Category Archive: Sources

  1. Falling Mist

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    EXPORT CURBS

    Pakistan and India are in a titfortat trade dispute over rice exports, each matching the other’s moves by withdrawing minimum export prices on rice products. Prime Minister Modi—caught between the needs of rural farmers and domestic consumers—had until recently curbed rice exports as part of his effort to keep domestic prices in check, which led to a Basmati export boom in Pakistan.

    In a 2024 article, PUSPA SHARMA and SWADHI KARTHIKEYAN examine the domestic objectives behind India’s rice export restrictions and the consequences for farmers and neighboring countries:

    “Prioritising domestic availability of rice and ensuring price stability has been a leading cause of rice export restrictions. During the election season, this becomes even more visible, as was the case in India. However, many Indian farmers were not happy with the export restrictions. According to the National President of the Kisan Mahapanchayat (Farmers Union), the government policy to ban food exports and allow cheaper imports reduced farmers’ meagre agricultural incomes. Moreover, despite the export restrictions, domestic food prices did not stabilize. India’s food inflation reached an all-time high of 190.6 points, which was up by 7.68 percent compared to the previous year. This had a double impact on a majority of the farmers who lost their income on the one hand, and as consumers, they had to face high food prices. Hence, justifying the rice export restriction policy as a preference towards domestic price stability and peace is perhaps a specious argument. The rising inflation and farmers’ discontent that was seen in the 2024 election results are evidence for that.”

     “The agrarian crisis in Punjab has intensified. Industry has seen a reversal, and corporate investments in agriculture have been unable to catalyze sustained development, alternative forms of employment, or economic diversification.” In PW, Shreya Sinha looks at the effects of Modi’s policies in the agriculturally-dependent Indian Punjab. Link. “In India, Punjab has almost no competitor in the field of rice production. Robust production in recent years did not really translate into gains for
    farmers as prices remained subdued.” By Suvidh Shah. Link.

    +  “Despite large input subsidies and price support, trade restrictions, among other things, reduce farmers’ actual price realization.” By Shweta Saini and Siraj Hussain. Link. “Rigidity of the export prices is likely to lead to national loss of foreign exchange, since the demand for fine rice is elastic.” Syed Mushtaq Hussain on the potential of Pakistani rice exports. Link.

    +  “The uncertainty caused by a sudden rise or fall in commodity prices has the potential to exacerbate the consequences of price declines relative to gains. Pakistan can achieve sustainable growth in agriculture by putting farmers back at the core circle of policy-making processes.” By Umair Kashif, Junguo Shi, Snovia Naseem, Muhammad Ayaz, Rehan Sohail Butt, Waris Ali Khan, and Mamdouh Abdulaziz Saleh Al-Faryan. Link

    NEW RESEARCHERS

    Water quality

    CLAIRE LEPAULT recently obtained her PhD from the Paris School of Economics. In her job market paper, using evidence from water quality and infant mortality, she assesses the effectiveness of wastewater treatment in India.

    From the abstract:

    “In developing countries, untreated sewage exposes people to alarming water pollution levels, yet there is limited knowledge about the effectiveness of wastewater treatment investments. I evaluate the effect of wastewater treatment on water quality and infant mortality in India, exploiting the staggered introduction of urban sewage treatment plants over the period 2010–2020. I match granular data on sewage treatment plants, river water quality, as well as child births and deaths using the hydrological network. I show that after starting wastewater treatment, levels of fecal coliforms—a commonly used measure of fecal contamination in water—decreased by 53 percent. Mortality under the age of six months declined by 20 percent downstream of the plants, with larger effects for boys and children from the bottom wealth quintiles. The results are consistent across several estimators robust to heterogeneous treatment effects, are not driven by selective migration, and are only found downstream of the plants, which rules out confounding effects from other local policies. A back-of-the-envelope calculation suggests that starting wastewater treatment earlier—from 2010—in urban areas later selected into treatment—after 2020—would have prevented over 40,000 child deaths in downstream sub-basins.”

    + + +

    +  “As we near the end of the Biden administration, revisiting the debates surrounding the 1990s’ neoliberal settlement reveals troubling parallels with the present political juncture.” New on PW, Henry Tonks reviews When the Clock Broke by John Ganz and A Fabulous Failure by Nelson Lichtenstein and Judith Stein. Link.

    +  “The reach of Morena’s popularity—leading twenty-two out of thirty-two states with its allies—is astounding. Morena has gained more electoral support than any party throughout the country’s quarter century of democracy.” Also new on PW, Camilo Ruiz Tassinari on the limits of Morena’s rise to power in Mexico. Link.

    +  In two recent ProPublica reports, Brett Murphy details how Secretary of State Anthony Blinken and the State Department have consistently disregarded legal limitations and internal objections to Israel’s human rights violations, instead working with lobbyists and weapons contractors to fulfill weapon transfer requests. Linklink. And in PW, see Tim Barker and Dylan Saba’s interview with former DoD attorney Sarah Harrison on US legal limitations regarding weapons transfers to countries that are arbitrarily blocking humanitarian aid. Link.

    +  “HRAs would provide public disaster insurance—filling gaps in private-sector coverage—and coordinate comprehensive disaster risk-reduction activities, taking the burden off individuals to “harden” their homes against extreme weather events.” By Kate Aronoff. Link.

    +  “The South remains poor, underdeveloped, and lags behind the rest of the country by every measurable standard.” By Keri Leigh Merritt. Link.

    +  Florian Kajuth uses evidence from Germany to examine the pivotal role of land prices for house prices, housing supply, and residential investment. Link.

    +  Alexander Hertel-Fernandez focuses on the labor movement to explore how private and public sector unions with increasingly left-leaning leadership engage conservative and Republican members. Link.

    +  “The failure of the Social Democrats and Communists in Germany to resist the rise of Nazism and to offer the German workers a socialist alternative to unemployment and fascism had its effects in Czechoslovakia. Industry in the Sudetenland was more severely hit than elsewhere in Czechoslovakia by the slump of the thirties, and unemployment among German speakers was about twice the national average. The appeal of pro-Nazi German nationalism grew among the Sudeten population, until in 1935 the pro-Nazi party polled 62–63 percent of the Sudeten votes. Nevertheless 300,000 Sudetens continued to vote for the Social Democrats and about 120,000 for communists. After Munich 40,000 of these suffered heroically for their internationalism in Nazi concentration camps, where about half of them perished.” By Chris Harman. Link.

  2. Les Lulua et les Baluba à Kananga

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    DUAL ECONOMY

    In a series of INET-sponsored working papers written between 2015–2018, economists Peter Temin, Servaas Storm, and Lance Taylor took W. Arthur Lewis’s dual economy theory of development (which describes split labor markets between rural and urban sectors characteristic to developing countries) and reapplied it to unbalanced output, employment, and income flows in the US economy over recent decades. While Lewis postulated a natural transition of employment from the subsistence zone to higher productivity sectors such as manufacturing, this trend is observed to be running in reverse in the US service-based economy.

    In a 2020 book, LANCE TAYLOR stresses how wage repression is the biggest driver of rising inequality in the US since the 1980’s:

    “As discussed, “real” output levels are calculated by deflating production flows at market values by price indexes. With this methodology in action, the signal that a sector is enjoying relatively high productivity growth is that the current price value of its real output is falling relative to the rest of the economy. In other words, its “terms of trade” are deteriorating. The terms of trade will shift in favor of a sector with lagging productivity in line with the “Baumol effect” (Baumol and Bowen, 1966). Computer power has become relatively less expensive over time while the cost of health care has gone up.

    Both Storm (2017b) and Rada (2007) assume that workers who do not find dynamic sector jobs are driven into the stagnant part of the economy. To paraphrase Storm: for rich economies, especially the USA, this “full employment” assumption reflects the fact that, in the absence of unemployment insurance and social security worth the name, workers must find jobs, if not in the better paid core, then in a low-end job in some peripheral activity. In contrast to standard models, endogenous adjustment of productivity in the stagnant sector allows employment (supplemented by fiscal transfers) to be maintained.”

     “The American dual economy appeared unable to provide basic public services at full employment, and it took the world-historical shock of the Covid-19 pandemic to make such deformations part of genuine legislative struggle.” New on PW, Andrew Elrod on the forgotten promise of Build Back Better and the prioritization of national security and corporate profitability over social reform in deficit spending. Link. And see JW Mason on the Biden administration’s trade war with China and whether the pursuit of industrial policy can be disentangled from militarism and economic nationalism. Link.

