Economics - March 22
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U.N. panel says world should ditch dollar
Jeremy Gaunt, Reuters
A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.
Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.
... Persaud said that the United States was concerned that holding the reserve currency made it impossible to run policy, while the rest of world was also unhappy with the generally declining dollar.
(18 March 2009)
Too Big to Fail? Think Again
Alex Steffen, WorldChanging
Clay Shirky, makes an excellent point about the collapse of newspapers, which could just as easily apply to a host of other North American industries that are so unwilling to even consider the possibility that times have changed that they've entered a period of surreality:
... The single biggest delusion in North America today is that the interconnected planetary problems bearing down on us can be faced with slight alterations to the current order; that a model of delivery prosperity based on suburbs and big cars and consumerism and profligate energy use and the careless spewing of pollution in all directions can be fixed through the swapping out of some of its constituent parts for slightly greener parts -- that green-built McMansions and hybrid cars and compact fluorescent light bulbs will prop the model up indefinitely. They won't, because we are in a situation where incremental reform has already been made meaningless by a revolution in context, and industry CEOs who demand incredulously to know how we're going to run an economy if car-dependent, high-consumption suburban lifestyles go away would do well to understand what Clay is saying here:
... We're moving more and more quickly into a period of rapid transformation. We could be embracing that change and setting out to build the next smart, bright green economy. Instead, we allow ourselves to be deceived into thinking that the current models are "too big to fail." They're not, and the longer we listen, the more epic the failure will be.
(14 March 2009)
The Economy is a Real Killer
Peter Dreier, CommonDreams
Economics is sometimes called the "dismal science," but sociologists are better at examining the human side of economic hard times. What they've learned is that when the economy is hurting, people are more likely to hurt -- and kill -- themselves and others.
Every day, week, and month that the current recession continues, and even deepens, more people die, get seriously injured physically, and suffer emotional hardships that can scar them for life.
When policymakers in Washington debate how to fix the economy, they typically look at changes in figures like the unemployment rate, the stock market index, and the gross domestic product. But there are other statistics that show the economy's ugly underside -- the toll that lay-offs, foreclosures and evictions, and dramatic drops in stock prices take on our daily lives. For example, there's a direct correlation between economic downturns and an increase in suicide and suicide attempts, heart attacks, domestic violence, child abuse, and murder.
(11 March 2009)
Keynes, Capitalism, and the Crisis (John Bellamy Foster Interview)
Brian Ashley, Amandla viz ZNet
Amandla: As governments across the world spend trillions to help private capital survive the global financial crisis, is it not misleading to talk of a shift to Keynesian policies?
JBF: I think there has been, as Paul Krugman says, a "return of depression economics," and in that sense we can talk about a revival of broadly "Keynesian" policies. Keynes advocated expansive fiscal policy and deficit financing in a depression, and all governments are now seeking to put such expansive policies in place to some degree -- although generally not on a big enough scale. Also Keynes clearly advocated government attempts to reflate the economy in the face of deflationary pressures, in the context of the banking crisis of the early 1930s. So in this sense too we can talk about a return to Keynesian economics.
But the real action right now is elsewhere, in the direct government salvaging of financial capital. This has little to do directly with Keynesianism and in fact reflects the continued dominance of financial capital in the crisis.
... Amandla: Can there be an exit from this crisis through a shift to green capitalism, i.e. massive investment in renewable energy, green technologies -- a kind of "green Keynesianism" as proposed by the folk of New Economics FoundationAmandla: Can there be an exit from this crisis through a shift to green capitalism, i.e. massive investment in renewable energy, green technologies -- a kind of "green Keynesianism" as proposed by the folk of New Economics Foundation.
