PW, Lenore Palladino on pension funds, asset managers, and solar energy. Link.

    +  “The liberal trading order has been weaponized; security, not efficiency, is the new watchword. And yet, 2023 has seen an all-time high of goods traded across borders.” From the most recent Polycrisis newsletter, by Kate Mackenzie and Tim Sahay. Link. 

    +  “The Hacienda Hedge has helped the Mexican government navigate multiple global shocks, including the 2008 global financial crisis and the COVID-19 pandemic.” A new report on the Hacienda Hedge—the Mexican Treasury’s cash-flow-positive, insurance-like petroleum hedging strategy—by JFI’s Jonathan Calenzani, Paul R. Katz, Sina Sinai, and Klea Kalia. Link.

    +  Carlos Algara and Daniel J. Simmons on how financial incentives positively affect Covid-19 vaccination rates. Link. 

    +  Two on neoliberal reforms in Turkish agriculture. Kubra M. Altaytas on the sugar industry’s privatization. Link. And Baran Karsak on the rise of harvest theft on avocado plantations. Link. 

    +  “In exchange for this emergency loan, the IMF imposed a series of conditions that have significantly exacerbated Sri Lanka’s wage and cost-of-living crises.” By Jayati Ghosh and Kanchana N. Ruwanpura. Link.

    +  Washe Kazungu on how climate action will impact land rights in Africa. Link. 

    +  “This article examines the compatibility of authoritarianism and accountability through groundbreaking research on citizen supervision of local state agents, a novel form of accountability politics that has been underway in China for a decade.” By Meixi Zhuang. Link. 

    +  “The hacienda was the crucial gearbox that prevented the tough, fast-moving iron wheel of mining—bound up with the requirements of the world capitalist market and the formation of a wealthy dominant class in the colonial towns—from continuing to destroy the cogs of the slow, rudimentary wooden wheel of the indigenous community, then the main ground for the reproduction of labor-power and the extraction of labor or product surplus. The Spanish hacienda institution was adapted to Mexico in the seventeenth century, and in the course of the eighteenth century it was consolidated as the main element regulating the use of labor-power. Since the plentiful supply of manpower had been squandered and exhausted in the previous period, the towns, mines, and haciendas developed various expedients for attracting and fixing their own workforce, including the gradual extension of wage labor and and its subsidiary hybrid, debt-peonage. In the evolving system, the hacienda acquired a fixed workforce in the shape of peons, servants, and artisans such as smiths, carpenters, masons, and even weavers. At the same time, according to the seasonal rhythm of field labor, it absorbed and repelled manpower from the indigenous communities. This labor-power continued to be mainly reproduced within the community: its surplus product was sucked out through the hacienda, which in turn produced food and other goods for the mines, the towns, and itself.” By Adolfo Gilly. Link. 

  2. Rest

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    MONEY AND COLONIALISM

    Since 2020, there have been military coups in six Francophone African countries—Mali, Chad, Guinea, Burkina Faso, Niger, and most recently Gabon. The region has also witnessed unprecedented civic protests against the French government. 

    In a 2021 book, FANNY PIGEAUD and NDONGO SAMBA SYLLA examine the economic consequences of France’s imposition of a common currency, the CFA franc, on its former African colonies.

    From the text:

    “There are four large handicaps imposed by the CFA system: an excessively rigid exchange rate regime, a problematic pegging to the euro, the underfinancing of African economies, and a free movement of capital that generates a massive financial bleed-out. Since 1948, the CFA franc’s parity with respect to its anchor currencies (first the French franc, today the euro) has been changed only once, during the 1994 devaluation. This means that some of the poorest countries in the world, such as Niger and the Central African Republic, for years have had to endure monetary policies tailored to suit the cyclical developments in very rich economies, first France and now the eurozone. It also means that the 15 member states of the franc zone taken individually do not have the possibility of using the exchange rate to cushion external shocks. The pegging of the CFA franc to the euro is problematic because an appreciation of the euro entails, for the countries of the franc zone, a reduction in the price competitiveness of their manufactured goods. The priority of the zone’s central bank is to ensure that there are sufficient foreign exchange reserves to defend the parity of the CFA francs against the euro. This means that they must limit the creation of money, that is, the domestic credit granted to governments, businesses and households. At the same time, it makes their imports cheaper and reduces the weight of their debt in dollars, hindering exports and favoring imports, which contributes to a deterioration of the trade balance.”

    + “The coming post-petroleum period will present a major economic challenge for Gabon, because the country has largely failed to use its abundant oil revenues to diversify into other forms of economic activity.” By Douglas A. Yates. Link. And read a PW essay by Daniela Gabor and Ndongo Samba Sylla about development agendas at the Gabon One Forest Summit. Link.

    + “After the failure of taxation, agriculture, and foreign aid, mining rent appears as the Nigerien state’s only remaining option to revive the development project disallowed by neoliberal reform.” By Rahmane Idrissa. Link. And Idrissa on the coup in Niger. Link. 

    + “Radical activists in Burkina Faso insist on the (re-)nationalisation of subsoil and agricultural resources and of other economic sectors; professional education and industrialisation, so that the country would become independent from foreign capital and capable of benefitting from its value chains.” By Bettina Engels. Link. And Engels on Burkina Faso’s security crisis. Link. 

    NEW RESEARCHERS

    Caste Norms

    ARIELLE BERNHARDT is a postdoctoral fellow at the MIT Department of Economics. In her job market paper, she explores the relation between caste, land, and colonialism. 

    From the abstract: 

    “This paper shows that caste norms are weakened when Hindus live alongside Adivasis, an indigenous minority outside of the caste system. Using a number of estimation strategies, including a historical natural experiment that led to local variation in Adivasi population share, we show that having more Adivasi neighbors decreases Hindus’ adherence to a wide range of caste rules. Hindu women in Adivasi-majority villages are 50% more likely to work and have substantially higher earnings. Individuals higher on the caste hierarchy are less likely to practice ‘untouchability’ towards those lower than them and villages are more likely to be integrated. We argue that Hindus adhere to caste norms as an investment in status within the caste system, and that this investment is less valuable when Adivasis—a lower-status out-group—form a larger share of the village population. Consistent with this explanation, caste norms are weaker in areas where British colonial policy led Adivasis to hold more land and political power, increasing the returns to social and economic interactions with Adivasis independent of their population share.”

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

    + + +

    + “Due to the fragmented nature of schools and districts, the financial mechanisms of the IRA threaten to reproduce underlying inequalities.” Also new on PW, David I. Backer on green investment for school infrastructure. Link.

    + A report from the Lowy Institute on “revitalising the green climate fund.” Link. 

    + Megan Raby on the United Fruit Company’s efforts at agricultural diversification. Link. 

    + “If China’s Boom is Over, Where Will Demand for Commodities Come From?” Jean van de Walle on industrial commodities and China’s infrastructure investment trajectory. Link.

