Category Archive: Sources

  1. Nightgown II

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    ELECTRICITE DE FRANCE

    Amid the ongoing global energy crisis, French Prime Minister Emmanuel Macron has announced the full renationalization of Electricite de France (EDF), the country’s decades old multinational electric utility company.

    In a 2020 article, GUILLAUME YON reflects on the historical origins of the company’s innovative postwar pricing structure.

    From the conclusion: 

    “In the immediate aftermath of the war, EDF’s engineers strongly believed in nationalizing the electricity sector. The prewar situation—with high competition between numerous small producers—was seen an obstacle to reconstructing and modernizing the country’s productive processes. But the available solutions appeared to them as insufficient to achieve this goal. They did not believe in the viability of fully centralized economic calculations performed by a planning board, but indicative planning was seen to be too modest and too defensive.

    EDF’s engineers invented their own solution, drawing on a rich tradition of state engineering. Emerging in 18th century France, state engineers were originally hired to design fortresses or warships. They invented optimization techniques to accommodate multiple technical and political constraints in a single coherent design, and then developed cost and price calculations to control and monitor the work of contractors in construction sites. In the 19th century, these techniques were applied to processes of industrialization—monitoring of the behavior of future users of bridges and railroads through pricing. The aim of this tradition was not to build a general theory of market equilibrium but to optimize concrete existing machines. Since the 18th century, state engineers thus made an explicit connection between the design and construction of large infrastructure and state-building processes. This explains the divergence from a different tradition that paved the way to the contemporary form of economic engineering.”

    Link to the text.

    +  “A study of EDF offers readers the opportunity to examine closely the transformation of French capitalism in the postwar period. This was a profound shift away from small and medium sized family firms towards behemoth enterprises.” From Robert Frost’s 1983 dissertation. Link.

    +  “While the regulatory framework of the French electricity sector has formally changed, the same political and administrative elites control the new regulatory agencies.” Pierre Bauby and Frédéric Varone consider the gap between EU imperatives and EDF’s corporate practices. Link.

    + A report by Francois Ailleret notes that “In mid-1999, EDF had already invested about €4.5 billion in approximately 20 countries in Europe, Latin America, Africa and Asia.” Link. And articles by Francesca Pilo, Laszlo Neumann, and Barbara Khol hint towards EDF’s role in the privatization of energy infrastructure in Brazil, Hungary, and Argentina respectively. Link, link, and link.

    NEW RESEARCHERS

    Tea Production in India

    NATALIE LANGFORD is Lecturer in Sustainability at the University of Sheffield. In a 2021 paper, she examines changing dynamics in Indian tea production as a response to an increase in domestic consumption.

    From the paper:

    “Domestic value chains coordinated by domestic lead firms are increasingly prominent within the global South. In India, the expansion of domestic consumption in the late 20th and early 21st centuries has shifted tea production from an export-oriented to a domestic-oriented industry. Thus, the political economy of tea production as a whole is increasingly shaped by domestic rather than global market factors. The significance of local trade and production to Indian tea producers challenges the tendency of development scholars to focus on the global value chain dynamics of commodity production and advocates for a more polycentric approach to the study of global trade and production. Using a value chain framework, this article identifies three processes which have driven the creation of new trade and production structures within India’s domestic tea market: a significant rise in the outsourcing and fragmentation of the production process; the expansion of smallholder-led production; and the introduction of private standards and governance programmes within the domestically oriented segment of production.”

    Link to the text. 

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

    + + +

    +   “Under the guise of integration and inclusion, the reforms bulldoze decades of labor victories and replace them with minimal rights and protections. Why, then, have the codes seen so little resistance?” New on PW, Chirayu Jain investigates the BJP’s new labor reforms and their effects on India’s 25 million building workers. Link. 

    +   “It seems likely that the post-Bretton Woods institutions will fragment and ultimately decline in importance. But what will replace them?” Also new on PW, a transcript of our event on the IMF after the collapse of Bretton Woods, featuring Karina Patricio Ferreira Lima, Mona Ali, Richard Kozul-Wright, Chris Marsh, and Lara Merling. Link. 

