- IoI Forum
- IoI Economy Forum
- Venue: London
- Date: Ongoing
The IoI Economy Forum meets regularly to discuss political economy across both the developed and emerging economies.
If you would like to join the forum, or would like further information, please contact Angus Kennedy at email@example.com.
Quantitative Easing: will it ever stop? Wednesday 30 April 2014
The next meeting of the Economy Forum will be at 7pm Wednesday 30 April 2014. Please email if you would like to attend.
Please note there will be a small charge of £5 to cover the room booking.
The next meeting of the Economy Forum will examine the success and failure of the ongoing programmes of quantitative easing on both sides of the Atlantic.
Phil Mullan will introduce the discussion.
Questions to consider
1. Why have central banks come to such prominence in recent years as economic policy makers?
2. What were the intended goals of Quantitative Easing?
3. How successful has QE been?
4. Were the fears about its negative effects overstated?
5. Is the tapering of US quantitative easing the beginning of the end of easy monetary policy?
6. What was behind the ‘forward guidance’ initiatives? Is it reasonable to assess ‘forward guidance’ as having failed?
William White, ‘Ultra Easy Monetary Policy and the Law of Unintended Consequences’, Federal Reserve Bank of Dallas, Working Paper No. 126, August 2012
Spencer Dale, ‘Limits of monetary policy’, Speech given by Bank of England Chief Economist, Trinity College, Dublin 8 September 2012
Glenn Stevens, Governor of the Reserve Bank of Australia, ‘Challenges for central banking’, Speech in Bangkok, 12 December 2012.
Athanasios Orphanides, ‘Is monetary policy overburdened?’, BIS Working Papers No 435, December 2013
Jon Hilsenrath, ‘New View Into Fed’s Response to Crisis: From Concern to Hope to Urgent Action, a Peek Inside the Central Bank During 2008’, Wall Street Journal, updated 21 February 2014
Andrew Filardo and Boris Hofmann, ‘Forward guidance at the zero lower bound’, BIS Quarterly Review, March 2014
Adam Smith: The Wealth of Nations Thursday 27 February 2014
Daniel Ben-Ami, author, Ferraris for All, introduced a discussion of Adam Smith's The Wealth of Nations.
This session will focus on Adam Smith’s own account of his political economy rather than subsequent attempts to claim his mantle. Participants should if at all possible read the allocated sections of The Wealth of Nations (TWON). A future forum will examine Smith’s Theory of Moral Sentiments.
QUESTIONS TO CONSIDER
- What were the main economic and intellectual influences on the development of Adam Smith’s political economy?
- How does the idea of the division of labour fit into TWON?
- How central is the theory of value to Adam Smith’s thought?
- How does Smith conceive of the relationship between individual self-interest and public prosperity?
- To what extent is it possible to glean elements of Adam Smith moral philosophy from his writing in TWON?
- Books one and two of TWON (available online here but many other versions exist). The most important sections of all are chapters I, V, VI, VII and VIII of book one.
- Isaac’s Rubin's A History of Economic Thought ( originally published in Russian in 1929). Available here. The section on Adam Smith (chapters 18-24) and the brief review of the course (chapter 40).
Several other short pieces are also useful as background:
- A polemic against the view that Smith simply maintained that individuals pursue their self-interest.
- A capsule biography of Smith
- A chronology of his life and times
Austrian Economics Tuesday 10 December 2013
Writer and libertarian Christian Michel introduced a discussion on Austrian Economics.
Listen to the recording here
The Austrian School has been an undercurrent in the economics field after the 1930s, first eclipsed by Keynesianism, then enjoying a brief revival of interest following Friedrich Hayek's Nobel Prize in 1974, and shadowed again by the Chicago School and Milton Friedman's Monetarism, and the Washington Consensus and new neo-liberalism (all theories the Austrians firmly opposed). The present revival is a consequence of the financial crisis. The Austrians correctly predicted it (and for the right reasons, unlike others). The crisis seems an empirical demonstration of what the Austrians' literature have been describing all along.
The talk will briefly show the original historical contribution of the Austrian School (the 'subjective theory of value', which completely refuted Marx's 'labour theory'). It will move on to show how other analyses, the non neutrality of money (against J B Say), the 'problem of knowledge', and the psychological dimension of time preference cause an unavoidable misallocation of assets in regimes of fractional reserve banking – besides the ethical problem of the practice. This misallocation of financial assets creates, in addition, serious income inequality, illustrating the 'Cantillon effect'.
The whole Austrian 'business cycle theory' (of 'boom and bust') explains more phenomena taking place in the decade before the 2007 crisis and since than rival Classical, Keynesian and Monetarist theories. Probably the weakness of the Austrian model for policy-making is that it prescribes, "don't start from here". We should, indeed, prevent booms if we want to avoid busts, but what to do when you are in the hole?
