Slow growth creates inequality or the other way around? August 26, 2012
Posted by Sverre in : Political economy , comments closedThrough the Twitter account of Gudmund Hernes, I became aware of a very interesting and thought provoking piece by Alexander Stille, based on the work of French economist Thomas Piketty. Titled “The heirs of inequality”, it highlights the connection between periods of slow growth and much economic inequality. Looking at the French economy from 1820 until today, and Scandinavian and American economies today, there appears to be a clear correlation. The causality is less clear. Does slow growth make for worse income distribution, does a poor income distribution slow growth, or are both effects reinforcing each other?
The Jedi and free trade – the political economy of Star Wars July 27, 2010
Posted by Sverre in : Political economy, Political Science in Popculture , comments closedWere the Jedi knights enemies of liberty? The political philosophy of the Jedi is explored by both Reason‘s Jesse Kline and Dan Drezner of Foreign Policy in recent blog posts. Kline claims that the main goal of the Jedi was to enforce the big government agenda of the Galactic Republic. Drezner refutes that we actually know too little of the agenda of the republic at all. What we do know, however, is that Palpatine tried to set up a totalitarian state that would surely be anti-liberal and big government.
The Trade Federation - evil trade monopolists
Drezner claims that we have little information on the pre-Phantom Menace policies of Supreme Chancellor Vallorum, leader of the Galactic Republic. We do however know that the monopolistic and militaristic Trade Federation appears to be at least partially sanctioned by the Republic, as they have their own representatives in the Senate. Vallorum does however appear somewhat opposed to their blocade of trade to Naboo, as he at the beginning of The Phantom Menace dispatches the Jedi to negotiate.
NYT sings the praise of Norwegian economic management May 14, 2009
Posted by Sverre in : Norwegian politics, Political economy, Public Policy , comments closed“As a socialist, I have always said that the market can’t regulate itself,” she said. “But even I was surprised how strong the failure was.”
These are the words of Norway’s Finance Minister Kristin Halvorsen from the political party Socialist Left (SV), which is part of the current centre-left government coalition in Norway. The words come from an article in the Global Business section of The New York Times, which praises the economic management of the Norwegian state, among other things how it has stuck with its social democratic welfare model through boom and bust.
The global financial crisis has brought low the economies of just about every country on earth. But not Norway.
With a quirky contrariness as deeply etched in the national character as the fjords carved into its rugged landscape, Norway has thrived by going its own way. When others splurged, it saved. When others sought to limit the role of government, Norway strengthened its cradle-to-grave welfare state.
And in the midst of the worst global downturn since the Depression, Norway’s economy grew last year by just under 3 percent. The government enjoys a budget surplus of 11 percent and its ledger is entirely free of debt.
The debt free government is of course something the current centre-left coalition can’t take the credit for alone. The Norwegian government has passed between Labour, centre-right and centre-left governments for the last decade. Since 1990, there has been a broad consensus in the Norwegian parliament for a programme of national savings in a government pension fund, to preserve value for future generations and avoid “Dutch disease“. I mentioned this policy in an earlier post on this blog.
The description of Norway as always sticking with its welfare model is another issue, though. Norway did go through a phase of privatization of welfare, for example the schooling system, during the last government, but this was abruptly stopped by the centre-left Stoltenberg administration when it came into power four years ago. Of course this didn’t necessarily affect government expenditure.
If the right wing were to come into power in the upcoming parliament elections, we might see another shift in this policy. Although supportive of the need for government stimuli to the economy, their preferred stimuli come in the form of tax cuts rather than the countercyclic government expenditures the current government favours. Last week’s conservative party congress heavily emphasized this.
(Hat tip to Tromp for bringing this to my attention).
Art – a public or private good? April 23, 2009
Posted by Sverre in : Political economy , comments closed
The so-called “Spectrial“, in which the founders of the Swedish file-sharing service Pirate Bay got harsh convictions in court has given further fuel to the debate over copyright laws and file sharing. The Norwegian Broadcasting blog NRK Beta has a very interesting comment on what many view at the industry shooting itself in the foot by waging war on its consumers.
