http://www.project-syndicate.org The highest quality commentaries and analysis from distinguished voices across the world en 2010-09-02T23:45:10+02:00 webmaster@project-syndicate.org webmaster@project-syndicate.org 1994-01-01T00:00:00+01:00 4 hourly http://www.project-syndicate.org/commentary/dhanarajan1/English <p>SINGAPORE – It has been a challenging decade for the pharmaceutical industry. With patents expiring in high numbers, new-product pipelines drying up, and intensifying competition from generics, branded pharmaceuticals have been haemorrhaging value.</p><p>At the same time, traditional markets are becoming saturated. Stark realities in industrialized countries – such as the impact of aging populations on tax-based and employer-funded health-care models – are leading governments to adopt regulatory regimes that demand more economical, value-based, and transparent drug pricing.</p><p>Under these circumstances, emerging markets present a new frontier. Originally attractive for offering low-cost production, developing countries now present a viable market for multinational corporations. The pharmaceutical industry has been eyeing this trend for a while. A recent study predicts that sales in 17 “pharmerging” countries – including India, Indonesia, Pakistan, Thailand, and Vietnam – will “in aggregate expand by $90 billion during 2009-2013.”</p><p>But in many emerging economies, a large proportion of the population is poor, and those who are not remain vulnerable to falling into poverty in times of crisis. Healthcare is financed largely out-of pocket – up to 60% in Asia – and many countries shoulder a “triple disease burden” of “old” diseases like tuberculosis and malaria, new infectious diseases like Influenza A (H1N1), and a “silent pandemic” in the form of non-communicable diseases such as diabetes and cancer. The challenges surrounding access to medicines remain critical, and, indeed, relevant to the industry’s business model.</p><p>Philanthropic approaches to the problem have achieved little systemic change. Drug donations by companies have been criticized for being mostly unsustainable. Often, the medicines are unsuitable for patients, unfamiliar to local prescribers, do not match national clinical guidelines, or are near expiry.</p><p>Because supplies of donated medicines can be unpredictable, they can create chaos in the market by preventing accurate quantification of needs and thus affecting planning. Donated supplies also have the overarching negative effect of undermining market competition – even generics cannot compete with free medicines. Price discounts have been more effective, though their effect is limited by their focus on specific high-profile diseases and least developed countries (LDCs).</p> Sumi Dhanarajan 2010-09-02T00:00:00+02:00 http://www.project-syndicate.org/commentary/turner2/English <p>LONDON – Obviously, the global financial crisis of 2008-2009 was partly one of specific, systemically important banks and other financial institutions such as AIG. In response, there is an intense debate about the problems caused when such institutions are said to be “too big to fail.”</p><p>Politically, that debate focuses on the costs of bailouts and on tax schemes designed to “get our money back.” For economists, the debate focuses on the moral hazard created by ex ante expectations of a bailout, which reduce market discipline on excessive risk-taking – as well as on the unfair advantage that such implicit guarantees give to large players over their small-enough-to-fail competitors.</p><p>Numerous policy options to deal with this problem are now being debated. These include higher capital ratios for systemically important banks, stricter supervision, limits on trading activity, pre-designated resolution and recovery plans, and taxes aimed not at “getting our money back,” but at internalizing externalities – that is, making those at fault pay the social costs of their behavior – and creating better incentives.</p><p>I am convinced that finding answers to the too-big-to-fail problem is necessary – indeed, it is the central issue being considered by the Standing Committee of the Financial Stability Board, which I chair. But we must not confuse “necessary” with “sufficient”; there is a danger that an exclusive focus on institutions that are too big to fail could divert us from more fundamental issues.</p><p>In the public’s eyes, the focus on such institutions appears justified by the huge costs of financial rescue. But when we look back on this crisis in, say, ten years, what may be striking is how small the direct costs of rescue will appear. Many government funding guarantees will turn out to have been costless: liquidity support provided by central banks at market or punitive rates will often show a profit, and capital injections will be partly and sometimes wholly recovered when stakes are sold.