    +  “Even after the pandemic made their critical role clearer than ever, care workers have experienced one of the most incomplete economic recoveries post-pandemic.” By Alí R. Bustamante. Link. “Government-supported investments in chips, renewable energy, and military hardware contribute to growth and to massive corporate profits. Such investments do create jobs. But they add nothing visible to living standards.” By James K. Galbraith. Link.

    +  See Peter Temin’s 2015 working paper for his application of W. Arthur Lewis’s dual economy model in an American context. Link. “If we want to revive our vanishing middle class, which Temin so eloquently describes, we’ll need to do more to undermine the dual economy structures he so accurately details.” By Chief Economist for the Invest in America Cabinet at the White House Heather Boushey. Link.

    NEW RESEARCHERS

    Ecologically unequal exchange

    CHRISTOPHER OLK is a PhD candidate in the Otto Suhr Institute for Political Science at the Freien Universität Berlin. In a 2024 research article, he examines currency hierarchy as a driver of ecologically unequal exchange (EUE).

    From the paper:

    “Ecologically unequal exchange describes a self-reinforcing dynamic whereby peripheries are driven to export large quantities of embodied resources in exchange for less resource-intensive imports from core countries. Such large-scale outflows of resources from the periphery typically lead to persistent poverty, ecological degradation, and political instability, all of which impair peripheral states’ capacity to follow a path of autonomous social, political, economic, and technological development (Bunker and Ciccantell, 2005, Rice, 2007, Costantini et al., 2022). Lack of such development and of productivity growth, in turn, reproduces the initital inequality. Core countries, in contrast, can satisfy high levels of domestic resource consumption while offloading onto peripheries the most socially and environmentally destructive effects, such as biodiversity loss (Shandra, Leckband, McKinney, & London, 2009), water pollution (Fitzgerald & Auerbach, 2016), or deforestation (Jorgenson, Dick, & Austin, 2010). Access to cheap biophysical resources also allows core countries to continually further their technological advantage, thereby increasing their factor productivity (Hornborg, 2014). Asymmetric resource transfers and technological disparities thus feed each other, creating a self-reinforcing cycle of global technological and economic divergence, alongside an ecological collapse of planetary scale but very unevenly distributed harm. While EUE is a structural feature of the world system since the early modern period, the volume of asymmetric resource flows has increased in absolute terms over time, especially over the last decades.”

    + + +

    +  “In the current wave of deglobalization, decoupling is an option only for nations that can afford it. Friendshoring, as a trade and national-security policy, is reserved for those who can choose their friends.” New on PW, Marcos Nobre on the international call for a “new Bretton Woods” occasioned by the recovery from the Covid-19 pandemic. Link.

    +  “There are now governments, left and right, across Europe, the US, and beyond that oppose the powers and structures of independent central banks in their entirety.” Also new on PW, Leah Downey on the democratic politics of central banking. Link.

    +  A new ProPublica report reveals that Secretary of State Anthony Blinken disregarded assessments by the US Agency for International Development and the State Department’s Bureau of Population, Refugees and Migration, which both concluded that Israel had deliberately blocked deliveries of food and medicine into Gaza. Link. And in PW, see Tim Barker and Dylan Saba’s interview with former DoD attorney Sarah Harrison on US legal limitations regarding weapons transfers to countries committing human rights violations. Link.

    +  “African countries borrow at rates that are up to eight times higher than Germany’s and four times higher than the United States’. It is a reverse Marshall Plan, in which the poorest finance the richest.” See Brazilian President Luiz Inácio Lula da Silva’s speech at the opening of the 79th session of the United Nations General Assembly in New York. Link.

    +  “We advocate for a combination of end-user, worker, and community-member deliberation and control that varies based on specific vulnerability and the risk of different groups in each provisioning system.” By Julia Steinberger, Gauthier Guerin, Elena Hofferberth, and Elke Pirgmaier. Link.

    +  Shiuli Vanaja, Niruj Deka, and Amit Basole conduct a field study of Rajasthan’s urban employment guarantee program, focusing on how it promotes the participation of women in the labor market and whether it provides income stability for participants. Link.

    +  Ilaria Mazzocco, Ryan C. Berg, and Rubi Bledsoe offer an overview of Chinese firms’ involvement in various segments of the EV supply chain in Latin America and the Caribbean and the implications for US strategy. Link.

    +  “In any attempt to account for the prosperity of the domestic American market, which is inseparable from its capacity to expand, the first point to underscore is the privileged fiscal regime of patronage in the United States, with benefits flowing alike to private persons, foundations, corporations, and museum supporters. Although the way US legislation deals with capital gains and the portion of an asset allowed for usufruct is complex, tax deductions are made on the basis of the current market value (fair market value) of a work subsequently donated to a museum, and not on its purchase price. The repercussions of this procedure on rising prices and on speculation are obvious. The number and size of corporate collections have grown steadily since the 1960s and represent a significant part of the domestic market.” By Raymonde Moulin. Link.

  3. Water Mill at Kollen

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    TAX RULE

    On Thursday, a new multilateral treaty signed at OECD will allow early implementation of a global minimum tax rule for cross-border payments, as part of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS). The framework is meant to update global tax policy in response to how large multinational companies have adapted to globalization and digitalization.

    In a September 2024 paper, Mona Barake and Elvin Le Pouhaër simulate the impact of the BEPS framework’s Pillar 1 proposal, which would repeal digital service taxes in certain countries and disallow the allocation of profits to countries that retain them:

    “The total tax base to be redistributed annually is estimated to range from €30.8 to €57 billion if Pillar One had been implemented over the 2016 to 2022 period. The Marketing and Distribution Safe Harbor (MDSH) adjustment reduces substantially redistributed Amount A from its initial level of €75–150 billion. After accounting for double tax relief, this results in net revenues of €5.7 billion in 2020 to €10.9 billion in 2022. Revenues would be unequally distributed across the globe. We find that the largest beneficiaries will be the United States, with between €3.1 billion and €3.4 billion in 2022, and China, with net gains ranging from €1.8 billion to €2 billion that same year. In absolute terms, high-income countries would gain more than middle and low-income countries, which should be expected given the size of their market and the purchasing power of their consumers.”

     “The relevance of low-taxed profit in high tax jurisdictions implies that domestic minimum taxes could raise considerable revenue not only in jurisdictions with low average rates, but also in jurisdictions with average rates above the minimum tax.” By Felix Hugger, Ana Cinta González Cabral, and Pierce O’Reilly. Link. And see Thomas Tørsløv, Ludvig Wier, and Gabriel Zucman on the tax avoidance strategies of multinational companies. Link.

    +  Ernesto Crivelli, Ruud A. de Mooij, and Michael Keen assess to what extent developing countries are affected by corporate tax base erosion, profit shifting, and tax competition. Link. “Corporate taxation increases the cost of capital and limits corporate investment. Hence, tax avoidance might also spur investment and produce some benefits for the economy as well, particularly in the case of financial constraints.” By María T. Álvarez-Martínez et al. Link.

    +  Dhammika Dharmapala reviews the empirical literature on base erosion and profit shifting. Link. “Profit shifting could be reduced dramatically using policies like a minimum global corporate income tax, but these policies would also reduce global output substantially.” By John Budd, Jozef Konings, and Matthew J. Slaughter. Link.

    NEW RESEARCHERS

    Public services

    MARIANNA SEBO recently obtained her PhD from the Economics Department at Barcelona University. In her dissertation, she examines local public service provisions and inter-municipal cooperation in the context of delivery costs and waste collection service quality.

    From the paper:

    “Public procurement is frequently used to contract solid waste collection services. Incomplete contracts and transaction costs increase the need for monitoring and supervision. In Barcelona, solid waste collection is regulated by competition, with four delivery zones being contracted out separately. Therefore, it is possible to make relative performance assessments, especially in the areas where the contracted firms operate close to each other. Private firms anticipate stronger competitive pressures near competitors’ zones, even after the contract has been awarded, and they compete on quality. Monthly data on the number of complaints regarding waste collection in the city’s 73 neighborhoods between 2014 and 2019 is used to evaluate quality. Using count model approaches, our results show that higher quality is provided in neighborhoods closer to other neighborhoods served by a competing firm. Moreover, lower quality is delivered in peripheral neighborhoods, where a comparison with competitors’ neighborhoods is much harder, if possible. The results are consistent with the hypothesis that firms strategically manage quality performance and tend to deliver higher quality where they anticipate that monitoring by the regulator is easier.”

    + + +

    +  NYC Climate Week is already here: Join JFI and the Center for Active Stewardship for several upcoming events!

    +  “What will happen in a region like the valley region of the Magdalena Medio, which has historically depended on the oil industry and is a hub for production, exploitation, refining, and transportation? A social transformation can’t be achieved overnight.” New on PW, Camilo Andrés Garzón interviews César Loza, President of la Unión Sindical Obrera, representing Colombia’s oil and gas workers. Link.

