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Ashwani Saith: Ajit Singh Of Cambridge And Chandigarh – An Intellectual Biography Of The Radical Sikh Economist

Has interesting stories from Cambridge:

Anthony Thirlwall provides us with this aphoristic nugget that sums it all up: “The distinguished development economist Ajit Singh tells how, when he first went to Cambridge to study economics, Nicholas Kaldor taught him three things: first, the only way for a country to develop is to industrialize; second, the only way for a country to industrialize is to protect itself; and third, anyone who says otherwise is being dishonest!” (Thirlwall quoted in Hein 2014, p. 178, footnote 35).

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References

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Hein, E. (2014). Distribution and growth after Keynes: A post-Keynesian guide. Cheltenham: Edward Elgar.

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Jason Hickel Features Again On Citations Needed

The latest episode of the podcast Citations Needed features Jason Hickel again who together with the hosts Nima Shirazi and Adam Johnson explain how the mainstream narrative hides the correct story about success and failure of nations by spreading the wrong idea that corruption is the main factor.

Jason Hickel: So, of course I teach on global economics and, and one of the questions I like to ask my students at the beginning of term is something along the lines of, okay, so we have this massive inequality between global north and global south, rich countries and poor countries, why do you think poor countries are so poor? And I would say, you know, 80 and 90 percent of the students will put their hands up and say they believe it’s because of corruption, you know, because the global south has corrupts leaders. But the problem with that story is it erases, you know, the history of colonization, the history of structural adjustments, the history of unfair trade arrangements. And so it’s a very de-politicized way of thinking about the drivers of impoverishment because the focus is solely on the nation states as opposed to the relationships between nation states and geopolitical regions of the world. And that’s really what I want to draw attention to.

💯 🎯

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Dimitri B. Papadimitriou, Michalis Nikiforos And Gennaro Zezza — Can Redistribution Help Build A More Stable Economy?

The latest Strategic Analysis report from Levy Institute.

Interesting chart and explanation:

The main reason for the relative stability of the trade and current account balances is presented in Figure 4d. Since the beginning of the recovery, the trade deficit in goods except for petroleum products has been following its precrisis trend.3 At the end of 2018 it reached its precrisis peak—and for that matter its historical peak—of around 4.4 percent. However, at the same time this increase has been counteracted by the improvement in the trade balance of petroleum goods, related to shale gas extraction. The trade deficit of petroleum goods is now close to zero, compared to 2.2 percent of GDP when shale gas extraction started in 2011 and 3 percent before the crisis. It is not then hard to calculate that, had it not been for this improvement in the petroleum products trade balance, the overall trade deficit of the US economy would be close to 7 percent, or more.

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Notes

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  1. To be more precise, the trade balance of non-petroleum goods started slowly improving in 2006, more than a year before the economy officially entered the recession. This improvement had to do with two main factors: (1) the slowdown of the US economy that had started already in 2006, and (2) the significant depreciation of the dollar that started in 2002 and continued up until 2008.
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Distributional Financial Accounts Of The United States

The Distributional Financial Accounts (DFAs) provide a quarterly measure of the distribution of U.S. household wealth since 1989, based on a comprehensive integration of disaggregated household-level wealth data with official aggregate wealth measures. The data set contains the level and share of each balance sheet item on the Financial Accounts’ household wealth table (Table B.101.h), for each of four percentile groups of wealth: the top 1 percent, the next 9 percent (i.e., 90th to 99th percentile), the next 40 percent (50th to 90th percentile), and the bottom half (below the 50th percentile). The quarterly frequency makes the data useful for studying the business cycle dynamics of wealth concentration–which are typically difficult to observe in lower-frequency data because peaks and troughs often fall between times of measurement. These data will be updated about 10 or 11 weeks after the end of each quarter, making them a timely measure of the distribution of wealth.

Also check the FEDS note and the working paper linked on the right in the Federal Reserve site.

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Jason Hickel — The Divide

Jason Hickel is a great economist and today I was looking up his 2018 book The Divide.

I found a nice passage:

The stated goal of the World Trade Organization is to create a ‘level playing field’ among trading partners. Each member has to play by the same rules — the same low tariffs and the same ban on subsidies. But in reality the idea of a level playing field is something of an illusion. when rich countries step onto the playing field they do so with industries that are immensely powerful and competitive — precisely because they spent their formative years of development under heavy protection. Poor countries, for their part, step onto the playing field with industries that have never had the benefit of protection and therefore have no hope of competing with their counterparts in rich countries. It may be a level playing field, but what good is a level playing field in a match between schoolchildren and a Premier League team? The rules are the same for both sides, but that doesn’t mean the game is equitable …

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Even if we assume that the game is in fact equitable, if we look more closely it becomes clear that the ‘level playing field’ is actually not very level at all: the rules are unfair even by the WTO’s own standards. Theoretically, the WTO requires every country to reduce their tariffs and subsidies to the same level, but in reality these cuts are applied selectively in favour of rich countries.

