Commentaries

John Stewart Mill vs. the European Central Bank

J. Bradford DeLong Series: Anatomy of the Global Economy

2010-07-29

When demand for government bonds is high, as it is nowadays, governments should increase the supply. That lesson, bequeathed to us by John Stewart Mill, is one that the core economies of the global North, as well as the European Central Bank, do not seem to have learned.... read

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Balancing China’s High Savings

Fan Gang Series: Enter the Dragon

2010-07-29

When a developing country has a high savings rate as a result of structural factors, as China does, the best strategy is not to reduce savings through dramatic exchange-rate appreciation, which may kill export industries overnight. Rather, savings should be channeled even more – and more efficiently – to domestic investment in order to avoid large external imbalances.... read

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Africa’s Economic House Divided

Sanou Mbaye Series: Into Africa

2010-07-29

Across Africa, almost all governments praise economic modernization as the cornerstone of prosperity and the yardstick by which their effectiveness should be measured. But too many African leaders have been willing to spend a fortune to equip their countries with state-of-the-art settlement systems, only then to proceed to exclude their citizens from using them.... read

Comments: 0 Recommended: 0 Read: 136

Open-Source Pharmaceuticals?

Jackie Hunter Series: Health and Medicine

2010-07-28

Much attention has been focused on the pharmaceutical industry’s slowness to develop new drugs and lack of productivity. But the real problem is that pharmaceutical companies cannot sustain their R&D departments, suggesting that they should look to other industries, such as computer software, for examples of pre-competitive collaboration.... read

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Indianomics

Jaswant Singh Series: Frontiers of Growth

2010-07-28

India is at the threshold of an era of unprecedented growth. But to cross it, Indians must craft a new idea of India – as the flagship of a modern global economy that unleashes the dynamism of all citizens.... read

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Is Middle East War Inevitable?

Volker Perthes Series: The World in Words

2010-07-28

No one in the Middle East is calling for war, but a dangerous pre-war mood is growing. Four factors, none of them new but each destabilizing on its own, are compounding one another: lack of hope, dangerous governmental policies, a regional power vacuum, and the absence of active external mediation. ... read

Comments: 0 Recommended: 1 Read: 1400

Making Sense of the Climate Impasse

Jeffrey D. Sachs Series: Economics and Justice

2010-07-28

Intense heat waves are currently hitting many parts of the world: the first five months of this year were the warmest on record going back to 1880, and May was the warmest month ever. So why do we still fail to act?... read

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How to Pay a Banker

Lucian Bebchuk Series: The Rules Of The Game

2010-07-27

It is now widely accepted that it is important to reward bankers for long-term results, because tying their compensation to short-term returns encourages them to take excessive risks. But tying executive payoffs to long-term results does not provide a complete answer to the challenge facing financial firms and regulators.... read

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Convicts for Export

Brahma Chellaney Series: Human Rights

2010-07-27

China has devised a novel strategy to relieve pressure on its overcrowded prisons: employ convicts as laborers on overseas projects. The practice has exposed another facet of China’s egregious human-rights record, which, when it comes to Chinese overseas companies’ overseas, includes the government’s failure to enforce its own regulations.... read

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The Hidden Future of the US Economy

Martin Feldstein Series: The Magic of the Market

2010-07-27

Just how bad is the outlook for the US economy? Unfortunately, you cannot tell from the forecasts, though many economists are raising their odds on a double-dip recession as government stimulus programs end and spending declines.... read

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Europe’s Federalism Debate Revived

Jean Pisani-Ferry Series: Reuniting Europe

2010-07-27

It is an old debate, but tensions within the euro area have revived it: can a monetary union survive without some form of fiscal federalism? If not, what kind of federalism is right for Europe?... read

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The Recession Dating Game

Michael Boskin Series: Transatlantic Perspectives

2010-07-26

The optimism that emerged in the early stages of the recovery from the financial crisis and recession has given way to more sobering assessments, with fear of a double-dip recession rising. But, depending on how we date when a recession begins and ends, double-dip recessions are more the rule than the exception. ... read

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Russia's Great Gas Game

Joschka Fischer Series: The Rebel Realist

2010-07-26

The primary goal of Russian gas policy isn’t economic, but political, namely to further the aim of revising the post-Soviet order in Europe – a quest that is directed mainly at Ukraine. De-regulating the EU gas market and reducing Russia's importance as a transit country for ex-Soviet producers would hold that ambition in check.... read

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Are We Really Secessionists Now?