The topic has generated so much literature in the last 140 years that it's impossible to make a non arbitrary selection. So with all those limitations, this is Christian Michel's:
The foundational text is Carl Menger's Principles of Economics, Vienna, 1871, but like all bibles, people use the comments, extract quotes, but never read the original (that goes for Marx's Capital, of course). The other canonical book is Ludwig von Mises's daunting Human Action, 1949. Same remark as above. Both authors, and the ones in between, studied in Vienna, hence the label 'Austrian School'.
For baby steps into the subject, I suggest the following readings:
Dr Eamonn Butler, Austrian Economics, a Primer, a 100-page easy read, published in booklet form by the Adam Smith Institute, and downloadable free in pdf format.
A long-time classic is Faustino Ballvé's Essential of Economics, a brief survey of principles and policies, first published in Mexico, 1956, republished many times, and translated into several languages. A free, English-language version exists as an e-book.
Another good place to start, if one has time for a 200-page book, is Economics in One Lesson, 1962, again a favourite of Austrians, many times republished, also available free online.
The economics of the Austrian School (more like Marxism, and unlike Keynesianism and Monetarism) are part of a whole epistemology. Probably the best approach is to be found in Hans-Hermann Hoppe's Economic Science and the Austrian Method, 90 (dense) pages, available in paper form from the very active Ludwig von Mises Institute, and in a free download.
Of course, the Austrian School itself and all the above authors, as well as the works mentioned are the subjects of Wikipedia entries and innumerable posts on blogs and forums.
The Entrepreneurial State Tuesday 1 October 2013
Professor James Woudhuysen introduced a discussion on Mariana Mazzucato's book.
Despite her Democratic Party desire to uphold the state against Milton Friedman, free-market ideologues and the Republican right, MM may nevertheless have performed a service. Through her research, she suggests that the US state, and in the first place the Defense Advanced Research Projects Agency (DARPA) and the National Institutes of Health, has often been the background force that explains the success of Great Men in innovation such as Steve Jobs. She attacks venture capitalists for their short-term horizons and contends that the private sector leaches benefits from the state. Refreshingly, she reproaches pharmaceutical companies for their share buybacks, their cuts in R&D, and their fondness for resorting to ‘open’ innovation at the expense of developing it themselves. She is rightly skeptical about today’s patents, George Osborne’s 10 per cent corporation tax on patents, and tax credits. She is also right to point up the significance of ‘animal spirits’ to innovation – of morale, talent, excitement and direction.
However, MM also argues that DARPA has brought tremendous advances; that its successes have been emulated by the Small Business Innovation Research (SBIR) programme initiated by Ronald Reagan in 1983; that the National Nanotechnology Initiative of George Bush in 2003 could bring about the next General Purpose Technology (GPT); that the collapse of the US solar firm Solyndra was because of impatient venture capitalists rather than a misguided state, and that many large companies, including Apple, fail to pay their taxes. Perhaps her most notable conjecture is that all parts of the iPhone owe their development to the state. Where is she right, and where is she wrong?
FURTHER QUESTIONS TO CONSIDER
- Clearly, the state has long been the breast at which private firms have sucked. But does that make its investments 'directed', courageous, early, capital-intensive, entrepreneurial, risk-taking, unbureaucratic and effective? If not, what would we propose?
- Like the polemical targets of Big Potatoes, MM dismisses the ‘linear’ model of innovation, and is anxious to say that innovation isn’t about R&D. Why does she feel the need to do this, and what is her alternative account?
- MM argues that the state has been bad at doing PR around its excellent role in innovation. How true is this?
- MM’s book is marred by her cavalier use of a number of familiar categories in modern political economy – categories which she fails to explain or justify. Which are the most prominent in her analysis? Why would we want to contest them?
- MM has kind words for Japan’s Ministry of International Trade and Industry (MITI) in the 1970s and 1980s. She argues that Italy’s problem is not too much state spending, but rather inadequate attention to education, human capital and R&D. She adds that Canada, Australia and New Zealand have higher debt, but stable growth. Finally she upholds Brazil, China and South Korea as examples of state-backed ‘green growth’. How do we assess the claims MM makes for these different countries?
- MM acknowledges her debt to John Maynard Keynes, Karl Polanyi, Joseph Schumpeter, Christopher Freeman, Marcia Angell, Robert Solow, Richard Nelson, Bill Lazonick and Carlotta Perez. How valuable are these sources for an understanding of innovation?
- Mariana Mazzucato, The Entrepreneurial State: Debunking Public vs. Private Sector Myths, (Anthem Press 2013)
- Martin Wolf, A much-maligned engine of innovation, Financial Times, 4 August 2013
- Rob Lyons, The state or the free market? What a choice…, Spiked, 26 August 2011
- Big Potatoes: the London Manifesto for Innovation
- JW, Big Pharma’s little critics, Spiked, 28 March 2013
- JW, article on US R&D
The truth about neoliberalism. Thursday 27 June 2013
Daniel Ben-Ami, author, Ferraris for All, introduced a discussion on neoliberalism.
