Source: Project Syndicate by Mariana Mazzucato and RobertSkidelsky
Mariana Mazzucato, Professor of Economics of Innovation and Public Value and Director of the UCL Institute for Innovation and Public Purpose, is the author of The Value of Everything: Making and Taking in the Global Economy.
Robert Skidelsky, a member of the British House of Lords, is Professor Emeritus of Political Economy at Warwick University. The author of a three‑volume biography of John Maynard Keynes, he began his political career in the Labour party, became the Conservative Party’s spokesman for Treasury affairs in the House of Lords, and was eventually forced out of the Conservative Party for his opposition to NATO’s intervention in Kosovo in 1999.
With the COVID‑19 pandemic forcing governments to spend on an unprecedented scale to sustain businesses and households, there has never been a better time to restore the state to its proper role as a rudder for the broader economy.
The market alone is simply no match for the challenges of the twenty‑first century.
LONDON – The COVID‑19 pandemic has had an immense, unpredictable, and lasting impact on economies around the world. As a result, governments have been given an opportunity – and an imperative – to rethink the role and purpose of fiscal policy. Den Rest des Beitrags lesen »
Kemal Dervis, a former minister of economic affairs of Turkey and administrator for the United Nations Development Program, is a senior fellow at the Brookings Institution.
Sebastián Strauss is a senior research analyst and Coordinator for Strategic Engagements at the Brookings Institution. Follow him on Twitter.
The COVID‑19 pandemic has exposed many flaws in advanced economies, not least the fact that inequality can be deadly. The case for giving all citizens a capital endowment – reflecting both their inalienable dignity and society’s return on its public investments – has never been stronger.
WASHINGTON, DC – It is far from certain whether the post‑pandemic recovery will be a lasting one that results in more sustainable and equitable economies. The temptation to try to return to the recent past is strong, and so are the vested interests favoring such a course.
But many now recognize that what the economist Branko Milanovic calls “liberal meritocratic capitalism” must change significantly in order to meet systemic challenges: not only climate change, but also increasing inequalities of income, wealth, wellbeing, and power – particularly in the United States. Extreme inequality and low intergenerational mobility pose an existential threat to market capitalism, and the recent mass protests in US cities against systemic racism have heightened the sense of urgency. Den Rest des Beitrags lesen »
In the last downturn, Chinese demand helped revive many economies. Economists say it likely won’t come to the rescue this time.
Getting the global economy back on its feet this year won’t be easy. But it will be even tougher without more help from China, the locomotive that powered recoveries from the world’s last economic emergency.
During the 2008‑09 financial crisis, China’s soaring demand for raw materials and other goods boosted growth across the world, underpinning rebounds in places like Brazil and Germany. Some countries, like Australia, avoided recession almost entirely thanks to trade with China.
China isn’t poised to help as much this time. Despite signs of a solid rebound recently, its economy has been hit much harder than in 2008‑09, limiting its ability to lift other nations from recession prompted by the coronavirus pandemic.
China is showing more restraint on stimulus spending compared with past downturns. It is also more self‑sufficient in some industries than previously, meaning it may need to buy less from abroad.
Thomas Nuernberger, Greater China chief executive of ebm‑papst Group, a fan and motor manufacturer based in southern Germany, says demand from Chinese hospitals and data centers has recovered. But sales have fallen sharply to the auto industry and to Chinese manufacturers that ship their products elsewhere. He expects caution among Chinese consumers and businesses to weigh on growth, reducing odds of a “V‑shaped” recovery.
“For 2020 it is not possible, I think, that China does the job” it did in 2008‑09, said Thilo Brodtmann, executive director of the German Mechanical Engineering Industry Association, a trade body. “Quite a few companies in China are struggling.”
Strong China
China is the only major economy forecast to grow in 2020. But it isn’t expected to lift other countries as much as during the last recession, when Chinese demand helped some countries avoid deep downturns. Den Rest des Beitrags lesen »
Mo Ibrahim is Chair and Founder of the Mo Ibrahim Foundation.