    +  “The number of public firms increased sharply in the first half of the 1990s. However, the number of listed firms peaked in 1997 and has since fallen by half, such that there are fewer public corporations today than 40 years ago” By Sebastian Dyrda, Guangbin Hong, and Joseph B. Steinberg. Link.

    +  “Case studies of the aeronautics and microelectronics industries provide evidence that the Pentagon has implemented a de facto industrial policy in the name of national defense.” By Gregory Hooks. Link. See Domhoff for a critique of Hooks and state autonomy theory, and a reply from Hooks. Linklink.

    +  “The increase in the Selic rate distinctively reduces inflation in groups such as “Food and beverages,” “Household items,” and “Clothing,” but has an insignificant impact on subgroups such as “Housing” and “Communication.” ” By Rafael S. M. Ribeiro, Gilberto Tadeu Lima, Gustavo Pereira Serra, and Marina Sanches. Link.

    +  “Microsoft’s nuclear deal is also the second major one inked by a technology company just this year. Amazon purchased a data center site co-located at another Pennsylvania nuclear plant in March.” By Matthew Zeitlin. Link.

    +  Elizabeth Pancotti, Todd N. Tucker, and Matthew Yglesias share opposing views on the usefulness of tariff policies in shaping markets. Link.

    +  “For the editors of Flame, structural location in capitalist production offered migrants from the Caribbean the possibility of imagining themselves as a global actor. The historical significance of the publication derived less from the originality of its form during a moment of global radicalism than its capacity to delineate the end of a decade when identities were in flux. Whilst Flame sought to platform the voices of black workers during the rise of fascist and racist violence in Britain, industrial restructuring in the advanced capitalist countries, and revolutionary expectations in the Caribbean, it also bookends a certain moment of political time. For its founder and co-editor, Anthony (Tony) Bogues—who would go on to be a Professor of Africana Studies at Brown University – Flame was historically significant because it aimed “to be a black radical, black workers newspaper at a specific moment when the political identity of being black British was being consolidated and formed.” ” By Casey Walsh. Link.

  4. The Bridge of Planets

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    CIRCULAR ECONOMY

    In July, UN Trade and Development released their Digital Economy Report 2024, which gives special attention to the intersection between environmental sustainability and production within the rapidly evolving digital economy. The report recommends “a more circular digital economy that would seek to reduce, reuse and recycle digital devices and infrastructure, including by extending their lifespan.” 

    In a 2022 paper, Pablo Alonso-Fernández and Rosa María Regueiro-Ferreira study the impact of extractivism and ecologically unequal exchange (EUE) on South America:

    “Free trade is a key factor in explaining the EUE, as it facilitates both productive relocations and the control of natural resources by more developed countries. The promotion of development through commodity exports has deepened the extractivist specialisation of South American countries. At the same time, unfavourable terms of trade, resulting from the significant difference in value added between their imports and exports, and the usual strategy followed by many developed countries of setting progressive tariffs according to the value added of the traded goods, has led to South America being caught in a specialisation trap. The only way for these countries to increase their incomes and finance imports or meet debt payments is to increase commodity production, because in the commodity market it is not easy to raise prices, they have hardly any internationally competitive industries, and their industrial exports are constrained by the tariff strategy of developed countries.”

     “The Social Metabolism concept shows the economy’s physical growth and its widening of the frontiers, scales and extraction speeds at the heart of the environmental problems. There has been a large growth of the social metabolism (the flows of energy and materials) in the economies of the Andean countries.” By Mario Pérez-Rincón, Julieth Vargas Morales, and Zulma Crespo-Marín. Link. And see José Gabriel Palma on the consequences of different patterns of specialization and export for the long-term growth paths of developing countries. Link.

    +  “Lithium resources are highly concentrated in South America. Geopolitical realignments, the urgency to decarbonise and the race to lead 5G and AI in a digitalised world have placed critical minerals centre-stage in the competition among leading industrial actors.” By Sophia Kalantzakos. Link. “Successful implementation of direct lithium extraction technologies in the Lithium Triangle would appear to reduce externalities on the local water supply and the concomitant effects on indigenous communities.” By Ryan C. Berg and T. Andrew Sady-Kennedy. Link.

    +  “We call for an explicit ban against planned obsolescence. We also propose that a unified and mandatory durability and reparability labeling system may prove beneficial. These labels should inform and empower consumers.” By Samuel Becher and Anne-Lise Sibony. Link. And see an ILO report on how a circular economy can provide solutions for youth employment in the global South. Link.

    NEW RESEARCHERS

    Land reform

    JEN-KUANG WANG is a PhD candidate in the Department of Economics at Penn State. In a 2024 paper, coauthored by Oliver Kim, he challenges the longstanding view that land reform was a major factor behind Taiwan’s economic takeoff.

    From the paper:

    “Unlike with public land, private lands redistributed under land-to-the-tiller did not benefit from freer crop choice, since they were not previously contracted to the Taiwan Sugar Company. But another important factor to consider is the operating size of farms: the land-to-the-tiller reform may have created holdings that were too small to fully support most households economically. Applying the 1961 average rice yield (2.4 tons/hectare) and the implied median farm sizes of the mean treated townships (0.2 hectares) as a rule of thumb, the average holding produced just 480 kilograms of rice a year—less than what it takes to support a single adult on 2,000 calories a day, and far too little to support a whole household. By contrast, areas with more public land redistribution saw operating farm sizes largely unchanged, with the median farm (still relatively small at half a hectare) able to comfortably support the annual caloric needs of two adults with its rice output.”

    + + +

    +  Join JFI and our affiliate initiative the Center for Active Stewardship for several events during NYC Climate Week later this month:

    +  “The stifling political atmosphere in the West Bank gives rise to a fear of the mukhabarat, the intelligence state, in a now-typical Arab fashion—but here in the West Bank we just have the repressive capabilities of the state, without the actual state.” New on PW, Fathi Nimer on recent escalations in the West Bank, the state of the occupation post-Oslo, settlement expansion, and the Palestinian Authority. Link.

    +  “Although Dilma was not the favorite candidate of businesspeople, there was a high expectation that the president would be re-elected—and it was this expectation that determined the apparent maintenance of industrial support until June 2013.” Also new on PW, Nicole Herscovici on the circumstantial alliance between the Workers’ Party and the business sector in Brazil. Link.

    +  “Chinese estimates of capacity utilization show that manufacturers, particularly those in green industries, seem to be increasing their capacity to produce far faster than their actual production.” By Matthew C. Klein. Link.

    +  “Founded in December 2017 by eight central banks and financial supervisors, the Network for Greening the Financial System is already credited with managing “to shift the discursive boundaries” in international policy debates.” By Eric Helleiner, Monica DiLeo, and Jens van ‘t Klooster. Link.

    +  Peter Eckersley, Katarzyna Lakoma, Pete Murphy, Tom Caygill, and Charlotte Pell conceptualize the overlap between different governance paradigms to provide a framework for how future studies may be operationalized in governance arrangements. Link.

    +  “The IRS was unable to collect almost $1 trillion a year in owed taxes because of lack of staff. The IRA included $80 billion to rebuild the capacity of the IRS, but some of that has been clawed back through subsequent budget fights.” Suzanne Kahn on rebuilding state capacity. Link.

    +  “Israeli attacks on aid organizations have become routine, despite systems in place to avoid humanitarian deaths. Aid groups share their coordinates with Israeli authorities and then are attacked by the IDF at those same coordinates.” By Stephen Semler. Link.

    +  “Antitrust law represents a vital tool for confronting undue market power and top-down domination in our economy. A true renewal of our anti-monopoly tradition will require not just stricter enforcement but a shift in philosophy.” An LPE Project round-up of back catalogue pieces covering antitrust law. Link.

    +  “In 1554, the Crown asked local governments in Mexico to identify “big lakes or notable springs whose waters have some particular virtue” or usefulness due to some essential characteristic of that water. These virtues and their agency were not human, and “virtue” does not refer to the moral principles or forms of reasoning that philosophers in the Western tradition have long debated. Rather, virtues were qualities of the waters identified by their material effects on other bodies, human and nonhuman, and grouped by those effects and their assumed underlying causes. As time passed, the virtues of waters were increasingly defined in terms of therapy and medicine, and the long medical tradition coming down from antiquity through the Arabs identified categories of waters by their effects on human bodies, such as aiding in rheumatism, healing skin disease, or dissolving kidney stones.” By Casey Walsh. Link.