Listen to the recording here:
Is there a powerful neoliberal current intent on pursuing austerity in western societies? Many self-identified liberals and leftists insist this is the case. The first step in tackling this question is to probe more deeply into the meaning of “neoliberalism”. Too often it is assumed to refer simply to an ideological commitment to the free market. This discussion will probe the topic more deeply.
QUESTIONS TO CONSIDER
- What are the main components of the neoliberal worldview?
- To what extent is neoliberalism a break from earlier forms of liberalism?
- What is the significance of the German /Austrian strand of neoliberalism?
- How has the influence of neoliberalism changed since the 1970s?
- Daniel Stedman Jones, Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics, (Princeton 2012)
- Jones can be heard discussing his book in this episode of the BBC Radio 4 Thinking Allowed programme. 21 January 2013.
- The book was reviewed by Daniel Ben-Ami in the Financial Times. (free registration may be necessary). 13 December 2012.
- “Burgin on Hayek, Friedman and the Great Persuasion”, Econtalk podcast (for those who are particularly keen there are many more links here too) 18 March 2013.
- Angus Burgin’s book is discussed by Frank Furedi in “The Struggle to Moralise Capitalism”, spiked January 2013.
- BBC Radio 4 Analysis podcast “Keeping the free market faith”, 14 October 2012.
- Oliver Marc Hartwich, “Neoliberalism: The genesis of a political swearword”, Centre for Independent Studies. 21 May 2009.
- Sebastian Dullien and Ulrike Guérot, “The long shadow of ordoliberalism: Germany’s approach to the euro crisis”, European Council on Foreign Relations. February 2012.
A new industrial revolution? Tuesday 7 May 2013
Peter Marsh, economist; former manufacturing editor, Financial Times, author, The New Industrial Revolution: Consumers: Globalization and the End of Mass Production, introduced a discussion on the themes of his book.
- Peter Marsh, The New Industrial Revolution: Consumers, Globalization and the End of Mass Production, May 2012
The limits and dangers of muddling through: Tuesday 5 March 2013
Phil Mullan, economist; author, The Imaginary Time Bomb, introduced the discussion.
In the January 2013 issue of Foreign Affairs Fareed Zakaria wrote in an article titled 'Can America be fixed?': "With only a few exceptions, the advanced industrial democracies have spent the last few decades managing or ignoring their problems rather than tackling them head-on". Nowhere is this more true than in the sphere of economics.
The economic problems that hit the western economies in the 1970s have never been fixed. Instead an extraordinary confluence of circumstances since the late 1980s meant that these problems could be papered over with temporary palliatives at home, and a greater reliance on wealth created elsewhere, especially in emerging Asia. This Long Slump has been disguised for extensive periods by the greater ease these palliatives gave in maintaining the appearance of expanding prosperity. This was a false prosperity built mainly on state-driven policies, not least the unprecedented expansion of debt. Ultimately these state-led methods for coping with the moribund condition have proved unsustainable, evidenced by the post-2008 return to stagnation conditions. Today's 'contained depression', evidenced by the sluggish recoveries everywhere in the west, is a consequence primarily, not of the financial crisis itself, but of those four decades of low investment in production and of lacklustre innovation, and of the political failure to address these deficiencies.
The defining characteristic of this long period of economic crisis is that the western elites have been able to turn muddling along into their modus operandi. The unusual economic and political circumstances since the 1980s – an end to social contestation at home and to Cold War abroad, globalisation, and the emergence of financialisation and other forms of greater state economic intervention - has opened up that 'muddle through' path for western elites of all political complexions. Not only do such measures not fix things properly, but they are at a great cost to our collective future. They get in the way of the long overdue economic renewal, by producing a state of corporate and personal dependency that inculcates against revitalisation. The sustained political evasion of the west’s profound economic challenges has itself become the number one barrier preventing a return to economic growth and genuine prosperity. In this way a political, subjective failure, and the continuation of 'muddle through' ways, prevents the thoroughgoing restructuring and revamp of the objective economic and technological conditions necessary to get us out of this Long Slump.
QUESTIONS TO CONSIDER
- Is it fair to say we've had 'productive decay' since the 1970s? Surely people living in the west are much better off than they were 40 years ago.
- What's wrong with 'muddling through'? It seems to have sustained rising prosperity for much of the time since the 1980s; today's problems are bound to pass at some point.
- How can one expect a state that has made a virtue of 'muddling through' to changes its approach and initiate a renaissance in innovation and production? As the physicist Andre Geim implies, isn't this a somewhat utopian hope ('Be afraid, be very afraid, of the world's tech crisis', Financial Times, 6 February 2013)?
- Phil Mullan, Draft discussion paper, not for circulation, 24 February 2013
How broken are the western economies?
