Archive for the ‘Political Economy’ Category

19
Aug

A century has passed since the start of World War I, which many people at the time declared was “the war to end all wars.” Unfortunately, wars just kept happening. And with the headlines from Ukraine getting scarier by the day, this seems like a good time to ask why.

Once upon a time wars were fought for fun and profit; when Rome overran Asia Minor or Spain conquered Peru, it was all about the gold and silver. And that kind of thing still happens. In influential research sponsored by the World Bank, the Oxford economist Paul Collier has shown that the best predictor of civil war, which is all too common in poor countries, is the availability of lootable resources like diamonds. Whatever other reasons rebels cite for their actions seem to be mainly after-the-fact rationalizations. War in the preindustrial world was and still is more like a contest among crime families over who gets to control the rackets than a fight over principles.

If you’re a modern, wealthy nation, however, war — even easy, victorious war — doesn’t pay. And this has been true for a long time. In his famous 1910 book “The Great Illusion,” the British journalist Norman Angell argued that “military power is socially and economically futile.” As he pointed out, in an interdependent world (which already existed in the age of steamships, railroads, and the telegraph), war would necessarily inflict severe economic harm even on the victor. Furthermore, it’s very hard to extract golden eggs from sophisticated economies without killing the goose in the process.

We might add that modern war is very, very expensive. For example, by any estimate the eventual costs (including things like veterans’ care) of the Iraq war will end up being well over $1 trillion, that is, many times Iraq’s entire G.D.P.

So the thesis of “The Great Illusion” was right: Modern nations can’t enrich themselves by waging war. Yet wars keep happening. Why?

One answer is that leaders may not understand the arithmetic. Angell, by the way, often gets a bum rap from people who think that he was predicting an end to war. Actually, the purpose of his book was to debunk atavistic notions of wealth through conquest, which were still widespread in his time. And delusions of easy winnings still happen. It’s only a guess, but it seems likely that Vladimir Putin thought that he could overthrow Ukraine’s government, or at least seize a large chunk of its territory, on the cheap — a bit of deniable aid to the rebels, and it would fall into his lap.

And for that matter, remember when the Bush administration predicted that overthrowing Saddam and installing a new government would cost only $50 billion or $60 billion?

The larger problem, however, is that governments all too often gain politically from war, even if the war in question makes no sense in terms of national interests.

Recently Justin Fox of the Harvard Business Review suggested that the roots of the Ukraine crisis may lie in the faltering performance of the Russian economy. As he noted, Mr. Putin’s hold on power partly reflects a long run of rapid economic growth. But Russian growth has been sputtering — and you could argue that the Putin regime needed a distraction.

Similar arguments have been made about other wars that otherwise seem senseless, like Argentina’s invasion of the Falkland Islands in 1982, which is often attributed to the then-ruling junta’s desire to distract the public from an economic debacle. (To be fair, some scholars are highly critical of this claim.)

And the fact is that nations almost always rally around their leaders in times of war, no matter how foolish the war or how awful the leaders. Argentina’s junta briefly became extremely popular during the Falklands war. For a time, the “war on terror” took President George W. Bush’s approval to dizzying heights, and Iraq probably won him the 2004 election. True to form, Mr. Putin’s approval ratings have soared since the Ukraine crisis began.

No doubt it’s an oversimplification to say that the confrontation in Ukraine is all about shoring up an authoritarian regime that is stumbling on other fronts. But there’s surely some truth to that story — and that raises some scary prospects for the future.

Most immediately, we have to worry about escalation in Ukraine. All-out war would be hugely against Russia’s interests — but Mr. Putin may feel that letting the rebellion collapse would be an unacceptable loss of face.

And if authoritarian regimes without deep legitimacy are tempted to rattle sabers when they can no longer deliver good performance, think about the incentives China’s rulers will face if and when that nation’s economic miracle comes to an end — something many economists believe will happen soon.

Starting a war is a very bad idea. But it keeps happening anyway.

By Paul Krugman, published on Aug. 17 in the http://www.nytimes.com

2
Aug

There is war in Europe. No, I’m not using the historic present tense to evoke August, 1914. I’m talking about August, 2014. What is happening in eastern Ukraine is war – “ambiguous war” as a British parliamentary committee calls it, rather than outright, declared war between two sovereign states, but still war. And war rages around the edges of Europe, in Syria, Iraq and Gaza.

I do not say “Europe is at war.” Most European countries are not directly engaged in armed conflict. Still, we should be under no illusions. For decades, we have lived with the comforting notion that “Europe has been at peace since 1945.” This was always an overstatement. In parts of Eastern Europe, low-level armed conflict continued into the early 1950s, followed by the Soviet invasion of Hungary in 1956 and of Czechoslovakia in 1968. In the 1990s, the former Yugoslavia was torn apart in a series of wars.

For all the differences, the dirty little wars of 2014 have an important connection to the horrendous “great” one that began in 1914. Many of them involve struggles of definition and control over patchwork territories left behind by the multiethnic empires that clashed 100 years ago, and their successor states. Thus, for example, the battle for eastern Ukraine is about the boundaries of the Russian empire. Some of the Russians, from Russia itself, who are now leading the armed pro-Russian movement in eastern Ukraine, have characterized themselves as “imperial nationalists.”