    + “We found that two years after unionization, nursing homes were 31.1 percentage points more likely than nonunion nursing homes to report workplace injury and illness data to OSHA.” By Adam Dean, Jamie McCallum, Atheendar S. Venkataramani, and David Michaels. Link.

    + Ian G. Baird on “land concessions and postwar conflict in Laos.” Link. 

    + Jeff Joseph reports on the labor struggles of Tamil Nadu’s purse seine fishers. Link.

    + Tobias Arbogast, Hielke Van Doorslaer, Mattias Vermeiren on the Federal Reserve’s growing skepticism towards the natural rate hypothesis. Link. 

    + “A growing literature exists showing how environments characterized by risk, such as those with greater rainfall variability or earthquake risk, tend to foster higher levels of religious participation and belief. We show that risk associated with oil dependence facilitated the proliferation of religious communities throughout the US South during the twentieth century. In resource-rich settings, managing risk associated with volatility is central to enjoying their economic benefits. To study the relationship between natural resource risk and religious participation, we consider the US South, where oil abundance has contributed to both increased wealth and economic risk. Our main results confirm that Southern counties with known oil abundance exhibit higher rates of religious participation over the sample period.” By Andreas Ferrara and Patrick A. Testa. Link. 

  3. Play (78th and the River)

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    This is an archived version of the PW Sources newsletter from Saturday, August 26. Sign up to receive PW Sources directly to your inbox here.

    CHINA’S ECONOMY

    Several investment banks have recently downgraded their growth forecasts for China in response to mounting debt crises, the closure of major real estate firms, and rising youth unemployment. 

    In a 2013 book, MICHAEL PETTIS examines the fundamental imbalance in China’s post-reform economic model, which prioritizes exports over domestic consumption.  

    From the text:

    Policies that force households to subsidize growth are likely to generate much faster growth in production than in consumption. In that case even with high investment levels, large and growing trade surpluses are needed to absorb the balance because the investment share of GDP cannot increase quickly enough to absorb the decline in the consumption share. This is what happened in China in the past decade until the crisis in 2007–8, after which Beijing had to engineer an extraordinary additional surge in investment in order to counteract the contraction in current account surplus. As Chinese manufacturers created rapidly expanding amounts of goods, the transfers from the household sector needed to subsidize this rapid expansion in manufacturing left them unable to purchase a constant share of the goods being produced. The result was that China needed to export a growing share of what it produced, and this is exactly what it did, especially after 2003. As long as the rest of the world—primarily the United States and the trade deficit countries of Europe and Latin America—have been able to absorb China’s rising trade surplus, the fact that domestic households absorbed a declining share of Chinese production didn’t matter much. But by 2007 China’s trade surplus as a share of global GDP had become the highest recorded in one hundred years, perhaps ever, and the rest of the world found it increasing difficult to absorb it. The global financial crisis sharply reduced the ability and willingness of other countries even to maintain current trade deficits, and this downward pressure on China’s current account surplus is likely to continue. Once China reaches its debt capacity limits, growth will come crashing down.

     + “Many local states in China act ‘developmentally’… The totality of these efforts combined, however, entails anarchic competition among localities, resulting in uncoordinated construction of redundant production capacity and infrastructure.” By Ho-fung Hung. Link. And read a PW interview with Xiao Ma on localized bargaining and China’s high-speed railways. Link. 

    + “Administrative decrees rather than monetary instruments such as reserve requirements, interest rate adjustments, and open market operations play the dominant role in controlling China’s money supply.” By Victor C. Shih. Link. 

    +   “In spite of relatively poorer legal protection and standard financing channels, the private sector has been growing much faster than the public sector and has been contributing to most of the Chinese economy’s growth.” By Franklin Allen, Jun Qian, and Meijun Qian. Link.

    NEW RESEARCHERS

    Labor market disparities

    CAITLIN HEGARTY is an assistant professor in economics at Williams College. In her job market paper, she explores the relation between firm heterogeneity and racial labor market disparities.

    From the abstract: 

    “This paper introduces a new channel to explain the excess sensitivity of Black employment: employer heterogeneity in hiring. There are persistent differences in the job-finding and separation rates of Black and white workers across firms of different sizes. Black workers face higher separation rates and lower job-finding rates on average, with more extreme disparities at small firms. Meanwhile, when the labor market is weak, the job-finding rate falls more for Black workers, with the biggest drop coming from large firms. The second half of the paper introduces a search model with employer size-specific information frictions that captures these patterns. The abundance of available workers during downturns encourages firms to be more selective about the workers they hire, leading to worse hiring outcomes for minority workers at all firms. This selection effect can produce larger changes in hiring rates for the disadvantaged workers at firms with better screening technology, because these firms are able to capture a higher share of the matching market and they are more susceptible to general equilibrium effects.”

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

    +++

    + “Bidenomics is a new legislative and macroeconomic policy mix, developed by Democratic Party elites to contain the threat of Trumpism.” New on the Polycrisis, a conversation with Ted Fertik, Daniela Gabor, Tim Sahay, and Daniel Denvir on Bidenomics. Link. 

    + “The greatest impact of BRICS will likely not be in creating eye-catching new institutions or ballooning membership, but rather, if it can achieve it, in provoking more meaningful cooperation from the richest countries.” Also new on the Polycrisis, from Kate Mackenzie and Tim Sahay. Link.

    +  Yuhan Zhang on China’s 5G industrial policy. Link. 

    +  “To account for the evolution yet persistent relevance of Corporate Planning, we analyze the content of Harvard Business Review since its foundation in 1922 until 2021.” By Hannah Bensussan, Cédric Durand, and Cecilia Rikap. Link.

    +  A report from Autonomy on the growing shortage of care provision in the UK. Link.

    +  “The multiplier effects of government expenditures on social protection” in 42 countries, from our friends at MADE at the University of Sao Paolo. Link. 

    +  David Rosenfeld on public debt distress in the Southern Africa Development Community (Malawi, Mozambique, Zambia and Zimbabwe). Link. 

    +  A conversation with Ilze Monasterio Zabala and Zoren Álvarez Salazar about gendered violence, precariousness, and the power of cattle ranchers in Bolivia’s lowlands. Link. 

    +  “The Merchant of Venice derives its drama from a series of formal contests between antinomies: Gentile and Jew, woman and man, country and town, young and old, hatred and love, friendship and advantage, mercy and justice. Yet parallel to these contests are monetary polarities so evident that one is tempted to look to them for the chief drama: Antonio and Shylock, real property and moveable property, usury and participatory risk, lead and gold. Both sets of contests are epitomized in the contest of the gold, silver, and lead caskets from which, under the terms of her father’s will, Portia’s suitors must choose. Portia, Antonio, and Shylock are all rich, but their riches distinguish their views of the world. Portia is ‘richly left’: she has inherited a fortune, no doubt from a merchant forebear ten times more villainous and crude than Shylock, but her family has followed the investment scheme laid down in antiquity: their riches are not for accumulation but for disbursement in pursuit of happiness, hospitality, love, and charity. Antonio is a merchant, but his business practices—a readiness to lend without interest or stand surety for a friend—arise in notions of commercial honor that are already hopelessly old-fashioned.” By James Buchan. Link. 