- Robert Gordon, ‘Is US economic growth over? Faltering innovation confronts the six headwinds’, Policy Insight 63, Centre for Economic Policy Research, September 2012
- '2013 Productivity Brief—Key Findings: Global Productivity Slowed in 2012, with Little Scope for Improvement in 2013’, Conference Board, January 2013 – consider charts 1 and 2 especially
- 'Innovation pessimism. Has the ideas machine broken down? The idea that innovation and new technology have stopped driving growth is getting increasing attention. But it is not well founded', The Economist, 12 January 2013
Quantitative Easing: a current example of muddling through: what are the consequences?
- William White, 'Ultra Easy Monetary Policy and the Law of Unintended Consequences', Federal Reserve Bank of Dallas Globalisation and Monetary Policy Institute, Working Paper No. 126, August 2012
- Spencer Dale, Chief Economist, Bank of England, 'Limits of monetary policy', speech, 8 September 2012
The state of industrial policy: Wednesday 5 December 2012
Rob Lyons, deputy editor, spiked, introduced a discussion on state industrial policy.
A recent government-commissioned report, by former Conservative deputy leader Michael Heseltine, has criticised the coalition for not having a strategy for growth. Heseltine argues for greater government intervention, particularly at local level, to revive ailing parts of both the economy and the country. Last year, the think tank Demos published a report by an Italian-American economist, Mariana Mazzucato, which argued that the 'entrepreneurial state' has always played a part in innovation, research and development and should do so even more.
On the other hand, free-marketeers would argue that a bloated state that draws off a large proportion of society's wealth will inevitably misallocate those resources and be a barrier to innovation and new ideas. Far better to simply let the market get on with it rather than have the state attempt to 'pick winners' based on political interests or current fashions. The high-profile failure of the US solar-power company Solyndra, which had been heavily supported by the federal government, is a case in point. There is also plenty of evidence that privatisation, the private-finance initiative and other state contracts have propped up large areas of economic activity in recent years in the absence of vigorous economic growth.
Some things that are necessary for the smooth operation of capitalism as a whole - like basic research, the provision of infrastructure, the creation of an educated workforce, and so on - may never be profitable for any individual company. Is there a role for the state that supports wealth creation without making the mistakes of state intervention in the past?
Some questions to consider in advance:
- It is widely recognised that the UK economy should be 'restructured' and/or 'rebalanced', but what does that really mean?
- Is it possible for government policy to improve economic growth? To revive manufacturing
- With the state already playing such a large role in the UK economy, is it a good idea to increase business dependence on it even further?
- The Heseltine Review
- David Green, A strategy for economic growth: a modern industrial policy, Civitas, October 2012
- Mariana Mazzucato, The Entrepreneurial State, Demos, July 2011
- Rob Lyons, The state or the free market? What a choice..., spiked, August 2011
- Ruth Lea (editor), Nations Choose Prosperity: Why Britain Needs an Industrial Policy, June 2009
- James Woudhuysen, State intervention is no substitute for innovation, spiked, October 2009
- Economist, French competitiveness: shock treatment, November 2012
- Economist, Big Brother is back: France and Germany lead a revival of state intervention, November 2012
- Ha-Joon Chang, 'No industrial policy please, we're British' is out of date, Guardian, September 2012
- Industrial Policy, The Concise Encyclopaedia of Economics
- Geoff Mulgan, Innovating our industrial policy, NESTA
The Giants of Asia: Tuesday 25 September 2012
Professor James Woudhuysen introduced a discussion on his Battle of Ideas session, the Giants of Asia.
With their huge populations and buoyant growth rates, China and India are two of the economic and technological powerhouses of the 21st century. And though many seem to forget it after the Lost Decade, Japan is the third largest economy in the world, the second largest developed economy and the world’s largest creditor nation. Nevertheless, all three countries have giant problems, too. Will the giants of Asia stumble in the face of the US rebound? And when might Asian production finally and decisively shift to low-cost Indonesia, Bangladesh and Vietnam?
Specifically, in this meeting, we want to look at the following questions about Japan:
- Some have argued that the (first) lost decade in Japan took place because the LDP and the state were too locked into the Cold War and a client relationship with US occupiers to take the steps that were necessary. In the light of the country's second lost decade, does this account still hold (enough) water?
- Was low household consumption, due to uncertainty about the future, to blame; or was there a productivity slowdown – and if so, why? Or was it all to do with an overvalued Yen?
- How much, and how, do we combat the standard 'cultural' explanations – refusal to allow immigration, in-bound FDI or female empowerment; government/civil service corruption; and ageing of the population?
- It is often pointed out that Japanese small firms, agriculture and retailing are backward. Why is this, and how important is it?
- The Japanese working class is notable for its quiescence – a big contrast with its record during the 1940s and 1950s, and with China, India and South Korea today. What can we learn from this in terms of the economy?