</p><p>Emerging estimates of the total fiscal costs of rescue vary by country, but are usually just a few percentage points of GDP. As a result of this crisis, however, government debt-to-GDP ratios in the United Kingdom and the United States will likely rise by 40 to 50 percentage points, and more important measures of economic harm – foregone GDP growth, additional unemployment, and individuals’ wealth and income losses – will rise as well.</p> Adair Turner 2010-09-02T00:00:00+02:00 http://www.project-syndicate.org/commentary/gulalp3/English <p>ISTANBUL – On September 12, Turks will vote on a set of constitutional amendments proposed by the ruling Justice and Development Party (AKP), which has been in power for eight years.  Since the vote falls on the 30th anniversary of the 1980 military coup, Prime Minister Recep Tayyip Erdogan is portraying the referendum as an opportunity to reject the military regime’s legacy.</p><p>Turkey’s constitution has been amended repeatedly since the coup. But its anti-democratic core remains intact – and, unfortunately, the current proposals do not dramatically alter that.  </p><p>Most of the previous amendments relied on agreements between governing and opposition parties, and were not put to a popular vote. This time, the AKP acted on its own and was barely able to garner from its own ranks the requisite majority for a referendum. Far from being an occasion for popular condemnation of the coup on its anniversary, the referendum is a mark of the AKP’s failure to gain widespread support for its project.</p><p>With another general election due next year, civil-society groups preferred that priority be given to lowering the 10% electoral threshold for parties to enter parliament, thus broadening political participation. The new parliament would then work on constitutional reform.</p><p>That, however, was out of the question: the AKP benefited from the rules put in place for the 2002 and 2007 general elections, in both cases converting pluralities of the popular vote into large parliamentary majorities.</p><p>In 2007, the AKP government briefly seemed interested in a new constitution, having weathered threats of a military coup just before the elections. A distinguished group of academics was assigned to produce a draft. But, before any public debate could occur, the AKP decided to amend only two articles of the constitution, in order to allow female university students to wear headscarves on campus.</p> Haldun Gulalp 2010-09-02T00:00:00+02:00 http://www.project-syndicate.org/commentary/chivian1/English <p>BOSTON – Biodiversity is essential for the functioning of ecosystems – from forests and fresh waters to coral reefs, soils, and even the atmosphere – that sustain all life on Earth. The ongoing and escalating disappearance of that diversity will harm society in myriad ways. One way that is often overlooked is the damaging impact on medical science.</p><p>For millennia, medical practitioners have harnessed substances from nature for treatments and cures: aspirin from the willow and, more recently, TaxolÔ– the groundbreaking anti-cancer drug – from the bark of the Pacific yew. Some of the biggest breakthroughs may be yet to come. But this can happen only if nature’s cornucopia is conserved, so that current and future generations of researchers can make new discoveries that benefit patients everywhere.</p><p>Consider the polar bear, threatened with extinction in the wild by climate change. These mammals spend up to seven months of the year hibernating, during which time they are essentially immobile. A human would lose a third or more of bone mass when immobile for this period of time.</p><p>Astonishingly, hibernating bears lay down new bone, by producing a substance that inhibits cells that break down bone and promotes those that produce bone and cartilage. Studying hibernating bears in the wild may lead to new ways of preventing the millions of hip fractures that result from osteoporosis – a disease that costs $18 billion and kills 70,000 people each year in the United States alone.</p><p>While hibernating bears can also survive for seven months or more without excreting their urinary wastes, humans would die from the buildup of these toxic substances after only a few days. Unraveling how the bears accomplish this miraculous feat may offer hope to the estimated 1.5 million people worldwide receiving treatment for kidney failure.</p><p>Polar bears, which pile on fat to survive hibernation and yet do not become diabetic, may also hold clues for treating Type II diabetes, a disease associated with obesity that afflicts more than 190 million people worldwide, reaching epidemic proportions in many countries.