  4. The Water Bearers

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    This is an archived version of the PW Sources newsletter from Saturday, August 26. Sign up to receive PW Sources directly to your inbox here.

    HOUSEHOLD BARGAINING POWER

    Feminist economists have problematized the “unitary” conceptualization of the household, probing the black box of domestic life to explore how allocations of labor and resources are contested within the family. 

    In a 1997 article, BINA AGARWAL examines how state policies and social norms affect intra-household bargaining power. 

    From the text:

    The household, market, community and state are four principal arenas where gender is both constituted and contested. Each simultaneously impinges on a woman’s bargaining power. For instance, a state may enforce policies that favor women’s interests, which some communities may resist: the situation in parts of South Asia could be so characterized. Or the state, community, and family may reinforce each other in strengthening, say, the strictures on women’s social and sexual conduct, as has happened under many Islamic regimes. Or state policies may be congruent with the dominant interests of the community but individual families may find that their economic and market-linked interests are in conflict with the norms set by local communities. Many poor rural households in Bangladesh today are cases in point: here a push toward Islamization by the state, and supported by local communities, has dictated greater female seclusion, but such strictures are now being contested by many poor women who find they seriously limit the family’s livelihood options. Essentially, the local communities plays an intermediate role between the state and the individual or the household, in defining and enforcing social obligations and social practices, including those concerning economic activity. To the extent that the state as maintains a relatively gender-progressive position in policies, legislation and implementation, it provides space for individual women or households to exit from or openly contest a community’s gender-retrogressive stranglehold. It also provides space for women to build organized resistance against gender-retrogressive practices prevailing in the community and/or household. 

    +  “Success in caring for one another is a precondition for the production of goods and services, but also an end result, a goal.” From Nancy Folbre’s classic 1994 text Who Pays for the Kids? And listen to Folbre’s interview on the Odd Lots podcast. Link. 

    +  “The dependence of production on reproduction, of waged work on unwaged work, is an insight from feminists who redefine what counts as economics and what constitutes legitimate economic analysis.” By Jennifer Cohen. Link. And Frances R. Wolley on the “feminist challenge to neoclassical economics.” Link. 

    +  “From the 1920s to the 1960s, women were quite influential in shaping Soviet Marxist-Leninist orthodoxy, within which the analysis of Western economic thought, assessment of modern capitalism, and justification of Soviet-style socialism were conducted.” By Anna Klimina. Link.

    NEW RESEARCHERS

    Intimate Partner Violence

    ANOUSHEH ALAMIR is a postdoctoral research fellow at the Economic and Social Research Institute in Dublin. In her job market paper, she explores the relation between public violence and intimate partner violence (IPV).

    From the abstract: 

    This paper uses the unexpected and geographically heterogeneous rise in drug-related violence occurring in Mexico since December 2006 to analyze whether living in a municipality increasingly exposed to violent crime changes a household’s internal use of violence. Combining georeferenced conflict data with survey data on household dynamics, I use two difference-in-differences methodologies to show that a rise in conflict-related homicides leads to a significant increase in the share of women experiencing both acts and threats of physical violence by their male partners. This trend is found in parallel to an average rise in women’s tolerance for partner abuse, and a drop in divorces on grounds of domestic violence in those affected municipalities. Furthermore, IPV growth is mostly found amongst households where the woman has low bargaining power. Thus, the conflict effect on IPV is associated with a rising tolerance for violence, which might become a new instrument for the male partner to get more decision-making power, especially when the woman’s outside options seem hampered.

    + + +

    +  “Sanctions rigged the game, enabling a structural transformation of the economy that helped Iran’s richest households take a greater share of the nation’s wealth.” New on PW, Esfandyar Batmanghelidj and Zep Kalb on the distributional effects of sanctions in Iran. Link.

    +  “If derisking and blended finance fail to mobilize sufficient private finance, it’s likely due to the structural limitations of companies like those represented at the World Bank’s new Private Sector Investment Lab.” And new on The Polycrisis, Advait Arun on the limits to private sector investment in the green transition. Link.

    +  “In this report, a progressive alternative to permitting reform is outlined, one that focuses on increasing public capacity for planning, assessment, and community engagement to ignite the transition.” By Johanna Bozuwa and Dustin Mulvaney of the Roosevelt Institute. Link.

    +  Two by Liani MK on Indonesian domestic workers in Malaysia. Link and link. 

    +  “Even if the bond market adapts, as it has in the past, its ballooning power, reach and complexity has some awkward implications for the global economy.” By Robin Wigglesworth. Link.

    +  “85% of the company that operates Niger’s uranium industry is owned by France’s Atomic Energy Commission and two French companies; only 15% is owned by Niger’s government.” Thomas Fazi on the coup in Niger. Link. 

    +  Michael Odijie on the tensions between state-level industrial policy and Regional Economic Communities in Africa. Link. 

    +  “Ecuadorians have chosen to safeguard the biodiverse Yasuní National Park from oil drilling, marking a major triumph for grassroots Indigenous and environmental activists against the fossil fuel consensus.” By Angélica María Bernal and Joshua Holst. Link. 

    +  “The unexpected success of the Salt Inspectorate in Republican China might well be best understood as the success of transplanting the Indian Civil Service to a very different environment. Despite its size and variability, China was likely a good fit with the norms of the Indian Civil Service because China’s educated elites were already steeped in a set of ideals about civil service, fairness, and the near sacred status of open civil service examinations. With the right combination of insulation and bureaucratisation, these ideals transferred readily to some policy arenas (Salt and Consolidated Tax) but were much less useful in areas of policy where there was a significant mismatch between the goals of the organisation and the personnel to implement those goals (Direct Tax), and didn’t work at all for most policy environments. But when we juxtapose the ideals of Indian Civil Service bureaucracy to China via a semi-autonomous, Western-dominated institution brought into being at the behest of international finance and compare it with the mother country (India) and the chief officer for tax at the turn of the century in India (Sir Richard Dane), there is one obvious question that remains. What accounts for the difference between India, where there was such mass discontent with the salt tax that Gandhi managed to convert that discontent into such a successful public procession as the Salt March, and China, where there was no such thing?” By Julia Strauss. Link. 

  5. Desert Bloom

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    This is an archived version of the PW Sources newsletter from Saturday, August 19. Sign up to receive PW Sources directly to your inbox here.

    DAR ES SALAAM SCHOOL

    From the mid 1960s, a group of international scholars—including Issa G. Shivji, Walter Rodney, John S. Saul, Giovani Arrighi—gathered at the University of Dar es Salaam to study the political and economic issues facing a newly postcolonial Africa. Looking past the given ideas of modernization theory, they argued for organic forms of socialist development suited to local contexts. 

    In a 2009 book, ISSA G. SHIVJI charts the rise of neoliberalism in Africa. 