- Tim Callen and Jonathan David Ostry, eds, Japan's Lost Decade: Policies for Economic Revival, 2003, IMF Google book, mainly financial
- Magnus Blomstrim and Sumner La Croix, eds, Institutional Change In Japan, 2006, Google book – glance at the Introduction and at the chapters on corporate governance (4), life-time employment (6) and the labour movement (7)
- Yoshio Sugimoto, An introduction to Japanese society, third edition, November 2009, tables on the working class, pp40-44. Search inside the Google book
- Foreign Press Centre, Japan, Facts and Figures
- Nikkei Weekly – two weeks for free
- Hamada et al on Japan and the overvalued Yen , 2009
- Hayashi & Prescott 1990s Japan, 2001
- Kneller et al Multinationals and productivity in Japan, 2012
- The Causes of Japan's 'Lost Decade': the role of household consumption, 2006
The moral limits of markets: Thursday 30 August 2012
Economics writer Daniel Ben-Ami will introduce a discussion on Michael Sandel’s What Money Can't Buy: the moral limits of markets. Sandel argues there is an urgent need for a public debate about how far market values, rather than just the market economy, should be allowed to go. In his view excessive marketisation leads to social corrosion and extreme inequality.
Questions to consider:
- What is the true extent of marketisation in America and Britain? Consider not just the economy but the social impact of market encroachment.
- At what point do market values become excessive?
- To what extent does marketisation corrode social bonds and a sense of a common identity?
- How do market values relate to the inequality debate?
- Michael Sandel, What Money Can't Buy: the moral limits of markets
After reading the book it is particularly worth watching and listening to Sandel’s broadcast performances as these illustrate his broader views and underpin his influence as a celebrity academic.
- Justice lectures: his popular Harvard introductory course to political philosophy
- 2009 BBC Reith lectures on “Markets and Morals”: this link in turn includes links to other broadcasts featuring Sandel
Short pieces by other authors on this topic include:
- Kurt Andersen “The end of excess: is this crisis good for America?” Time magazine. 26 March 2009
- Daniel Ben-Ami Ferraris for All, p4-6 and p35 briefly considers this subject
- Lizzy Davies “Sarkozy and Merkel tell US that Europe will lead way towards ‘moral’ capitalism” Guardian 8 January 2009
- Amitai Etzioni “The moral limits of economic growth” Sociological Forum 21 (4) December 2006
- Boston Review How Markets Crowd Out Morals
The military-industrial complex today: Thursday 14 June 2012
Professor James Woudhuysen will introduce the discussion.
In terms of industrial policy, it can be argued that the UK – and even more, the US – have long had one: it's called the state's procurement of weapons that have a fair amount of R&D put into them. Most recently, Obama's State of the Union address (January 2012) said that the US Department of Defense, the world’s largest consumer of energy, would make one of the largest commitments to clean energy in history – with the US Navy purchasing enough capacity to power 250,000 homes a year.
Clearly the role of military procurement has changed over the years; right now, for instance, the new US cybersecurity agency cannot find all the computer specialists it wants. Since Eisenhower's influential and liberal 1961 farewell address, which coined the phrase 'military-industrial complex', US defence spending totals and percentages, as well as US forces/weapons postures, have likewise been through their ups and downs, declining as a percentage of GDP during the Cold War and reviving even before 9-11, and certainly since. Over the years, too, nuclear weapons, always a relatively cheap option, have become a smaller and smaller element in US defence spending.
Economic and political attitudes to the MIC have also changed. Historically the left always attacked the MIC for its pork-barrel subversion of democracy, its expense, its waste, its baroque product innovations, its arms exports, its debatable 'spin-off', and its direct interest in starting wars. On the other hand, from Baran and Sweezy in the 1950s through to the British SWP, military budgets have long been seen as an essential Keynesian support for capitalism, mopping up the capitalist 'surplus' generated elsewhere. More recently, however, the US has seen (and again the UK is not far behind) a convergence between militarists worried about energy security, and Greens keen on military innovations spinning off into renewable energy.
Cuts in UK defence are sharp. At the same time UK defence secretary Philip Hammond has just added his voice to traditional US demands that Germany do more in defence. Meanwhile cuts in US defence are a mirage, and there is a very rapid increase in defence spending in China and India.
What role would we assign to expenditure on armed services and weapons today? Are arms really so different from other kinds of products? Why have attempts to restructure the MIC, and reap a peace dividend, proved so difficult? What do we make of the growing US deployment of private armed services in places like Iraq? What can we foresee about the future course of defence spending, in the UK, the US and Asia?