The COVID-19 pandemic is a shared global challenge, and it demands a shared global response that addresses both the health and economic dimensions of the crisis. More extensive debt relief for Africa is an essential feature of any such response.
ABUJA – Last month, the African Union launched the Africa Medical Supplies Platform to facilitate the production and provision of vital medical equipment – the latest achievement in an already impressive response to the COVID-19 crisis. Yet, in the same week, it was revealed that most of Nigeria’s federal government revenue was going to debt-service payments, and the country would be cutting public-health spending by 40% – even as COVID-19 infections continue to climb.
The contrast is as tragic as it is stark. The world’s youngest continent is itching not only to stand on its own two feet, but also to provide global leadership. And it remains hamstrung by an old foe: debt. If Africa is to achieve its potential, its creditors must set it free.Debt relief works. Fifteen years ago this week, the G8 issued the Gleneagles declaration, relieving 18 “highly indebted poor countries” – Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda, and Zambia – of debt totaling more than $40 billion.No longer saddled with massive debt-service costs, countries were able to invest more in their own economies and people. Many of the countries that had received debt relief, such as Ethiopia and Rwanda, subsequently experienced significant upticks in economic growth. Standards of health care, access to education, and employment opportunities improved markedly. And countries improved their governance and benefited from greater stability – crucial to sustaining long-term growth.This progress is now at risk of unraveling. Though Africa has so far recorded a relatively low number of COVID-19 infections, it faces a severe economic crisis, with potentially far-reaching social and political implications. External demand, oil prices, tourism and travel revenues, and remittances have all collapsed. Investors have pulled $100 billion from emerging markets since the beginning of the pandemic – the largest-ever capital outflow in such a short period This is contributing to a deepening – and highly dangerous – liquidity crisis.African governments urgently need capital to stabilize economies hit by cumulative external shocks and to finance an adequate public-health response. Yet, unlike the eurozone or the United States, most African countries cannot print money to get them through the crisis. Moreover, their fiscal space remains limited, not least because they must continue to make large debt payments. This leaves their leaders with an impossible choice: cut spending on crucial services, as Nigeria has done, or default.
Debt relief would save countries from this bleak scenario, freeing up the capital needed to fight the pandemic and stabilize the economy. World leaders already recognize this. In April, G20 leaders agreed to suspend some debt repayments for the world’s poorest countries for the rest of 2020. But it is nowhere near enough. Pledges must now be swiftly implemented and significantly expanded. Specifically, all creditors – bilateral, multilateral, and private – must implement an immediate debt-service standstill for all African countries until the end of 2021.
As Vera Songwe, the Executive Secretary of the United Nations Economic Commission for Africa, has proposed, a special purpose vehicle (SPV) could also be created, modeled on the repurchase (“repo”) facilities that American and European central banks often use to support the smooth functioning of markets. This new lending vehicle, backed by the G20 central banks, would not only expand access to cheap liquidity; if designed well, it could also support the shift toward a more sustainable growth model.The International Monetary Fund also has an important role to play. The creative use of its reserve asset, Special Drawing Rights, could go a long way toward supporting fragile economies.The world’s wealthiest economies have responded to the COVID-19 crisis with unprecedented fiscal measures. African countries must do the same. Ensuring that they can is not charity; it is a matter of shared interest.
If African governments lack the resources to respond effectively to the crisis, the hard-won gains of recent decades will be wiped out; poverty will skyrocket; the virus will become increasingly difficult to contain; and social unrest will grow, particularly in countries like Sudan that are already struggling to end decades-long conflicts. This would exact a massive human and economic toll, and leave all of us living in an increasingly insecure world.
The COVID-19 pandemic is a shared global challenge, and it demands a shared global response that addresses both the health and economic dimensions of the crisis. Debt relief for Africa is an essential feature of any such response.
The European Commission could soon become a big player in capital markets
The euro zone has not been a hospitable place for investors seeking safety in recent years. The currency area’s pool of super‑safe, aaa‑rated sovereign securities shrank by 40% between 2007 and 2018. Rating agencies downgraded some of its members during the debt crisis of 2010‑12. Two of its remaining top‑rated issuers—Germany and the Netherlands—have energetically hacked away at their debt piles.