    From the text:

    “During the first one-and-half decades of independence, African economies showed impressive but unsustainable growth. Growth in agriculture was based on extensive cultivation rather than a rise in productivity. Growth in manufacturing was of the import-substitution tvpe, with little internal linkages, and dependent on imported intermediary inputs. Investment was largely public, while domestic private capital was stashed away in foreign countries. By 1990, 37 percent of Africa’s wealth had flown outside the continent. During this period, the developmental state borrowed heavily. By the end of the 1970s, cheap loans turned into heavy debt burdens. Growth rates became negative, debt repayments became unsustainable, fiscal imbalances went out of control, and so did inflation. One after another, African governments found themselves at the door of the IMF and the Paris Club pleading for mercy. The 1980s, described as Africa’s ‘Lost Decade,’ saw the decline of developmentalism and the rise of neoliberalism. Structural Adjustment Programs were pushed through, which concentrated on stabilization measures: getting rid of budget deficits, bringing down inflation, getting prices right, unleashing the market, and liberalizing trade. Balancing budgets involved cutting subsidies to agriculture and reducing allocations to social programs, including education and health. Unleashing the market meant doing away with protection of infant industries and rolling back the state from economic activity. The results were devastating: education, medical care, health, nutrition, rates of literacy, and life expectancy all declined. Deindustrialization set in. Redundancies followed. Even some of the modest achievements of the nationalist period were lost or undermined.” 

    +  “The financial institutions of colonial Africa—banks, insurance companies, currency boards—were scandalously neglectful of indigenous interests.” From Walter Rodney’s classic 1972 text How Europe Underdeveloped Africa. Link. 

    +  “Should not Tanzania’s socialist moment constitute a very real learning experience for a continent that has still not fully confronted the threat of continuing subordination by global capital?” By John S. Saul. Link. And Essays on the Political Economy of Africa, by Saul and Arrighi. Link.

    +  Shivji’s classic 1970 essay “The Silent Class Struggle,” with responses from Rodney, Saul, Kassim Guruli, Tamás Szentes, and Justinian Rweyemamu. Link. And Mahmood Mamdani on the history of the African University. Link. 

    NEW RESEARCHERS

    Suburban commutes

    JESSICA GALLANT is a Ph.D. candidate in economics at the University of Toronto. In her job market paper, she explores how time costs affect the demand for free HIV care in Malawi. 

    From the abstract: 

    “Despite the wide availability and free provision of antiretroviral therapy (ART), a life-saving treatment for HIV, keeping patients in care is a challenge across Sub-Saharan Africa. In this paper, I provide evidence from Malawi that time costs are a key barrier to adherence to ART. My staggered difference-in-differences empirical strategy exploits the random timing of appointments relative to floods, which generate exogenous variation in the value of patients’ time. Floods have heterogeneous effects on income, but consistently reduce agricultural labour by 45%. I show that this negative labour shock is an important determinant of demand for ART. Floods cause a 50% reduction in the number of patients who miss appointments to refill their medication, and lead to better long-term adherence and lower mortality. Having an appointment in the weeks following a flood, compared to just before, causes a 2 percentage points lower likelihood of stopping ART for three months or longer and a 20% lower risk of death within a year. My estimates suggest that reducing the likelihood of three-month treatment interruptions from its peak in the busy rainy season to its low in the dry season could decrease mortality rates by 15%.”

    + + +

    +  “Two types of images are key to understanding current debates about economic globalization: the hockey stick chart, representing the stunning and inexorable growth of some phenomenon; and the cross chart, whose lines represent changes in relative power and prosperity.” New on The Polycrisis, by Anthea Roberts and Nicolas Lamp (with visuals by Yusuf Khan). Link.

    +  Why the Fed and the ECB diverged on climate. By Monica DiLeo, Glenn D. Rudebusch, and Jens van ‘t Klooster. Link. See also: DiLeo on the achievements and limits of the Bank of England’s climate policies. Link.

    +  Mohamed Kheir Omer on the “resource politics” behind the coup in Niger. Link.

    +  “An abrupt correction of asset values is possible once markets recalibrate the likely impacts of climate change… Steve Keen also predicts such a ‘Minsky moment’ and warns it will be ‘unpleasant, abrupt and wealth-destroying.'” Vanessa Houlder and Nathalie Thomas in the FT on mispriced physical risk and the threat of a “climate Minsky moment.” Link.

    +  A report from Private Citizen on how buyout firms promote oil and gas drilling on public lands. Link. 

    +  “Every barrel of oil Iran is currently selling to China is increasing U.S. leverage for future talks.” By Esfandyar Batmanghelidj. Link. 

    +  Maurizio Totaro on “oil, labor, and authoritarian neoliberalism in Kazakhstan.” Link. 

    +  “The formative years of the bop pioneers’ careers were bounded by two crucial historical events: the boom and bust cycle of the Swing Era and the outbreak of the Second World War. The Swing Era defined the ‘art world’ within which they would live and work. As we have seen, the startling expansion of the music industry shattered the older, more static role of the dance musician, holding out the tantalizing prospect of unprecedented reward. Those coming of age after 1935 naturally had higher expectations than their predecessors, for they could see firsthand the profits being made. They were predictably frustrated when the economic contraction after 1939 forced them into unequal competition with both their white counterparts and older, better-connected black musicians for a share of the shrinking pie. The onset of war partially salvaged the situation, by stimulating the economy with new defense spending and creating a nearly hysterical demand for entertainment on the home front. But the fabric of American life was warped by war into unpredictable patterns. The resultant chaos undermined the status quo, making it easier for the imaginative and ambitious to challenge it.” By Scott DeVeaux. Link. 

  6. New York/Wall Street

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    This is an archived version of the PW Sources newsletter from Saturday, August 12. Sign up to receive PW Sources directly to your inbox here.

    REGULATION SCHOOL

    Founded in the 1970s in Paris, the Regulation School was a group of scholars who offered a novel conceptualization of economic history. Rejecting the notion of universal economic laws, they presented capitalism’s development as a series of phases, each defined by certain social and institutional forms, with an internal mechanism to regulate crises. 

    In his 1990 book, ROBERT BOYER explains the methodological foundations underpinning the school’s heterodox approach. 

    From the text:

    “Departing from orthodox Marxism, adopting structuralist tools, and strongly influenced by the historical methods of the Annales school, the founding fathers of the regulation school showed how the dynamics of both business cycles and major crises depend upon forms of productive structures and social relations. On these foundations were developed the key concepts of regulation theory: institutional forms, the wage relation, regimes of accumulation, and modes of regulation—their combination defining a mode of development. If the crash of 1987 did not lead rapidly to the depression as after 1929 as many predicted, it is because America’s contemporary mode of development is not the same as during the interwar years. The sequence of events in the two crises has been completely different, as are the interconnections between the spheres of finance and accumulation. Likewise, the advanced capitalist countries have not followed identical strategies in their search for a new mode of development. Their particular social compromises, unequal degrees of acceptance of the new production methods, and sometimes opposed economic policy choices lie behind the distinctly unequal macroeconomic performances of the United States, Japan, and Europe. Finally, the causes and course of the crisis were present in outline within the previous mode of development. As time passed, its contractions and disequilibria could not longer be contained by the workings of the existing institutional forms and mode of regulation. Yesterday’s strengths have become today’s weaknesses and vice versa, although there is no general law at work in the matter. This, in a nutshell, is the point of regulation theory.” 