</p> Eric Chivian, Aaron Bernstein, Achim Steiner 2010-09-02T00:00:00+02:00 http://www.project-syndicate.org/commentary/casaszamora3/English <p>WASHINGTON, DC – Opposition to plans to build a mosque near “Ground Zero,” the spot where the World Trade Center’s twin towers fell on September 11, 2001, comes in various shades. To their credit, many of the project’s opponents have avoided the crass bigotry that is becoming a standard trait of right-wing discourse in the United States. But even moderate critics of the mosque (actually an Islamic cultural center with a prayer room called Park 51) betray in their arguments two assumptions that are as questionable as they are ingrained in the prevailing public discourse in the US.</p><p>The first of these misbegotten assumptions is to underrate social intolerance as a threat to freedom. While accepting the project’s impeccable legal credentials, its opponents nevertheless demand that it be relocated on the grounds that even fully lawful conduct may be offensive to a group of citizens. This is a dangerous road to take in a liberal society.</p><p>More than 150 years ago, in his essay On Liberty, John Stuart Mill demolished the belief that the quest for individual freedom is, above all, a struggle against the state. This belief still features prominently in the rhetorical arsenal of US conservatives, notably in the inflamed proclamations of the Tea Party movement. But, as any member of a historically persecuted community – from gays to Jews to Roma – can attest, social intolerance may curtail civil rights as much as any law.</p><p>Indeed, up until the 1967 Supreme Court ruling that struck down anti-miscegenation laws throughout the US, interracial marriages were an oddity even where they were legally allowed. A majority considered them offensive, and therefore expected interracial couples to show what is demanded today from Muslims in Manhattan: respect for other people’s sensitivities. In a nation of laws, such as the US, it is disingenuous and unfair to grant legal protection to a right – in this case the right to worship God as we see fit – and then selectively ban its exercise de facto because a majority or minority takes offense.</p><p>Thus, the strident calls to stop the Park 51 project are as serious a threat to freedom as an outright legal ban. If Muslims are not to be allowed to build anything Islamic anywhere near Ground Zero, let those who feel insulted strive to change the law through an open democratic process in which the reasons for a legal ban can be argued openly and without fig leafs. Democracy demands no less.</p><p>The second, more invidious assumption of the opponents of Park 51 concerns what happened in September 2001. Some of the project’s adversaries claim that it must be stopped because it will be a tribute to the perpetrators of a despicable deed. Underlying this argument is the idea that the attack was an explicitly religious act carried out by an enemy faith, whose believers – even those who denounced the atrocity – are tainted and deserve to have their constitutional rights restricted.</p> Kevin Casas-Zamora 2010-09-01T00:00:00+02:00 http://www.project-syndicate.org/commentary/buruma41/English <p>NEW YORK – Who were those flag-waving, cheering, hollering, singing, and praying Americans who gathered in Washington DC on the last Saturday in August at a rally to “restore the honor” of the United States? This tax-free jamboree of patriotism was ostensibly non-partisan (otherwise it could not have been tax-free). The main organizer and speaker was Glenn Beck, the right-wing populist radio and TV personality, who promised to restore not only the nation’s honor, but “American values,” too.</p><p>The other star was Sarah Palin, the darling of the populist Tea Party crowds, who began by paying her respect to Martin Luther King, Jr. For it was here, on this very same spot and date, that he gave his “I have a dream” speech in 1963. She then quickly proceeded to give a long celebratory speech about the heroism of US soldiers “fighting for freedom” abroad.</p><p>It seemed an odd – and to many offensive – transition: from King’s great plea for civil rights to Palin’s sentimental clichés about the military. But then there was something odd about the entire event, just as there is something odd about the Tea Party movement itself. This latest surge of American populism is financed by some extremely wealthy men, including a couple of oil billionaires named David and Charles Koch, who favor cutting taxes for the super-rich and abolishing government subsidies for the poor, such as Social Security and President Barack Obama’s health-care plan.</p><p>This agenda might seem selfish, though understandable from the point of view of an oil billionaire. But who are all those people wildly cheering for the billionaire’s dream, on of all days the anniversary of Martin Luther King’s speech? They are almost uniformly white, largely middle-aged and above, and for the most part far from wealthy. </p><p>The majority have no college degree. Many say that they are afraid of losing their jobs. No doubt quite a few of them would have trouble paying the astronomical costs of American health-care bills without government assistance. In other words, they would benefit from the publicly financed programs that the Tea Party’s sponsors wish to abolish.