Archive for the 'Newsletter' Category

Hartosh Singh Bal, 3QuarksDaily

Time Magazine declared it the year of the protester, clubbing together what was happening in regions as different as the Arab world, the US and India. While it is easy to find commonalities among the young, urban and largely middle-class protesters who came out on the streets, in some cases they were protesting against the tyranny of their governments and asking for democracy, in other cases they were protesting the shape democracy had come to acquire in their countries. The occupy Wall Street movement and the India against Corruption movement both represent similar sentiments. In the US the anger was directed against the influence of corporate on the democratic system largely through electoral funding, in India it was against corruption with the understanding that the source of high corruption was the cycle that went from the spending of vast sums of money (often illegally) for the elections to raising money when in power (often illegally) for the next elections.

As the countries making their way to democracy will find out in their own time, the funding of elections and its influence on the polity is the most problematic aspects of democracy. While much is made of local factors in estimating the cost of elections, much of the spending in elections is actually independent of such factors. Equalizing for the population size of each constituency and the difference in living standards gives a fair estimate across countries and time periods for election spending, especially in countries unconstrained by effective legislation on campaign spending, such as the US or India.

In the 2010 elections the average spending of the winning candidate for the US House of Representatives was $ 1.4 million. Factor in the ratio of the US population over 435 House seats as opposed to the Indian population spread over 543 Lok Sabha seats, allow for the GDP in terms of purchasing power parity and you arrive at a ballpark figure of average spending of Rs 1.3 crore (about $ 250,000) per Lok Sabha  by winning candidates.  Even though figures for Indian elections are difficult to calculate this is certainly the right order of magnitude for the expenditure in the 2009 elections. As a check one can use the base figure of spending in the 2000 US House election, adjust for population growth, inflation and increase in GDP (PPP) to arrive at a surprisingly accurate figure for the spending in 2010. This holds true for Indian elections as well if comparisons are made between 2004 and 2009. While the exactitude of such an estimate can be disputed on many grounds, I believe it captures the essential fact that much of the spending in an election can actually be accounted for in terms of population and living standards of a country. More…

Eamonn Fingleton, The New York Times

The fashionable Shibuya neighborhood in Tokyo.

DESPITE some small signs of optimism about the United States economy, unemployment is still high, and the country seems stalled.

Time and again, Americans are told to look to Japan as a warning of what the country might become if the right path is not followed, although there is intense disagreement about what that path might be. Here, for instance, is how the CNN analyst David Gergen has described Japan: “It’s now a very demoralized country and it has really been set back.”

But that presentation of Japan is a myth. By many measures, the Japanese economy has done very well during the so-called lost decades, which started with a stock market crash in January 1990. By some of the most important measures, it has done a lot better than the United States.

Japan has succeeded in delivering an increasingly affluent lifestyle to its people despite the financial crash. In the fullness of time, it is likely that this era will be viewed as an outstanding success story.  More…

Image: Kosuke Okahara for The New York Times

Stefan Auer, Eurozine

European leaders’ unwavering commitment to ever closer union is causing more harm than good, argues Stefan Auer. Europe doesn’t need more integration; it needs more democracy to enable its nations to regain control over their destiny. Partial and well-managed disintegration may be preferable to a chaotic implosion.

Europe’s better times were meant to be ahead of it. Not so long ago, “the European dream” was believed to have provided the best “vision of the future”;^[1] Europe was going to “run the twenty-first century”,^[2] having created “an entirely new species of human organization, the likes of which the world has never seen”.^[3] If the West – and most of the world – was American in the twentieth century, the twenty-first was going to be European. But not in any crude, old-fashioned, imperial, my-values-are-better-than-yours kind of way; rather in an open and open-ended reflexive, self-critical, you-are-as-good-as-or-better-than-me way. Europe was going to lead the world by example; do it gently. “Soft power Europe” would rule without anyone noticing but everyone benefiting. All these assumptions proved hubristic: Europe’s turn of fortune is humbling, humiliating and, perhaps, irreversible.

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Niall Ferguson, The Wall Street Journal

Welcome to Europe, 2021. Ten years have elapsed since the great crisis of 2010-11, which claimed the scalps of no fewer than 10 governments, including Spain and France. Some things have stayed the same, but a lot has changed.

The euro is still circulating, though banknotes are now seldom seen. (Indeed, the ease of electronic payments now makes some people wonder why creating a single European currency ever seemed worth the effort.) But Brussels has been abandoned as Europe’s political headquarters. Vienna has been a great success.

“There is something about the Habsburg legacy,” explains the dynamic new Austrian Chancellor Marsha Radetzky. “It just seems to make multinational politics so much more fun.”

The Germans also like the new arrangements. “For some reason, we never felt very welcome in Belgium,” recalls German Chancellor Reinhold Siegfried von Gotha-Dämmerung.

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Map Illustration by Peter Arkle, via The Wall Street Journal

René Magritte: La Fissure, 1949

By Paul Volcker, New York Review of Books

It should be clear that among the causes of the recent financial crisis was an unjustified faith in rational expectations, market efficiencies, and the techniques of modern finance. That faith was stoked in part by the huge financial rewards that enabled the extremes of borrowing, the economic imbalances, and the pretenses and assurances of the credit-rating agencies to persist so long. A relaxed approach by regulators and legislators reflected the new financial zeitgeist.

All the seeming mathematical precision that was brought to investment, all the complicated new products, including the explosion of derivatives, that were intended to diffuse and minimize risk, did not work as had been claimed. Instead, the vaunted efficiency helped justify an explosion of weak credit and an emphasis on trading along with exceedingly large compensation for traders.

If those remarks sound critical—and they are meant to inspire caution—let me also emphasize that the breakdown in financial markets and the “Great Recession” since 2007 are also the culmination of years of growing, and ultimately unsustainable, imbalances between and within national economies. These are matters of failures of national economic policy and the absence of a disciplined international monetary system.

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Image:  Art Resource/©2011 C. Herscovici, London/Artists Rights Society (ARS), New York, via NYBooks.com