    +  “The regulation approach is distinct from two mutually contradictory conceptions: first, the idea that rules and institutions are products of the convergence of private decisions; second, that any non-market force that has a global effect on the development of capitalist economies must proceed from the state.” From Michel Aglietta’s classic study, A Theory of Capitalist Regulation: The US Experience. Link. 

    +  “The concepts of mode of regulation and regime of accumulation can be seen to function with respect to the Regulationists’ phases within capitalist history—called modes of development—rather analogously to the way Marxist concepts social relations of production and forces of production function with respect to the modes of production.” By Robert Brenner and Mark Glick. Link.

    +  “A regulationist approach to the state would treat it like the commodity or wage relation: as an invariant which itself needs regulation.” By Jessop Bob. Link. And John Grahl on Aglietta’s monetary theory. Link. 

    NEW RESEARCHERS

    Credit and colonialism 

    CATHERINE COMYN is a PhD candidate in international political economy at King’s College London. In a 2023 chapter, she explores the role of finance in the colonization of New Zealand.

    From the text: 

    “White credit networks and the debt relations they fostered in Māori communities were immensely damaging in their effects on whānau, hapū and iwi1 from the 1860s through to the 1900s. These relations fuelled a self-perpetuating system of colonization by binding Māori into networks of dependency on the colonizer that could be dissolved only through the alienation of land. Taken together, the Native Lands Acts of 1862 and 1865 were a key driver of this system of financial colonization. The Acts, whose effect upon Māori land tenure is often understood as one of ‘individualization’, must also be grasped as means of enacting a profound financializaton of Māori land, realized fundamentally through the transformation of land into a security against debts. For, what the land Acts implemented first and foremost—inseparable from and prefiguring the individualization of Māori land tenure—were particular debt relations. It was these relations, rather than the legislation directly, that crippled Māori economically, wresting the base from them piece by piece, repayment by repayment.”

    + + +

    +  “The recent influx of private investment differs from prior state efforts to encourage private participation during the heyday of neoliberalism in the 1990s.” New on PW, Isadora Cruxên on evolving public-private relations in Brazilian water provision. Link.

    +  Bruno Bonizzi, Jennifer Churchill, and Sahil Dutta on how to fix the UK pensions system. Link. 

    +  Maureen Tkacik on “the great American hospital shell game.” Link. 

    +  “I asked Norwegians to design their preferred tax rate structure and find that within the top 1 per cent, tax rates are far below (by as much as 23 percentage points) where citizens want them to be.” By Ruben Mathisen. Link.

    +  Lee Harris reports on a new TSMC chip factory in Arizona, and what it shows us about supply chains, organized labor, knowledge-transfers, and IRA implementation. Link.

    +  A report from the Lincoln Institute of Land Policy about “greening America’s smaller legacy cities.” Link. 

    +  “In what ways might the digital renminbi (RMB), also known as e-CNY, bolster China’s efforts to internationalize its currency?” By Wei Ru Deng. Link. 

    +  “Sharia-compliant products have been gaining popularity among British Muslims. Take the home-ownership scheme offered by HSBC’s sharia-compliant range, Amanah (amanah means ‘trust’ in the moral and legal sense). Muslims are forbidden to pay or receive interest and are troubled by conventional lending, because it appears to put the burden of risk on the borrower not the lender: in the Islamic view, no transaction is ethical unless risk is fairly distributed between the parties. HSBC Amanah’s scheme is based on an Islamic contract known as ‘diminishing musharaka’ and it’s approved, like all HSBC Amanah’s services, by a board of sharia scholars. A would-be home-owner must put up 40 per cent of the cost price (much less before the credit crunch); the property is registered in a trust (amanah) as a jointly owned asset, with the bank’s majority ownership diminishing over an agreed period, as regular payments are made; the customer promises to buy the bank’s share, and the bank promises to sell it to the client. The property is envisaged as a set of units and the customer’s payments as twofold: one part is rental, for the right to live in it, another is a form of unit-acquisition. The trust keeps a tally of the bank’s diminishing ownership and the growing share to the customer. At term, the trust is dissolved and the home passes to the customer. In the meantime, no interest has been charged.” By Jeremy Harding. Link. 

  7. Five Fingers of Fury

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    This is an archived version of the PW Sources newsletter from Saturday, August 5. Sign up to receive PW Sources directly to your inbox here.

    MILITIAS

    Since April 15, the Sudanese Armed Forces (SAF) and paramilitary Rapid Support Forces (RSF) have been fighting to take control over Sudan. Extensive war crimes have been committed by both sides. 

    In a 2019 paper, ALEX DE WAAL charts the emergence of a “political marketplace” defined by paramilitaries and crony capitalists in Sudan. 

    From the text:

    “During the 1999-2011 period, Sudan’s political economy consolidated around a rentier crony capitalist system, reliant on oil revenues. Following the separation of South Sudan in 2011 and the loss of oil revenue, the regime pursued new strategies for financing state operations and politics, but each involved major trade-offs. Artisanal gold was exploited for export, at the dual cost of inflation and empowering the paramilitaries that controlled the gold mines. Renting out military services to Saudi Arabia and the United Arab Emirates generated powerful rivals within the centre. Leasing agricultural land and increasing tax revenue squeezed the constituencies that had benefited from the oil boom era. By 2018-19, President Omar al-Bashir’s political budget was fast dwindling, and with it his ability to reconcile the competing demands of different claimants. The popular uprising was a protest against the ‘rule of thieves,’ comprising a coalition of the former subaltern beneficiaries of the oil boom and ‘payroll peace,’ who had been shortchanged after 2011, plus the professional classes in Khartoum and their children. It drew on a well-established repertoire of Sudanese civic protest, adapted to the current circumstances. The military takeover in April 2019 was (after a brief wobble) the restoration of a similar political market, except with a new political business manager (General Hemedti). Although it has received an injection of cash (from Saudi Arabia and the UAE) and political energy, it is a less viable arrangement than that of the ousted President al-Bashir. This is because Hemedti lacks the reputational assets of his predecessor, his coalition is narrower, and his takeover does not remedy the macroeconomic crisis.” 

    +  “Sudanese policy makers were well aware of the vast inequalities that plagued their country, yet the tools of mid-twentieth-century macroeconomics helped them justify ignoring these in favor of the goal of catching up economically with the states that they aspired to have as peers.” By Alden Young. Link. And see Young’s review of Morten Jerven’s The Wealth and Poverty of African States in PW. Link. 

    +  “The main economic achievement of Bashir’s government was to supercharge the system of peripheral exploitation, using militias to clear populations away from oilfields and goldfields, and then setting up opaque currency mechanisms that allowed private elements within the state to siphon off profits.” By Edward Thomas and Magdi el-Gizouli. Link. 

