Föhrenbergkreis Finanzwirtschaft

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Posts Tagged ‘Basu’

The Approaching Debt Wave

Posted by hkarner - 1. Februar 2020

Kaushik Basu, former Chief Economist of the World Bank and former Chief Economic Adviser to the Government of India, is Professor of Economics at Cornell University and Nonresident Senior Fellow at the Brookings Institution.

The World Bank has warned that a massive debt wave is building worldwide. There is no telling who will be hit the hardest, but if vulnerable countries, from the United Kingdom to India, do not act soon, they may face severe economic damage.

NEW YORK – Over the last decade, the world economy has experienced a steady build-up of debt, now amounting to 230% of global GDP. The last three waves of debt caused massive downturns in economies across the world. 

The first of these happened in the early 1980s. After a decade of low borrowing costs, which enabled governments to expand their balance sheets considerably, interest rates began to rise, making debt-service increasingly unsustainable. Mexico fell first, informing the United States government and the International Monetary Fund in 1982 that it could no longer repay. This had a domino effect, with 16 Latin American countries and 11 least-developed countries outside the region ultimately rescheduling their debts.In the 1990s, interest rates were again low, and global debt surged once more. The crash came in 1997, when fast-growing but financially vulnerable East Asian economies – including Indonesia, Malaysia, South Korea, and Thailand – experienced sharp growth slowdowns and plummeting exchange rates. Den Rest des Beitrags lesen »

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A Low, Dishonest Decade

Posted by hkarner - 30. Dezember 2019

Kaushik Basu, former Chief Economist of the World Bank and former Chief Economic Adviser to the Government of India, is Professor of Economics at Cornell University and Nonresident Senior Fellow at the Brookings Institution.

Eighty years ago, the poet W.H. Auden wrote that “Waves of anger and fear / Circulate over the bright / And darkened lands of the earth.” Like Auden in 1939, we must accept the possibility that things could become far worse than they already are.

MUMBAI – I write this not as a professional economist, nor as a policymaker, but as a citizen of a tiny planet that is spinning through a vast universe that we barely understand. I write this “As the clever hopes expire / Of a low dishonest decade,” and as “Waves of anger and fear / Circulate over the bright / And darkened lands of the earth.” It was 80 years ago that W.H. Auden wrote those lines, in his poem “September 1, 1939.” We find ourselves in a similar position today.

As the current decade draws to a close, large parts of the world are mired in conflict, stable democracies have suddenly been knocked off kilter, and societies are increasingly divided by race, religion, and political ideology. And as the planet warms, millions of people are feeling compelled to move elsewhere in search of survival and opportunity. But new barriers, born of a renascent nationalism and narrow tribalism, are increasingly standing in their way.I am not foolish enough to be certain that this will all pass. The world may not, in fact, turn back from the brink of political and environmental disaster, and continue to prosper and grow, just because it did so in the past. Den Rest des Beitrags lesen »

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The Rich Can Fight Inequality, Too

Posted by hkarner - 24. März 2019

Kaushik Basu, former Chief Economist of the World Bank, is Professor of Economics at Cornell University and Nonresident Senior Fellow at the Brookings Institution.

Many wealthy people in the United States and elsewhere support the objective of curbing extreme economic inequality. They should not allow themselves to be silenced by right-wing accusations of hypocrisy.

NEW DELHI – When wealthy people espouse left-wing causes, such as redistribution of wealth, those on the right often label them hypocrites. “If you are so concerned about equality, why don’t you give up some of your own income first?” is the usual retort.

This response can have a powerful dampening effect. Most people do not like to think of themselves as hypocrites. So the wealthy are faced with a choice: either give away some of their assets and then campaign against inequality, or just keep quiet. Most prefer the second option.

This is unfortunate, because global inequality is reaching intolerable levels. What’s more, wealth tends to remain in families over time. Inequality is becoming dynastic, with some people born rich and vast numbers who are poor from the moment they appear on Earth. Den Rest des Beitrags lesen »

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A Thimbleful of Optimism for 2019

Posted by hkarner - 3. Januar 2019

Kaushik Basu, former Chief Economist of the World Bank, is Professor of Economics at Cornell University and Nonresident Senior Fellow at the Brookings Institution.

Amid today’s global conflicts, debasement of public debate, attacks on democratic institutions, and escalating geopolitical tensions, it is hard to find much cause for hope. But it is still possible to restore faith in our shared humanity.