- Political background, current and historical: the ABCs are on Wiki
- Todd S Purdum, One nation under arms, Vanity Fair, January 2012
- James Fallows, The dustbin of history, Foreign Policy, 1 November 2002
- Edward Luce, The mirage of Obama's defence cuts, Financial Times, 29 January 2012
For MIC buffs:
- JW, 1991 Chapter 7 on US attempts to restructure the complex, 1961-1990
- JW, 1991 Chapter 3 on [Marxist] political economy of armed forces and arms production
- FY 2013 Budget Proposal documents
For MIC super buffs:
- SIPRI 2011 Yearbook Chapter 4 on world defence spending
- MoD 2011 Defence Statistics, only need bother with Tables 1.1-1.14, 1.7, 1.9b
- MoD, National Security Through Technology, February 2012
- SIPRI 2009 Report on the world arms trade
- Liberal critique of the exceptional rise in defence spending after 1998 and its present stabilisation above Cold War levels: Carl Conetta, An undisciplined defense: Understanding the $2 Trillion Surge in US Defense Spending, January 2010
When all the fruit is gone: Tuesday 17 April 2012
Phil Mullan introduced a discussion on the recent book The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better
Cowen attributes America's economic troubles to a combination of technological exhaustion by around the 1960s, and of Americans' failure to see that this technological plateau had been reached and to adjust accordingly since.
Questions to consider:
- Was there a step-change in US economic capabilities around this time?
- What's the relationship between technological progress and economic growth?/
- How does the Cowen thesis fit alongside the other once popular thesis in America: the mini-long boom of the 'Great Moderation' in the 1990s and 2000s?
- Cowen's book has made a stir in the US elite; how does the acclaim for it sit alongside the latest burst of optimism about the US economy's prospects and, especially, Washington's bi-partisan rejection of the latest expressions of US declinism (e.g. Obama's 2012 State of the Union address comment: "Anyone who tells you otherwise, anyone who tells you that America is in decline or that our influence has waned, doesn't know what they're talking about.")?
- The Book of Jobs, Joseph Stiglitz, Vanity Fair, January 2012, for another take on the reasons for the 'Long Slump'
- Sinking into the ‘great stagnation’, Martin Wolf, Financial Times, 21 December 2011
- The End of the Future, Peter Thiel, National Review, 3 October 2011
- The Decline and Fall of America’s Decline and Fall, Joseph Nye
- Interview with Alexander Field, author of A Great Leap Forward: 1930s Depression and U.S. Economic Growth
- The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better, Tyler Cowen, Dutton Books: 2011
Not essential for the discussion but if you are interested in the technology-productivity theme historically:
- Does the new Economy measure up to the Great Inventions of the Past?, Robert Gordon, NBER WP 7833, especially pp. 1-26, (or in Journal of Economic Perspectives, Fall 2000
- Believe it Or Not! The 1930s Was a Technologically Progressive Decade, January 2007
Equality and Efficiency: the big trade-off, Tuesday 28 February 2012
Angus Kennedyintroduced a discussion on the classic text Equality and Efficiency: the big tradeoff by Arthur M. Okun. As many call today for increased taxes to pay for social entitlements and to restrain the alleged greedy excesses of bankers and the City, for the state to deliver social justice and fairness, it is worth considering the arguments that attempts to increase equality in society can not only be economically wasteful and inefficient but also even that they come at the expense of freedom and at the risk of creating a culture of dependency and passivity.
“High tax rates,” wrote Okun, “are followed by attempts of ingenious men to beat them as surely as snow is followed by little boys on sleds.” Is it true that there is a necessary tradeoff between equality and efficiency? That attempts to regulate the economy such as Basel III are doomed to failure? Would lower tax rates benefit us all or just the well-off? In what sense can we be considered to be equal, if any, so long as inequalities in wealth distribution remain?
- Equality and Efficiency: the big tradeoff, Arthur M. Okun, Brookings Institution: 1975
- Americas inequality need not determine the future of Britain, Martin Wolf, FT, 22/12/11
- A fixation with inequality, a poverty of understanding, Daniel Ben-Ami, spiked, 23/12/11
- Defending rights from the right, Matthew Taylor, RSA Blog, 27/12/11
- The problem with entitlements, Matthew Taylor, RSA Blog, 30/12/11
- Obama's "war on religion", Economist, 11/02/12
- What voters never hear about the English health service, Iain Martin, FT, 12/02/12
- America's failed promise of equal opportunity, Alex Gourevitch & Aziz Rana
Less cash? More inequality? The reality of changes in UK living standards, Wednesday 21 September 2011
Daniel Ben-Ami introduced a discussion on trends in living standards in Britain. There is much talk about growing poverty, rising inequality and the impact of public spending cuts on the British population. This discussion will seek to identify real material changes in living standards. It will attempt to work out developments in relation to poverty, inequality and austerity in recent years. It will also consider the pitfalls of different approaches to measuring such shifts. In the aftermath of the English riots and against a background of ongoing austerity, it is important to establish to what degree Britons are really feeling the pinch.
Questions to consider
- What was the impact of the recent recession on popular living standards?
- How strong is the evidence that inequality is widening?
- Besides changes to wages what other factors are important in determining movements in living standards?
- What are the implications of having different measures of inflation when trying to measure changes in living standards?
- What is the best way methodologically to approach the question of changing living standards?