    +   “Consolidation in the asset management industry increases universal ownership and common ownership of industry rivals.” Amir Amel-Zadeh, Fiona Kasperk, and Martin C. Schmalz on the largest shareholders of US public firms. Link. 

    +   “In the last decade, Ghana lurched from unprecedented shortages to electricity over-abundance, entailing spiralling debt.” Barnaby Joseph Dye on the “good governance” agenda and Ghana’s electricity sector. Link. 

    +   Ted Tatos and Hal Singer on the NCAA and monopsony power. Link. 

    +   “Both local air pollution policies and recent coal-to-natural gas fuel switching have played major roles in reducing U.S. racial/ethnic pollution disparities from electricity.” By Danae Hernandez-Cortes, Kyle C. Meng, and Paige E. Weber. Link. 

    +   Martha Bernal and Ilich Ortiz examine the structural factors behind Colombia’s mass protests in 2021. Link.

    +   “As is well-known for Europe and the Middle East, wages rose sharply and remained high during the Black Death that began in the middle of the fourteenth century and lasted until the sixteenth century and even later. Our evidence indicates that the Justinian Plague that began in the sixth century and lasted at least until the middle of the eighth century had equally profound consequences on wages and per capita incomes. The environment of labor shortages, high labor incomes and high per capita wealth in the aftermath of the Justinian Plague stimulated agricultural productivity, the urban economy, and long-distance trade by creating demand for income elastic goods, both domestic and imported.” Şevket Pamuk and Maya Shatzmiller examine economic change in the Egypt and Iraq from 700 to 1500. Link. 

  2. Blue Mountain

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    PENSIONS

    Among the most notable innovations in trade union strategy since the late 20th century has been the rise of shareholder activism. The approach leverages trillions of dollars in trade union pension funds to navigate the financial sector on behalf of members—as workers and investors.

    In his 2021 book, SANFORD JACOBY examines the history of trade union pension provision. In doing so, he offers insight on transformations in the US financial sector and insurance industry since the late 19th century.

    From the introduction: 

    “Unions have three types of power at their disposal. Two are rooted in the labor market: organizing power and bargaining power. The third is political power. Over the last fifty years, there’s been an ebbing in all of them, particularly in the labor market. Industries with once-high union density, such as manufacturing and transportation, have experienced huge membership losses. About a quarter of the union wage premium vanished between 1983 and 2018. Because the promise of higher wages is a selling point for joining unions, the premium’s decline diminished labor’s organizing power.

    Labor’s political power did not decline as sharply. Unions still serve as aggregators for the Democrats, albeit less so than before. They now compete with the party’s other interest groups. It was difficult for unions to transform their political clout into remedies for their organizing problems. Out of the quandary came a search for new sources of power.  The loss of members made stark the choice between business as usual and the need for new approaches. With their pension funds, unions found a source of power outside the labor market to augment their power within it.”

    Link to the text.

    +  “92.1% of US corporate equity and mutual fund value is owned by white households; Black households own 1.5% while Hispanic households own 1.9%.” A recent article by Lenore Palladino examines shareholder primacy and the racial wealth gap. Link.

    + From March, an article by Amanda Kass, Andrew Crosby, and Brenda Parker exposes the complexities of municipal pension fund policies in Illinois. Link.

    +  “Under the ascendant interpretation of the fiduciary duty of loyalty, public pension trustees owe their allegiance to the fund itself, rather than to the fund’s participants and beneficiaries.” From 2014, David H. Webber “examines ways in which public pension funds invest against the economic interests of their own participants.” Link.

    h/t Lenore Palladino, whose Twitter post compiled many of these sources and others.

    NEW RESEARCHERS

    Deforestation in the Amazon

    PhD candidate in government at Harvard University ALICE XU studies social and environmental policy in the Global South. A recent paper examines the politics of deforestation in the Brazilian Amazon.  

