This is a little old.
I’m a big fan of Joseph Stiglitz work, as an economist and as an economics commentator/activist.
This touched a cord.
“There are too many regulations against democracy and not enough regulation to stop wallstreet.”
Those people were mostly speculators who had borrowed marks. Since the stabilization wasn’t absolutely believed, the nominal interest rate was 20% per day. Making people wait a few days for their promised dollars is a way to bankrupt them. Bankrupting all the people betting against the stabilization is a way to make it work.
April 27, 2011, 9:18 AM
UK, Not OK
The bad GDP number for the UK isn’t a surprise — in fact, judging from market response, investors seem to have expected something even worse. Still, if you step back and look at what has been happening, it’s doubleplusungood: zero growth over the past 6 months, with every reason to be worried on the downside looking forward, as Cameron’s austerity bites deeper.
Jonathan Portes gets to the nub of it:
On fiscal policy, the message is that we should listen to economists, not credit rating agencies. Most mainstream economists argued that the impact of the government’s fiscal consolidation on confidence and consumer demand would be negative; so it has proved.
Meanwhile, the argument that fiscal overkill was necessary to appease the credit rating agencies has again been disproved by market reaction – or the lack of it – to the Standard & Poor’s outlook warning last week in America, where US Treasury yields hardly budged.
In short, there is no confidence fairy; and S&P can call invisible bond vigilantes from the vasty deep, but they won’t actually come when called.
Portes hits, in particular, on a point I’ve tried to make a number of times, here and more recently here: right now, we’re living in a world in which basic economics points to conclusions utterly at odds with what Very Serious People are supposed to believe, in which radical outsiders base their views on standard economics while orthodox types turn to heterodox, highly dubious speculations.
Econ 101, buttressed if you like by fancier New Keynesian models, says that contractionary fiscal policy is, well, contractionary. Yet much of the world of movers and shakers bought into the exotic notion that expectational effects — the confidence fairy — would make contractionary policy expansionary. And they clung to this belief even as the supposed historical evidence in favor of expansionary austerity was thoroughly debunked.
I score this one against the moralist forces in our country. They are basically against what other countries find successful.
What was their secret? Determined policies to expand educational opportunities and access to health along with a willingness to depart from the conventional wisdom of the day and experiment with their own remedies. Even though all three North African countries are Moslem, empowering of women seems to have played an important role as well:
There is now substantial evidence that the health and schooling of children can be raised by empowering women, and this is precisely what Tunisia did when it raised the minimum age for marriage, revoked the colonial ban on imports of contraceptives, instituted the first family planning programme in Africa, legalized abortion, made polygamy illegal, and gave women the right to divorce as well as the right to stand and vote for election.
What is somewhat puzzling, as Rodriguez and Samman also note, is that these countries have not made nearly as much progress in democratization.
These new “facts” substantially enrich our understanding of the development landscape over the last four decades.
This is probably one of the top 5 posts I’ve read about the Philippines this year.
Marketman’s Running Survey
In the survey I am running (or if you read this later, survey that I ran), it seems some 40% of readers actually think the Philippines is POORER than it is, in other words, a fairly negative sentiment. Some 24% of you got it right, with roughly 86-88% of the families earning less than PHP25,000 per month for a family of 5. But approximately 36% of you were varying degrees of being overly optimistic, and believed that many more families earned more than they actually do. Okay, so hold this thought for a moment. Roughly 87% of all families in the Philippines, representing 75.7 million people, are living on less than PHP5,000 (USD110) per month per person on average in income.
Okay a little too over the top. but I really wanted you to read this!!!
There is often no alternative but thinking in terms of a “second” or “third” best. But that thinking is more soundly directed if done in terms of an image of what the “first” best would be, and how the “second” and “third” bests might be designed to move in the direction of that “first” best, or at least not to be in contradiction with it.
I constanly site this during conversations with friends about traffic. Looks just about right.
Consistent with the themes in this morning’s transportation forum, road pricing is a growing tool being used by cities and states around the world to change behaviors drivers and shift the balance of transportation from car-dependent to a more multi-modal form system. Six month ago, IBM and NXP Semiconductors began a pilot in Eindhoven to implement variable road pricing based on traffic demand, time of day and type of car (i.e., size + environmental impact of vehicle). Following are some insights from the pilot:
- * Seventy percent of drivers improved their driving behavior by avoiding rush-hour traffic and using highways instead of local roads.
- * On average, these drivers in the trial saw an improvement of more than 16 percent in average cost per kilometer.
- * A clear system of incentives is critical to changing driving behavior.
- * Instant feedback provided via an On-Board Unit display on the price of the road chosen and total charges for the trip is essential to maximizing the change in behavior.
People who follow the politics in the USA knows host stupid the people in the system can be.
I’m watching Citizen Tube here http://www.youtube.com/citizentube?feature=ticker on the Healthcare summit. I’m seriously envious of them right now. When we have senators who are hitting each other with personal snide remarks. When most of the questions that are being asked in Presidential forums are not up to snuff, Simply put I have no Idea who has the policy-fu down pat. Who knows basic economics, basic public policy etc. Damn. and you have self styled pundit who really know nothing.
If we are hard headed about this the huge remittances of Filipino overseas workers can be thought of as investment. We have a postive balance of payments, we need to marshal these resources and create a focused try at finding our comparative advantage and try to develop industries that we can be world leaders in.
Wallace said the Philippines had enjoyed low inflation and high international reserves and a stable balance of payments under Arroyo.
But he attributed this to the actions of the central bank and the huge remittances of millions of Filipinos working overseas.
He said most Asian countries, except small ones such as Cambodia and East Timor, were getting more foreign investment than the Philippines.
AYC Consultants economist Benvenuto Icamina said that, to attract more investment, the Philippines would need to revise certain “discriminatory taxation” policies that favor local companies over foreign ones.
He also said the country needed to upgrade and modernize its infrastructure while improving its governance and cutting “non-tariff barriers” such as red tape.
Read the whole thing.
This is a post about long term solvency – the things that we do now that determine whether we have an economic crisis in twenty or thirty years. In that sense this is a post about Australia, the US, New Zealand, Canada and Japan and possibly even China. The PIGS have rolled their dice. Most the rest of us are still shaking the dice in the tumbler.