Category Archives: Economy

Map of the day: Global wealth inequality

From Science [and click on it to enlarge]:

BLOG Wealth inequality

And from the Washington Post, the richest 0.1% in the United States now control as much wealth as the bottom 90%:

BLOG A rich coup

The brink of crisis: Globalization reaches a peak

The world may be on the brink of another financial collapse, this time with the Chinese economy as the likely catalyst, and with Britain holding $500 million in Chinese debt, the “sceptered isle” may bear a major portion of the impact.

One thing is certain: The world’s economy can’t continue with an agenda of unlimited development and endless consumption of throwaway goods, given that limits to extractive resources may have already peaked.

British radical economist James Meadway has been tracking the state of the globalized economy, and he sees major shifts already underway as China shifts from its economic roles.

Meadway, formerly an economist with the New Economics Foundation, described his concerns in a September essay for the Guardian:

Has globalisation peaked? Two fundamental factors suggest it may have. First, the financial crisis itself revealed the systemic weaknesses inherent in an over-extended financial system. Major financial institutions, banks chief among them, are now significantly more wary about reaching beyond their home bases. In the event of a future crisis, they will require strong, supportive states ready to back them up. This has drawn banks and states closer together, with weak states and weak banks propping each other up, as in the eurozone’s “sovereign-bank nexus” (the strong links between government debt and banks).

Second, states themselves are acting strategically. Globalisation was associated with a belief in the supreme merits of government inaction on the economy, but governments are increasingly strategic economic actors.

China is attempting an immense shift away from its decades-old role as low-cost exporter to the world, expanding both its domestic market, and seeking to create a new, regional trading block around the new Silk Road. The collapse of its stock market, naturally, necessitated a huge (if deeply flawed) government intervention. Protectionism is on the rise, whilst yuan devaluation has raised the spectre of “currency wars”. The German state, meanwhile, is an assiduous defender of its own interests as a manufacturing exporter.

Failure to address the looming crisis will only make the crisis worse, he explains.

In this, the latest edition of Taiq Ali’s Telesur English series, The World Today, Meadway explains his concerns as well as possible reforms to adjust the world’s economy to the new realities of the 21st Century:

The World Today: The State of the Economy

Program notes:

Tariq Ali talks to James Meadway, radical economist, about the global economy, the failure of world leaders to effectively resolve the financial crisis in 2008, and the probability of another crisis occurring in the future.

Chart of the day: California bank assets soar

From that wonderful database maintained by the Federal Reserve Bank of St. Louis:

BLOG Banks

Chart of the day: A political sea change

From Gallup, one reason Bill O’Reilly is getting nastier:

BLOG Redistribution

Chart of the day: Baltic Dry Index record low

A clear sign of troubled times ahead comes in the form of the Baltic Dry Index, a measure of global shipping activity. The really bad news is that the index has hit an all-time low, indicating that global shipping has come to a near-stop, largely because of the growing economic problems in China and China, where imports of raw materials and exports of finished goods are stalled and construction has undergone a dramatic downturn.

First, from Bloomberg, a one-month chart showing Friday’s all-time low:

BLOG Baltic dryy index 2

And from via Business Insider, a graph covering the pre-Great Recession China-fueled high, followed by a precipitous decline, and the ongoing low level of shipping activity the the years since:

BLOG Baltic dry inedx

On the mad utopian dreams of neoliberals

A recent episode of Christ Hedges’s news series for Telesur English features an interview with Canadian intellectual provocateur John Ralston Saul on the twisted origins and pernicious intellectual distortions of neoliberal ideology.

An erudite scholar and ferocious analyst, Saul has relentlessly pilloried the intellectual perversions underlying much of modern economic thought in a series of books [most famously Voltaire’s Bastards: The Dictatorship of Reason in the West] and essays, with his most recent targets being the twisted rationales employed by apologists for an economic order that has given rise to modern plutocracy.

In conversation with Hedges, Saul worries that modern neoliberalism has proven to resemble Beniuto Mussolini’s fascism.

From The Real News Network:

Days of Revolt: Neoliberalism as Utopianism

From the transcript:

SAUL: Right? And what they did, most universities, was they did an intellectual cleansing of the economic historians to remove the possibility of doubt, the possibility of speculation on ideas, leaving these sort of hapless — mainly hapless macroeconomists, who fell quite easily into the hands, frankly, of the ideologues, the neoliberals, neoconservatives, who were — you know, let’s face it. What is this ideology? It’s an ideology of inevitability, an ideology based on self-interest, an ideology in which there is no real memory. And at the end of the day, it really is — it’s about power and money.

HEDGES: It’s about, you write, making every aspect of society conform to the dictates of the marketplace, which, as you point out, there’s nothing — and I think you say something like 2,000 or 5,000 years of human history to justify the absurdity that you should run a society based on —

SAUL: On the marketplace.

HEDGES: — the marketplace.

SAUL: Let me just take a tiny step back as a historical marker, which is the day that I realized that the neos were claiming that Edmund Burke was their godfather or whatever, I realized that we were into both lunacy and the denial of history, ‘cause, of course, in spite of his rather crazy things about Mary Antoinette and the French Revolution, most of his career was about inclusion, standing against slavery, standing for the American Revolution, and of course leading a fight for anti-racism and anti-imperialism in India — amazing democratic [incompr.] a liberal in the terms of the early 19th century. So when you see that these guys were trying to claim him, it’s like lunatics today claiming Christ or Muhammad to do absolutely unacceptable things.

And I think that the fascinating thing is once you get rid of history, once you get rid of memory, which they’ve done with economics, you suddenly start presenting economics as something that it isn’t, and you start saying, well, the market will lead. And these entirely theoretically sophisticated experts are quoting the invisible hand, which is, of course, an entirely low-level religious image–it’s the invisible hand of God, right, running the universe. As soon as you hear that term and they say, oh, that’s what Adam Smith said — but when you talk to them, they haven’t read Adam Smith. Adam Smith isn’t taught in the departments of economics. You get quotes from Adam Smith even when you’re doing an MA or whatever. They don’t know Adam Smith. They don’t know that he actually was a great voice for fairness, incredibly distrustful of businessmen and powerful businessmen, and said never allow them to be alone in a room together or they’ll combine and falsify the market and so on, so that what we’ve seen in the last half-century is this remarkable thing of big sophisticated societies allowing the marketplace to be pushed from, say, third or fourth spot of importance to number one and saying that the whole of society must be in a sense structured and judged and put together through the eyes of the marketplace and the rules of the marketplace. Nobody’s ever done this before.

HEDGES: How did it happen?

SAUL: Well, I mean, I think it happened gradually, partly by this emptying out of the public space, by this gradual —

HEDGES: What do you mean by that?

SAUL: Well, by the advancing of the idea of the technocracy and the gradual reduction of the space of serious political debate and ideas, and with that the rise of kinds of politicians who would be reliant on the technocracy and really were not themselves voices of ideas that would lead somewhere, you know, the humanist tradition, democratic tradition, egalitarian tradition. And we can see this all sort of petering out. And you can like them or dislike them, but you can see when the real idea of debate of ideas and risk on policy starts to peter out with Johnson and suddenly you’re into either populists or technocrats.

Chart of the day: An immigration tide reversal

From the Pew Research Center [PDF], dramatic evidence that the Great Recession saw a reversal of the flow of Mexican immigrants:

BLOG Migration