JBF: There is a lot of talk recently about "green Keynesianism." Robert Pollin and others at the Political Economy Research Institute at the University of Massachusetts issued a report last year on Green Recovery, which was conceived in essentially these terms -- as is the work of the New Economics Foundation in Britain, with which I am less familiar. In this context, Obama's stimulus package has been interpreted by many as a "Green New Deal" or as "Green Keynesianism," due to its emphasis on the development of energy saving technology. Theoretically, any increase in government spending at this time can help soften the downturn and even contribute to the eventual restoration of economic growth. As Keynes said, if the government simply put people to work by having them dig holes in the ground it would help stimulate the economy under such circumstances. So there is no doubt that spending on the environment would, like any other spending, serve to promote growth.
What kind of spending one does of course matters economically in the degree to which it immediately provides jobs and socially in its usefulness. Dollars spent on investments in future technology are certainly less efficient in putting people to work immediately than work relief programs. Environmental spending can of course be of either kind, but the bulk of green spending in the Obama plan is, I gather, directed at research and long-run technology and investment projects. This will not give as much bang for the buck in terms of current job promotion and in fact is heavily geared to subsidies to industry. We might even say that what is being advanced is not so much green Keynesianism as "green Schumpeterianism," since it is primarily aimed at stimulating investment with new technology.
In spending on the environment in a capitalist economy one runs up, like everywhere else, on deeply entrenched class forces of resistance. Those things that could be done to address the ecological crisis, such as the closing of coal plants and their massive replacement by other forms of energy, or the establishment of a national carbon tax with 100% dividends to the public, as proposed by NASA's James Hansen, are not done, because the vested interests won't allow it. Either it interferes with economic growth or with profits or both. Obama heavily committed himself during the presidential campaign to the continued support of big coal.
Indeed, there are really two questions here. Can a green Keynesianism lead to economic recovery? And can we save the environment this way? My take on green Keynesianism is that it is much too limited in nature, and too technologically driven, to constitute the nucleus of a full economic recovery. In fact, we are faced with a deep, long-lasting problem of economic stagnation and the crisis of financialization, as discussed in The Great Financial Crisis, which Keynesianism by its nature can do little to address. With regard to the environment -- to be understood as by far the most serious challenge of our time since the climate, the earth's species, and human civilization are all threatened -- what is currently needed is not an economic recovery plan or faster economic growth, but an ecological revolution. This would necessarily be a social revolution, on a far more massive scale than anything yet imagined. This is an issue that I have addressed in my forthcoming book (to be published in April) The Ecological Revolution.
Keynes can help us understand the flaws of capitalism but he cannot take us very far down the road to meeting the challenges of the twenty-first century. His practical suggestions were in the end simply limited to trying to fix what he called "magneto" (or alternator) problems. He avoided directly addressing the larger contradictions or "outstanding faults" of capitalism that he saw. He never got beyond advocating more in capitalist terms, while we live in a world where we need to focus on enough. For this we need not Keynes (or Schumpeter), but the much more revolutionary -- economically, socially, and ecologically -- figure of Marx. (See my Marx's Ecology.) Keynes represented the last great scientific defender of a "rational capitalism" that has now proven to be impossible.
(21 March 2009)
James Bellamy Foster is an editor of the independent socialist Monthly Review. He has written previously on peak oil and the ecological crisis. -BA
China’s Big Recycling Market Is Sagging
Dan Levin, New York Times
...Since Mr. Tian migrated from Sichuan province, the multibillion-dollar recycling industry has gone into a nosedive because of the global economic crisis and a concomitant fall in commodity prices. Bottles now sell for half of what they did in the summer.
“Even trash has become worthless,” Mr. Tian said recently as he made his way to a collection center, his sacks nearly bursting.
The collapse of the recycling business has affected people like Mr. Tian, the middlemen who buy the waste products and the factories that refashion the recyclable waste into products bound for stores and construction sites around the world. American and European waste dealers who sell to China are finding that their shipments are being refused by clients when they arrive in Asia.
The ultimate victim may be the environment, already overrun with enough trash in places to threaten people’s health, now further burdened with refuse that until recently would have been recycled.
The effect is being felt acutely in China, the world’s largest garbage importer.
(11 March 2009)