(1) Panel discussion with Mark Weisbrot, Jeffrey Frankel, and Richard Parker: I went to the panel discussion that D&S co-sponsored at the Kennedy School of Government at Harvard (I had lobbied for it to be held somewhere more welcoming to non-academics) on Greece and the eurozone crisis. The discussion was interesting, but I found it a bit too limited by a “cost-benefit” approach, which (as I pointed out in the question period) tends to obscure how class interests might be involved. If you’re talking about the costs and benefits of various policy responses to the debt crisis in the eurozone, you may not notice (or ask about) how costs to one group (e.g. workers) might benefit another group (bankers or wealthy elites). Anyhow, I asked some follow-up questions to the panelists via email. I ended up having a nice exchange with Frankel, who stuck to his guns about the advantages of having technocrats in charge. Weisbrot responded to a question that I’d asked about whether Iceland would be a better model for a possible default by Greece, rather than Argentina (as he’d proposed in the panel discussion). Here’s what he said:
Yes I agree there were some very good policies that Iceland adopted, including letting the banks absorb most of their losses rather than socializing them, the devaluation, the increased social safety net and equalizing income re-distribution ( see http://www.imf.org/external/np/seminars/eng/2011/isl/pdf/so.pdf , and counter-cyclical fiscal policy. But of course Greece would have to not only default but leave the euro in order to have a program like this. And I don’t know if they would get IMF support like Iceland did .. . remember the it’s the EC and ECB that are telling the IMF what to do.
I don’t see what good a default would do if they didn’t exit; they would almost certainly have a serious financial crisis with the default, and without exiting the euro they would still have the same harmful macro policies, including the exchange rate.
Of course I hesitate to say that Greece should default and exit the euro, because the success of this strategy would depend a lot on what kind of leadership carried it out, and some other factors that I can’t know about without having more knowledge of the entire situation there. I can only say that it is clearly and option that should be seriously considered, given their projected future under the current program. The Argentines did great, but they had strong leadership that was willing to do whatever was necessary to promote a fast and robust recovery, regardless of what any powerful interests wanted.
Here are some related links:
- The article on Greece and the eurozone crisis in our Jan/Feb issue (find it online here); you’ll see a sidebar that discusses the balance-of-trade and wage-repression issues (and cites this talk by Heiner Flassbeck; here’s an article by Flassbeck that makes some of the same points).
- An interview with Gerald Epstein of UMass-Amherst about technocrats, bankers, and the threat to democracy: Banking “Technocrats” Undermine Democracy.
- A piece from today’s Financial Times on Iceland’s remarkable recovery; plus Paul Krugman’s blog post on the FT piece (hat-tip Bryan Snyder).
(2) Jim Yong Kim and Dying for Growth: An interesting flap over Obama’s nominee for head of the World Bank, Jim Yong Kim, who is president of Dartmouth and a public health expert and associate of Paul Farmer’s: turns out he co-edited a book called Dying for Growth: Global Inequality and the Health of the Poor, which has gotten him some flack, according to this piece in the Financial Times, mentioned at Naked Capitalism. Our pal Mark Engler has a great commentary on the nominee and the flap (including an interview with…Mark Weisbrot) over at his blog at Dissent. Here’s a quotable quote from the introduction to Dying for Growth:
At the heart of current conventional wisdom in economics, we find the concept of growth and a number assumptions about the relationship between economic growth and quality of life. Economic growth usually refers to real (inflation-adjusted) annual percentage change in a country’s gross domestic product (GDP). Strong GDP growth is commonly taken as the primary vital sign of a healthy economy and the best proof that a society is “developing.” Worldwide, economic and political policy over the last several decades has been driven by the perceived imperative to achieve and sustain growth. The conviction that enhanced economic growth automatically brings with it increased prosperity and a better life for all–not only the already affluent but, in the long run, the disadvantaged members of society as well–is widespread, and until recently, virtually unquestionable.