    +  “While Sudan’s trade unions were an active feature of prior democratisation struggles, the combination of economic contraction and the weak manufacturing base endemic to many African post-colonies had meant their decline in scale.” By Hassan E.T. Link. And Reem Abbas on the RSF’s financial networks. Link. 

    NEW RESEARCHERS

    Suburban commutes

    TEREZA RANOŠOVÁ is a Ph.D. candidate in economics at the University of Michigan. In her job market paper, she explores how suburban expansion affects welfare and labor outcomes. 

    From the abstract: 

    “Over time, as metro-areas sprawled to the suburbs, long commutes became common. In this paper I combine motivating evidence with a structural model to show that even though long commutes are particularly detrimental to married women’s labor market outcomes, in terms of welfare it is singles who lose the most. First, I show that the gender gap in commuting among singles is negligible. Second, men in couples (not women) have much longer commutes than single men, and job access alone cannot explain this difference. This together with other observations suggests that commuting features gains from specialization harnessed within couples, allowing men to take better jobs. I embed this feature in a quantitative spatial model with endogenous marriage and location choices that successfully captures the commuting and location patterns by marital status. In a joint housing and marriage market equilibrium, as metro areas sprawl, commuting increases most for men in couples and employment falls most for women in couples, contributing to gender gaps in both outcomes. However, in terms of welfare singles lose more than couples, increasing the value of marriage. Couples are able to partially evade commuting costs through specialization, lower housing costs and redistributing resources within the household.”

    + + +

    +  “The construction of agribusiness as a myth serves to occupy a position akin to that of an idol in the public imagination.” New on PW, Guilherme C. Delgado and Sérgio Pereira Leite on the “reprimarization” of the Brazilian economy. Link.

    +  “Between climate extremes and record fossil fuel profits, political backlash to climate action by right wing parties is gathering strength.” New on The Polycrisis, Kate Mackenzie and Tim Sahay on action and inaction in the planetary impasse. Link.

    +  “The paper documents irregularity in India’s 2019 general election data by showing that the incumbent party’s win margin distribution exhibits excess mass at zero, while no such pattern exists either in previous general elections or in state elections held simultaneously and subsequently.” By Sabyasachi Das. Link. 

    +  Brett Heinz on Lockheed Martin’s “stock buyback bonanza.” Link.

    +  “For workers, the Cambodian government’s continuing repression of the NagaWorld strike, and the arrest and sentencing of the union leader are a testament to the grim reality for the labour movement.” By Aria Huang. Link. 

    +  Anthony Pahnke and Jordan Treakle on “the evolving role of the US state in land policy.” Link. 

    +  “The case of the North Sea is pertinent for an equitable phase out of oil and gas, both globally and domestically.” By Felipe Sanchez, Björn Nykvist, Olle Olsson, and Linus Linde. Link.

    +  Sam Klein-Markman on lithium mining in rural Brazil. Link. 

    +  “In conversations and interviews with female domestic workers from lower or ex-Untouchable castes, I was told that until the early 1980s they could not enter the employers’ homes and only got outside cleaning and washing jobs. They had to wash dishes and clothes downstairs in the open compound of the apartment even if the employer lived on the third or fourth floor. Employers would take back the utensils only after sprinkling water on them. In the last few decades, especially in cities like Pune, new ways in which caste relationships are negotiated through the work in the household have emerged. Middle class women began working for income outside the home and, in consequence, domestic workers came inside the bungalows and flats. Without any reservations about caste, colour, or creed they also entered the kitchens. To the washing of the utensils were added the sweeping the house and maintaining cleanliness in and about the bungalow. In many places the entire responsibility of maintaining the kitchen was entrusted to domestic workers.” By Lokesh. Link. 

  8. Willseden Junction

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    This is an archived version of the PW Sources newsletter from Saturday, July 29. Sign up to receive PW Sources directly to your inbox here.

    BANKING CLUBS

    Between the late 1950s and the 1970s, several European commercial banks formed clubs to share information and collaborate on services. 

    In a 2011 book, RICHARD ROBERTS and CHRISTOPHER ARNANDER argue that the clubs emerged as a response to the rising dominance of US banks. 

    From the text:

    “Following the establishment of the European Economic Community in 1957, the expectation of European financial and economic integration led many major European banks to seek ways of fostering cross-border co-operation. To this end, five far-ranging bank associations, club-like in character, were formed between banks of different European nationalities. The European banking clubs were intended to stimulate a broad exchange of information between members and the joint development of marketing, technology and research. Exchanges of personnel were encouraged and they were regarded as important for training. A variety of joint business undertakings were pursued, including the formation of consortium banks and the co-financing of large projects. These joint ventures provided a means for sharing the costs and risks of developing an international presence, particularly outside Europe. They were expected to enhance services to corporate clients in each other’s home markets and to resist the mounting challenge from the major US banks—Le Défi Américain (The American Challenge). Some of the clubs at times were even regarded as laying the groundwork for cross-border mergers and the formation of pan-European banks. But these visions did not bear fruit. Instead, from the mid-1970s the major European banks began to develop their own presence in each other’s markets, undermining the purpose and roles of the banking clubs.” 

    +  “As these clubs were limiting competition between their members, they were somehow at odds with the idea of a common market in banking, which, on the contrary, aimed at enabling banks to freely compete on the EEC countries’ markets.” By Alexis Drach. Link. 

    +  “In the 1970s, European banks, and their banking clubs, shifted their focus on the Eurodollar markets from Luxembourg, as an international currency hub, to London where the US banks were operating.” By Mareike Beck. Link. 

    +  “Clubs and consortia represented a crucial and cost-effective link between two different visions of international banking, the scattered and independent initiatives of the 1950s and 1960s and the autonomous initiatives of the 1980s onwards.” By Carlo Edoardo Altamura. Link. 

    NEW RESEARCHERS

    Global Banks

    ROCÍO E. SUÁREZ is an assistant professor in economics at Washington College. In her job market paper, she explores the effects that holding reserves accumulation during trade shocks has on sovereign default.

    From the abstract: 

    “How large are the benefits of holding international reserves under terms of trade shocks when sovereign debt is denominated in foreign currency? To answer this question, we develop a model of endogenous sovereign default with international reserves accumulation. A negative terms of trade shock increases the service cost of debt but, at the same time, it raises the value of international reserves holding which may help reducing default risk. Calibrated to 16 emerging economies over the period period 1997-2019 we find that, in a model with no reserves accumulation, default risk is twice as high relative to the benchmark calibration and consumption falls 50% more when the economy is hit by a terms of trade shock. Not holding reserves increases the volatility of consumption by 17% with respect to the benchmark, 40% more than a model with no terms of trade variability.”

    + + +

    +  “Andry argues that these left policies constituted a coherent alternative to the neoliberal version of European integration which ultimately manifested, but that leaders of the western European left missed a crucial ‘window of opportunity’ to implement them.” New on PW, Neil Warner reviews Aurélie Andry’s Social Europe, The Road not Taken. Link.

