The New Normal Servaas Storm

The U.S. economy is suffering from two interrelated diseases: secular stagnation rather than growth, and polarization of jobs and incomes. The two disorders have a common root in the demand shortfall, originating from the ‘unbalanced’ growth between technologically ‘dynamic’ and ‘stagnant’ sectors. In this context, to assume that potential output growth is determined by exogenous factors of ‘technology’ and ‘demography’, while demand growth is simply irrelevant in the long run, can be a mistake. Click to read the full article

World Capitalist Crisis getting Accentuated Prabhat Patnaik

At the last Spring meeting of the IMF and the World Bank, Christine Lagarde, the Managing Director of the IMF, had confidently stated that the world economy was on the path of recovery, a view echoed by most official soothsayers of the system. And yet within days of Lagardes’ remark, fresh data showed that the U.S. economy whose tentative recovery had been the cause of this optimism, was once more slowing down. Since Europe had never really shown much recovery anyway, and since China and India, whose earlier resilience owed much to an unsustainable expansion of credit (C.P.Chandrasekhar, Frontline, May…

Break up the Banks: A practical guide to stopping the next global financial meltdown Andrew Cornford

Banking reforms to regulate the financial sector have broadly remained inadequate. In the book reviewed, Shirreff proposes the legal separation of banking activities into three groups, a return to unlimited liability for partners in investment banks and caps on total remuneration as the radical and effective steps needed to stabilise the sector. He also favours scrapping of Basel I and II norms and the application of a financial transaction tax. The global applicability and acceptance of these proposals, however, remains uncertain. Break_Up_Banks (Download the full text in PDF format)

Public Bank Privatisation in a Post-truth World C.P. Chandrasekhar

Narendra Modi government appears to have decided to privatise public sector banks (PSBs). Preparations are underway with arguments being marshalled that “there is no alternative” to privatisation. Privatisation (Download the full text in PDF format) (This article was originally published in the Economic & Political Weekly, Vol. 52, Issue No. 19, 13 May, 2017)

Genetically Engineered Disappointments Jomo Kwame Sundaram and Tan Zhai Gen

Advocates of genetically engineered (GE) crops have long claimed that genetic engineering is necessary to raise crop yields and reduce human exposure to agrochemicals. Genetic engineering promised two major improvements: improving yields affordably to feed the world, and making crops resistant to pests to reduce the use of commercial chemical herbicides and insecticides. Genetic modification of crops through natural evolution or artificial crossbreeding has been happening for millennia, giving rise to more productive or resilient crop species. Thus, the term ‘genetic engineering' more accurately refers to the artificial introduction of genetic material to produce new GE varieties. Trans-Atlantic divide A…

The Illusion of an Economic Spring C.P. Chandrasekhar

While policy makers, analysts and observers paint a picture of an ongoing global economic recovery, the numbers seem to drag the optimists down. Barely days after IMF Managing Director, Christine Lagarde, declared at the spring meetings of the World Banka and the IMF that, “Spring is in the air and spring is in the economy as well,” came bad news from the US. The advanced economy that was being looked to as the one that would pull the world system out of a decade long period of sluggish growth performed poorly in the first quarter of 2017, growing at an…

A Permanent Solution to the Crucial Issue of Public Stockholding for Food Security Purposes Which Would also Benefit the Developed Countries Jacques Berthelot

The concept of agricultural support is broader than that of agricultural subsidy as it encompasses "market price support" (MPS) through import protection and export subsidies, albeit in different ways for the OECD and the WTO Agreement on Agriculture (AoA). For the OECD, the MPS represents the gap between domestic farm prices and current world prices (the border price of each country) rendered at farm gate, encompassing import protection as well as export subsidies. The MPS is "financed" essentially by consumers, considering that they are entitled to buy their food and other agricultural products at world prices and that import duties…

Changing Challenges in the Modernization of Development Banks in Latin America: The case of Nacional Financiera, Mexico’s key Development Bank Juan Carlos Moreno-Brid, Esteban Perez Caldentey and Laura Valdez

Development banks in Latin America were traditionally given the key role of creating markets by funding long-term capital accumulation—on many occasions with State-owned enterprises in new sectors or strategic activities, besides deepening the financial system. With the implementation of Washington Consensus policies in the 1990s,development banks assumed the function of free market subsidiary institutions whose main goal is to solve market imperfections. Mexico´s Nacional Financiera exemplifies this Copernican turn in policy making. From being Mexico’s key policy bank for development, NAFINSA was transformed into a second-tier financial intermediary oriented to ease MSMEs’ access to financial resources, essentially through innovative Factoring…

World Bank fudges on inequality Jomo Kwame Sundaram & Anis Chowdhury

The 17 Sustainable Development Goals (SDGs) – collectively drafted and then officially agreed to, at the highest level, by all Member States of the United Nations in September 2015 – involves specific targets to be achieved mainly by 2030. The Agenda seeks to "leave no-one behind" and claims roots in universal human rights. Thus, addressing inequalities and discrimination is central to the SDGs. Poverty and Shared Prosperity 2016: Taking on Inequality is the World Bank's first annual report tracking progress towards the two key SDGs on poverty and inequality. Annual reporting on poverty, inequality This particular report evaluates progress towards…