The idea that robust economic growth will automatically lead to a better life for everybody is comforting. Unfortunately, it is also wrong. The concrete effects of decades of political and economic policies designed to promote and sustain growth contradict the hypothesis that corporate-led economic growth is the only path to reducing poverty and improving the quality of life for all people. The studies in this book present evidence that the quest for growth in GDP and corporate profits has in fact worsened the lives of millions of women and men. Our authors show, through a series of detailed case studies, how specific growth-oriented policies have not only failed to improve living standards and health outcomes among the poor, but also have inflicted additional suffering on disenfranchised and vulnerable populations.
What I found interesting about the flap around Kim was that his critics didn’t challenge the empirical studies in the book, but simply the fact that he would question the orthodoxy about growth. And his defenders seemed mostly to claim that it wasn’t growth per se that he had criticized in the book (at a time when lots of people were criticizing the World Bank, which has changed its tune itself, they hasten to add), but certain kinds of growth-inducing policies.
But when you read the introduction to the book (I haven’t read the whole book), it sounds like a full-throated critique of what Jonathan Rowe called “the growth consensus.” Since we’ve been pulling together the 29th edition of our textbook Real World Macro, I happened to be looking at the article that Rowe, who died last year, wrote for D&S, The Growth Consensus Unravels. Regular readers of this blog will know that it’s one of my favorites. I was poking around Rowe’s still-active website and I stumbled on two very interesting pieces: oone he co-authored in the Atlantic, If the GDP Is Up, Why Is America Down?, and Down Among the Economists (in which he talks about an AEA panel with Louis Uchitelle of the New York Times, Paul Krugman, and Larry Summers in which Krugman and Summers criticize the Atlantic piece. Both well worth checking out. Great (and surprising) that Obama’s nominee for World Bank president is someone of whom Jonathan Rowe would approve.
(3) Supreme Court on Obamacare mandate: Why is no one talking about the fact that the mandate (in Massachusetts and, once it goes into effect, the whole country) will mostly coerce low-income people–people who are not poor enough to qualify for Medicaid, but who neither get employer-based insurance nor can easily afford to buy private insurance on their own? People have tended to focus on healthy risk-takers, but no one would do that if they didn’t have to. Even the Supreme Court arguments in favor of the mandate have tended to depict such people as free riders, rather than as sick (or potentially sick) people who simply can’t afford insurance. And the mandate forces them to buy it, and to buy really crappy plans.
And why are so few people pointing out that a single-payer system is a viable alternative to the mandate? Well Health Care Now! is talking about it, and you can too, if you heed their call for people to write letters to the editor encouraging coverage of single-payer. And we’re talking about it–I just posted our “Economy in Numbers” piece by Gerald Friedman about how a single-payer system could be funded (Funding a National Single-Payer System). Jerry shows that if it is funded the right way, the outcome would be redistributive, vs. the Obamacare/Romneycare mandate, which is redistributive in the wrong direction (as is the current way we finance health care, since health care costs are a bigger part of poor people’s household budgets than they are for the well off). Please print up and distribute.
(4) Trayvon Martin and George Zimmerman: I will have a great guest post on this soon, but for now, check out this interesting piece from a blog at Psychology Today. Who cares if Zimmerman is racist? What’s important is that the underlying social arrangements are racist, including the legal system.
(5) Occupy the MBTA: Readers in the Boston area should–absolutely must–come to the rally at the Statehouse on Wednesday April 4th to protest proposed fare hikes and service cuts to Boston’s public transportation system, the “T.” Info about the latest ridiculous plan here. Info on the protest here and here. And while I’m at it: here’s an interesting piece from the Gothamist about a collaboration between the transit workers’ union in NYC and Occupy down there; and a great piece from Dissent from a few years ago about the radical history of the “M.T.A.” song (aka “Charlie and the M.T.A.”), which the MBTA co-opted for its mascot and plastic farecard system.
Look for two related articles in our May/June issue: a cover story on credit rate swaps (which have increased the debt of the MBTA, and of lots of transit systems and municipalities); and a piece about Occupy the MBTA, by yours truly.
That’s it for now.