In the book Hickel attempts to prove among many things that:

Poor countries are poor because they are integrated into the global economic system on unequal terms.

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Jason Hickel — Global Inequality: Do We Really Live In A One-Hump World?

The elephant chart is a propaganda chart, misleading you into believing that there’s some convergence of fortunes of people across the planet. As if it’s not enough, there’s a new infographic: transformation from a two-hump world to a one-hump world.

Jason Hickel does an alternative analysis, and finds that the “income gap between the average person in the North and the average person in the South has nearly quadrupled in size, going from $9,000 in 1960 to $35,000 today.”

Hickel says:

… there has been no “catch up”, no “convergence”. On the contrary, what’s happening is divergence, big time.

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Why is this happening? … the global economy has been designed to facilitate the North’s access to cheap labour, raw materials, and captive markets in the South – today just as during the colonial period. Sure, some important things have obviously changed. But the countries of the North still control a vastly disproportionate share of voting power in the World Bank and the IMF, the institutions that control the rules of the global economy. They control a disproportionate share of bargaining power in the World Trade Organization. They wield leverage over the economic policy of poorer countries through debt. They control the majority of the world’s secrecy jurisdictions, which enable multinational companies to extract untaxed profits out of the South. They retain the ability to topple foreign governments whose economic policies they don’t like, and occupy countries they consider to be strategic in terms of resources and geography.

These geopolitical power imbalances sustain and reproduce a global class divide that has worsened since the end of colonialism. And yet this injustice is conveniently erased by the one-hump graph, which offers a misleadingly rosy narrative about what has happened over the past half century.

Check his excellent infographic. 📉

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Bob Rowthorn: Keynesian Economics – Back From The Dead?

Bob Rowthorn delivered this year’s Godley-Tobin lecture on March 1 in New York.

Bob Rowthorn, New York, 2019

Among other things, he talks of Neochartalism! He says he hadn’t heard about it till recently and suggests that their idea that the central bank could buy bonds says nothing about the exchange rate.

He seems to suggest that heterodox ideas seem to become mainstream but I do think that while heterodox ideas are more noticed, the level of imperialist propaganda is the strongest and it will be quite a battle.

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Maria Cristina Marcuzzo — Joan Robinson, The Rational Rebel

Maria Cristina Marcuzzo on Joan Robinson’s critique that economics ought to be driven by science and not ideology:

… In her view, the main problem with contemporary economic theory was that it made fundamental issues increasingly obscure rather than clear. Her last paper, which was published posthumously, had a telling title “Spring Cleaning”: “It seems to me that the whole complex of theories and models in the textbooks is in need of a thorough spring cleaning. We should throw out all self-contradictory propositions, un-measurable quantities and indefinable concepts and reconstruct a logical basis for analysis with what, if anything, remains.”

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Doug Henwood In Jacobin On Neochartalism

On Facebook, Doug Henwood says that he wanted the title The Phantasmic World Of Modern Monetary Theory, A Late Imperial Fever Dream for his piece critiquing Neochartalism but Jacobin editors changed it to Modern Monetary Theory Isn’t Helping.

Henwood has written an excellent critique of Neochartalism, a cut above most critiques. I liked the part about Beardsley Ruml who is quoted frequently by the Chartalists but it turns out that he is a right-wing nut, against taxes 😁

It’s important because as Henwood argues in this piece, Neochartalists do not seem to want high taxes. In my view they get deceived by their own rhetoric.

And the article contains an important discussion of Turkey, highlighting how Neochartalists avoid discussion of balance of payments problems:

When I asked Mosler what MMT had to offer Turkey, a country whose currency has been losing value for the last four years and had something of a financial crisis in the summer of 2018, he responded with a bit of avian whimsy: “Without our recipe for Turkey they’re a dead duck.”

However this recommendation to read his article shouldn’t be taken as an endorsement of all of Henwood’s views. Fiscal policy supremely matters. Just not the Neochartalist way. Henwood seems to not understand the importance. The cover of the issue is silly, as Bernie Sanders himself does soft imperialism.