</p><p>And yet, there they are, denouncing as “socialism” Obama’s health-care legislation, or a slight tax increase for the richest 1% of the population. To them, “socialism” means “European”, or simply “un-American.” Unlike the movement’s sponsors, the crowds chanting “USA! USA!” do not appear to be motivated by economic self-interest.</p> Ian Buruma 2010-09-01T00:00:00+02:00 http://www.project-syndicate.org/commentary/dousteblazy1/English <p>PARIS – The global economic crisis has claimed many victims – unemployed workers, underwater homeowners, and bankrupt pensioners – but nowhere have the repercussions been as devastating as in the developing world. The setback to the fragile gains of recent years, particularly in Africa, threatens to return millions of people to the extreme poverty from which they had just managed to escape. In addition to the prospect of enormous human suffering, severe economic, political, and social pressures now threaten to overwhelm and destabilize developing countries, triggering conflict on an unprecedented scale.</p><p>What makes today’s downward spiral particularly disheartening is that the economic crisis has hit at a time of the first glimmerings of progress, notably in health care. Since 2000, the rate of people dying from AIDS has declined, child-killing diseases like malaria and measles are being tackled more effectively, universal primary education is inching forward, and the targets for safe drinking water are in sight.</p><p>Now, though, the global economic crisis is sapping developed countries’ shaky efforts to fulfill their commitments for official development assistance (ODA) in order to achieve the United Nations’ Millennium Development Goals (MDGs). A UN report warns that annual investment from these donor countries is falling $35 billion short of the $150 billion goal. Unless something changes, there is little chance that the MDG targets can be sustained in the long run.</p><p>Indeed, the consequences of the fall-off in ODA are already dramatic; the number of people going hungry and in extreme poverty is now far greater than before, and the same is true of the unemployed, those who work in vulnerable jobs, or earn less than $1.25 a day. Progress in health and literacy is being undermined. World Bank data link the economic downturn to an increase, by 200,000, in mortality among children under the age of five. </p><p>Moreover, 536,000 women a year die in childbirth, and maternal health is also the one MDG progress towards which has stagnated since the targets were established 10 years ago. Every minute that passes means one less mother, and it is shameful that 99% of these deaths occur in developing countries.</p><p>So should we despair of achieving the MDGs, not just by the original deadline of 2015 but even by the end of the century? Viewed through the traditional ODA prism, with its one-year budgets, public-finance constraints, and competing national priorities, there seems little cause for optimism. But there is a way to replace the traditional paradigm with an internationally accepted model that has a proven record of success, particularly in health care. </p> Philippe Douste-Blazy 2010-09-01T00:00:00+02:00 http://www.project-syndicate.org/commentary/rogoff72/English <p>CAMBRIDGE – As the US economy limps toward the second anniversary of the Lehman Brothers bankruptcy, anemic growth has left unemployment mired near 10%, with little prospect of significant improvement anytime soon. Little wonder that, with mid-term congressional elections coming in November, Americans are angrily asking why the government’s hyper-aggressive stimulus policies have not turned things around. What more, if anything, can be done?</p><p>The honest answer – but one that few voters want to hear – is that there is no magic bullet. It took more than a decade to dig today’s hole, and climbing out of it will take a while, too. As Carmen Reinhart and I warned in our 2009 book on the 800-year history of financial crises (with the ironic title “This Time is Different”), slow, protracted recovery with sustained high unemployment is the norm in the aftermath of a deep financial crisis.</p><p>Why is it so tough to boost employment rapidly after a financial crisis? One reason, of course, is that the financial system takes time to heal – and thus for credit to begin flowing properly again. Pumping vast taxpayer funds into financial behemoths does not solve the deeper problem of deflating an overleveraged society. Americans borrowed and shopped until they were blue in the face, thinking that an ever-rising housing price market would wash away all financial sins. The rest of the world poured money into the US, making it seem as if life was one big free lunch.