  5. The Triumph of David

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    DEFICIT HAWKS

    A recent brief by the Penn Wharton Budget Model estimates that the Harris Campaign’s tax and spending proposals would increase primary deficits by $1.2–2 trillion over the next ten years. While Vice President Harris’s cost-of-living platform remains ambiguous, and Trump’s disruptive policy proposals fall outside the scope of basic budget models, both are expected to contribute to a bigger fiscal deficit. 

    In a September 2024 brief from the Roosevelt Center, David Stein traces the history of deficit politics and argues for a deeper shift in fiscal and monetary policy away from the deficit-hawk paradigm:

    “While the New Deal’s social compact had imagined—if never fully realized—employing deficit spending to ensure economic stability, the commitment to balanced-budget orthodoxy heralded a retreat from these aspirations and techniques. The official platforms of the Democratic Party track this transformation in policy priorities and prevailing ideologies, from the rise of full employment in the 1940s to the dominance of balanced budgets after the 1980s. The 1972 Democratic Party platform, reflecting the power of the full-employment agenda, emphasized that “full employment—a guaranteed job for all—is the primary economic objective of the Democratic Party” (The American Presidency Project 1976). Such a view was echoed again in 1976 and 1980, as it had been in prior decades. But by 1984, full employment barely warranted a mention in the platform—the federal budget deficit, meanwhile, drew 37 references (The American Presidency Project 1984; see Figure 2). That shift in focus would persist during the Clinton years and beyond. This was not just an effort to score political points in election years. At a core level, deficit-hawk politics were about reordering governmental priorities, constraining the ambitions and achievements of the public sector. These policies would eventually undermine efforts to ameliorate the harms of the 2008 recession, and they continue to curtail the prospect for adequately addressing climate change, or making other necessary investments in the care sector that are needed to make the 21st century livable. In short, Democrats need to slough off the shackled imagination of deficit-hawk politics to meaningfully confront the clear challenges ahead.”

     “If all the people who worry and spend sleepless nights—all for fear of the debt—could forget about it and spend their efforts toward achieving a growing national income, their contribution to the solution of the debt problem would be far greater.” By Evsey Domar. Link. And in PW, see JW Mason on the implications of Keynes’s alternate vision of monetary production for the politics of sovereign debt and monetary policy in the US. Link.

    +  “There’s little evidence of a link between deficits and inflation for the US economy where monetary policymakers are free to pursue low inflation. But developing countries, requiring seigniorage revenue, show a strong link between fiscal deficits and inflation.” By Keith Sill. Link

    +  “As long as the Fed believes that deficit spending is inflationary, government deficits are likely to lead to tight monetary policy and rising interest rates.” By L. Randall Wray. Link. “An increase in the deficit reduces national saving and hence future national income, regardless of its effects on interest rates.” By William G. Gale and
    Peter R. Orszag. Link.

    NEW RESEARCHERS

    Shale Shock

    ALEXANDER F. GAZMARARIAN is a PhD candidate in the Department of Politics at Princeton University. In a 2024 working paper, he analyzes presidential elections from 1972 to 2020 with a difference-in-differences design to find that the shale gas shock increased the Republican vote share by 4.9 percentage points.

    From the paper:

    “This historical advantage for the Democrats in coal country was due partly to union ties (Dark 1999). Other issues also drew voters to the Democratic Party since rates of unionization vary (Gaventa 1982), and there are also some regional differences in baseline support. This average Democratic advantage created the conditions for a partisan reversal. Democratic voters in these areas were cross-pressured. The Democratic Party, in addition to defending labor, also backed environmental regulations that threatened coal (Mildenberger 2020). The Democratic Party has long “owned” environmental issues, being seen as more competent and consistent, while the Republican Party has been more pro-business and antiregulatory (Egan 2013). As early as 1988, the Democratic platform included a call to address climate change, while the Republican platform promised to defend the coal industry. To the extent that Democratic voters were aware, they faced a dilemma: supporting a party that protects workers’ rights could jeopardize their industry’s viability. I argue that the decline of coal due to the shale shock increased Republican support through two mechanisms. First, the decline of coal raised the salience of the Democratic Party’s environmental issue ownership since voters increasingly saw a conflict between their economic self-interest and partisan preference. Second, the Republican Party also sought to politicize the issue by blaming environmental regulations, which mobilized new voters.”

    + + +

    +  Join JFI and our affiliate initiative the Center for Active Stewardship for several events during NYC Climate Week later this month:

    +  “Unions have become quite good at winning large-unit elections. From 2014–2021, 63 percent of large-unit certification elections were successful.” New on PW, Benjamin Fong focuses on the role of large-unit NLRB elections in labor’s resurgence. Link.

    +  “Preference convergence between centre-left and centre-right workers is only visible in export-oriented Germany, while significant differences remain in consumption-led Britain.” By Erik Neimanns and Lucio Baccaro. Link.

    +  “China and Africa account for one-third of the world population. Without our modernization, there will be no global modernization.” See the full text of the keynote address by Chinese President Xi Jinping at the opening ceremony of the 2024 FOCAC Summit. Link.

    +  Suresh Naidu’s 2022 essay on the future of the US labor movement. Link.

    +  “Israeli soldiers shot and killed American activist Aysenur Ezgi Eygi on Friday. Earlier this year, two 17-year-old Palestinian Americans were killed in the West Bank. The US government decried the killings but have yet to launch investigations.” By Jonah Valdez. Link.

    +  “For a generation of Northeast Valley residents, community revitalization meant leaving, not staying, in their community to find jobs that might proffer the relative stability their parents enjoyed as workers at GM Van Nuys.” By Julia Brown-Bernstein. Link.

    +  “By early 2016, Lava Jato had helped create the conditions for Rousseff’s impeachment, and it was working publicly toward the arrest of likely 2018 presidential candidate Lula—while also sparing members of the Partido da Democracia Social Brasileira (Party of Brazilian Social Democracy—PSDB), the PT’s main center-right rival. Even as the U.S. press was reporting on US collaboration with Lava Jato, most outside Brazil saw the operation as a legitimate, even heroic, investigation. Thus, that collaboration might have seemed morally justified. By 2017, Lava Jato’s neutrality was coming under scrutiny, with critiques of the operation finding their way into publications such as Foreign Affairs (Robertson, 2017) and reporting on the economic devastation wrought by Lava Jato appearing in the Washington Post (Lopes and Miroff, 2017). It is noteworthy that as US consensus about Lava Jato’s benevolence faded, so did reporting on US involvement. By Brian Mier, Bryan Pitts, Kathy Swart, Rafael R. Ioris, and Sean T. Mitchell. Link.

  6. Meandering the Dark Blue

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    DEFORESTATION REGULATION

    Restrictions on the consumption of products associated with deforestation have been implemented by private companies via zero deforestation commitments (ZDCs), and have been adopted by developing countries for the incentive of result-based financing through REDD+. As of December 2024, the European Union Deforestation Regulation (EUDR) in the European Green Deal (EGD) will prohibit certain raw materials and related products from being exported to the European Union if they involve the use of deforested land.

    In an August 2024 working paper from the Center for Distributive, Labor, and Social Studies (CEDLAS), PABLO DE LA VEGA uses Comparable General Equilibrium modeling to examine the potential environmental and economic impacts of the EUDR in Argentina:

    “The potential economic impacts of the EUDR in Argentina are considerable. Using Comtrade data and the list of products covered by the regulation, Calvo et al. (2024) estimate that the EUDR would reach approximately 40 percent of the value of Argentina’s exports of goods to the EU (about US$ 5 billion, 5 percent of total exports of goods), which is the second most important destination for Argentina’s exports of goods. The main production chains affected are soybean and livestock, which account for 80 percent and 15 percent of the value of exports to the EU reached by the EUDR, respectively. As a consequence of the EUDR, between 2025 and 2030, GDP would be reduced by an average of 0.46 percent with respect to the baseline scenario. However, of greater magnitude is the potential environmental impact. Deforested hectares would be reduced by 6.64 percent and emissions of polluting gases by 0.39 percent.”

    +  “Implementation of commitments to reduce deforestation is hampered by different perceived financial risks, differences in the levels of influence and power held by different actors, and a perceived entitlement to deforest.” Angela M. Guerrero, Natalie A. Jones, Helen Ross, Malika Virah-Sawmy, and Duan Biggs explore multiple sustainability initiatives targeting deforestation in the soy supply chain, using a mental model perspective. Link. In PW, see Fernando Rujitsky on Brazilian agribusiness and the green transition. Link.

    +  “It is the EGD that has fundamentally shaped the EU’s response to the major crises and challenges associated with the emerging geopolitical reality.” By Mathieu Blondeel. Link. And see a 2023 policy paper from the Real Instituto Elcano on the EGD as a driver of EU-Latin American cooperation. Link.