During the Balkan wars of the 1990s, jigsaw pieces from the Austro-Hungarian and Ottoman empires were fought over, and then reassembled into new, smaller puzzles, such as Bosnia, Kosovo and Macedonia. Many of the frontiers on today’s map of the Middle East go back to the post-First World War settlement, when Western colonial powers spliced together disparate parts of the former Ottoman Empire into new protectorates – Iraq, Syria, Palestine. The big exception is of course the state of Israel;   but that, too, can  trace a lineage   back to the deadly after-life of European empires. For Nazi Germany,   which attempted to exterminate the Jews, was the last hideous fling of German racial and territorial imperialism.

So what is Europe going to do now about its own long-term consequences? The first thing Europeans must do is simply to wake up to the fact that we live in a dangerous neighbourhood. Being Greater Switzerland is neither a moral nor a practical option: not moral, because Europeans, of all people, should never be silent while war crimes are being committed; not practical, because we cannot insulate ourselves from the effects. Today’s fighters in Syria will be tomorrow’s terrorists in Europe. Today’s dispossessed are tomorrow’s illegal immigrants. Let these little wars burn, and you will be shot down out of the sky on your way from the Netherlands to Malaysia on Flight MH17. No one is safe.

Read more…

Published on Augusto 1 in the Globe and Mail by Timothy Garton Ash.

14
May

On Monday 12 May, Dr. Casilda Güell, Professor of Political Science at the Universitat Internacional de Catalunya, addressed the MIR class in a very lively debate on regional integration. Quoting various authors including Barry Buzan and Richard Haas, Dr. Güell discussed the merits of regional integration in addressing the global challenges countries face today including financial crises, epidemics, terrorism, climate change. The nation state is now receding and no country alone can tackle these global problems, not even a superpower.  According to Buzan, the world is changing and we are evolving from a unipolar world dominated by a reluctant hegemon, the US, to a multipolar world with different poles composed of regional unions such as the EU, Mercosur, ASEAN…

Unlike what many pundits affirm, China will not be the next hegemon. It is unwilling to take on that role and should it rise to that position, other poles would counterbalance it.  Dr. Güell then discussed the 5 layers of integration, free trade, customs union, common market, economic union and political union. The EU is currently between the 4th and 5th layers. NAFTA is at the first stage while Mercosur is currently a customs union. Dr. Güell asked the students if economic integration was a prerequisite to political integration: peace through commerce. Opinions were divided even though history shows that political union when it is reached first goes through the stage of economic integration.

The seminar concluded with short student presentations on the pros and cons of NAFTA, Mercosur and the EU. The class was overwhelmingly in favor of regional integration with one of two dissenting voices that made for a richer discussion.

 

 

 

6
May

 

Four years ago yesterday, the Deepwater Horizon oil rig exploded, killing 11 men and spilling thousands of barrels of oil into the Gulf. This Thursday is the first anniversary of the Rana Plaza collapse in Bangladesh, which killed more than 1,100 garment workers.

What has happened in the time since these disasters? BP was barred from drilling in U.S. deepwater—until last month. Western clothing brands are upgrading Bangladeshi factories, but the fundamentals of their business haven’t changed: Brands outsource production to factories serving multiple clients in low-wage, low-regulation countries (not just Bangladesh).

The lack of fundamental change in these industries—and others, such as financial services after the 2008 crisis—suggests disasters like these are bound to happen again.

Indeed, every corporate crisis evokes a sense of déjà vu. The Rana Plaza catastrophe bore echoes of the 1911 Triangle Shirtwaist Factory fire. The unfolding story of General Motors’ faulty ignition switches brings back 1970smemories of the Ford Pinto, whose infamously fire-prone fuel tanks went unfixed because upgrading them would have cost more than the $200,000 Ford set for a human life.

Why does the corporate world fail to learn from its tragic past?  From 1999 to 2008, I worked for BP in Indonesia, China, and at the company’s London headquarters. It was my job to assess and mitigate the social and human rights risks to communities living near major BP projects, a role that existed because the executives I worked with understood that what was good for those communities was good for our business. I did innovative, progressive work bringing in experts and setting up partnerships and programs to benefit contract workers and neighbors of big BP projects in the developing world. But, obviously, I did not manage to prevent the Deepwater Horizon disaster, or the 2005 explosion of a BP refinery in Texas City that killed 15 people and injured many more.

I wanted an answer to that question, and I decided to write a book, reflecting on both my own experience and, also, documenting the experiences of my peers in other companies who similarly thought they were making progress mitigating risks to stakeholders, but then were faced with evidence to the contrary: supply chain managers in apparel companies who were sourcing at Rana Plaza; tech executives working to protect privacy but still seeing users persecuted with the data their companies collect.

Why, with this global invisible army of people working to prevent them do these disasters still happen? Why do they still happen when there are an unprecedented number of CEOs talking about corporate social responsibility (CSR)? More importantly, what does this “invisible army” need to succeed?