    From the abstract:

    “What accounts for subnational variation in deforestation in the Brazilian Amazon? In this paper, I examine the ways in which the institution of local political competition, in particular, affects deforestation in Brazil, which houses the largest remaining tract of tropical rainforest in the world. I argue that politicians concerned with winning the margins under high political competition are pressured to forsake forest cover in the Amazon to cater to private commercial interests that profit from deforestation. Using satellite-based spatial deforestation data for the 783 municipalities in the Brazilian Amazon between the years 2000-2012, I test the theory by systematically examining the effects of local political competition on sub-national patterns of deforestation. Drawing on qualitative evidence from semi-structured interviews, I illustrate the ways in which in their efforts to weaken enforcement, mayors engage in ‘bureaucratic packing,’ a surge in appointments of new municipal personnel who are partial to the mayor’s agenda. As a strategy, ‘bureaucratic packing’ allows the mayor’s cabinet to bypass working with long-serving bureaucrats or to relax enforcement directly through the appointment of new leadership. Such bouts of bureaucratic expansion, therefore, undermine the role of existing personnel in municipal and state secretariats. Using the example of deforestation in the Brazilian Amazon, the argument illustrates the ways in which local political competition, in encouraging forbearance in the enforcement of regulatory standards, in turn generates incentives to weaken bureaucratic capacity.”

    Link to the paper, link to Xu’s website. 

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

    + + +

    +   “Reluctant to embrace mineral production in their own territories, European governments have leveraged the language of comparative advantage to place the responsibility of mineral production on the shoulders of poor, resource-rich countries.” New on PW, Jewellord T. Nem Singh on mining, development, and the EU’s critical raw materials strategy. Link. 

    +   View a recording of this week’s event on resource nationalism in Latin America and the global push for decarbonization, featuring Thea Riofrancos, Miguel Angel Marmolejo Cervantes, and Martín Obaya, and moderated by Alex Yablon. Link.

    +   “I investigate how through PAYGO, off-grid solar electricity in sub-Saharan Africa is being transformed into a cash flow, a financial asset and a conduit for consumer debt.” Lucy Baker on “electricity capital” in sub-Saharan Africa. Link. 

    +   Luciana de Souza Leão on conditional cash transfer programs and state efforts to make poverty visible in Brazil and Mexico. Link. 

    +   “Restoring our Regional Federal Reserve Banks to their original status as a network of regional development banks – ‘Spreading the Fed’ – will ensure that all assets financed with public capital are productive assets.” Robert Hockett’s proposal for public capital allocation. Link. 

    +   Seth Schindler, Ilias Alami, and Nicholas Jepson on state capitalism, industrial strategy, and the Wall Street Consensus. Link. And read Daniela Gabor’s PW essay on the WSC at COP26 from last year. Link. 

    +   Jamie Hansen-Lewis and Michelle M. Marcus measure the effects of US maritime emissions regulations. Link. 

    +   “Cities, even great industrial cities teeming with immigrants, were not the initiators and propellants of American civil society. Voluntary associations were more apt to flourish in small cities and towns than in large metropolises. The relationship between city size and number of groups—and the relationship between city size and total number of members in these groups—is powerful and negative. Between the mid-nineteenth century and the mid-twentieth century, voluntary associations grew most quickly and proliferated most heavily in the smallest cities and towns. The civic core was in the periphery, away from the big cities and outside the Northeast.” Gerald Gamm and Robert D. Putnam on voluntary associations in the US. Link. 

  3. Reflected Ray

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    SRI LANKA

    Amidst food shortages, an energy crisis, and a “complete collapse” of the economy, Sri Lankan President Mahinda Rajapaksa faces mass protests calling for his resignation. At the same time, the government is in negotiations with the IMF around a bailout deal. 

    In a 2013 article, AHILAN KADIRGAMAR puts the current crisis into context, tracing the rise of foreign debt obligations and capital inflows to Sri Lanka following the end of the civil war in 2009. 

    From the text: 

    “The armed conflict that pitched the state against the Tamil militants began around the same time the Jayawardene regime initiated the open economy policy in the late 1970s. The conjuncture at the end of the war, with concerns regarding security and stability of the country as the guns went silent and the fall out of the global economic crisis of 2008 directing greater flows of capital into the emerging markets, provided the conditions for the acceleration of neoliberal development. The Rajapaska regime seized the moment promising to resolve all problems through a development push. The authoritarian 18th Amendment to the Constitution of 2010 ensured much greater powers to the president to transform the economy. And in turn the patronage that came with development initiatives assisted in the consolidation of the regime.