    +  Charolette Streck argues that REDD+ programs can prevent deforestation leakage via national and jurisdictional programs that integrate local investments. Link. See Nicolas Kreibich and Lukas Hermwille on the post-2020 voluntary carbon market, and see Allegra Dawes on the current voluntary carbon market landscape. LinkLink.

    NEW RESEARCHERS

    Dutch Disease

    SANTIAGO GRANA-COLELLA is a PhD candidate at the Universidad Nacional de San Martín. In a 2024 working paper, coauthored with Ignacio Silva Neira, he assesses the suitability of the Dutch Disease hypothesis as an explanation for the commodity boom and accompanying appreciation of the real exchange rate in Latin American countries between 2003–2019.

    From the paper:

    “The policy recommendations developed from heterodox currents, particularly from New Developmentalism (ND) and post-Keynesian criticism, are varied due to the diversity of approaches established and the assumptions considered. The ND approach advocates mainly for export taxes to mitigate the DD’s effects (Bresser-Pereira, 2008). In this regard, Dvoskin and Feldman (2018), while formalizing ND proposals in a model that endogenizes the productive structure of a small open economy, show that export duties might be a more feasible policy than export taxes since they will not raise costs for primary producers, thus avoiding repercussions on the prices of commodities derived from these products. However, as demonstrated by Dvoskin, Feldman, and Ianni (2020) through a Sraffian model, conflict inflation is a limit to export diversification through exchange rate policies. Another significant limitation of the ND approach is its foundation in addressing market failures, which consequently disregards the role of industrial policies as crucial elements for fostering new competitive advantages. Palley (2021) states that these policy recommendations do not substantially differ from neoliberal ones. The ND simplifies the development issue by not considering the global productive structure (i.e., not considering the long-term dynamics explained in the center-periphery theory) and thus avoiding discussions surrounding productive transformation. Furthermore, Palley (2021) asserts that the implementation of an export tax establishes a development strategy based on the inflow of foreign currencies that impacts financial vulnerability due to the dependence on external finances.”

    + + +

    +  “Patronage systems helped to stabilize the initial path of neoliberal reform by undergirding the ANC’s legitimacy, but under Zuma they began to critically undermine conditions for corporate accumulation.” New on PW, Niall Reddy on the ANC, opposition parties, and circuits of the informal economy in South Africa. Link.

    +  “The natural rate, says the ECB, ‘while unobservable … provides a useful guidepost for monetary policy.’ The idea of an unobservable guidepost perfectly distills the contradiction embodied in the idea of R*.” Also new on PW, JW Mason on orthodox assumptions of money neutrality in monetary policy. Link.

    +  “Country platforms are now an increasingly hot topic, and are being advanced by the Brazilian hosts of this year’s G20, along with the IMF, multilateral banks, G7 governments, and the financial sector.” New on the Polycrisis, Kate Mackenzie and Tim Sahay on country platforms, a new concept for coordination between international finance institutions, private finance, and states. Link.

    +  “The Employee Free Choice Act would allow unions to be certified if a majority of workers sign certification cards. This would assess workers’ support or opposition to unionization without requiring the government to run costly elections.” By Matt Bruenig. Link.

    +  A Department of Commerce press release announces the preliminary memorandum of terms for providing $50 million in proposed direct funding to HP Inc., which specializes in microfluidics and microelectromechanical systems, under the CHIPS and Science Act. Link.

    +  A new working paper by Melissa Arnold Lyon, Matthew A. Kraft, and Matthew P. Steinberg examines how teacher strikes affect compensation, working conditions, and productivity, using an original dataset of 772 teacher strikes between 2007–2023. Link.

    +  “My finding that fines are associated with increased financial distress, declines in credit reputation, and reduced employment stability suggests that, on average, US households cannot easily absorb typical, but unplanned, expense shocks.” By Steven Mello. Link.

    +  “The Gujarati merchants belonged to the Jain sect, similar to the Buddhists, who carried non-violent, pacific principles to extremes. In general, no merchant community in the Indian Ocean traded with sword in hand and most of the commercial emporia were neutral ports of trade without defensive walls, standing armies, and naval fleets. The main political principle which governed the policy of their rulers was to provide complete protection to an international community of merchants who were often granted extra-territorial juridical rights in exchange for not violating the port’s neutrality. Even when a great trading city such as Canton in China or Cambay in Gujarat was part of a strong empire or a military state, the rulers treated the port as if it lived from the profits of trade. The local governors were given a certain measure of independence in formulating the administrative and political structure of the towns. Underlying the entire system of trade and the balance of power was the assumption that the ocean was not an area of armed conflict in which warring states should exercise their sovereignty.” By Kirti N. Chaudhuri. Link.

  7. Pigeon

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    IRAN’S ELECTIONS

    Promising economic prosperity, president-elect Masoud Pezeshkian won the Iranian election on a reformist platform oriented toward improving economic relations with the West, a departure from a period of conservative dominance led by the late president Ebrahim Raisi. As part of his campaign, Pezeshkian recruited Mohammad Javad Zarif, the former foreign minister who led the Iranian negotiations in the Iran nuclear deal.

    In a 2017 book, TRITA PARSI chronicles how Iran and P5+1 countries pushed through fierce resistance to secure the Iran nuclear deal:

    “The conventional wisdom in Washington is that diplomacy succeeded because multilateral sanctions crippled the Iranian economy and forced Iran back to the negotiation table. Had it not been for the sanctions, Iran’s nuclear program would have expanded and the United States and Iran would have drifted toward war. Conversely, Tehran believes the acceleration of Iran’s enrichment program during the sanctions and the Rouhani government’s improvement of the economy without sanctions relief convinced the United States that sanctions were a dead end and forced it back to diplomacy. ‘Once Rouhani got elected and we began improving the economy without any sanctions getting lifted, we sent the US a clear signal that sanctions wouldn’t break Iran,’ President Hassan Rouhani’s chief of staff, Mohammad Nahavandian, argued. ‘The utility of sanctions had come to an end and the Americans chose diplomacy.’

    Though both narratives contain grains of truth, neither explains the full picture. In reality, it wasn’t so much the pressure the two sides exerted on each other that broke the deadlock as it was the compromises they made. The U.S. side pressured the Iranians either to capitulate or to engage with the United States directly without any conditions regarding enrichment. Rather than halting or slowing down its program, Tehran counter-escalated by enhancing its nuclear activities. Iran went from having 123 centrifuges in 2003 to 22,000 by 2013 and grew its stockpile of low-enriched uranium from 1,500 kilograms in 2009 to 12,000 by 2013. ‘In other words, despite sanctions, despite everything that was offered, Iran continued its program because they believed deeply that they had a right to do this as an NPT country, to have a peaceful nuclear program,’ Kerry told the Council on Foreign Relations on July 24, 2015. ‘Well, folks,’ he added, ‘sanctions hasn’t done anything to stop their program.'”

    +  “As a first measure, my administration will urge our neighboring Arab countries to collaborate and utilize all political and diplomatic leverages to prioritize achieving a permanent ceasefire in Gaza aiming to stop the massacre and prevent the broadening of the conflict.” Pezeshkian’s “message to the new world” published in the Tehran Times. Link.

    “The color green eventually emerged as the campaign color of Mir-Hossein Mousavi’s bid to become the Iranian president and almost instantly fled into the varied mazes of Islamic, Iranian, and Persian sacred and mundane registers.” Hamid Dabashi on Iran’s 2009 elections and the Green Movement. Link

     “Pezeshkian’s coalition of political and economic interests advocated a series of measures to solve the crisis: market liberalization, the stemming of middle-class capital flight, the empowerment of the private sector, and the courting of foreign investment.” Eskandar Sadeghi-Boroujerdi in Sidecar. Link. More reactions to the election: Aniseh Bassiri Tabrizi for Chatham House, and Ali Vaez for Foreign Policy. Linklink. And, previously in PW, Esfandyar Batmanghelidj and Zep Kalb find that sanctions have disproportionately favored the wealthy in Iran. Link

    NEW RESEARCHERS

    Labor Volatility

    CÉSAR CASTILLO-GARCÍA is a PhD candidate in economics at the New School for Social Research. In a 2022 working paper, he examines the origins of neoliberalism in Latin America by looking at the case of Peru. 