- Feeling the pinch, Roger Bootle, Economic Review (Deloitte)
- UK high street faces difficult decade as consumer squeeze intensifies and households focus on paying down debt, Ernst & Young Item Club
- Living Standards During the Recession, Institute for Fiscal Studies
- An Anatomy of Economic Inequality in the UK, National Equality Panel
- The Impact of the Recession on Household Income (podcast), Office for National Statistics
- Social Trends: Labour Market, Office for National Statistics
- Missing Out, Matthew Whitaker and Lee Savage
Is the dollar dead?, Wednesday 3 August 2011
Phil Mullan introduced a discussion on the fate of the dollar. During most of the twentieth century the US and the dollar have reigned supreme in the world. The dominance of the dollar as the leading international currency has both expressed US hegemony and also more recently helped to sustain it. As each year passes economic power is shifting more and more away from the US, and from the west in general, to China and the rest of the emerging economies. How much longer can the US expect to maintain its own currency as world money?
Questions to consider
- Over the long term what are the main determinants of a currency's relative level?
- How did the $ attain its global role?
- What are the benefits to the US of issuing the main international reserve currency?
- Why is the $ perceived to be under threat as world money?
- What are the factors likely to sustain or undermine its current position?
- Twilight of Pax Americana, Christopher Layne and Benjamin Schwarz, LA Times, September 29 2009
- Sterling’s Past, Dollar’s Future: Historical Perspectives on Reserve Currency Competition, Barry Eichengreen, April 2005
- The Indebted Empire: America’s Current-Account Deficit Problem, Iwan Morgan, International Politics, 2008
- United Nations, World Economic Situation and Prospects 2011, January 2011
- International Monetary Fund, Reserve Accumulation and International Monetary Stability, April 13 2010
- The People's Bank of China, Zhou Xiaochuan: Reform the International Monetary System, March 23 2009
Inflation: is the problem getting bigger?, Wednesday 1 June 2011
Professor James Woudhuysen introduced a discussion on inflation, commodity price ups and downs, and what may lie ahead.
Questions to consider
- How important is inflation in general and right now, in the UK and internationally?
- If not on a 1970s scale, is Britain entering several or more years of 'stagflation'?
- Of the current reputed sources of inflation, how much influence would we ascribe to (A) Chinese/Asian demand for commodities (oil, food, etc) fuelled by continuing urbanisation (B) Quantitative easing and general state indebtedness/largesse [China included] (C) The falling rate of profit, which causes employers to raise prices so as to buoy up margins (D) in the case of the UK, Sterling devaluation?
- Why has the US been relatively immune to inflation until recently?
- Daniel Pimlott, Travel costs push UK inflation to 4.5%, Financial Times, 17 May 2011
- ONS, Inflation Statistics, 17 May 2011
- OECD, Consumer prices and underlying data
- Roger Bootle, Why we should hope for a large fall in commodity prices, Telegraph, 8 May 2011
- Daniel Ben-Ami, Belated look at falling incomes, 20 March 2011
- Monetary Policy Committee Remit, Gordon to Eddie, 2003
Behavioural Economics, Thursday 5 May 2011
Timandra Harkness introducd a discussion on behavioural economics.
Questions to consider
- To what extent are Behavioural Economics’ critiques of homo economicus – the rational economic agent of classical economic theory – valid or useful?
- Can Behavioural Economics be applied beyond consumer behaviour?
- What was its appeal before the recession?
- Elizabeth Dickinson, Anthropology of an Idea: "Behavioral Economics"
- Craig Lambert, The Marketplace of perceptions
- Sharla A. Stewart, Can behavioral economics save us from ourselves?
- Robin Neill, The Market System and Behavioural Economics
- Robin Neill, Misbehavior in Behavioral Economics and the Unhappy Thing about Happiness Economics
- Tim Harford, Why We Do What We Do
Global Imbalances, Thursday 24 March 2011
Ben Hunt, author of The Timid Corporation: Why Business is Terrified of Taking Risk, introduced a discussion on global imbalances.
Questions to consider
- What are the "global imbalances"?
- What are their root causes?
- Were they responsible for the financial crisis as is commonly claimed?
- What is the role of the breakdown of the Bretton Woods system in causing the imbalances?
- Has China's export-model of growth reached its limits?
- What is wrong with the current discussion on imbalances and "rebalancing"?
- Is the world entering a dangerous new economic and political era as is increasingly claimed?
- Richard Duncan, The Corruption of Capitalism: a strategy to rebalance the global economy and restore sustainable growth (2009) (Also see his website and various articles)
- Ben Hunt, In the dark (February 2011)
- Sean Collins, The truth about the currency wars (October 2010)
- Andrew Smithers, Rebalancing the global economy (Sep 2010)
- R Rajan, Rebalancing the World Economy (Aug 2010)
- The Economist, Rebalancing the World Economy: America (July 2009)
- Stephen Roach, The Consumption Gap (July 2010)
- Martin Wolf, Fixing Global Finance (expanded edition) (2010) (And/or his FT world economy articles)
- Gideon Rachman, Zero Sum World: Power and politics after the crash (2010)
- Charles Dumas, Globalisation Fractures: how major nations' interests are now in conflict (2010)
The New Economics, Thursday 10 February 2011
Daniel Ben-Ami introduced the discussion.
