Sep
20

People, Power, and Profits: Progressive Capitalism for an Age of Discontent

In 2019, Joseph Stiglitz published "People, Power, and Profits: Progressive Capitalism for an Age of Discontent." The book covers a wide range of topics, largely on contemporary American policy while also highlighting their histories - and is overtly political (Trump comes up frequently, throughout). The author provides an analysis of the challenges as well as potential pathways for the future. Some of the policies that are recommended include new regulations, such as regulating corporate business and money in politics. Other recommendations include introducing new services in the areas of social protection and safety nets as well as ensuring full employment, equality of opportunity and greater investment in education and research. Many of the recommendations will be common to readers familiar with economic arguments on the left-of-centre political spectrum. Very few, with the exception potentially of a universal basic income scheme, are radical or new. Nonetheless, this is worth a read, or at least the scan, to understand the economic arguments behind these recommendations. 

Some context on why regulations are called for and the barriers to change:

"Adam Smith's invisible hand (the notion that the pursuit of self-interest leads as if by an invisible hand to the well-being of society) is perhaps the single most important idea in modern economics, and yet even Smith recognized be limited power of markets and the need for government action. Modern economic research - both theory and experience -has enhanced our understanding of government's fundamental role in a market economy. It is needed both to do what markets won't and can't do as well as make sure that markets act as they are supposed to." (p. 24)

"The truly greedy and short-sighted in the 1 percent have come to understand that globalization, financialization, and other elements of the current economic rulebook are not supported by the vast majority of Americans, and understandably so. For these, this has one deeply disturbing implication: if we let democracy run its course, and if we believe in a modicum of rationality on the part of voters, they will choose an alternative course. In their pursuit of their naked self-interest, these super-rich have thus formulated a three-part strategy: deception, disenfranchisement, and disempowerment. Deception: they tell others that policies like the 2017 tax bill to further and enrich the rich will actually help ordinary Americans, or that a trade war with China will somehow reverse deindustrialization. Disenfranchisement: they work hard to make sure that those who might vote for more progressive policies can't or don't, either by making it hard for them to register, or by making it difficult for them to vote. And finally, disempowerment: they put sufficient constraints on government so that, if all else fails and a more progressive government were elected, it couldn't do what is needed to reform our politics and economy. One example: the constraints imposed by an increasingly stacked and ideological Supreme Court." (p. 27)

"A particularly invidious example of market power is the oligopoly in academic publishing. Chapter 1 highlighted the central role of knowledge in increases in our well-being. Advances in knowledge, in turn, require the dissemination of ideas. But in our market-based economy, this has been entrusted largely to the market, and the form that has taken is a highly concentrated and highly profitable oligopoly, with some five publishers accounting for more than half of all papers published, and for 70 percent of those in the social sciences. The irony is that the publishers get the articles for free (in some cases, they even get paid to publish them), the research reported is typically funded by the government, the publishers get academics to do most of the editorial work (the review of the articles) for free, and educational institutions and libraries (largely government-funded) then pay the publishers. Their high prices and excess profits, of course, mean that there is less money to fund research." (p. 76)

"Right now, on balance, our economy needs more regulations, at least in certain key arenas. Our economy has been changing fast, and our regulations need to keep pace. Twenty years ago, for instance, we didn't realize the dangers posed by carbon emissions; we now do, and we need regulations to reflect that. Twenty years ago, obesity was not the problem it is today. Now, we need to protect our children from the sweet and salty foods, designed to be addictive, that are contributing to this epidemic. Twenty years ago we didn't have the opioid crisis that has in part been manufactured by the pharmaceutical industry. Twenty years ago we didn't have a rash of for-profit educational institutions exploiting their students and the government loans for which they qualify. The conflict over net neutrality provides a vivid example of the need for regulation and the ways in which corporate interest manipulate the system for their own advantage." (p. 146)

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Nov
28

New Publication: Soil and Water Conservation in Ethiopia

Zerihun N., Tsunekawa, A., Nigussie H., Enyew A., Cochrane, L. and Floquet, A. and Abele, S. (2018). Applying Ostom's Institutional Analysis and Development to Soil and Water Conservation in Ethiopia. Land Use Policy. https://doi.org/10.1016/j.landusepol.2017.11.039

Abstract: Sustainable land management is of utmost importance in Ethiopia and relies on Soil and Water Conservation (SWC) measures collectively implemented by smallholders through participatory processes. This paper contributes systematic evidence on how SWC strategies are implemented and how participation is operationalized. Drawing upon inductive, qualitative research, we explore the design, implementation and evaluation of SWC activities, as they relate to Ostrom's Institutional Analysis and Development (IAD) framework, in order to determine how the activities can be made more appropriate, effective and sustainable. Findings show that on all levels of Ostrom's framework, there are shortcomings in the SWC institutions, which have to be addressed with more participatory approaches, a change from top-down to bottom-up measures, and economic incentives for farmers to invest in SWC measures instead of e.g. compulsory labor, and the integration of so far neglected groups like youth, women and the landless.

Available here. From the Journal here.

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Oct
30

Can Trade Promote Development?