    From the paper:

    “I argue that the Peruvian case is an ideological precursor of the South American neoliberal authoritarianism before the 1950s. The alternative narrative I propose studies the Peruvian neoliberalism as an opening episode of the deep transnational connection between the two foundational events (the Walter Lippmann Colloquium (WLC) and the first meeting of the Mont Pèlerin Society (MPS)) and Latin American economic experts, who played a role in influencing public opinion through political relations and media outlets and directly devising economic policies. The first wave shows the public appearances of the French neoliberal Louis Baudin (WLC and MPS) in Peru. Throughout his book L’Empire socialiste des Inkas (1928), Baudin contributes to the critique of socialism and Indigenism in the Peruvian society and introduces the term neoliberalism in his conferences of 1947 in Lima. In the second wave, the economists Pedro G. Beltrán and Rómulo Ferrero (first member of MPS) appear in the design of free-market policies implemented during Manuel Odría’s dictatorship of the 1950s. Those Peruvian economists implemented developmental policies during the conservative government of Prado Ugarteche (1955-1961). While Beltrán succeeded in bringing Kennedy’s Alliance for the Progress to countervail the advance of Castroism in South America, Ferrero acted as a pundit and technocrat in favor of austerity and developmentalist policies.”

    + + + 

    +  “The best route to holding together and growing Labour’s 2024 coalition in 2029 is by wielding the power of the state to drive up quality of life, rather than waiting for the market to deliver.” New on PW, Mathew Lawrence and Sacha Hilhorst on the Labour victory in the UK. Link.

    +  “While rising interest rates in other countries reduce liquidity, aggregate demand, investment, and consumption, in Brazil, by contrast, higher interest rates augment financial wealth.”Also new on PW, Clara Zanon Brenck and Rafael Ribeiro on Brazilian interest rate policy. Read in English or Portuguese

    +  “The new bonds are thus structured to game the IMF’s fiscal targets and increase the return bondholders get out of Sri Lanka’s debt exchange rather than to insulate Sri Lanka against future risks.” Brad Setser on Sri Lanka’s macro-linked bonds. Link

    +  Angus McNelly on Luis Arce’s Movement Toward Socialism (MAS) party and Bolivia after the attempted coup. Link

    +  “India is simultaneously becoming both more democratic and more illiberal.” Milan Vaishnav reflects on India’s recent elections. Link

    +  “The fundamental problem for Ruto is that he faces a very difficult fiscal crisis at a time when the old playbook of Kenyan politics doesn’t work anymore.” Ken Opalo on the Kenya protests. Link

    +  Cecilia Rikap on US big tech, artificial intelligence, and national innovation systems. Link

    +  “We construct the first consistent market rent and home sales price series for American cities across the 20th century using millions of newspaper real estate listings.” By Ronan C. Lyons, Allison Shertzer, Rowena Gray, and David N. Agorastos. Link. From Paul Williams and Yakov Feygin at the Center for Public Enterprise, a proposal for a national housing construction. Link.

    +  “The prominence of chiaroscuro in late 18th-century French oil painting posed significant challenges for tapestry weavers, which led artisans and chemists to seek chemical solutions for replicating in textiles the style’s high contrast between light and dark. Textile manufacturers struggled to reproduce the intense gradations of painters like Jacques-Louis David, and innovations in dye technology were driven by the need to match the naturalism and Enlightenment symbolism of contemporary paintings. Napoleon’s investment in dye chemistry and the establishment of a dyeing school aimed to standardize colorants and rebrand traditional arts with political imagery. The integration of scientific expertise in the decorative arts led to advancements that laid the groundwork for future developments in synthetic colorants.” By Delanie Linden. Link

  8. El Ramo De Tirana

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    CHINA-PAKISTAN ECONOMIC CORRIDOR

    Because of the China-Pakistan Economic Corridor’s (CPEC) passage through the long-disputed Kashmir region, India has boycotted three consecutive Belt and Road Initiative (BRI) summits. The Indian-occupied territory of Jammu and Kasmir (J&K) remains one of the most militarized zones in the world.

    In a 2012 paper, SANTOSH SINGH looks back on the origins of the Kashmir issue and China’s strategic investment in the region:

    “Why has Beijing’s activism in Kashmir increased recently? First, as Harrison has argued, China wants high-speed rail and road access to the Persian Gulf region through the Gilgit–Baltistan region of PoK. He stated that once the links were completed, China would be able to transport cargo from its western / eastern regions to the new Chinese built Pakistani naval bases at Gwadar, Ormara and Pasni, just east of the Persian Gulf, within 48 hours instead of two to three weeks. Second, European security expert Andrew Small has opined that China is providing tacit support to Pakistan in its jihadi strategy with an aim to engage half a million Indian troops in J&K (“Tacit China support to Kashmir Militants,” Times of India, 9 July 2010). Third, China finds the Gilgit–Baltistan region valuable because it borders its own Western Xinjiang province, from where it can keep a watch on Uighur separatists. Fourth, Beijing’s sole objective behind questioning India’s legal authority over J&K is to make it defensive and ultimately weaken its locus standi in Pakistan’s illegal possession of PoK. Fifth, China allegedly wants to set up military bases in Pakistan to exert pressure on India and counter US influence in Afghanistan and Pakistan as well (Saibal Dasgupta, “China Eyes Military Bases in Pakistan,” Times of India, 30 January 2010).”

    +  “The example of Pakistan—the biggest national recipient of BRI funding—is illustrative of the successes, failures, and governmental shortcomings hampering China’s ambitions to lead the developing world.” By Joe Leahy, James Kynge, and Benjamin Parkin. Link. “China’s ability to achieve a return on its investment depends on Pakistan’s stability.” By James Schwemlein. Link.

    “The confusion over CPEC arises when commentators mix up long-term industrial zones, for which little planning or conceptual work has been done, with the energy projects that are already at various stages of execution.” By Dr. Ishrat Husain. Link.  

     “In the wake of India’s announcement of the abrogation of Article 370 of the Constitution and the reorganization of the state of Jammu and Kashmir in August 2019, China’s Kashmir policy further drifted away from its traditional line.” By Masahiro Kurita. Link. And see Gurnam Singh on the geo-political implications of the Karakoram Highway system for India. Link.

    NEW RESEARCHERS

    Labor Volatility

    CHRISTINE BRAUN is an assistant professor at the University of Warwick. In a recent journal article, she proposes an adjusted unemployment rate to capture the rise in the proportion of job seekers classified as out of the labor force.

    From the paper:

    “It is well-known that the work-horse search and matching model cannot match the volatility in labour market tightness, when using only the standard pool of unemployed, through reasonable productivity shocks (Shimer, 2005). I show that labour market tightness, constructed using the adjusted unemployment rate or total searchers rate, is 24%–38% less volatile. In fact, the labour market is less volatile in several dimensions than previously thought. Second, I calculate new measures of efficient unemployment and show that these measures have been increasing in the post 2008 recession period. Third, I show that the much-debated flattening of the Phillips Curve is significantly less, and in some specifications absent, when using the adjusted unemployment rate, or total searcher rate, as a measure of the output gap.

    In assessing the volatility of the labour market, I look at three statistics: job seeker rates, vacancy rates, and labour market tightness. The three job seeker rates I compare are the standard unemployment rate, adjusted unemployment rate, and total searcher rate. The vacancy rates I compare are vacancies per labour market participant. Total vacancies are constructed using the Help Wanted Index taken from Barnichon (2010) from 1980 to November 2000, and total job openings from the Job Openings and labour Turnover Survey from December 2000 to July 2020. The standard vacancy rate is calculated as total vacancies per standard number of unemployed and employed. The adjusted vacancy rate is calculated as total vacancies per adjusted number of unemployed and employed.”

    + + +

    +  “Continued disinvestment is the cost for continued occupancy; displacement the condition for investment.” New on PW, Ruthy Gourevitch writes on the lack of safeguards in place to prevent landlords from using IRA-funded repairs as an opportunity for rent hikes. Link.

    +  “China remains a huge market for intermediate and end-user products. Chinese consumer power remains an important aspect for any long-term business strategy for Western firms.” Also new on PW, Jewellord T. Nem Singh on the manufacturing prowess of China and the future of industrial competition between China and the US. Link.

    +  “It is not implausible to estimate that up to 186,000 or even more deaths could be attributable to the current Gaza conflict.” In a Lancet report, Rasha Khatib, Martin McKee, and Salim Yusuf factor indirect deaths into the death toll in Gaza. Link.

    +  James Vernon writes on the outsourcing of services at London’s Heathrow Airport in the 60’s and 70’s, using it as a paradigmatic example of how deregulation reinforces racial hierarchies. Link.

    +  “Between 2020 and 2022, the decrease in poverty levels in Iran was largely due to a significant uptick in consumption growth. Income redistribution from the richest to the poorest contributed only marginally to poverty reduction.” From the World Bank’s Spring 2024 Iran Economic Monitor report. Link.