</p><p>Even now, many Americans believe that the simple solution to the nation’s problem is just to cut taxes and goose up private consumption. Cutting taxes is certainly not bad in principle, especially for supporting long-term investment and growth. But there are several problems with the gospel of lower taxes.</p><p>First, total public-sector debt (including state and local debt) is already nearing the 119%-of-GDP peak reached after World War II. Some argue passionately that now is no time to worry about future debt problems, but, in my view, any realistic assessment of the medium-term risks does not permit us simply to dismiss such concerns.</p><p>A second problem with tax cuts is that they might well have only a limited impact on demand in the short run, with the private sector hoarding a significant share of the funds to repair badly over-leveraged balance sheets.</p> Kenneth Rogoff 2010-09-01T00:00:00+02:00 http://www.project-syndicate.org/commentary/fischer54/English <p>BERLIN – Entering a war is easy; getting out of it is the hard part. That axiom is particularly true for the United States today, as it muddles through three wars – two of which were forced upon it (Afghanistan and the “war on terror”), with the third (Iraq) started unnecessarily by a US administration blinded by ideology and hubris.</p><p>The US has no prospect of a military victory in Afghanistan or Iraq; these wars’ economic costs can hardly be borne anymore, and political support at home is dwindling. America must withdraw, but the price – for the US, its allies in the region, and for the West – remains an open question.</p><p>The last US combat troops have pulled out of Iraq. Despite using all the means at its disposal, the world’s greatest military power managed only to create a precarious domestic stability. No one today is hanging “Mission accomplished!” banners. None of the urgent political problems caused by US intervention – the distribution of power between Shia and Sunni, between Kurds and Arabs, and between Baghdad and the regions – was actually resolved.</p><p>Iraq remains a state without a common nation. Moreover, it threatens to turn into a battleground for its neighbors’ opposing interests. The struggle between the leading Sunni power, Saudi Arabia, and Shia Iran for Persian Gulf hegemony threatens to turn Iraq into a battlefield again, including another round of civil war. Neighboring Syria and Turkey would probably be dragged into such a conflict instantaneously. One can only hope that the vacuum created by America’s withdrawal doesn’t implode in violence.</p><p>The situation in Afghanistan is even more complicated. Afghanistan is the mirror image of Iraq: a nation without a state. Separatism was never a threat here, but ever since the Soviet invasion in 1979, the country has been a theater of war for global and regional conflicts.</p><p>What we see in Afghanistan isn’t just a civil war. Via their Afghan allies, Pakistan in particular but also Saudi Arabia, Iran, India, and Central Asian countries are embroiled in a fight for influence.</p> Joschka Fischer 2010-08-31T00:00:00+02:00 http://www.project-syndicate.org/commentary/delong105/English <p>BERKELEY – We hear from surprisingly many quarters these days that governments in Europe and North America, and their central banks, should give up on the expansionary policies they have pursued to try to create jobs. The high unemployment currently afflicting the North Atlantic, critics of government stimulus maintain, is not cyclical but “structural,” and thus cannot be alleviated by policies that boost aggregate demand.</p><p>Let me be the first to say that structural unemployment is a true and severe danger. When people who in other circumstances could be happy, healthy, and productive members of the workforce lack the skills, confidence, social networks, and experience needed to find work worth paying for, we obviously have a problem. And if unemployment in Europe and North America stays elevated for two or three more years, it is highly likely that we will have to face it. For nothing converts cyclical unemployment into structural unemployment more certainly than prolonged unemployment.</p><p>But is that true today? Does it look right now as if the biggest problem facing the economies of Europe and North America is structural unemployment? It does not.</p><p>Let us remember what structural unemployment looks like. The economy is depressed and unemployment is high not because of slack aggregate demand generated by a collapse in spending, but instead because “structural” factors have produced a mismatch between the skills of the labor force and the distribution of demand. The structure of demand by consumers is different from the jobs that workers are capable of filling.