The World Bank has been leading other multilateral development banks (MDBs) and international financial institutions to press developing country governments to ‘de-risk’ infrastructure and other private, especially foreign investments.
The United Nations’ renamed World Social Report 2020
(WSR 2020) argued that income inequality is rising in most developed countries, and some middle-income countries, including China, the world’s fastest growing economy in recent decades.
While overall inter-country inequalities may have declined owing to the rapid growth of economies like China, India and East Asia, national inequalities have been growing for much of the world’s population, generating resentment.
The World Bank has finally given up defending its controversial, but influential Doing Business Report
(DBR). In August, the Bank “paused” publication of the DBR due to a “number of irregularities
” after its much criticized ranking system was exposed as fraudulent.
US third quarter GDP numbers released two weeks ago delighted stock markets and President Trump. Output had picked up by 7.4%, annualised as 33.1%, the largest quarterly economic growth on record, almost double the old record of 3.9% (annualised as 16.7%) in the first quarter of 1950, seven decades ago.
In July, the UN Secretary-General warned
that a “series of countries in insolvency might trigger a global depression”. Earlier, the United Nations Conference on Trade and Development (UNCTAD) and the International Monetary Fund (IMF) had called
for a US$2.5 trillion coronavirus crisis package for developing countries.
Limited liability protection for shareholders in joint stock companies was introduced to encourage investments in them. However, it has encouraged irresponsibility, causing much harm while generating profits without responsibility.
Limited liability limits responsibility
Columbia Law School’s Professor Katarina Pistor
has extended her critique of the legal system to emphasize the implications of such limited liability. Limited liability encourages shareholders not to pay attention to the harm corporations they invest in may do.
was arguably the most influential economist of the second half of the 20th century, associated with promoting ‘neo-liberal’, free-market, shareholder capitalism
Friedman’s monetarist economics is now widely considered irrelevant, if not wrong, especially with the low inflation associated with ‘unconventional’ monetary policies following the 2008-2009 global financial crisis.
Industrial policy – or the promotion of particular investments, technologies, industries, regions and enterprises – has been practiced by a variety of governments to try to accelerate economic growth and transformation.
Milton Friedman’s libertarian economics advocating shareholder capitalism has influenced generations trying to understand the economy, not only in the US, but all over the world.
‘Ethno-populism’ has emerged and spread in recent decades in response to the mixed consequences of neoliberal globalization. It appropriates nationalist rhetoric for narrow ethnic, religious, cultural or other communal ends, typically with a chauvinist, jingoist rejection of selected Others as politically expedient.
In recent decades, many contemporary macroeconomic and financial problems have been blamed on ‘soft budget constraints’ (SBCs), with the term becoming quite popular in the economics lexicon, financial media and political discourse.
With many in the world experiencing declining living standards, there has been growing frustration. Many hope that progressive taxation will improve things. While some economies once had progressive tax systems, recent decades have seen regression.
After accusing the World Health Organization (WHO) of pro-China bias, President Donald Trump announced US withdrawal
from the UN agency. Although the US created the UN system for the post-Second World War new international order, Washington has often had to struggle in recent decades to ensure that it continues to serve changing US interests.
The World Bank leadership must urgently abandon its ‘Maximizing Finance for Development
’ (MFD) hoax. Instead, it should resume its traditional multilateral development bank role of mobilizing funds at minimal cost to finance developing countries.
With the Covid-19 contagion from late 2019 spreading internationally this year, governments have responded, often in desperation. Meanwhile, predatory international law firms are encouraging multimillion-dollar investor-state dispute settlement (ISDS) lawsuits citing Covid-19 containment, relief and recovery measures.
Developing country debt has continued to grow
rapidly since the 2008-2009 global financial crisis (GFC). Warnings against debt
have been reiterated by familiar prophets of debt doom such as new World Bank chief economist, Carmen Reinhart
, once dubbed the ‘godmother of austerity
The Trans-Pacific Partnership (TPP) Agreement should be dead and buried after President Trump announced US withdrawal immediately after his inauguration in January 2017. After all, most major US presidential candidates in the last election, including Hillary Clinton, had opposed the TPP.
International Monetary Fund (IMF) Managing Director Kristalina Georgieva has warned
that developing countries would need more than the earlier estimated
US$2.5 trillion to provide relief to affected families and businesses and expedite economic recovery.
The 2020 State of Food Security and Nutrition in the World
, issued by the Food and Agriculture Organization and its United Nations partners in mid-July, reports that chronic hunger continued to increase to 690 million worldwide in 2019, 60 million more than in 2014.
Covid-19 threatens economic life the world over. The most urgent and important need is for governments, businesses and families to survive. Governments must revive economies and livelihoods to prevent Covid-19 recessions from becoming protracted depressions.
The Covid-19 crisis is clearly a ‘black swan event’, threatening both public health and livelihoods. Both the pandemic and containment efforts are not due to business operations and decisions, but nonetheless have compelling consequences for them.
With uneven progress in containing contagion, worsened by the breakdown in multilateral cooperation due to mounting US-China tensions, recovery from the Covid-19 recessions of the first half of 2020 is now expected to be more gradual than previously forecast
Pandemic response measures
In the face of the Covid-19 pandemic, many governments, especially of Organization for Economic Cooperation and Development
(OECD) economies, have introduced massive fiscal and monetary packages for contagion containment, relief and recovery.