    The post-war period characterised by a second wave of neoliberalism witnessed great flows of global capital that commenced with the approval by the executive board of the International Monetary Fund (IMF) of US$ 2.6 billion Stand-by Arrangement for Sri Lanka in 2009. This was followed by multilateral and bilateral aid amounting to billions of dollars from actors such as the World Bank, Asian Development Bank (ADB), Japan, China and India, and the sale of sovereign bonds worth US$ 4 billion to foreign institutional investors.  The stock market, domestic banks and real estate also attracted billions of dollars. Many national policies ranging from financial and banking deregulation, to tax reforms with an emphasis on indirect taxes thereby burdening the masses, to controversial land grabs stimulated these global financial flows. And much of this capital has been absorbed in infrastructure from roads to ports and airports as well as hotel and real estate development. In Colombo and other towns, particularly along the coast, financialisation has been tied to urbanisation where financial investments have been sunk into real estate with rosy projections of returns from the tourism industry. National finances consisting of increasing short-term international debt have bound the government to the policies of the IMF. Uneven development, where close to 45% of the GDP is concentrated in Colombo and the Western Province, has been further aggravated by urbanisation policies.”

    Link to the article.

    +  “If the entire crisis was generated because of the build-up of Sri Lanka’s foreign loan obligations, then the solution to take money out of the country’s budget to offset risks perceived by investors is simply another turn on the rack.” Kadirgamar and Devaka Gunawardena respond to the IMF Staff Report’s recommendations for Sri Lanka. Link to the piece, and link to the IMF report. 

    + A 1985 article by W. D. Lakshman, Governor of the Central Bank of Sri Lanka from 2019 to 2021, examines IMF and World Bank interventions in the nation from 1951 to 1977. Link. And Gulbin Sultana looks at Sri Lanka-China relations. Link. 

    +  “Counterintuitively, it was the Rajapaksas who benefited from the Easter Sunday massacre.” In NLR Sidecar, Rohini Hensman reflects on the legacy of the civil war and ethnic violence in the current crisis. Link. 

    NEW RESEARCHERS

    Debt Sustainability and IFIs

    In her dissertation, CHRISTINA LASKARIDIS examines the history of measuring debt sustainability at the World Bank and the IMF. 

    From the abstract:

    “Since the early 2000s, debt sustainability is assessed by the World Bank and the International Monetary Fund (IMF) through a policy template called Debt Sustainability Analysis (DSA). This thesis examines the origins of Debt Sustainability Analysis (DSA) by identifying specific episodes between the origin of these institutions and the early 2000’s when the DSA template was created. The thesis argues it was the lack of political agreement about how to resolve debt crises that galvanised a number of specific analytical efforts. First, the growth of international loans prompted a large data collection effort, and the growing repayment difficulties that emerged, prompted quantitative techniques to model the likelihood of debt repayment difficulties. Second, the notion of intertemporal debt sustainability marginalised structural and external causes of debt crises and elevated the role of primary balances in restoring debt repayments. Given the lack of an overarching framework to debt crisis resolution, the IMF and World Bank emerged as key actors that developed their technical capacity in debt issues. This served, inter alia, to guide their own lending and decision making, to discipline their own staff assessments and to maintain credibility in managing crises, despite repeated failures. The DSA, launched in 2002, was the culmination of a series of efforts to operationalise tools for measuring repayment prospects in the context of debt crises. Without an overarching and commonly agreed framework however the consequence of this development was that under the appearance of theoretical rigour, these tools attempted to displace political conflict over debt crisis, and at the same time, aspired to increase the credibility of powerful institutions.”

    Link to the paper. 

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

    + + +

    +   Join PW on Friday, July 1 at 1:30 pm ET for a discussion on resource nationalism and the politics of decarbonization, featuring Thea Riofrancos, Miguel Angel Marmolejo Cervantes, and Martín Obaya, and moderated by Alex Yablon. Register here.

    +   View a recording of this week’s event celebrating the launch of Diminishing Returns, featuring Mark Blyth, Lucio Baccaro, Oddný Helgadóttir, Eveleyne Hübscher, and Jonas Pontusson. Link.