Robert Howse and Ruti Teitel Series: The Worldly Philosophers

2010-07-26

The World Court’s recent ruling on Kosovo’s unilateral declaration of independence is being widely touted as giving a green light to secessionist movements to gain statehood. In fact, it does no such thing, as the Court itself repeatedly emphasized.... read

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The Middle Kingdom’s Middle Class

Wellington K.K. Chan Series: China Stands Up

2010-07-26

There are compelling demographic, geographic, and broadly cultural reasons for China's spectacular success in the three decades since the lauch of Deng Xiaoping's economic reforms. But surely China’s success has depended on that of its entrepreneurs – and their deeply rooted patterns of activity.... read

Comments: 2 Recommended: 1 Read: 2576

Pakistan’s Moral-Hazard Economy

Shahid Javed Burki Series: Frontiers of Growth

2010-07-23

Foreign donors must insist that Pakistan reform its economy in order to escape the moral hazard implied by continued dependence on aid flows. But that outcome is much more likely if democracy flourishes throughout the country.... read

Comments: 0 Recommended: 1 Read: 2522

Hezbollah in a Corner

Paul Salem Series: Islam

2010-07-23

The future of Hezbollah has never looked more uncertain. Indeed, given the recent death of Grand Ayatollah Muhammad Hussein Fadlallah, rising tension with Israel, and possible international criminal indictments of its operatives, Hezbollah appears to be hemmed in on all sides.... read

Comments: 0 Recommended: 1 Read: 3280

Power to the People

Carlos Slim and Kandeh K. Yumkella Series: Earth in the Balance

2010-07-23

UN Secretary-General Ban Ki-moon’s Advisory Group on Energy and Climate Change is calling for the international community to commit to universal access to modern energy services by 2030. The financial implications of meeting this goal are large, but not overwhelming when weighed against the enormous benefits. ... read

Comments: 2 Recommended: 1 Read: 2230

Life by the Numbers

Esther Dyson Series: Net World

2010-07-22

Almost everyone is faced at some point with decisions about medical treatments and side-effects, for themselves and for loved ones. The most important thing to understand in such situations is statistics.... read

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Who Should Safeguard Financial Stability?

Robert J. Shiller Series: Finance in the 21st Century

2010-07-22

Central bankers around the world failed to see the current financial crisis coming before its beginnings in 2007, and thus did not act to relieve the pressures that led to it. But central bankers are still the people who are in the best political and institutional position to ensure financial stability.... read

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The Sumo and the Yakuza

Masahiro Matsumura Series: The Asian Century

2010-07-21

Allegations of match-fixing, dope-smoking, orgies, and ties to gangsters among the sport’s top stars have enraged the Japanese public and mobilized the police. But Sumo's alleged ties with the Yakuza, Japan's ancient organized-crime groups, partly reflect the country's economic malaise, which has cost the sport its more respectable patrons.... read

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Running in Place on Trade

Jagdish Bhagwati Series: The Open Economy and Its Enemies

2010-07-20

G-20 meetings regularly affirm the importance of maintaining and strengthening openness in trade, and June’s summit in Toronto was no different. Yet talk is cheap, and the open-mouth policy of (generally pro-trade) pronouncements has not been matched by action.... read

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Consolidators versus Stimulators

Robert Skidelsky Series: Against the Current

2010-07-20

The classical view of the economy, which Keynes set out to demolish, is not only alive, but in recent years has been dominant, feeding the belief that competitive markets can regulate themselves, will always provide as much employment as is wanted, and are immune to large-scale collapse. Now the believers are clamoring for fiscal consolidation worldwide. ... read

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The End of Automotive Mobility?