The pandemic might help alleviate the shortage. Germany, once fixated on its “black zero”, or balanced budget, will go deeply into the red. It may run a fiscal deficit of as much as 7.5% of gdp this year, reckons the Bundesbank. A raft of issuance may also come from an unusual source: the European Commission. If plans for it to finance the eu’s recovery spending go ahead, it could become a big influence in global capital markets.
The commission already issues a modest amount of bonds on behalf of the European Union, which it mostly lends on to member states. Its debt stock amounts to €52bn ($59bn, or 0.4% of eu gdp in 2019). Plans to fund the recovery from the pandemic will take this much higher. From September it will raise €100bn, which it will in turn lend to countries in order to finance temporary‑employment schemes. Den Rest des Beitrags lesen »
Every time they’ve lost since 1968, they’ve called it illegitimate—except for the 49‑state landslides.
Joe Biden, asked recently if he had considered the possibility that President Trump may refuse to concede defeat in the election, answered that he had. But he was “absolutely convinced,” the former vice president said reassuringly, that if such a thing happens, military personnel will “escort him from the White House with great dispatch.”What a relief!
The exchange brings to mind the 2016 campaign, when media personalities speculated that Mr. Trump would refuse to concede to Hillary Clinton. The hypothesis was never tested, Mr. Trump having had the bad manners to win, but it turned out to be they who refused to concede defeat—not by contesting the election results but by persuading themselves and half the country that Mr. Trump had won by illegal means and generally behaving like spoiled children for the next four years.
I suspect Mr. Trump would have conceded the night of the election (which Mrs. Clinton did not do), for the simple reason that he neither expected nor particularly wanted to win. In the event that Mr. Trump fails to win re‑election, he will depart willingly. Not graciously, perhaps, but willingly and at the appointed time. Den Rest des Beitrags lesen »
EU finance ministers agreed to accept the two Eastern European nations into the region’s exchange‑rate mechanism
FRANKFURT—Bulgaria and Croatia took a big step toward adopting the euro currency, potentially becoming the newest members to the bloc after years of economic crises and shocks.
European Union finance ministers agreed to accept the two Eastern European nations into the region’s exchange‑rate mechanism, a waiting room for joining the common currency area, the European Central Bank said in a statement Friday.
The move means that Bulgaria and Croatia could become the bloc’s 20th and 21st members as soon as 2023, provided they meet other economic and regulatory criteria.
In particular, they need to keep their currency trading in a narrow band vis‑à‑vis the euro for at least two years. Den Rest des Beitrags lesen »
World Population Day will mark a global crisis – one that is best tackled by more access to birth control, particularly in Africa
President Magufuli pulled off an intriguing feat last year when, in a single speech, he managed to affront just about every liberal cause on the planet. The Tanzanian leader told a public rally not to listen to advice from foreigners on contraception because it had “sinister motives”. For good measure, he accused women who use birth control of being “lazy” – it was their duty to have large numbers of children.
By any standards, these were outrageous remarks – and worrying ones, for they indicate there has been a deep and potentially catastrophic failure by the west in promoting a measure on which the future health of our planet depends: limiting numbers of our species. Until this basic task is achieved, virtually every measure we take to tackle global heating will be negated by the energy demands of the extra billions we have added to global populations, say campaigners.
Hence the demonstrations – to be staged by groups such as Britain’s Population Matters and others – in capitals around the world on Thursday when the planet marks World Population Day. This will be the 30th anniversary of the annual event set up by the United Nations in 1989 – when there were a mere 5 billion people on Earth – to focus attention on the urgency of our impending population crisis.
Today there are about 7.7 billion men, women on children on Earth, a staggering figure given that a century ago, there were only 1.9 billion.And although populations have stabilised in many regions, in particular Europe and North America, figures released by the UN this month show global numbers are now growing at the alarming rate of about 100 million every 14 months.By 2050, the Earth’s population will have hit 9.7 billion and it will continue to rise, reaching a figure of about 10.9 billion by 2100.