</p><p>For example, suppose that you have many workers qualified and skilled to work in construction, but households have decided that their houses are more than large enough, and wish to fill them with manufactured goods. This would produce structural unemployment to the extent that the ex-construction workers could not do things in manufacturing that would make it worthwhile for manufacturing firms to hire them.</p><p>In that case, we would expect to see construction depressed: firms closed, capital goods idle, and workers unemployed. But we would also expect to see manufacturing plants running at double shifts – the money not spent on construction has to go somewhere, and, remember, the problem is not a lack of aggregate demand. We would expect to see manufacturers holding job fairs, and when not enough workers showed up, we would expect to see manufacturers offering higher wages to attract workers into their plants, and then raising prices to cover their higher costs.</p> J. Bradford DeLong 2010-08-31T00:00:00+02:00 http://www.project-syndicate.org/commentary/feldstein26/English <p>CAMBRIDGE – The household saving rate in the United States has tripled in the past three years. Why? And what does it mean for the US economy and the rest of the world?</p><p>The rapid rise in saving has reduced consumer spending, slowing the pace of GDP growth in 2009 and in early 2010. If the saving rate continues to rise rapidly, it could push America’s fragile economy into another downturn. That would mean lower imports, creating a potential problem for countries that depend for their employment on exporting to the US.</p><p>Higher household saving depresses consumption because it is the difference between households’ after-tax income and what they spend. The saving may be deposited in bank accounts or used to buy mutual funds or corporate stock. Saving may also take the form of individual contributions to retirement accounts or employer contributions to corporate saving plans. Paying down debt on credit cards or mortgages also counts as saving – but increases in the value of existing assets like stocks or real estate do not, even though they increase the value of household wealth.</p><p>In any year, some households are savers and others, especially retirees, are dissavers that use past saving to finance current consumption. The nation’s net household saving rate is the difference between the saving of the savers and the dissaving of the dissavers.</p><p>The recent rise in the US household saving rate reversed a long-term decline that began 25 years ago. Before that, between 1960 and 1985, American households saved an average of 9% of their after-tax incomes. The saving rate in each of those 25 years was between 7% and 11%.</p><p>But, after 1985, a variety of changes caused saving to decline until it reached less than 2% in 2007. One reason was that rising stock markets and higher house prices made individuals wealthier, reducing their need to save for retirement and allowing retirees to dissave more. The general shift from defined-benefit pension plans to defined-contribution plans meant that employees felt the effect of rising share prices directly in their own personal accounts.</p> Martin Feldstein 2010-08-31T00:00:00+02:00 http://www.project-syndicate.org/commentary/pisaniferry3/English <p>PARIS – The dispute that has emerged in the United States and Europe between proponents of further government stimulus and advocates of fiscal retrenchment feels very much like a debate about economic history. Both sides have revisited the Great Depression of the 1930’s – as well as the centuries-long history of sovereign-debt crises – in a controversy that bears little resemblance to conventional economic-policy controversies.</p><p>The pro-stimulus camp often refers to the damage wrought by fiscal retrenchment in the US in 1937, four years after Franklin Roosevelt’s election as US president and the launch of the New Deal. According to computations by the economist Paul van den Noord, the net result of the 1937 budget was a fiscal contraction amounting to three percentage points of GDP – certainly not a trivial amount. Economic growth plummeted from 13% in 1936 to 6% in 1937, and GDP shrank 4.5% in 1938, while unemployment rose from 14% to roughly 20%. Although fiscal policy was not the only cause of the double dip, ill-timed retrenchment certainly contributed to it.</p><p>So, are we in 1936, and does the budgetary tightening contemplated in many countries risk provoking a similar double-dip recession?</p><p>Clearly there are limits to the comparison. For starters, much less time has elapsed since the financial crisis, the recession has been much shallower, and recovery has come faster. Moreover, important developments that occurred between the 1929 stock-market crisis and the 1937 fiscal retrenchment – especially America’s turn to protectionism in 1930 and the monetary turmoil of subsequent years – have no analog today.