The 2008-9 economic and financial crisis was a tremendous shock to the discipline of economics. Economists were mortified by their failure to predict events. Within a short time it became widely accepted that many core elements of the discipline were sadly lacking.
Common themes in the discussion of economics included the need to make it more moral, historical and understanding of human psychology. This meant it should be correspondingly less focused on profits, mathematical models and the idea of rationality.
Typically the case for the new economics, also sometimes referred to as the “Keynesian resurgence”, was put in counter-position to a supposed free market orthodoxy. Supporters of new economics saw themselves as pragmatic proponents of state intervention rather than doctrinaire advocates of the free market.
Perhaps the best known institution promoting new economics was the Institute for New Economic Thinking. Since its foundation in October 2009 the organisation has gained the support of many of the world’s top economists and economic policymakers.
Existing think tanks which took up the theme included Demos and the IPPR. This was in addition to organisations that pre-existed the crisis such as the New Economics Foundation and the New Economics Institute - although the latter changed its name from the EF Schumacher Society in 2009.
Questions to consider
- Why were conventional economists so defensive about their discipline following the advent of the 2008-9 crisis?
- What are the most important elements of the new economics?
- Does it represent a return to traditional Keynesianism?
- How influential are the remaining free market economists?
- Daniel Ben-Ami, Moderate radicals, Fund Strategy
- Paul Krugman, How did economists get it wrong?, New York Times
- John H Cochrane, How did Paul Krugman get it so wrong?
- Stephanie Flanders, The economist's new clothes, Radio 4 Analysis
- Some of the videos on the INET website are good background too and quite short.
- Michael Porter & Mark Kramer, The Big Idea: Creating Shared Value, Harvard Business Review
Where in the world is the economy going? Wednesday 15 December 2010
The discussion – an end of the year review – was on the state of the world economy post G20, with introductions by Rob Killick and Mina Blauel on the situation in the developing and in the developed world: global imbalances between slow growth and rapid development; currency wars; trade deals; protectionism; etc.
Read Rob Killick's edited introduction.
- Signs that America’s global grip is slipping, Daniel Ben-Ami, fundstrategy, 15 November 2010
- America’s economic policy mix is a threat to the world, Philippe Legrain, vox, 2 November 2010
- The Super-Cycle Report, Standard Chartered, 2010
- Capital Flows to Emerging Market Economies, IIF Research Note, 4 October 2010
- The Honeymoon has to end sometime, UBS Investment Research, 18 November 2010
- Still not a wall of cash, UBS Investment Research, 23 April 2010
Sunday 10 October 2010
Alex Hochuli will introduce a discussion on Anatole Kaletsky’s latest book Capitalism 4.0
- Secrets of Capitalism - Religion and Science, BBC Radio 4, 27 September
- For a New World, New Economics, Robert Skidelsky, August 30
- Case for new era is overdone, Daniel Ben-Ami, August 16
- Capitalism 4.0 by Anatole Kaletsky, Observer, July 25 2010
- Capitalism looks back to the future, Financial Times, July 18 2010
Sunday 5 September 2010
Professor James Woudhuysen introduced a discussion on 'Does Britain need an industrial policy?'
Some questions to consider:
- Could an industrial policy avoid austerity and inject dynamism into the economy?
- Is it just another word for protectionism?
- Can you pick winners?
- How or should the state support the private sector?
And some suggested readings:
- Leviathan Inc, The Economist, August 5 2010
- Defence Procurement in Crisis: A Call for Leadership, Royal United Services Institute, 3 March 2010
- Don’t neglect biotech, Simon Best, spiked
- UK needs a selective industrial policy, Ha-Joon Chang, Comment is free, 3 May 2010
Sunday 25 July 2010
Daniel Ben-Ami introduced a discussion on his new book Ferraris for All: In Defence of Economic Progress
Some questions to consider:
- What counter-arguments could be used against the view that growth scepticism is a useful concept?
- Should more attention be paid to those who are unambiguously opposed to growth?
- How does romantic anti-capitalism fit into the argument?
- What positive policy proposals, if any, can be drawn from the arguments in the book?
- How can the themes in the book be developed? What other areas of growth scepticism could be tackled besides the environment, inequality and happiness?
Sunday 20 June 2010
Yimeng Liu introduced a discussion on the realities of income distribution in China in the context of its rapid economic growth.
Yimeng kindly submitted this paper, Income Disparity in China, as a briefing document.
Further suggested readings:
- A Stronger China, Linda Yueh, Finance & Development, June 2010
- Unrest spreads among Chinese workers, FT, 09/06/10
- Foxconn halts compensation payments, MacUser, 09/06/10
- Buy an iPad, kill a Chinaman, spiked, 03/06/10
- Strike breakers, Economist, 03/06/10
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