Brian Ladd Series: Earth in the Balance

2010-07-19

Economists who blithely assume that pre-2008 automobile sales are “normal,” because Americans “need” their cars, misunderstand the nature of the automobile market. Enormous cars, long commutes, and vast parking lots do have their advantages, but we could manage to live without them – and we may have to sooner rather than later.... read

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Russia’s Lost Opportunity with Japan

Yuriko Koike Series: Asia Watch

2010-07-19

The recent exchange of spies between Russia and the US appears to demonstrate that the “reset” in bilateral relations has worked. But Russia failure to “reset” its relations with Japan is not only a lost opportunity, given Russia’s need to modernize its economy, but also a strategic error in view of Russia’s increasing worries about China.... read

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Europe’s Vision Deficit

Guy Sorman Series: The World in Words

2010-07-19

What makes Europe's desolate economic landscape even gloomier is European leaders’ striking inability to explain it to their citizens. Indeed, it seems that here lies the seminal reason for their plunging poll ratings: they seem to lead nowhere, because they have no vision on which to draw.... read

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Asia’s Leadership Gap

Simon Tay Series: The Asian Century

2010-07-19

This week, ten foreign ministers from ASEAN are meeting in Hanoi, and will then host their counterparts from across the region, including US Secretary of State Hillary Clinton. ASEAN meetings are sometimes criticized as “talking shops,” but this time dialogue and strategic leadership are needed immensely.... read

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The French Way of Crisis

Michel Rocard Series: The Statesmen's Debate

2010-07-16

France is in disarray, with Nicolas Sarkozy’s popularity at the lowest point seen in decades for a French president and scandal roiling the government. But the deeper problem is that the French are less happy, and less optimistic about the future, than they once were - or than citizens of other countries are now.... read

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Double-Dip Days

Nouriel Roubini Series: After the Storm

2010-07-16

With the world economy set to slow, a scenario in which US growth slumps to 1.5%, the eurozone and Japan stagnate, and China’s growth rate falls below 8% may not imply a global contraction, but it will feel like one. And any additional shock – a highly plausible concern – could tip the global economy back into full-fledged recession.... read

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In Finance We Distrust

Michael Spence Series: The New Wealth of Nations

2010-07-16

It now seems universally accepted that government should establish the structure and rules for the financial system, with participants then pursuing their self-interest within that framework. But in a complex system in which expertise, insight, and real-time information are widely dispersed – and trust is lacking – reliance on such a framework seems deficient and unwise. ... read

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The Uses and Abuses of Economic Ideology

Adair Turner Series: Frontiers of Growth

2010-07-15

John Maynard Keyenes once wrote that, "Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.” But today the greater danger is that practical men and women gravitate to vulgar versions of the dominant beliefs of economists who are very much alive.... read

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Youth Without Work

Edoardo Campanella Series: Europe at Home and Abroad

2010-07-14

Among the many devastating effects of the current global financial crisis, one of the most pernicious in the developed world is the upward trajectory of youth unemployment. When young people cease to be the engine of an economy, long-run economic growth is endangered, and social unrest becomes a real threat to the democratic political order.... read

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A Roosevelt Moment for America’s Megabanks?

Simon Johnson Series: The Hopeful Science

2010-07-14

Just over a hundred years ago, the US led the world in terms of rethinking how big business worked – and when the power of such firms should be constrained - by enacting the Sherman Antitrust Act. The Dodd-Frank financial-reform bill, which is about to pass the US Senate, does something similar – and long overdue – for banking.... read

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Affordable Green Energy

Bjørn Lomborg Series: Global Warning

2010-07-14

The dominant approach to addressing climate change – subsidizing inefficient technologies or making fossil fuels too expensive to use - cannot possibly achieve the goal of reducing greenhouse-gas emissions by 50% by mid-century. Instead, we should fund the basic research that will make green energy too cheap and easy to resist.... read

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A Drug War on Auto-Pilot

Ivan Briscoe Series: Latin America

2010-07-13

The "war on drugs" in Latin America has been an abject failure. It is time for a serious reconsideration of the status and regulation of illegal drugs, one that points to selective legalization, as well as to reclassification of the market for drugs as a public-health, rather than a criminal, concern.... read

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Fiscal Fibs and Follies

Barry Eichengreen Series: The Next Financial Order

2010-07-13

Across the globe, the debate over fiscal consolidation has the distinct sound of two sides talking past one another. Whereas severely distressed southern European states may well benefit from cutting their budget deficits, those arguing for fiscal consolidation in the major G-20 economies are playing a dangerous game.... read

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Justice for Srebrenica’s Dead