    +   Our friends at the Fiscal Policy Institute in New York are hiring a policy analyst. Link for more details. 

    +   Lynn M. Paltrow and Jeanne Flavin examine 413 cases of arrest and forced interventions on pregnant women in the US, in the post-Roe era from 1973 to 2005. Link. And Cynthia R. Daniels, Janna Ferguson, Grace Howard, and Amanda Roberti investigate the prevalence of misinformation in state-level restrictive abortion laws. Link. 

    +   Serkan Demirkılıç, Gökhan Özertan, and Hasan Tekgüç on exchange rates and food price inflation in Turkey. Link.  

    +   “The paper uses the Post-Keynesian concept of an asset’s own rate of return to assess how susceptibility to the combined effects of erratic capital flows and the vulnerability vis-à-vis the physical and transitional risks of climate change reduces macroeconomic policy space.” By Anne Löscher and Annina Kaltenbrunner. Link. 

    +   Evelyne Hübscher, Thomas Sattler, and Zbigniew Truchlewski compare political opposition to fiscal adjustments in Germany, Spain, and the UK. Link. 

    +   Jingyang Huang and Kellee S. Tsai on private-public linkages in China’s digital surveillance industry. Link. 

    +   “Hellenistic Berenike was a stone-walled, fortified city/base largely built atop a low rocky ridge immediately to the west of what would later become the unfortified Roman port city. Archaeological excavations at Berenike, ongoing since 1994, have exposed the remains of the original Hellenistic site. The associated artefacts, along with studies of groundwater levels and bedrock stratigraphy, allow us to reconstruct the history of this third-century BC hydraulic installation through to its failure during a period of climate instability at the end of century. Evidence suggests that the late third-century BC hiatus in occupation may have resulted from a multi-year drought that caused the city’s freshwater source to run dry. This climatic shift was probably triggered by a volcanic eruption in 209 BC, an event that also caused a failure of the Nile to flood, leading to the famine-induced revolt of 207–186 BC in Upper Egypt.” By Marek A. Woźniak and James A. Harrell. Link. 

  4. Clinging to the Shoulders

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    LONDON METAL EXCHANGE

    In March of this year, the London Metal Exchange suspended trading in nickel after a 250 percent price hike brought its value to $100,000 a ton. The cancellation has shaken the commodities exchange’s reputation, and inspired a series of fierce lawsuits calling bias.

    It’s not the first time that the exchange has become the site of global economic tensions. In a 2020 article, JACK SEDDON examines the organization’s micropolitics at the turn of the century.

    From the text: 

    “Since its inception in 1877, the LME has distinguished itself from futures markets in the United States through its physical-trade-orientated rather than finance-orientated membership and structure. Traditional members understood themselves to be ‘metals men,’ whose personal fortunes, and those of the market collective, depended on the success of the international metals trade. Yet, the growth in financial contracts traded on the exchange relative to underlying physical production has advanced in the three decades since banks and financial groups joined the market. In the 1970s, some 80% of trading on the LME was driven by firms (producers, fabricators, and end users) with a genuine commercial interest in metals as such. The remaining 20% was conducted by financial investors without such an interest. Now, a physical trading base of around 30% supports a huge superstructure of financial activity.

    This transformation is the result of gradual changes at the political and institutional level which weakened the long-standing coalition between traditional metal merchants and the LME stewards who maintained the physical-trade-orientated market structure. Demutualization in 2000 and outside regulation shaped by and for powerful banking groups reduced the number and influence of LME members owned by physical mining companies and end users of metals. As miners, fabricators, and end users were marginalized, a column of high-speed traders on the proprietary trading desks of banks and hedge funds filled the gap, in the process transforming the nature of trading on the exchange. The interests and ideals pursued in the LME are thus conditioned by physical-trade-orientated institutional legacies and intense distributional conflicts between traditional metals merchants and financial market participants.”

    Link to the piece.

    +  “Many observers agree that the LME’s 1978 futures trade for aluminum reshaped global markets and the strategies of the main industry actors, but little attention has been paid to the factors behind this change.” A 2018 article by Marco Bertilorenzi examines how EU policymakers shaped global commodities markets. Link.