Reading it made me take a political economist view of the apparent discrepancy of rights and ownership between consumers and industry. For the political economist, the market for pirated music and movies is an interesting and peculiar case. It appears to me that the current state of affairs is that the majority of young people view art as a public good, while the music and movie industry insist on treating it as a private good. (more…)
Is the EU suited to handle the crisis? April 1, 2009
Posted by Sverre in : Political economy, World politics , comments closedKeeping up the recent days’ interest in the EU’s response to the financial crisis, I came across Megan McArdle’s comments on the apparent failure of EU states to apply enough stimulus to the economy, and points to a significant system failure within the EU system:
But as multiple people have blogged, this isn’t just a matter of the infamous tight-fistedness of Germany’s fiscal and monetary policy, born out of the ashes of Weimar; it’s genuinely harder for Europe to run a stimulative policy. For one thing, they can’t coordinate a broad European policy, which means that any government will see substantial amount of any stimulus “leak” abroad–and also that there is great temptation to free ride. For another, they aren’t the world reserve currency, so they can’t borrow on the same lavish, practically interest-free scale as the US Treasury.
What are the French up to? March 31, 2009
Posted by Sverre in : Political economy, World politics , comments closedJust after writing the post on Le Maire’s speech, I came across this news story from AFP, that French president Nicolas Sarkozy is threatening to walk out on the G20 summit unless he gets his way. According to Bloomberg, what he’s after is:
[…] to give more economic oversight power to the International Monetary Fund, and more financial oversight to an institution that would derive from the Financial Stability Forum, a group that brings together senior representatives of national financial authorities, regulators, central banks and international financial institutions.
The French leader is pushing for the G-20 to endorse accounting rules that reduce boom and bust economic cycles, and to regulate hedge funds and rating agencies. He’s calling for rules that would force banks to disclose traders pay to regulators, which could in turn ask financial institutions to increase reserves if their compensation system encourages risk taking.
The French do seem to be taking a confrontational line to get international actors to work together. This might possibly just be a display from Sarkozy’s side to show his domestic audience that he is taking action, without having to dig too deep into France’s own coffers. His moral-religious rhetoric seems to support this theory.
An EU-US trade war in the making? March 31, 2009
Posted by Sverre in : Political economy, World politics , comments closedI was listening to an LSE podcast of a lecture by French Minister of State for European Affairs Bruno Le Maire, when I heard some surprising statements made. He was talking about how it was important for European nations not to resort to protectionism in the face of the current crisis when he happened to make some interesting, possibly disturbing, statements. He talks about the difference between protecting your industries and protectionism. I can’t spot the difference, can you? (from approiximate 1h10min into the speech):
[…]so I am not in favour of protectionism, as I just said, I am just in favour of European measures – measures decided at the European level – that would prove to our citizens that we are taking into account their fears and worries and that we are trying to protect our European economy, that we are trying to protect our industries. This is a very difficult balance we have to find, but this is not protectionism. Protectionism means today that the UK would take some very concrete measures just to protect one of its plants, in New Hampshire for example, or London. Or that France would take some very national measures just to protect one of its industries or one of its plants in Normandie or the south of France without taking into account the interest of the UK and Germany and Spain and Italy. That’s the difference between the two ways of protectin industries and protecting our economies[…] (more…)
YouTube: A modern-day propaganda leaflet March 21, 2009
Posted by Sverre in : Political economy, World politics , comments closedEver since WWI, propaganda leaflets dropped behind enemy lines were an important tool in trying to weaken support for whoever was in charge among the local population. It is believed to be an effective tool, which is why it is still in use in conflicts around the world. One of the defining aspects of Obama’s campaign to become president was how well he was able to exploit the new social internet media to his advantage. And he has apparently taken this with im into the White House.
Yesterday, he released a Youtube video aimed at the Iranian people, obviously in an effort to convince Iranians that the United States hopes for peace and does not want to be enemyof Iran. You can see the three-minute video here:
[youtube=http://www.youtube.com/watch?v=6MDklneATBI] (more…)
Trade protectionism rising March 18, 2009
Posted by Sverre in : Political economy , comments closedThe World Bank reports today that protectionism in the world is rising as a result of the current crisis. 17 of the G20 nations have enacted protectionist policies despite their pledge in the Washington action plan as recently as November 15 last year. Article 13 of the action plan states:
We underscore the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty. In this regard, within the next 12 months, we will refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organization (WTO) inconsistent measures to stimulate exports.
EU fails to help its eastern members? March 3, 2009
Posted by Sverre in : Political economy, World politics , comments closedEastern Europe has been hit hard by the financial crisis, and were hoping that the EU would be able to help them over the worst of it. Figures presented by Eastern European government claimed that 5 million jobs were in imminent danger of being lost, something that would seriously hit the entire EU and potentially drop a new iron curtaion over Europe. At a summit this Sunday, the EU rejected a bailout plan designed to help Eastern European nations, mostly outside the Euro area. Was it a sign that Western Europe doesn’t want to help their eastern neighbours, or was it just the rejection of a bad plan? If the former, the entire EU project might be about to fail one of its toughest tests yet. (more…)