Chuck Sudetic Series: Human Rights

2010-07-12

Fifteen years ago, Serb soldiers overran the Bosnian town of Srebrenica – despite its status as a “safe area” under UN protection – and proceeded to expel the town’s people and execute 7,600 captives. Out of this massacre, however, have come significant achievements in the cause of international justice.... read

Comments: 2 Recommended: 2 Read: 1994

De Gaulle at the Barricades

Jonathan Fenby Series: The World in Words

2010-07-12

This is a busy year for round-number anniversaries for France’s greatest leader since Napoleon: Charles de Gaulle was born 120 years ago, died 40 years ago, and delivered his celebrated call to resistance over the BBC 70 years ago. Yet another event in de Gaulle's illustrious career, 50 years ago, is equally deserving of commemoration, for it helped create the Fifth Republic.... read

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The Dollar and the Dragon

Joseph S. Nye Series: Of Might and Right

2010-07-12

A "balance of financial terror" has settled over US-China economic relations. China could bring the US to its knees by selling off its massive holdings of dollar-denominated reserves, but it would bring itself to its ankles in the process.... read

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The Market Confidence Bugaboo

Dani Rodrik Series: Roads to Prosperity

2010-07-12

Governments around the world are now cowering in fear of "market confidence" – that ineffable object of desire that makes officials impement policies they don't really believe in. Indeed, if the current crisis gets worse, it will be political leaders that bear primary responsibility – not because they ignored markets, but because they took them too seriously.... read

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Is Europe Doing Everything Wrong?

Mario I. Blejer and Eduardo Levy Yeyati Series: European Economies

2010-07-09

Reviving the EU's peripheral economies - Greece, Ireland, Portugal, and Spain - requires euro depreciation, closing the inflation differential between the eurozone's periphery and core, and, in some cases, orderly debt restructuring. But EU policymakers have chosen to do precisely the opposite on each front.... read

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How Inequality Fueled the Crisis

Raghuram Rajan Series: In Search of Dynamism

2010-07-09

Before the recent financial crisis, politicians from both political parties in the US egged on Fannie Mae and Freddie Mac, the giant government-backed mortgage agencies, to support low-income lending in their constituencies. There was a deeper concern behind this newly discovered passion for housing for the poor: growing income inequality.... read

Comments: 8 Recommended: 1 Read: 25792

Is Israel a Normal Country?

Ian Buruma Series: Crossing Cultures

2010-07-08

It is true, as many defenders of Israel claim, that the Jewish state is judged by different standards from other countries. But, while anti-Semitism plays a part in this, it may not be the main reason.... read

Comments: 4 Recommended: 1 Read: 5905

Collaborating with Corruption

Fron Nahzi Series: Europe at Home and Abroad

2010-07-08

Too often, the US, the EU, and the UN choose to look the other way in ethnic Albanian areas of the Balkans, giving free rein to corrupt officials in the vain hope of gaining local support for international efforts to strengthen “regional stability.” But this policy has yielded little stability, while keeping Kosovo, Albania, and Macedonia on the crumbling edge of the “failed state” abyss. ... read

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Taming Finance in an Age of Austerity

Joseph E. Stiglitz Series: Unconventional Economic Wisdom

2010-07-08

Finance is supposed to serve the interests of the rest of society, not the other way around. Having gotten the world into its current economic mess, financial markets are now dictating fiscal austerity to countries that have no choice but to go along - and then betting against these countries when they do.... read

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Europe’s Banks, Europe’s crisis

Daniel Gros Series: Euronomics

2010-07-07

Europe’s policy makers have let themselves been misled by politically convenient views of the crisis, first believing that all problems came from the US, and now blaming reckless fiscal policy by the eurozone's southern members. But the real problem is the EU's weakly capitalized banks, which are so interconnected that problems in one country quickly jeopardize the entire system. ... read

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Central Banking Deflowered

Harold James Series: Capitalism Then and Now

2010-07-07

After the ECB announced on May 9 that it would buy the government bonds of Mediterranean countries experiencing severe fiscal strains, critics complained that the Bank had “lost its virginity.” But, whether they like it or not, central banks' responsibility has always extended far beyond merely ensuring price stability.... read

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Turkey’s Frontline Foreign Policy