KOLKATA – At the end of this year of political trauma and conflict, I found myself feeling an unexpected sense of hope, sitting in Mumbai, where I could see the Arabian Sea stretching westward toward the Gulf of Aden and Africa, as well as the vast Indian subcontinent extending eastward to the Bay of Bengal and the lands beyond.

To be sure, one must not gloss over the ongoing catastrophes of 2018. In Yemen, millions of civilians, including children, are suffering starvation and indiscriminate violence. On the southern border of the United States, refugees fleeing misery and conflict don’t know if they will be met with sanctuary or bolted gates and tear gas. Around the world, hyper-nationalist politicians and egomaniacs are launching trade wars, stoking hatred, and veering toward fascism. Den Rest des Beitrags lesen »

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Profit Sharing Now

Posted by hkarner - 1. Oktober 2018

Kaushik Basu, former Chief Economist of the World Bank, is Professor of Economics at Cornell University and Nonresident Senior Fellow at the Brookings Institution.

Recent proposals to grant workers equity in the economy have been met with skepticism by those who fear that radical intervention in the market inevitably paves the road to serfdom. But profit-sharing schemes, if designed properly, could be an ideal response to today’s dangerously high levels of inequality.

NEW YORK – At the British Labour Party’s annual conference in Liverpool this month, the shadow chancellor of the exchequer, John McDonnell, proposed a profit-sharing scheme that would grant workers equity in the firms where they are employed. McDonnell raised this idea in what was decidedly a political speech; and policy experts and economists have reacted skeptically. While a poorly executed profit-sharing program could do serious damage, that is no reason to reject the idea altogether. It is in fact a good sign that the idea is being publicly defended by a political leader.

Many mainstream economists, from Martin Weitzman and Richard B. Freeman to Joseph E. Stiglitz, Debraj Ray, and Kalle Moene have proposed variants of the concept. And with many advanced economies at a critical juncture, with unconscionable levels of inequality threatening to shred the very fabric of democratic politics, “equity for the poor” is an economic principle whose time has come. Den Rest des Beitrags lesen »

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Inequality in the Twenty-First Century

Posted by hkarner - 17. Dezember 2017

Dec 15, 2017 Kaushik Basu, Project Syndicate

Kaushik Basu, former Chief Economist of the World Bank, is Professor of Economics at Cornell University and Nonresident Senior Fellow at the Brookings Institution.

As inequality continues to deepen worldwide, we do not have the luxury of sticking to the status quo. Unless we confront the inequality challenge head on – as we have just begun to do with another existential threat, climate change – social cohesion, and especially democracy, will come under growing threat.

MUMBAI – At the end of a low and dishonest year, reminiscent of the “low, dishonest decade” about which W.H. Auden wrote in his poem “September 1, 1939,” the world’s “clever hopes” are giving way to recognition that many severe problems must be tackled. And, among the severest, with the gravest long-term and even existential implications, is economic inequality.

The alarming level of economic inequality globally has been well documented by prominent economists, including Thomas Piketty, François Bourguignon, Branko Milanović, and Joseph E. Stiglitz, and well-known institutions, including OXFAM and the World Bank. And it is obvious even from a casual stroll through the streets of New York, New Delhi, Beijing, or Berlin. Den Rest des Beitrags lesen »

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Evidence-Based Policy Mistakes

Posted by hkarner - 1. Dezember 2017

Kaushik Basu, former Chief Economist of the World Bank, is Professor of Economics at Cornell University and Nonresident Senior Fellow at the Brookings Institution.

People’s everyday experiences provide huge amounts of potentially useful information. While a common-sense approach based on individual experience is not the most “scientific,” it should not be dismissed out of hand.

TURIN – After years of stressing the importance of evidence-based policymaking, economists have clearly had some influence on politicians. What economists now need to do is to impress upon those same politicians that citing any evidence before adopting any policy is not evidence-based policymaking at all.

Turkish President Recep Tayyip Erdoğan has thrown around numbers to defend his decision to flood the Turkish economy with state-guaranteed credit. But the truth is that the policy was a politically motivated effort to win public support by engineering short-term growth (at the cost of driving inflation to a nine-year high of 12%). Den Rest des Beitrags lesen »

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The Global Economy in 2067

Posted by hkarner - 22. Juni 2017

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The Insecurity of Inequality

Posted by hkarner - 12. April 2017

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Trump’s Gift to China

Posted by hkarner - 10. März 2017

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