    +  “One advantage of the Chinese model is its unique blend of political centralization combined with economic and administrative decentralization.” Also new on PW, Poornima Paidipaty interviews Pranab Bardhan. Link.

    +  “For a country—and a region—accustomed to spending what it doesn’t have, the idea of saving part of the wealth and investing it for higher future returns once the energy transition arrives is revolutionary.” In Bloomberg, Juan Pablo Spinetto writes about Brazil’s subnational social wealth funds, referencing a JFI report by Andrea Gama. Link and link. 

    +  “In Cameroon, the unintended consequences of Nigeria’s fuel subsidy withdrawal ripple across the beleaguered Anglophone region.” By Francis Tim Mbom. Link. 

    +  Will Bateman on the fiscal role of the US Fed. Link. And see Bateman’s recent PW essay, co-authored with Jens Van ‘t Klooster, on the history of monetary financing. Link. 

    +  “Instead of a simple, linear process of diffusion, the electric avatar of Western-style fossil capitalism arrived in the colonial periphery belatedly, haphazardly, and reluctantly.” By Elizabeth Chatterjee. Link.

    +  Indrajit Roy on the “politics of the poor” in India. Link. 

    +  “We estimate that physicians lose 18% of Medicaid revenue to billing problems, compared with 4.7% for Medicare and 2.4% for commercial insurers.” By Abe Dunn, Joshua D Gottlieb, Adam Hale Shapiro, Daniel J Sonnenstuhl, and Pietro Tebaldi. Link.

    +  How landless peasants become urban landlords in Shanghai and Guangzhou, by Saul Wilson. Link.

    +  “In post-slavery Brazil, Afro-Brazilian women worked for paltry sums in the homes of wealthier (not necessarily wealthy) families. But the precise arrangements varied significantly. Some received a consistent (though low) wage, which they would use to support their family. In other cases, women were not paid or paid a very low wage and/or served as live-in employees on call 24 hours a day. Moreover the complete transference of poor, mainly Afro-Brazilian children into white and/or wealthy families occurred in the Northeast. Initially labeled ajuda contratada (contracted help), a young girl would be sent to work in the home of a wealthy family when she was only a few years away from marriage. She usually received no compensation apart from receiving food and housing in return for her labor. Her presence in the wealthy home was considered merely a transitional period until marriage.” By Elizabeth Hordge-Freeman and Jaira J. Harrington. Link. 

  9. Hot Plate

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    This is an archived version of the PW Sources newsletter from Saturday, July 22. Sign up to receive PW Sources directly to your inbox here.

    WAR ON DRUGS

    Mexican President Andrés Manuel López Obrador came to power in 2018 vowing to end the country’s war on drugs. Yet, as he nears the end of his six-year tenure, the immensely complex drug trade continues to yield high levels of violence.

    In a 2016 article, OEINDRILA DUBE, OMAR GARCÍA-PONCE, and KEVIN THOM examine how trade policy and maize prices shape illicit crop production in Mexico. 

    From the text:

    “About 29% of agricultural workers (representing 14% of all workers) in Mexico were identified as maize workers in 1990. Over the course of the 1990s and 2000s, several major fluctuations in the maize price impacted income opportunities. The implementation of the North American Free Trade Agreement (NAFTA) in 1994 initiated liberalization of the sector, expanding import quotas and reducing tariffs. The introduction of NAFTA precipitated a large decline in the price of maize in Mexico: between 1993 and 1994, it dropped by 20%. Using data from 1990-2010, we demonstrate that price changes induce differential drug market outcomes across municipios of varying maize suitability. We show effects along the entire narco-trafficking chain, starting with increases in illicit drug crops and ending with cartel violence. We document impacts on the cultivation of marijuana and opium poppies, as well as seizures of raw marijuana and opium gum. It was hoped that NAFTA would deliver economic gains by more efficiently allocating resources. Relative price changes were expected to initially reduce agricultural incomes but ultimately encourage workers to join more productive, export-oriented sectors. While Mexican manufacturing has expanded, the reduction in maize prices following the agreement also contributed to the growth of the illicit drug sector.” 

    +  “Tied to—or simultaneous with—anti-drug funding, laws are adjusted, and reforms are brought in that encourage privatization and increased foreign direct investment.” Dawn Paley on “drug war capitalism” in Mexico. Link. 

    +  “The origins of Mexico’s drug wars can be found in the Mexican state’s decades-long attack on popular movements advocating for social and economic justice.” By Alexander Aviña. Link. 

    +  “A significant effect of the Mexican Drug War on the GDP per capita for states with military operations equal to –0.5%, over the period 2007–2012.” By Jose Roberto Balmori de la Miyar. Link. 

    NEW RESEARCHERS

    Global banks

    JULIEN ACALIN is an economist at the International Monetary Fund. In his job market paper, he explores how internationally active banks shape global imbalances. 

    From the abstract: 

    “This paper studies the role of global banks in cross-border gross and net capital flows. I propose a tractable multi-country model in which leverage-constrained global banks intermediate funds between local banks with heterogeneous projects. Following a relaxation of their constraint, global banks reallocate more funds, generating higher gross capital flows. I show that countries with higher net external liabilities to global banks experience a larger deterioration in their current account balance, driven by a larger increase in investment, after a leveraging up by global banks. Fluctuations in global banks’ leverage play a key role in driving global imbalances.”

    + + +

    +  “At the core of this problem is that many treasurers do not have a complete view of their money across entities and the world.” New on PW, Elham Saeidinezhad interviews Tim van Bijsterveldt about transformations in the global payments system. Link.

    +  “Mottley, Zelenskyy, and Modi’s framing of their demands shows how developing countries are determined to shift the global power structure to make their states capable of solving pressing problems.” New on The Polycrisis, Kate Mackenzie and Tim Sahay on how developing nations are seeking to remake the world order. Link.

    +  “In this brief, we provide a comprehensive array of data on fully refundable state CTCs as a resource to lawmakers, researchers, and advocates.” JFI’s report on state-level child tax credits, by Halah Ahmad and Jack Landry. Link.   

    +  A green cement technology tracker, from Leadership Group for Industry Transition. Link.

    +  A report from Climate and Community Project, on how trolleybuses can help decarbonize San Francisco’s transit system. Link.

    +  “Even if Bretton Woods III emerges, leading to the formation of a robust parallel financial system that is not based on the dollar, central banks will continue to engage with the legacy dollar-based financial system.” By Esfandyar Batmanghelidj. Link. 

    +  “During the Anti-extradition Movement in Hong Kong, a wave of new unions surfaced—18 newly registered unions in 2019 and 491 in the first half of 2020.” By Anita Chan and Sallie Lau. Link. 

    +  Geraldine Pratt, Caleb Johnston, and Kelsey Johnson on “the growing employment of companion robots in elder care.” Link.