</p><p>Nevertheless, the 1937 episode does seem to illustrate the dangers of attempting to consolidate public finances at a time when the private sector is still too weak for economic recovery to be self-sustaining. (Another case with similar consequences was Japan’s value-added tax increase in 1997, which precipitated a collapse of consumption).</p><p>Fiscal hawks also rely on history-based arguments. The economists Carmen Reinhart and Kenneth Rogoff have studied centuries of sovereign-debt crises, and remind us that today’s developed world has a forgotten history of sovereign default. A particularly telling example is the aftermath of the Napoleonic wars of the early nineteenth century, when a string of exhausted states defaulted on their obligations. The 1930’s are relevant here as well, given another series of defaults among European states, not least Germany.</p> Jean Pisani-Ferry 2010-08-31T00:00:00+02:00 http://www.project-syndicate.org/commentary/wolf27/English <p>NEW YORK – In the 1992 United States presidential election, George H. W. Bush’s campaign made a political splash by going after the television show Murphy Brown – one of the first times, but far from the last, that a fictitious character was introduced to score political points in America. Murphy Brown, played by actress Candice Bergen, was a TV anomaly at that time: a sympathetically portrayed single mother. So Bush’s vice president, Dan Quayle, attacked the show for normalizing rather than stigmatizing single motherhood.</p><p>Much hand-wringing followed, with single mothers (never, at that time, single fathers) cast as harbingers of doom for core American values. The implication was that selfish me-first feminists (if they were affluent white women) or feckless social parasites (if they were low-income women of color) were putting their own interests above their children’s. Daniel Patrick Moynihan’s widely reprinted study The Negro Family: The Case for National Action painted a picture of single motherhood as the primary instigator of inner-city and especially African-American criminality, illiteracy, and drug use.</p><p>How times have changed. Just as single mothers were irrationally castigated then, so today an equally irrational hagiography has risen around them. (Europe has more single mothers than the US, but, characteristically, has less need to moralize about them one way or the other). In US pop culture, the single mother has evolved from selfish yuppie or drug-dazed slut into a woman who is more fun, slightly more heroic, and certainly less frumpy than her married counterpart.</p><p>Indeed, single mothers are the new maternal ideal – women whose maternal drive is so selfless and intense that they choose to raise children even under the burden of their solitary status.</p><p>Angelina Jolie’s photo spread with her toddler son, adopted from Cambodia, in Vanity Fair heralded this shift: the sexy young woman and her son in a luxurious hotel bedroom made single motherhood look fun and glamorous.</p><p>Suddenly Hollywood stars and starlets who were otherwise unattached began to sprout little offspring: Calista Flockhart, who played TV’s ultimate desperate childless single woman, adopted a son – and, like a fairy tale, later met and married Harrison Ford. Kourtney Kardashian of the reality show The Kardashians had a baby as an “unwed mother” – a stigmatizing term that has gone out of fashion – and is depicted as bravely holding down the fort and staying up all night with feedings as the child’s irresponsible father parties.</p> Naomi Wolf 2010-08-30T00:00:00+02:00 http://www.project-syndicate.org/commentary/fan18/English <p>BEIJING – Reports about labor shortages, wage disputes, and wage increases for migrant workers in China have abounded of late. They naturally raised concerns, or expectations, that China’s labor-cost advantages may be disappearing. </p><p>It is my hope that China’s comparative advantage as a low-wage producer does disappear – the sooner the better. But why should I, a Chinese economist, wish to see China’s competitiveness reduced through rising labor costs? After all, when a country still lacks real advantages, such as higher education, efficient markets and enterprises, and a capacity for innovation, it needs something like low wages to maintain growth.</p><p>While cheap labor has been a key factor in generating high growth over the past three decades, it has also contributed to profound income disparities, especially in recent years. And persistent, widening inequality might cause social crises that could interrupt growth and damage competitiveness. China must avoid such a scenario, and if wages could increase in some meaningful way, it would indicate that the economy might finally reach the next stage of development, during which income disparities would be narrowed.