    +  “In conjunction with the LME, international metal trading companies effectively checked oligopolistic efforts by large copper producers in an era when other producer industries like oil and steel came to be defined by such competition.” Nathan Delaney’s 2018 dissertation examines the development of the transatlantic copper market from 1870 to 1930. Link.

    + A 1991 ECLAC report on “the metal exchanges and their incidence in the development of mining in Latin America and the Caribbean.” Link. And see the transcript from an April PW event on commodity markets and the Russia sanctions. Link. 

    NEW RESEARCHERS

    Poverty & Race in the American South 

    Regina Baker is Assistant Professor of Sociology at the University of Pennsylvania. In a new paper, she analyzes the impact of state institutions on inequality and poverty in the American South. 

    From the abstract:

    “Building on literatures on racial regimes and the legacy of slavery, this study conceptualizes and constructs a novel measure of the historical racial regime (HRR) and examines how HRR influences contemporary poverty and racial inequality in the American South. The HRR scale measures different manifestations of the U.S. racial regime across different historical periods—slavery and Jim Crow—and is based on state-level institutions including slavery, sharecropping, disfranchisement, and segregation. The analyses use Luxembourg Income Study data (2010–18) for 527,829 Southerners. Results show that residing in a state with stronger HRR is not significantly associated with greater poverty for all and especially not among White Southerners. Rather, a higher level of HRR worsens Black poverty and especially Black-White inequalities in poverty. Further, HRR explains a significant share of the Black-White poverty gap. This study demonstrates the enduring influence of historical state institutions on contemporary poverty and racial inequality.”

    Link to the paper. 

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

    + + +

    +   Join us on June 22 at 4pm ET (note the time change) for the launch of Diminishing Returns, a new book on the politics of secular stagnation. Featuring: Mark Blyth, Lucio Baccaro, Oddný Helgadóttir, Eveleyne Hübscher, and Jonas Pontusson. Register here.

    +   “Helleiner shows that neomercantilism could be highly exploitative and autocratic, harnessed for liberation movements, or provide a basis to pursue social reform.” New on PW, Justin Vassallo reviews Eric Helleiner’s The Neomercantilists. Link.

    +   On July 1 at 1:30pm ET, join us for a conversation on resource nationalism in Latin America and the politics of decarbonization, moderated by Alex Yablon and featuring Thea Riofrancos, Miguel Angel Marmolejo Cervantes, Martín Obaya. Link to register.

    +   Skanda Amarnath on the recession risk following the announcement of the Fed interest rate hike. Link. And Robert Armstrong on the current state of the US economy. Link. 

    +   A new Employ America report on anti-inflation strategy, by Amarnath, Arnab Datta, and Alex Williams. Link. And from the new Center for Public Enterprise, a report by Paul Williams, Yakov Feygin, Chirag Lala, and Mitch Green, on targeting inflation by reducing oil consumption. Link. 

    +   “This paper builds a new dataset on bank ownership and finds no evidence of a negative correlation between state-ownership of banks and economic growth.” New research from Ugo Panizza. Link. 

    +   Mukul Kumar looks at the expansion of coal plants on India’s coasts over the past three decades. Link. 

    +   Fulya Apaydin and Mehmet Kerem Çoban on dependent financialization in Turkey. Link. And see a recent PW Sources newsletter on Turkey’s financial crisis here. 

    +   Robert Huang and Matthew Kahn find that the carbon footprint of US public transit has not significantly decreased from 2002 to 2019. Link. 

    +   “To conduct this investigation into the relative importance of mechanization, we analyze the remarkably detailed data in the U.S. Commissioner of Labor’s 13th Annual Report on Hand and Machine Labor (HML). It recorded all individual tasks from start to finish associated with the production of over 620 highly specific manufactured goods using ‘machine methods’ in the late 19th century, along with those involved in the production of the same good by the traditional ‘hand methods.’ We find that (1) the more frequent use of inanimate power in factory production had significant positive effects on labor productivity but that (2) these effects accounted for just one-third of the average difference in production operation times between hand and machine labor. We then conduct a broader study of the roles of other factors, including the division of labor and the adoption of high-volume production. We find that these additional factors are of roughly similar importance in accounting for the average difference in productivity between hand and machine labor.”  By Jeremy Atack, Robert A. Margo, and Paul W. Rhode. Link. 