    +  A Financial Times report examines the Taliban’s initiative in Afghanistan’s mining sector. By Benjamin Parkin, Jana Tauschinski, Steven Bernard, Chris Campbell, Sam Joiner, Peter Andringa and Sam Learner. Link.

    +  “Despite hand-wringing by The Economist, the fact that China’s photovoltaic companies are slaughtering each other by flooding the world with cheap solar panels is prima facie evidence of stunning policy success and value creation.” By Han Feizi. Link

    +  “In a significant departure from the proposed rule, the final rule does not require registrants to disclose Scope 3 GHG emissions.” A Heads Up review of the finalized rules for emissions reporting in companies’ SEC filings. Link.

    +  Umair Javed on Pakistani electoral politics and the parliamentary victory of Imran Khan’s PTI party. Link.

    +  “While GDP expanded over time to include forms of unpaid work such as the subsistence agriculture that had so concerned Deane, the exclusion of unpaid household services remains entrenched in international statistical standards, despite contestation by economists, statisticians, and feminist scholars (Braunstein, 2021). According to DeRock, while statisticians in the statistical departments of international agencies such as the United Nations, International Monetary Fund, and World Bank are aware of criticisms, they represent a united front against the inclusion of household services as a result of “shared norms (about the quality of official statistics) and ideas (about the boundaries of markets)” (2021, p. 31). So, although the United Nations System of National Accounts’ production boundary has expanded, unpaid care work remains beyond the pale despite its economic importance.” By Jane Humphries. Link.

  9. Sunrise

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    This is an archived version of the PW Sources newsletter from Saturday, June 29, 2024. Sign up to receive PW Sources directly to your inbox here.

    BOLIVIA

    In an attempted coup, an irregular deployment of troops led by General Juan José Zuñiga stormed the presidential palace in Bolivia on Wednesday night, only to retreat three hours later. The following day, supporters gathered around President Luis Arce, whose popularity has plunged amid an economic crisis and deepening tensions with former President Evo Morales.

    In a 2009 paper, ARINDRAJIT DUBE, ETHAN KAPLAN, and SURESH NAIDU look at coups against governments that had nationalized a considerable amount of foreign investment, and estimate gains for multinationals that stood to benefit from the regime change:

    “The qualitative evidence on links between business and coup planners is substantial. First, much of the early CIA leadership was recruited from Wall Street. A 1945 report on the CIA’s precursor by Colonel Richard Park claimed that the “hiring and promotion of senior officers rested not on merit but on an old boy network from Wall Street” (Weiner 2007, p. 7). Secondly, there was direct contact between the companies that had been nationalized and the CIA. For example, at the time of the coup planning against Arbenz, three high ranking members of the executive branch of government had strong connections with the United Fruit Company. Alan Dulles, a former member of the board of directors of the United Fruit Company, was Director of the CIA. Thomas Dudley Cabot held at different times the positions of Director of International Security Affairs in the State Department and CEO of the United Fruit Company. His younger brother, John Moore Cabot, was secretary of Inter-American Affairs during much of the coup planning in 1953 and 1954. Besides the fact that Anglo-Iranian was a majority state-owned company, the company met with CIA agent (and later historian) Kermit Roosevelt, who alleged in his 1954 history that the initial plan for the coup was proposed by the Anglo Iranian Oil Company. In Belgium, the royal court and the powerful bank Societe Generale tied together a social and financial network of colonial officials and businesses. De Witte writes that “the incontrovertible political conclusion is that the political class, including the [Belgian] court, had a direct material interest in the outcome of the Congo crisis” (De Witte 2001, p. 37). Most directly, the minister of African Affairs, a key instigator and planner of Operation Barracuda, Harold d’Aspremont-Lyden was the nephew of Gobert d’Aspremont-Lyden who was an administrator for Union Mini`ere. The Senate Church Committee reported that the CIA held meetings with U.S. multinationals involved in Chile on a regular basis, even to the point of ITT (whose board included John McCone, a former director of the CIA) notoriously offering the CIA $1 million to overthrow Allende’s government (Weiner 2007). In short, social links between the government officials responsible for the coups and financial interests are well-documented. Secret plans for regime change could have easily made it into the ears of financial actors who, even if not directly connected to the affected companies, could arbitrage this information on the market.”

    +  “Despite the threat lithium extraction poses to the communities surrounding Salar de Uyuni, ethnographer Revette often encountered the general sentiment that ‘this time it’s different.’ ” Youssef Al Bouchi and Brett R. Caraway on the obstacles to state-led lithium industrialization and how Bolivia risks re-inscribing its subordinate position as a raw material exporter. Link.

    “Evo Morales’s lithium project was presented as a succesful example of post-neoliberalism. However, ten years later, lithium has become the center of huge controversy due to delays in the different project phases and the technology selected.” By Daniela Sanchez-Lopez. Link.

     “The government of Evo Morales chose to cancel contracts with firms from Germany and China, due to protests in Potosí demanding royalties. The now ex-president even attributes his overthrow to foreign interest in controlling the mineral.” By Rocío Lloret Céspedes. Link. And see Sergio Herrera Deza on state-led development in Bolivia and its pilot contracts with the Chinese consortium CBC. Link.

    NEW RESEARCHERS

    Collective Bargaining

    IHSAAN BASSIER is a postdoctoral research economist at the Centre for Economic Performance at the London School of Economics and Political Science. In a working paper, he uses union collective bargaining in South Africa to present a theoretical framework of wage transmissions from covered to noncovered firms.

    From the paper:

    “Bargaining councils have been a central institutional feature of the South African labour market since at least 1981 when Apartheid restrictions on Black worker unionization were significantly repealed (see Bhorat, Westhuizen, and Goga (2009) and Budlender and Sadeck (2007) for overviews). A bargaining council refers to a collection of employer and employee unions from a particular industrial and geographic area which meets over workplace issues. It is established by applying to the country’s Department of Labour under the main criterion that the applicant unions collectively represent 30% of employees in the covered area. One of the most important functions of bargaining councils is to negotiate collective bargaining agreements, which set minimum wages by occupation, though supplementary wages can be establishment-specific. The collective bargaining agreements vary in period, often three years,
    but sometimes shorter and renewed annually or even longer. As in other industrial relations settings, there is a set procedure for negotiations between parties, beginning with consultations with members. While strikes during negotiations may occur, final agreements often preclude strikes and lockouts for the duration of the contract. Prescribed wage increases are most often indexed to inflation and specified as percentage increases applicable to all workers. Working conditions are also negotiated, though union surveys suggest wages are by far the most important item (NALEDI, 2006). After an agreement is reached, the bargaining council may apply for extension (routinely granted) by government mandate to non-party firms falling within its scope. Finally, enforcement is monitored by the bargaining councils which employ inspectors and to which unions may report noncompliant employers.”

    + + +

    +  “The 2003 UFCW strike was very damaging to the union. One of the main lessons was that it was no longer possible for locals to negotiate in isolation from other parts of the country.” New on PW, Andrew Elrod interviews John Marshall of the United Food and Commercial Workers, Locals 324 & 3000 on the Kroger-Albertsons merger and past waves of consolidation within the retail grocery industry. Link.

    +  “Hungary’s bid for battery supremacy is political, not economic. Throughout the past fourteen years, Viktor Orbán has learned that catering to the German automotive industry can protect his regime from EU censure.” Also new on PW, Pálma Polyák on Hungary’s role in Europe’s EV industry. Link.

    +  On July 1, at 4pm EDT, the Carnegie Endowment for International Peace and Phenomenal World will host an online conversation between Noah Gordon, David Wallace-Wells of the New York Times, and Kate Mackenzie and Tim Sahay of the Polycrisis. Link to register.

    +  “If we assume the number of noncombatant men killed equals the number of women killed, which is equivalent to about half of the roughly 14,000 adult male deaths, we can estimate that around 80 percent of the Gazans killed have been civilians.” By Adam Gaffney. Link.

    +  Linda Calabrese, Rhys Jenkins, and Lorena Lombardozzi introduce a special issue of The European Journal of Development Research that examines developmental dynamics between Global China and countries that are host to the Belt and Road Initiative. Link.

    +  “Inferences about the evolution of Treasury market depth, and hence liquidity, are largely invariant with respect to measurement decisions that go into market depth calculations.” By Michael Fleming, Isabel Krogh, and Claire Nelson. Link.

    +  Examining the American Chamber of Commerce as a key source of information for US embassies, Calvin Thrall identifies a new avenue through which informational lobbying can influence foreign policy. Link.

    +  Robert Muggah and Katherine Aguirre detail new trends expressed by recent homicide data for cities in Latin America and the Caribbean. Link.