These are the kind of population numbers we associate with simple organisms swimming in a pond, not those of a big‑brained omnivore that requires 3,000 calories a day to survive. If there are 10 billion of us, every forest, valley and piece of land will have to be turned to agriculture to feed us. “Our planet cannot withstand such numbers,” says the palaeontologist Peter Ward in his book The End of Evolution.
Our planet cannot withstand such numbers ‑ Peter Ward, palaeontologist
Crucially, the vast majority of the extra 3 billion human beings that could be added to Earth’s population will be born in Africa. Today there are about 1.2 billion Africans. By 2100, there will be more than 4 billion.Our growing population crisis therefore needs to be tackled there as a priority: by boosting women’s rights, by making contraception easily available and by improving education for all. The remarks of President Magufuli suggest that this is going to be a very hard task. Nor have the actions of Donald Trump’s White House helped. By slashing funds to international birth control programmes, the US is now undermining hopes of limiting Africa’s population growth.
We should note that many countries in Africa are likely to become grimly inhospitable when global heating takes its grip on Earth. Millions may be driven from their homes as heatwaves, famines and droughts sweep their lands.
Yet very little of the burning of fossil fuels that has triggered this climate crisis occurred in Africa. It took place in the west, whose industrial emissions are a key cause of global heating. It is a fact we should remember when millions of climate refugees from scorched and overpopulated nations seek salvation on our shores.
Asked how costs would be offset, campaign refers to Biden’s previous plan to raise taxes on corporations and the wealthiest Americans and reverse tax cuts for high earners
Former Vice President Joe Biden laid out a broad proposal to boost the U.S. economy.
Former Vice President Joe Biden laid out a $700 billion plan Thursday to revive the U.S. economy with an America‑centric approach to job creation and manufacturing, issuing a direct challenge to President Trump as they prepare to compete for working‑class voters in the November election.
Mr. Biden’s “Buy American” economic agenda is designed to counter Mr. Trump’s “America First” platform through what he said would be the largest mobilization since World War II of public investments in procurement, infrastructure and research and development.
Under Mr. Biden’s plan, the federal government would spend $400 billion in government purchasing of U.S.‑based goods and services over four years and $300 billion in research and development for new technologies and clean‑energy initiatives.
“The stakes couldn’t be higher,” said Mr. Biden, who spoke from Dunmore, Pa., and cited the economic damage and human cost inflicted by the coronavirus pandemic. “That’s why this is no time for divisive politics. Donald Trump may believe in pitting Americans against Americans. I don’t.” Den Rest des Beitrags lesen »
Xavier Vives, Professor of Economics and Finance at IESE Business School, is co‑author (with Elena Carletti, Stijn Claessens, and Antonio Fatás) of the report The Bank Business Model in the Post‑Covid‑19 World.
Banks have a chance to improve their battered public image by playing a constructive role in mitigating the current economic crisis. But with COVID‑19 set to accelerate the sector’s digitalization and restructuring, their future could soon become more uncertain.
BARCELONA – The COVID‑19 crisis has revealed banks to be not part of the problem for a change, but part of the solution. They have so far proven to be resilient, mostly as a result of the stricter capital and liquidity requirements imposed on them following the 2007‑09 global financial crisis. Today, many governments are using banks to channel funds to households and firms hit by the pandemic’s economic fallout.
Furthermore, governments have granted banks a temporary moratorium on implementing tougher regulatory and supervisory standards,in order to reduce the potential pro‑cyclicality of measures introduced in the last two decades and avert a credit crunch. As a result, banks now have an opportunity to reverse the reputational damage they suffered in the financial crisis. Den Rest des Beitrags lesen »
ABUJA – Last month, the African Union launched the Africa Medical Supplies Platform to facilitate the production and provision of vital medical equipment – the latest achievement in an already impressive response to the COVID-19 crisis. Yet, in the same week, it was revealed that most of Nigeria’s federal government revenue was going to debt-service payments, and the country would be cutting public-health spending by 40% – even as COVID-19 infections continue to climb.