Jayati Ghosh
All too often people in countries experiencing financial crisis are told that the road to recovery necessarily involves pain, that fiscal austerity and cuts in spending that adversely affect the lives of ordinary citizens are necessary costs of correction of macroeconomic imbalances and the consequent adjustment that is considered essential for recovery. This is repeated so often that it is now taken as received wisdom by policy makers and civil society alike – yet in fact it is not true at all. It can actually be plausibly argued that in several situations the reverse is correct, that attempts to reverse economic downswings through cuts in public spending are counterproductive and makes matters much worse. This is clearly evident for all to see in the case of crisis-ridden countries in the eurozone, for example.
And there are also positive counter-examples, that show how taking into account the concerns and requirements of ordinary citizens (and paid and unpaid workers in particular) can work as a positive macroeconomic strategy that actually provides a route out of crisis. Sweden provides an example of a country that responded to the financial crisis by explicitly recognizing and attempting to reduce the pressures on workers, and particularly women workers whose needs are often the last to be considered in such periods of crisis. Sweden incorporated measures to maintain or ensure favourable conditions of women’s work and life into its broader economic recovery strategy.
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Sunita Narain
India’s solar power policy is now entering round two. And there is much that needs to be reviewed and reworked as the business of solar energy has seen massive turbulence in India as well as globally. In the first phase (2010 to 2013) of the Jawaharlal Nehru National Solar Mission (JNNSM) the target was to set up 1,000-2,000 MW of grid-based solar power in the country. By 2013, the country has indeed commissioned some 1,000 MW of solar power, but 700 MW of this target comes from the non-JNNSM state of Gujarat.
The next phase of the national solar mission kicks in from 2013. The Union Ministry of New and Renewable Energy has set a target of 9,000 MW of solar power by 2017, of which 5,400 MW will be paid by cash-strapped states. But three years is a long time in this fast-moving business. There have been drastic changes—for the good and the bad—in this sector since the mission began in 2010.
First, the good news: the price of solar energy has come crashing down in the past two-three years. In November 2010, when the first tender for solar photovoltaic (PV) power was opened, the lowest tariff was Rs 10.85 per kWh. A year later in December 2011, when new bids were opened, the tariff was down to Rs 7.49 per kWh. This makes solar energy attractive as it is now close to grid parity, with energy utilities buying power at Rs 4-5 per kWh.
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Matias Vernengo
The World in 2013 by The Economist has been out for a while. Got it at the airport this weekend and read a few pieces. Really bad. Nothing new. One piece caught my attention though. On the fiscal cliff and the elections this terrible article says:
“Mr Obama will maintain that his victory, along with continued Democratic control of the Senate, constitute a mandate for his version of deficit reduction. But in fact the elections produced mixed results: Mr Obama narrowly won the popular vote and the Republicans retained their majority in the House of Representatives.”
First, facts; yes the GOP won the House, but Democratic House candidates won more of the popular vote than their Republican counterparts. Redistricting or Gerrymandering is what explains this failure of democracy. Dems probably need more than 55% of the popular vote to win the majority in the House.
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Gerald Epstein
Among the critical problems that were pushed aside by the “fiscal cliff” negotiations between President Obama and Congressional Republicans, none are more pressing – or more intertwined– than the criminally high rate of unemployment still plaguing the country and the massive debt overhang faced by underwater homeowners.
While President Obama, the House Republicans and billionaire-financed conservative pundits, economists and “think” tanks shriek about unsustainable debt and deficits, official unemployment languishes at 7.8% percent, while millions of Americans are struggling with underwater mortgages and many are facing foreclosure. We confront this perverse set of priorities despite the fact that, as Robert Pollin has repeatedly pointed out, U.S. government interest payments on public debt as a share of federal outlays is at an extremely low level of 7.7%, about half the level as when Ronald Reagan was President.
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Carlo Panico and Francesco Purificato, Guest Bloggers
The media and some professional blogs are spreading the view that the European debt crisis is caused by the decision of the political authorities of the countries under attack to let their citizens live beyond the material possibilities of the economy. They advertise the unfounded fears that the taxpayer of the other euro-countries is becoming the victim of a money machine that rewards the profligacy of Southern European countries. As shown in our PERI paper The debt crisis and the ECB’s role of lender of last resort, these fears have become powerful political forces inhibiting rational solutions.
When the crisis began in April-May 2010, the Greek sovereign debt was around 300 billion euros and it was sufficient to buy a portion of it to persuade the markets that the authorities were determined to stabilise the interest rates. Yet, in spite of its independence, the ECB waited the end of the regional elections of May 9 in Renania-Westfalia (Germany) to respond to the speculative attacks, which had gambled on the view that the European authorities would not react until the election had ended.
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Nancy Folbre, Guest Blogger
Some of the most vivid political rhetoric of 2012 reflects a debate that has lasted centuries. Who are the makers and who are the takers? Much economic theory revolves around efforts to distinguish the two. The conceptual effort is motivated by noble intent: presumably, a good economic system encourages making (creating more to go around) and discourages taking (redistributing what others have made).
Yet it is surprisingly hard to create a consensus about these labels, and past disagreements, still unresolved, lurk in the background. History is shaped by contending claims over who is more productive than whom. Powerful groups like to describe themselves as makers rather than takers, partly to glorify themselves and partly to discourage take-backs.
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Martin Khor
So, the United States at the last minute averted a “fiscal cliff” crisis last week, and the world gave a sigh of relief, since the fate of the US economy has strong impact on other countries.
But that sigh was accompanied by a shake of the head at how this drama involving a contest of wills between the President and the Republicans in Congress has become an American way of life.
Has the economy of the US and the rest of the world economy become too dependent on how Washington’s budget politics plays out? It seems so, for some time to come.
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Alejandro Nadal
In 1964 Mr. Jerome Daly took a mortgage for $14,000 US dollars from the First National Bank of Montgomery in Minnesota. In 1967 he was $476 in arrears, the bank initiated foreclosure proceedings and bought the property at a sheriff’s sale. The bank then sued for possession and a jury trial was held in December 1968 in a township with a very appropriate name, Credit River.
Daly argued that the mortgage contract was null and void because it lacked consideration on the part of the bank. In legal parlance this means that in any contract both parties must exchange something of inherent value. When the bank had granted the loan it had simply inserted an entry in a ledger, thus “creating money out of thin air.” Because the bank did not commit anything of value into the contract, there was no consideration and the contract was null and void. The plaintiff had no legal base to claim Daly’s house.
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