Joseph Stiglitz and Andrew Charlton wade through the debates and evidence in "Fair Trade for All: How Trade Can Promote Development" (2005). The book aims to "describe how trade policies can be designed in the future with a view to helping the developing countries" including that "liberalization needs to be managed carefully - the task is much more complex than the simple prescriptions of the Washington Consensus which blithely exhorts developing countries to liberalize their markets rapidly and indiscriminately" (p. 2). It has been over a decade since the book was published, and as a result some of the details have changed, but the general arguments are important ones. The book is easy to read for non-economists and is highly recommended. 

The book begins: "The rules which govern world trade affect the livelihoods of the whole planet, and influence the economic development of all nations... You might hope that the world's trading system went some way to redressing the global inequalities which slice our world into the rich, the poor, and the very poor. Yet the opposite is true. The world trading system has protected the interests of the rich countries, at the expense of the poor, and entrenched inequalities" (p. v). 

The authors provide plenty of examples to back up the strongly worded statement given at the outset. One example: "Farmers are subsidized and protected by the governments of the rich countries, where less than two percent of the workforce is employed in agriculture. This protection shuts out goods produced by farmers of developing countries, where agriculture supports the livelihoods of most of the world's poor people. Intellectual property rules protect the rights holders in the rich countries, but do little to transfer technology to the underdeveloped industries in the poor countries. We are in the bizarre position of giving the developing world some $100 billion in aid every year, but costing them three times as much in protectionist policies." (p. v; see also p. 7). 

Despite what might be assumed (based on the positionality of the authors), the authors do not advocate for free trade, in all places at all times. In fact, they argue against this. "To date, not one successful developing country have pursued a purely free market approach to development. In this context it is inappropriate for the world trading system to be implementing rules which circumscribe the ability of developing countries to use both trade and industry policies to promote industrialization" (p. 17). And, not just trade - liberalization will affect inequality, and thus other services are required (like safety nets) to ensure the redistribution of wealth do not simply re-create new forms of poverty.

One point I found interesting was a commentary on the idea of 'comparative advantage', and the limits (or limiting role it can play). "For example, the theory of comparative advantage told South Korea, as it emerged from the Korean War, that it should specialize in rice. But Korea believed that even if it were successful in increasing the productivity of its rice farmers, it would never become a middle- or high-income country if it followed that course. It had to change its comparative advantage, by acquiring technology and skills. It had to focus not on its comparative advantage today, but on its long run, its dynamic comparative advantage. And government intervention was required if it was to change its comparative advantage." (p. 30). Often the 'comparative advantage' discourse is deterministic, stories such this present comparative advantage not as a reflection of present resources and opportunities but also of a vision for different opportunities and creating pathways for that. 

The focus of the second half of the book is what fair trade could actually look like - in agriculture, intellectual property, labor mobility, non-tariff barriers, and a number of other areas. Interested readers should pick this book up.

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Sep
25

Citizen Action and National Policy Reform

"Citizen Action and National Policy Reform: Making Change Happen" (2010), edited by Gaventa and McGee, presents a series of case studies of citizen movements and advocacy for national policy change. The book fits well within the "How Change Happens" space. Cases are presented from: South Africa, Philippines, Mexico, Chile, India, Brazil, Morocco and Turkey. The cases represent "emerging or existing democracies characterized by functioning states and at least some democratic space" (p. 4), even if that was not the intended objective of the volume. However, these effective cases suggested to the editors that it was "precisely because these are the kinds of settings where we can most expect collective citizen action on national policy to emerge" (p. 4).

Give the difficulty of summarizing the diversity of the cases, this review will share the key lessons learned about citizen action for policy change, as outlined by the editors in a series of propositions:

  • Proposition 1: Political opportunities are opened and closed through historic, dynamic and iterative processes. While political opportunities create possibilities for collective action for policy change, these openings themselves may have been created by prior mobilization.
  • Proposition 2: Civil society engagement in policy processes is not enough by itself to make change happen. Competition for formal political power is also central, creating new impetus for reform and bringing key allies into positions of influence, often in synergy with collective action from below.
  • Proposition 3: While international allies, covenants and norms of state behaviour can strengthen domestic openings for reform, they can also be the subject of fierce domestic opposition. Successful reform campaigns depend on careful navigation to link international pressures with differing and constantly changing local and national contexts.
  • Proposition 4: Successful policy change occurs not through professional advocacy alone, but involves complex and highly developed mobilizing structures which link national reformers to local and faith-based groups, the media and repositories of expertise. Such structures are built over time, deeply grounded in the societies where they are found, and linked to the biographies of those who lead them.
  • Proposition 5: Alliances between social actors and champions of change inside the state are critical to make policy change happen. Social mobilization structures provide opportunities for state-based reformers to generate change from within, just as political opportunity structures provide spaces for social actors to do so from without.
  • Proposition 6: Policy change on contentious issues requires contentious forms of mobilization. Contentiousness is a dynamic and contingent concept. Successful collective action must also be dynamic, with the ability to frame issues carefully, adjust to changing circumstances and audiences, and draw upon a wide repertoire of strategies.
  • Proposition 7: 'Success' can be understood in many different ways, especially among the different actors in a broad-based campaign or social movement. In general, robust and sustainable changes require campaigns which link the national to the local and which pay attention to the processes of empowering citizens and deepening democratic governance as well as to effecting policy change itself.

This book is a great resource. One note of caution, although the book was published in 2010, it appears most of the case studies were written around 2004-2006, and largely reflective of activities from the late 1990s and early 2000s.

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