Carbon Markets Biased, Distorted, Undermined Jomo Kwame Sundaram
Carbon dioxide emission taxes, prices and markets have been touted as key to stopping global heating. However, carbon markets have failed mainly because they favour the rich and powerful. Market Solutions Better? Mainstream economists believe the best way to check global heating is to tax greenhouse gas (GHG) emissions. Equivalent ‘carbon prices’ have been set for the other significant GHGs. But many have been revised due to their moot, varied and unstable, arguably incomparable nature. High carbon prices for GHG emissions are expected to persuade emitters to switch to ‘cleaner’ energy sources. Higher prices for energy-intensive goods and services are…
Developing Countries’ Government Debt Crises Loom Larger Ndongo Samba Sylla and Jomo Kwame Sundaram
Developing countries are being blamed for having borrowed and spent irresponsibly. But they have only been doing what foreign powers and financial interests have urged them to do. Since the 2008 global financial crisis, developing nations have been told to borrow massively from private finance, even at exorbitant interest rates, to scale funding up ‘from billions to trillions’. With progress towards sustainable development often in reverse, servicing external debt now blocks progress. Many governments have cut back spending in line with conditions or advice from powerful foreign economic agencies. Current account tales Many still believe all national economies should have…
Industrial Policy, East or West, for Development or War? Jomo Kwame Sundaram
Developing countries wanting to pursue industrial policy were severely reprimanded by advocates of the ‘neoliberal’ Washington Consensus. Now, it is being deployed as a weapon in the new Cold War. Industrial policy vs colonialism Industrial policy is often seen as pioneered by Friedrich List. But List was inspired by George Washington’s first Treasury Secretary, Alexander Hamilton. He advocated promoting manufacturing as the Industrial Revolution was beginning in England. For List, post-colonial national development required tariffs. Despite a title deceptively similar to his earlier Principles of the Natural Economy, List’s Principles of the National Economy was quite different, clearly inspired by Hamilton. The Meiji…
Global South Stagnating under Heavier Debt Burden Jomo Kwame Sundaram
Much higher interest rates – due to Western central banks – are suffocating developing nations, especially the poorest, causing prolonged debt distress and economic stagnation. US Fed-induced stagnation After the greatest US Fed-led surge in international interest rates in more than four decades, developing countries spent $443.5 billion to service their external government and government-guaranteed debt in 2022. The World Bank’s last International Debt Report showed most of the poorest countries in debt distress as borrowing costs began to surge. The increase has cut into scarce fiscal resources, reducing social spending on health and education. Debt-servicing costs for all developing countries in 2022 increased…
Building Popular National Economic Alternatives Jomo Kwame Sundaram
Viable, popular national economic alternatives require conditions to help build and sustain them. An independent, accountable government can ensure supportive institutions, including laws. National Economies For the Global South, globalisation has often meant renewed foreign domination. While dating back to the age of empire, foreign domination is less evident in post-colonial times, making it more difficult to organise against it. National sovereignty and independence are necessary to develop and sustain viable popular economic alternatives. This requires addressing contemporary realities. Some unexpected opportunities may even emerge from the new challenges faced. Cooperation among significant national social forces must be maintained for…
Hapless New Year for Global South Jomo Kwame Sundaram
As dire economic predictions for 2023 did not materialise, pundits began 2024 far more optimistically. But policy ghosts from the last half-century will likely undermine such wishful thinking. Optimistic forecasts As New Year celebrations of different cultures decline with the coming of spring in the northern hemisphere, it is useful to review and reconsider various end-of-2023 and early-2024 economic prognoses against what happened in the previous year. Macro-financial economist Nouriel Roubini agrees that worst-case scenarios – including a “severe recession, leading to a credit and debt crisis”, stagflation, and other financial crises – are unlikely for now. But he acknowledges this can easily be “derailed…
Imperialism, Globalization and Its Discontents* Jomo Kwame Sundaram
Imperialism continues to dominate the world. Globalisation is losing to some of its anti-theses, but imperialism still rules, increasingly by law, albeit in changing even contradictory ways. Hence, we live in challenging times. It is often difficult to see the main challenges we face as there seem to be so many. Also, the new or the unusual gains far more attention than what appears commonplace. Power and Empire Our histories and cultures are often quite different despite our common, but varied experiences of foreign domination, even rule. Such power involves varied mixes of socioeconomic and political relations, involving governance and…
North Ignores ‘Perfect Storm’ in Global South Jomo Kwame Sundaram
A gathering ‘perfect storm’ – due to various developments, several quite deliberate – now threatens much devastation in the global South, likely to most hurt the poorest and most vulnerable. Globalisation's protracted decline The age of globalization had mixed consequences, unevenly incorporating national markets for labour, goods and even some services. It ended gradually, with the trend far more pronounced following the protracted worldwide stagnation since the 2008 global financial crisis. Sometimes still referred to as the Great Recession, Western central banks resorted to unconventional monetary policies, mainly ‘quantitative easing’, to keep their economies afloat. But easier credit enabled more…
Neocolonial ISDS, Abused, Biased, Costly, and Grossly Unfair Jomo Kwame Sundaram
Investor-State Dispute Settlement (ISDS) provisions in international trade and investment agreements – long abused by opportunists with means – are slowly being rejected by cautious governments. Developing country governments need to be much more wary of ISDS and its implications, and should urgently withdraw from existing commitments. They should expunge ISDS clauses in existing trade and investment agreements and exclude them from new ones. ISDS ripe for abuse ISDS allows a foreign investor to sue a ‘host’ government for compensation by claiming new laws, regulations and policies adversely affect expected profits, even if changed in the public interest. It involves…
Onerous Debt making Poorest Poorer Jomo Kwame Sundaram
Contractionary economic trends since 2008 and ‘geopolitical’ conflicts subverting international cooperation have worsened world conditions, especially in the poorest countries, mainly in Africa, leaving their poor worse off. Conditions and prospects are so bad that two well-known globalisation cheerleaders have appealed to rich nations for urgent action. Former IMF Deputy Managing Director and World Bank Senior Vice-President, Professor Anne Krueger and influential Financial Times columnist Martin Wolf warn ominously of the dire consequences of inaction. Deepening stagnation Following tepid growth after the 2008 global financial crisis, Covid-19 disrupted supply chains worldwide. Then, post-pandemic recovery was disrupted by wars in Ukraine and then Gaza. Food and energy…