    +  “When SunZia is completed and running at full blast, it will generate roughly 1 percent of the country’s electricity needs. After that, to fully decarbonize the electricity sector, we will need to run it all back ninety-nine more times.” By Robinson Meyer. Link.

    +  Christina Eckes examines the compatibility of the current Energy Charter Treaty and of its reformed text with the normative and regulatory autonomy of the EU. Link.

    +  “The energy crisis of the early 1970s briefly opened up a radically new horizon of energetic possibilities that played out differently around the world. For India, that energy crisis did not begin with the famous Arab oil embargo of 1973. Instead, like many poor oil-importing nations, it experienced the first oil shock as merely one component of a broader climate-food-energy emergency that reverberated throughout the political system. This crisis brought a twinned set of fateful changes. By June 1975, Prime Minister Indira Gandhi had resorted to imposing a constitutional dictatorship—the Emergency—for the first and only time in independent India’s existence, one among a series of coups and authoritarian takeovers that swept the Global South. Less noticed was a second transformation with planetary ramifications. Rising popular expectations collided with the energy crisis to impel a state-led embrace of coal, despite elite reservations about the environmental damage that would follow.” By Elizabeth Chatterjee. Link.

  10. Takin’ a chance on luv

    Comments Off on Takin’ a chance on luv

    This is an archived version of the PW Sources newsletter from Saturday, June 22, 2024. Sign up to receive PW Sources directly to your inbox here.

    PALESTINIAN AUTHORITY

    In the wake of several countries unilaterally recognizing Palestine, Israel’s extremist Minister of Finance Bezalel Smotrich has promised to strengthen Jewish settlements in the West Bank and is considering further sanctions against the Palestinian Authority for attempting to bring about the formal recognition of Palestinian statehood. The US has urged Israel to release the Palestinian tax revenues that Smotrich froze in early May.

    In a 2024 chapter, TARIQ DANA explains how Israel’s control of the PA’s tax revenue has been implemented as a form of indirect rule in the Occupied Palestinian Territories (oPt) after Oslo:

    “Unlike the Open Bridges’ reliance on the Israeli state’s financial resources to implement economic stimulus projects to stimulate pacification in the oPt, Oslo secured significant resources through donors’ commitments to support the PA under the banner of peacebuilding and economic development. International aid has been instrumental to the pacification process in crucial ways: it mitigates the harmful consequences of Israel’s colonization; it sustains the PA institutions; it provides salaries, social services, and humanitarian assistance to the population; and it supports the PA elite and its authoritarian and neo-patrimonial politics. Therefore, donors’ policies have been consistent with the Israeli position of keeping in place weak institutions and dependent economy through perpetuating the Oslo status quo. The complicity of donor-led peacebuilding in this arrangement is credited by Turner as being a form of counterinsurgency whose goal is to support compliant actors who have vested interests in ensuring stability and to help to embed their power in opposition to others who reject the autonomy arrangement. Moreover, the oPt economic dependency on Israel meant the continuation of Israeli control over vital resources for the PA’s institutional sustainability. In this way, Israel managed to subjugate the PA to heavy pressure to accept its demands. A prominent example is Israel’s control of the PA ‘tax clearance system,’ which is levied and transferred to the PA by Israel on a monthly basis. As the tax transfer accounts for more than 60 percent of all the PA revenues, Israel often uses this financial leverage to extract political concessions through withholding these amounts to force the PA to comply with its policies.”

    +  “The PA revenue structure’s reliance on Israel impeded the PA’s ability to represent Palestinians in international settings. The example of joining and utilising the ICC highlighted Israel’s strategic use of clearance revenue to undermine the PA.” By Anas Iqtait. Link. And see Amal Ahmad on the PA’s revenue structure and Israel’s strategy of containment. Link.

    “The urgent resolution of the ongoing clearance revenue dispute is critical, alongside addressing the volatility of revenues collected by Israel for the PA, which hampers predictability of fiscal policy implementation.” The World Bank’s 2024 report on the dramatically worsened fiscal and humanitarian crisis in the West Bank and Gaza. Link.

     “The two-state solution’s exclusionary nature reveals a fundamental flaw: the authority to define a Palestinian state has always rested with external powers, whether Israel, the United Kingdom, or the US.” By Samer Elchahabi. Link. And Nadia Abu Zaher compiles interviews with Fatah’s Central Committee members concerning the option to dissolve the PA. Link.

    NEW RESEARCHERS

    Water Infrastructure

    RÉGIS KOUASSI is a PhD candidate in economics at the University of Montreal. In a working paper, he examines flash floods and water infrastructure quality in the United States.

    From the paper:

    “Drainage systems include a network of sewer pipes with auxiliary structures such as gutters, ditches, and pumping stations, tasked with collecting and evacuating water throughout human settlements (Fema, 2023a). Broadly, we can distinguish three types of sewers: separate stormwater sewers, sanitary sewers, and combined sewers, which respectively carry only stormwater, only sewerage, or both (USDHEW, 1964; USEPA, 2015). The relationship between a system’s capacity and local flood occurrence is more salient for combined sewer systems. Indeed, while they channel both rainwater and wastewater to treatment plants during periods of low precipitation, exceeding the capacity of the system during periods of heavy precipitation can lead to the backflow of untreated wastewater and stormwater into basements or surface streets via manholes (USEPA, 1999). In the case of separate sewer systems, local flooding could occur due to two phenomena termed Infiltration and Inflow. The first term refers to groundwater seeping into defective pipes or sewer joints, while the second refers to surface water, usually stormwater, which flows quickly into sewers. A 1990 report from the EPA to Congress, on rainfall-induced infiltration (RII) into sewer systems, indicates that most collection and treatment systems in the U.S. do not have the capacity to withstand peak flows during the rainy season, resulting in backups into buildings and overflows (USEPA, 1990). A 1970 survey of local jurisdictions in the U.S. and Canada shows that these two problems are pervasive and create significant damages, which include back-flooding of sewerage into public roads and private properties, creating basement flooding, and properties inundation (APWA, 1970). Moreover, most capacity-related separate sewer overflows are related to wet-weather events (ASCE, 2004).”

    + + +

    +  “The UMSCA lacks legal tools to enjoin corporations from defying their obligations to workers or the public good. Like NAFTA, the UMSCA’s main goal is to continue facilitating investments regardless of their social and environmental consequences.” New on PW, Alejandra González Jiménez on labor struggles in the context of Mexico’s electric vehicle boom. Link.

    +  On July 1, at 4pm EDT, the Carnegie Endowment for International Peace and Phenomenal World will host an online conversation between Noah Gordon, David Wallace-Wells of the New York Times, and Kate Mackenzie and Tim Sahay of the Polycrisis. Link to register.

    +  “The price of mobilising private capital under the current austerity-minded Washington Consensus is therefore further dependence on fickle foreign investors.” Advait Arun in The Break DownLink. And see Arun’s PW essay on the limits of private finance. Link

    +  Mick Dueholm, Aakash Kalyani, and Serdar Ozkan consider how tight labor markets incentivize investment and automation. Link.

    +  “The cancellation of congestion pricing jeopardizes key funding and matching federal dollars for a suite of the MTA’s construction projects at the 11th hour.” By Joseph Politano. Link.

    +  “Our proposal to challenge mainstream comparative law’s coloniality lies in the idea of decolonial comparative law: a re-articulation of comparative law on the basis of decolonial theory.” By Lena Salaymeh and Ralf Michaels. Link.

    +  Lenore Palladino and Harrison Karlewicz on public pension funds and the dominance of private financial markets. Link

    +  “Contrary to a widely held view that India’s economic growth has been services-led, the article claims that in the last two decades, India has had manufacturing-led economic growth, not service-led.” By Bishwanath Goldar. Link

    +  “In over four years, the Israel Leahy Vetting Forum process has failed to approve the identification of a single ineligible Israeli unit.” By Charles O. (Cob) Blaha. Link.

    +  Zong! #3, one of a cycle of poems written by M. NourbeSe Philip, exposes the tension between different (and sometimes competing) conceptualizations of value that characterised the enslavement of black Africans. ‘Some negroes,’ the equivalent sum of negroes, were jettisoned like any other species of cargo, by Captain Luke Collingwood in the hopes of recovering the value of the insurance funds that had been secured by the slave owners. The slaves did not exist in themselves (as individual human beings) in the eyes of the law, or one may surmise, Captain Collingwood, but rather as a type of property that could be deemed superfluous—an ‘etcetera.’ The simultaneous presence of these competing forms of value in the same object (a slave’s value, however ambiguous, as a person marked by racial difference, and her value as a commodity) speaks to the coemergence of modern conceptualizations of race and modern forms of property.” By Brenna Bhandar. Link.