    +  “Until the late nineteenth century, most tequila companies did not have extensive landholdings or grow their own agave. Instead, they bought agave from the haciendas and larger farms in the area. As demand for tequila increased, the distillery owners began buying up smaller distilleries and acquiring land. Jesús Flores, Cenobio Sauza, and other local elites expanded their plantations of agave in the Tequila region. This led to an enormous concentration of ownership of the agave plantations. In 1890, out of a total of 60 million plants in Jalisco, Cenobio Sauza had more than 5 million (spread out over twenty-five hundred to three thousand hectares of land); several other elites in the region had between 2.5 and 5 million agaves each. By this point, the hacienda land in the Amatitán-Tequila valley was almost completely planted with agave. A description of the region from 1893 noted that the tequila producers had “dedicated themselves assiduously to the cultivation of [agave], which now [constituted] the wealth of some of the haciendas.” And in 1896, making full use of the loopholes permitted to elite landowners by President Díaz, Cenobio Sauza obtained the last agave fields in Jalisco that were still held by the indigenous population.” By Sarah Bowen. Link. 

  10. Ríos Navegables

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    This is an archived version of the PW Sources newsletter from Saturday, July 15. Sign up to receive PW Sources directly to your inbox here.

    DUTCH IMMIGRATION

    The Dutch coalition government collapsed last week, with Prime Minister Mark Rutte resigning after centrist coalition members refused to support highly restrictive policies for refugees. 

    In a 2020 chapter, RINUS PENNINX charts the history of post-war labor immigration in the Netherlands. 

    From the text:

    “By the end of the 1950s, the country’s postwar economic reconstruction was so successful that labour reserves decreased significantly and, in labour-intensive industries (metallurgy, food and textile industries and mining), it was difficult to find sufficient workers. From 1961, a state-organized official recruitment drive started to fill vacancies, mainly with un- or low- skilled workers. First came Italians, then Spaniards, Portuguese, Greeks and Yugoslavs; still later came Turks, Moroccans, Tunisians, and Algerians. Between 1961 and 1975, some 85,000 migrant workers were officially recruited until the drive was ended. However, many more came. Immigration Policy was dominated by the belief that foreign workers’ engagement was only temporary—which is why they were popularly called gastarbeiders (guestworkers). Initially (1960–1967) they were seen as a buffer for industrial sectors being restructured and for general fluctuations in economic activity. As a result of the brief economic recession in 1966/7, the concept of the foreign worker acting as a buffer receded but the temporary nature of ‘guestwork’ remained a basic policy premise. ‘The Netherlands is not an immigration country’ was the crucial sentence in the Memorandum on Foreign Workers of 1970. The government maintained that ‘guestwork’ would become redundant when the restructuring process was complete. During the boom years of recruitment (1969–1971), however, the stricter regulation of  admission proved to have little effect on the actual inflow of recruited workers. The increasing demand for labour made foreign workers indispensable until the economic crisis of 1973.” 

    +  “The Dutch government not only tried to prevent migration to the Netherlands; it also took measures to introduce settled immigrants to return. Even more ambitious was the idea of stimulating return migration by development programs for regions in the sending societies that were heavily dependent on migrant labor.” By Hans Van Amersfoort and Penninx. Link. 

    +  “Despite the fact that the Dutch job machine has been churning out jobs at a very high rate almost continually in the 1990s, unemployment among immigrants has remained relatively high.” By Robert Kloosterman, Joanne Van Der Leun, and Jan Rath. Link. 

    +  Aslan Zorlu and Joop Hartog on guest workers and “skilled” labor in the Dutch economy. Link. 

    NEW RESEARCHERS

    Climate change denial

    EDGARD DEWITTE is a PhD candidate in economics at SciencesPo Paris. In a recent paper, he explores the link between fossil fuel identities and beliefs around climate change.

    From the abstract: 

    “Almost half of U.S. citizens doubt the reality of human-made climate change, and this share has remained stable over the last three decades. This paper argues that the roots of this denial are, in part, to be found in the economic histories of communities. Using data on 3.6 million oil and gas wells drilled between 1859 and 2022, I show that long-term exposure to fossil fuel extraction negatively impacts present levels of climate change beliefs—independent of present production and employment. These effects are neither driven by ideological bundling of beliefs, nor by selective migration. Instead, building on archival and, in particular, historical local newspapers data, I document the development of persistent fossil fuel identities in communities linked to their extraction, and show how they interacted with the formation of beliefs.”

    + + +

    +  “As cash-rich institutions, multinational corporations are concerned not so much with access to funding but with obstacles posed by foreign exchange fluctuations, cash flows, and supply chain disruptions.” New on PW, Elham Saeidinezhad on the global payments system and the end of LIBOR. Link.

    +  “It’s more comfortable and politically convenient to continue to fight the culture war over higher education than to confront the facts about the causes and consequences of this ugly mountain of student debt.” In the New York Times, JFI’s Laura Beamer and Marshall Steinbaum on the student debt crisis. Link. And link to JFI’s report on the student loan repayment pause. 

    +  The thirtieth anniversary special issue of the Review of International Political Economy, featuring articles on gendered finance, Chinese high-speed rail, and company colonies, and more. Link. 

    +  “Honduras’ powerful elite families enjoy enormous tax privileges, and they have stridently opposed the introduction of progressive taxes.” By Sammy Castro. Link. 

    +  Ritu Dewan, Jashodhara Dasgupta, Sona Mitra, and Sruthi Kutty sketch out a feminist fiscal policy for India. Link.

    +  “Firms that used the Double Irish redirected $59 billion in royalty payments to the United States in 2020, the first year of full closure.” By Navodhya Samarakoon. Link. 

    +  Chiara Colesanti Senni, Maria Sole Pagliari, and Jens van‘t Klooster
    on the climate footprint of the European Central Bank’s Targeted Longer-Term Refinancing Operations program. Link.

    +  Saerom Han on “precarious workers’ collective actions” in Tunisia. Link.

    +  José Antonio Vega Araújo, Miquel Muñoz Cabré, Reinaldo Lerma, and Yismary Ramirez on “the social acceptance of wind energy among Indigenous Wayuu communities” in Colombia. Link.

    +  “From about the ninth century on, a geniza room was located in a synagogue in Fustat (old Cairo), where for centuries tens of thousands of documents were deposited. The room and its contents were eventually forgotten until the end of the last century, when the treasure was rediscovered. The geniza contains more than one thousand documents which reflect the eleventh-century Mediterranean trade. These documents depict this trade as free, private, and competitive. The authorities’ stance with respect to international trade reflected the tolerance and liberalism that characterized the period. Muslim rulers, especially the Fatimids (who ruled North Africa, Sicily, Egypt, and Palestine), sought to promote trade and no official restrictions fettered migration or the transfer of raw materials, finished goods, or money across the Mediterranean. Both transportation and mail delivery were competitive and largely private, and shipping was available even to a small merchant, who could rent storage space on a ship. The trade within each trade center was free and competitive, with many buyers and sellers interacting in bazaars and storehouses, where they negotiated and competed over prices, using brokers, open-bid auctions, and direct negotiation.” By Avner Greif. Link.