Here are some of the themes that emerged from my interviews and reflections:

1. People lie. More than one person I interviewed told me a story of touring a factory, doubling back on the pretense of forgetting something, and catching workers turning in their goggles or other protective gear. Factory owners will hide bad news if failing an audit means losing business. A few companies like H&M are said to have committed to multi-year contracts with suppliers, which are hoped to strengthen relationships between firms and suppliers, enabling them to address problems together, and remove incentives for suppliers to lie about conditions for fear of losing business. But in the meantime, as Jeremy Prepscius of BSR (Business for Social Responsibility), where I’m a human rights advisor, told me, “There’s always one good factory, and there’s always one that lies better than everybody else. So guess which one would have the cheaper price?”

2. People don’t talk to each other. Big organizations often operate in distinct, siloed divisions, and multi-disciplinary issues like human rights and sustainability often fall through the cracks. As director of corporate citizenship at Microsoft, Dan Bross oversees assessments that cut across multiple functions like legal and product development to identify potential risks to users. He told me, “I have a horizontal job in a vertical world.” Read more…

By Christine Bader; Published on April 21, 2014 in the Atlantic:  http://www.theatlantic.com

2
Apr

Is le tea party brewing in France?

Written on April 2, 2014 by Waya Quiviger in Europe, Op Ed, Political Economy

Steeped in conservative rage and tasting of grass roots, a political backlash has traditional politicians and the news media asking the once-unthinkable: Is le tea party brewing in France?

If it were, it would be populated by the likes of Catherine Mas-Mezeran, a Parisian mother of three who wrinkles her nose at the mention of President François Hollande. She calls him “the Socialist,” which, technically, he is. But if President Obama had the birthers, Hollande now has the baptismists.

 

French President Francois Hollande has made Interior Minister Manuel Valls his new prime minister, replacing Jean-Marc Ayrault, who, with other ministers, took the blame for the Socialists' defeat in local elections.

French President Francois Hollande has made Interior Minister Manuel Valls his new prime minister, replacing Jean-Marc Ayrault, who, with other ministers, took the blame for the Socialists’ defeat in local elections.

Like others in a growing movement here, she firmly believes an unsubstantiated rumor emanating from conservative circles that Hollande may have secretly renounced his Christianity. “He has rejected his baptism,” she said. “This is really shocking.”

An Elysee Palace spokesman responded, “This rumor is as ridiculous as it is unfounded.”

The movement’s strength in numbers, however, cannot be ignored. Initially a reaction to a same-sex marriage law passed last year, the movement has morphed into the most sustained mobilization of social conservatives here in more than a generation.

A reinvigorated right delivered a devastating blow to Hollande in Sunday’s local elections across the country, prompting a humbled Hollande to reshuffle the French government on Monday. He replaced Prime Minister Jean-Marc Ayrault with Interior Minister Manuel Valls, a politician considered more palatable by some on the right.

Results of the runoff vote showed the far-right National Front scoring its biggest victory ever, taking 11 towns and a major district in Marseille in part by appealing to outraged residents. The left ceded more than 150 other cities to the center-right Union for a Popular Movement (UMP).

Losses by the Socialists also reflected economic doubts and disenchantment with Hollande. But across Europe — a continent often viewed on the other side of the Atlantic as a bastion of liberal thought — several nations are in the throes of their own full-blown culture wars, and perhaps nowhere are they raging quite as fiercely as in France.

Tens of thousands of people are taking to the streets in repeated protests, many for the first time in their lives. They are organizing assemblies and social-media campaigns even as some angry newcomers run against incumbents on the right whom they consider not socially conservative enough.

A show of strength on French streets in February led Hollande to backtrack on a measure that opponents feared could have helped same-sex couples have children through in vitro fertilization and surrogacy.

Scores of social conservatives took their children out of public schools for one day in January to protest new lessons being tested in some French schools aimed at dispelling gender stereotypes. The social conservatives said the lessons could lead to boys wearing dresses and girls playing mechanic, or even masturbation classes for children.

“We are witnessing the rise of a tea party of the French,” Valls warned in the newspaper Journal du Dimanche.

A continent already hit by economic upheaval is confronting a wave of bitter societal polarization over a host of issues such as euthanasia, abortion and same-sex marriage.

In Spain, the conservative government of Prime Minister Mariano Rajoy is seeking to push through legislation that would greatly limit abortion rights, unleashing a bitter confrontation with the left and reversing the steady march of liberal social policies there since the death of Gen. Francisco Franco. In Poland, a measure that would grant same-sex civil partnerships failed last year because of major opposition, prompting Prime Minister Donald Tusk to say he saw no chances of such unions passing within the next 10 to 15 years.

During Germany’s national election campaign last year, center-right Chancellor Angela Merkel sparked outrage among progressives after expressing doubts about full adoption rights for same-sex couples. “To be completely honest with you, I’m having difficulty with full equality,” she told public TV. Read more…

 

Published on March 31st in the Washington Post: http://www.washingtonpost.com

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