Dangers and Lessons of Present Multiple Crises

The Covid-19 pandemic, erupting in the background of lethargic global economy, could turn out to be the singular biggest crisis in a century. First reported in Wuhan, China, the corona virus has reached almost all countries. It has infected close to 1 million persons and caused over 40,000 deaths at time of writing; and the figures keep climbing. It is a health catastrophe which if not checked in its track would be the most serious since the Spanish Flu of 1918 that killed over 50 million people.

State Intervention Necessary to Overcome Covid-19 Threats

It is now clear that most East Asian government responses to novel coronavirus or Covid-19 outbreaks have been effective. In Hong Kong, Japan, Singapore and Taiwan, the number infected have remained relatively low despite their proximity and vulnerability, while containment in China and South Korea has been impressive.

Use Stimulus Packages for Longer Term Progress

The coronavirus pandemic seems to have finally forced governments around the world to ditch their obsession (at least for the moment) with delivering budget surplus. As stock markets tumble, stimulus measures, worth billions of dollars, are announced to boost investor confidence and consumer spending to keep economies running.

Share Buybacks Enable Predatory Value Extraction

‘Getting government out of the way’, the neoliberal ‘free market’ mantra, was supposed to boost private investment. Instead, business investment has declined as a consequence. Many economies now seem incapable of making much needed investments to sustain growth, apparently due to ‘capital allocation’ problems.

Global Economic Consequences of COVID-19

The panic resulting from the events starting with the deaths in Wuhan keeps spreading globally faster than the spreading of the virus itself. Quite apart from the immediate health dangers, now a new economic danger looms large globally. We are facing the prospects of a deep and lasting global recession regardless of the health policy and economic policy measures taken by China, the US and other countries unless there is timely global cooperation and coordination. What will be the global economic impact of COVID-19 if swift and effective action is not taken globally? Is there a way to find out through some kind of rigorous model-based economic analysis?

CORRECTED VERSION: Stock Market Bubble Threat

The US is currently still in a stock market bubble which, if history is any guide, is likely to end, as argued by Thomas Palley. While President Trump would, of course, like to sustain it to strengthen his November re-election prospects, the Covid19 black swan is already showing signs of pricking the bubble

Coronavirus Exposes Global Economic Vulnerability

As the outbreak of the novel coronavirus COVID-19 threatens a global pandemic, major stock markets around the world have suffered their worst performance since the 2008 financial crush.

Lucky Trump Looking Smug

Meeting the President of the Republic of Korea in September 2019, President Donald J Trump bragged that the “US economy is the envy of the world”. Trump reiterated such claims in his State of the Union address in early February, hailing his own policies with typical humility.

Global Economy Still Slowing, Dangerously Vulnerable

In an annual ritual early in the year, most major economic organizations have released forecasts for the global economy in 2020. Incredibly, almost as a reminder of where financial power resides in this day and age, the International Monetary Fund (IMF) released its forecasts at the World Economic Forum’s 50th annual meeting in Davos.

Intellectual Property Raises Costs of Living

Many medicines and medical tests are unaffordable to most of humanity owing to the ability of typically transnational pharmaceutical giants to abuse their monopoly powers, enforced by intellectual property laws, to set prices to maximize profits over the long-term.

Financialization Increases Inequality

Financialization has worsened inequality through various channels, including macroeconomic policies. For example, quantitative easing and low, if not negative interest rates have fuelled credit and asset price bubbles, while fiscal spending cuts have adversely affected those depending on government assistance.

Exchange Rate Undervaluation for Export-Led Growth Promotion

One mercantilist view is that exchange rate undervaluation – e.g., via accumulation of foreign exchange reserves in China’s case – is ‘industrial policy’ to promote export-led growth, benefiting producers of exports while discouraging imports.

Was China Manipulating Its Currency?

Many argue that China’s impressive growth for last four decades has been due to deliberate exchange rate undervaluation, promoting exports and discouraging imports. In August last year, the Trump administration accused China of engaging in currency manipulation.

Billionaires Beware

The latest November 2019 UBS/PwC Billionaires Report counted 2,101 billionaires globally, or 589 more than five years before. Earlier, Farhad Manjoo had seriously recommended, ‘Abolish Billionaires’, presenting a moral case against the super-rich as they have and get far, far more than what they might reasonably claim to deserve.

Reflections for a New Year

In a world shaken by so many problems, it is difficult to look at 2020 and not make some kind of holistic analysis. While enormous progress has been made on many fronts, it is clear that the tide has turned, and we are now entering – or have already entered – a new low point in the history of humankind..

Why Is Growth Slowing in China?

China’s gross domestic product (GDP) grew by 14%. Since then, its growth rate has declined by more than half to 6.6% in 2018. The five-year moving average growth rate is at its lowest since reforms began in 1978, although annual growth briefly fell lower during 1989, the year of the Tian An Men incident.

Inequality and Its Many Discontents

Much recent unrest, such as the ‘yellow-vest’ protests in France and the US ‘Abolish the Super-Rich’ campaign, is not against inequality per se, but reflects perceptions of changing inequalities. Most citizens resent inequalities when it is not only unacceptably high, but also rising.

Social Protection Necessary to Quickly End Poverty, Hunger

Historically, most social security systems have developed in the formal sector of rich economies. However, most of the poor and hungry in the world live in rural areas, surviving in the informal economy.

More Austerity for Developing Countries: It’s Bad News, and It’s Avoidable

After years of austerity, a number of Eurozone countries are now considering expansionary fiscal policies. And in the UK, government spending is set to return to levels last seen in the 1970s. But austerity abounds elsewhere in the world, including in some of the poorest countries.

A New Deal for Sustainable Development

Almost nine decades ago, newly elected US President Franklin Roosevelt introduced the New Deal in 1933 in response to the Great Depression. The New Deal consisted of a number of mutually supportive initiatives, of which the most prominent were: a public works programme financed by budget deficits; a new social contract to improve living standards for all working families, including creation of the US social security system; and financial regulation to protect citizens’ assets and channel financial resources into productive investments.