Shlomo Avineri Series: The World in Words

2010-07-05

Turkey claims to be pursuing a “zero conflict” policy that aims to minimize regional tensions and enhance stability. But, thanks to its alliance with Iran and support for Hamas, Turkey now finds itself rushing headlong into a series of conflicts – with Europe, the US, Israel, and moderate Arab regimes.... read

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Expanding Crime and Punishment in Tibet

Robert Barnett Series: China Stands Up

2010-07-03

China has been widely criticized for using exceptionally harsh treatment of almost any form of political dissent in Tibet to maintain control over the region. But two recent events in Tibet, involving the trials of two leading Tibetans who had not attacked or criticized the state at all, do not follow this logic.... read

Comments: 1 Recommended: 1 Read: 3840

Protectionist Myths

Jagdish Bhagwati Series: The Open Economy and Its Enemies

2010-07-03

The pessimism and despair that often overwhelms free traders today is unwarranted. The arguments of protectionists, new and old, are just so many myths that can be successfully challenged.... read

Comments: 6 Recommended: 1 Read: 7342

Is Speculating on Food Dangerous?

Denis Drechsler, George Rapsomanikis and Alexander Sarris Series: Frontiers of Growth

2010-07-02

Some believe that the food-price crisis in 2007-2008 was amplified by speculative trading in commodity futures, which have become an integral part of food markets. But futures markets have evolved in response to market participants’ need to manage price risks, and they are an indispensable marketing tool for many commodities.... read

Comments: 3 Recommended: 1 Read: 3097

Food for Thought on GM Crops

Per Pinstrup-Andersen Series: Science and Society

2010-07-02

The global food crisis of 2007-2008 was a warning of what the future may hold in store if we continue with business as usual, including misplaced opposition to using modern science in food and agriculture. European and developing-country governments must reverse their hostility to GM organisms in order to help ensure food security for all.... read

Comments: 5 Recommended: 1 Read: 3923

Can Good Emerge From the BP Oil Spill?

Kenneth Rogoff Series: The Unbound Economy

2010-07-02

Perhaps it is a pipe dream, but it is just possible that the ongoing BP oil-spill catastrophe in the Gulf of Mexico will finally catalyze support for a US environmental policy with teeth. If so, the starting point should be a renewed push for a carbon tax.... read

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The World Cup and African Women

Juliet Torome Series: The World in Words

2010-07-02

Given male dominance in African politics and soccer, any chance to improve the state of the sport that might arise from the 2010 World Cup will most likely benefit men. Until brought to a level where they can compete in international tournaments beyond Africa, women’s soccer teams on the continent will continue to struggle.... read

Comments: 3 Recommended: 3 Read: 3542

An American Oil Spill

Anthony D'Agostino and Benjamin K. Sovacool Series: Earth in the Balance

2010-07-01

When accidents happen, there is always enough blame to go around, and with the Deepwater Horizon oil spill in the Gulf of Mexico, no one has been spared – with the exception of a key culprit, the American public. Americans' addiction to cheap gasoline has fueled an obsession with drilling, damming, and digging their way out of problems. ... read

Comments: 2 Recommended: 2 Read: 2721

Who “Lost” Turkey?

Joschka Fischer Series: The Rebel Realist

2010-07-01

When, after Turkey voted at the UN against new sanctions on Iran, US Secretary of Defense Robert Gates harshly criticized Europeans for having contributed to this estrangement, his undiplomatic frankness caused quite a stir in Paris and Berlin. But Gates hit the nail on the head.... read

Comments: 8 Recommended: 1 Read: 5773

The Nascent Liberian Miracle

Antoinette M. Sayeh Series: Into Africa

2010-07-01

In late 2003, Liberia began to emerge from two decades of brutal military government and civil war that had stripped the country bare and generated massive foreign debts. Now, Liberia has reached a historic milestone: a comprehensive debt-reduction package that opens up new opportunities to rebuild the country.... read

Comments: 1 Recommended: 0 Read: 2092

Asia’s Dueling Duopoly

Heizo Takenaka Series: The Asian Century

2010-07-01

In today’s Asia, there are two economic powers of global standing, Japan and China. But the balance of economic power between the two is changing, and fast: sometime this year, China’s GDP will exceed that of Japan, and its economic footprint will continue to spread rapidly across Asia and the rest of the world.... read

Comments: 1 Recommended: 2 Read: 3401

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