</p><p>Unfortunately, China has not yet reached that point – and will not any time soon. Agriculture remains the main source of income for more than 30% of China’s labor force, compared to less than 2% in the United States or 6% in South Korea. Another 30% of the labor force comprises migrant workers, who have doubled their incomes by moving from agriculture to the industrial and service sectors. </p><p>Although migrant workers earn only about $1,500 per year on average, the income gap between them and agricultural laborers provides a powerful incentive for the latter to try to find better-paid non-farm jobs. Naturally, this competition in the labor market suppresses non-farm wages: whereas labor productivity in non-farm sectors increased by 10-12% annually in the past 15 years, migrant workers’ real wages have increased by only 4-6% per year. As a result, income disparity between low-end labor, on the one hand, and professionals and investors, on the other, has also increased.</p><p>All this means that the process of industrialization in China still has a long way to go. To reduce farm labor to 10% of the labor force (the point at which, judging by historical experience elsewhere, China may achieve worker-farmer wage equilibrium), the economy needs to create about 150 million new non-farm jobs.</p> Fan Gang 2010-08-30T00:00:00+02:00 http://www.project-syndicate.org/commentary/bhagwati3/English <p>NEW YORK – Economists long ago put to rest the error that Adam Smith made when he argued that manufacturing should be given primacy in a country’s economy. Indeed, in Book II of The Wealth of Nations, Smith condemned as unproductive the labors of “churchmen, lawyers, physicians, men of letters of all kinds; players, buffoons, musicians, opera-singers, opera-dancers, etc.” We may agree with Smith (and Shakespeare) about the uselessness of lawyers perhaps, but surely not about Olivier, Falstaff, and Pavarotti. But the manufacturing fetish recurs repeatedly, the latest manifestation being in the United States in the wake of the recent crisis.</p><p>In mid-1960’s Great Britain, Nicholas Kaldor, the world-class Cambridge economist and an influential adviser to the Labour Party, raised an alarm over “deindustrialization.” His argument was that an ongoing shift of value added from manufacturing to services was harmful, because manufactures were technologically progressive, whereas services were not. He even got a Labour Chancellor of the Exchequer, James Callaghan, to introduce in 1966 a Selective Employment Tax, which taxed employment in services more heavily than employment in manufactures – a measure that was reversed in 1973, once it was realized that it would hit the tourist industry, which generated badly needed foreign exchange.</p><p>Kaldor’s argument was based on the erroneous premise that services were technologically stagnant. This view no doubt reflected a casual empiricism based on the mom-and-pop shops and small post offices that English dons saw when going outside their Oxbridge colleges. But it was clearly at odds with the massive technical changes sweeping across the retail sector, and eventually the communications industry, which soon produced Fedex, faxes, mobile phones, and the Internet.</p><p>In fact, the dubious notion that we should select economic activities based on their presumed technical innovativeness has been carried even further, in support of the argument that we should favor semiconductor chips over potato chips. While rejection of this presumption landed Michael Boskin, Chairman of President George H.W. Bush’s Council of Economic Advisers, in rough political waters, the presumption prompted a reporter to go and check the matter for himself. It turned out that semiconductors were being fitted onto circuit boards in a mindless, primitive fashion, whereas potato chips were being produced through a highly automated process (which is how Pringles chips rest on each other perfectly).</p><p>The “semi-conductor chips versus potato chips” debate also underlined a different point. Many proponents of semiconductor chips also presumed that what you worked at determined whether, in your outlook, you would be a dunce (producing potato chips) or a “with-it” modernist (producing semiconductor chips).</p><p>I have called this presumption a quasi-Marxist fallacy. Marx emphasized the critical role of the means of production. I have argued, on the other hand, that you could produce semiconductor chips, trade them for potato chips, and then munch them while watching TV and becoming a moron. On the other hand, you could produce potato chips, trade them for semiconductor chips that you put into your PC, and become a computer wizard! In short, it is what you “consume,” not what you produce, that influences what sort of person you will be and how that affects your economy and your society.</p> Jagdish Bhagwati 2010-08-27T00:00:00+02:00