  5. First Class Road

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    DEFENSE PRODUCTION ACT

    This week, President Biden invoked the Defense Production Act (DPA) to boost clean energy production, including solar technology, heat pumps, insulation, green hydrogen, and transformers. In recent years, the DPA has strayed from its wartime connotations, from coordinating Covid-19 responses, and more recently, addressing the baby formula shortage. 

    In a January 2022 report for the Roosevelt Institute, TODD TUCKER explains the primary authorities of the DPA, informing the Act’s potential use in future industrial policy. 

    From the report: 

    “Priorities and allocations are tools currently authorized under the Defense Production Act (DPA). Priorities are among the government’s most powerful tools for using demand channels to structure industries, through both its own purchases and for those of private firms that receive priority orders. Businesses that receive priority orders are required to accept them and cannot charge higher prices or impose more onerous terms than they would in the normal course of business. There is a very limited set of instances where rejection of a rated order is possible: if the order is impossible to fill by the requested date (in which case the order must be rejected, but the earliest later delivery rate must be offered), or if the requested order or service is not or is no longer provided. The recipient is in turn empowered to push the requests down their supply chain to expedite action from their suppliers as well. The timeline for acceptance/rejection can be as little as six hours or as long as 15 days. 

    In contrast to priorities, the allocation power allows the government to use supply channels to shape industrial activity. With priorities, the state is essentially one procurer among others (even if it can push itself to be first in the queue). In contrast, allocations are a more direct economic planning tool. Under current regulations, the allocation power includes set-asides (requiring businesses to reserve materials, services, or facilities capacity in anticipation of priority orders), directives (orders to take or not take certain actions, such as to stop or reduce production of an item; prohibit the use of specific materials, services, or facilities; or divert such resources from one purpose to another), and allotments (caps on the maximum quantity of a material, service, or facility authorized for a specific use). Allocation orders present even less flexibility than priority orders. Even if full compliance is impossible for some reason, the recipient must comply to the fullest extent possible for as long as the Department of Commerce (or another agency under delegated power) tells them to. For decades, the Department of Defense has been the primary user of DPA authorities, issuing around 300,000 priority orders annually for routine procurement needs. But the Act’s powers have a longer and more varied usage in earlier decades, and the year 2020 may be a turning point back toward more regular use of these powers.”

    Link to the text.


    +  “Never before had any President used the emergency powers conferred by the subject federal statutes to compel domestic fuel suppliers to sell fuel to a civilian buyer.” Frank Lindh’s 2001 article on Bill Clinton’s decision to invoke the DPA during California’s utilities crisis. Link.  

    +  Jake Stieber examines labor members’ 1951 decision to withdraw from the Wage Stabilization Board, an authority created under Title IV of the original DPA and terminated in 1953. Link. Richard Field’s 1950 article examines the wider range of stabilization measures that were part of the original legislation. Link. And for more on price stabilization measures in US history, see Andrew Yamakawa Elrod’s recent essay on price controls. Link. 

    + “When the federal government invoked the DPA, it inadvertently put two interests at odds with each other—providing medication for a rare but serious disease and speeding up vaccination rates against the coronavirus.” Gabriella Smith on the DPA’s dilemmas in pharmaceuticals. Link. Thomas Bollyky and Chad Bown on the DPA and vaccine supply chains. Link. And Lee Harris this week, on the limits of the DPA: “A full-stack industrial policy would likely go beyond the DPA and rely on more agencies for financing.” Link.

    NEW RESEARCHERS

    Maternity Leave & Formal Employment

    PhD student in applied economics at the University of Minnesota KHOA VU studies health, education, and labor. A recent paper co-authored with Paul Glewwe investigates the labor market effects of a maternity leave requirement. 

    From the abstract:

    “This study examines how extending the maternity leave requirement affects women’s decision to work in the informal or formal sector in Vietnam. We use a difference-in-differences approach to evaluate the 2012 Amendments to the Vietnam Labor Law, which imposes a longer maternity leave requirement than before. We find that the law increases formal employment and decreases unpaid work among women. This is driven by women switching from agricultural household work to employment in the private formal sector, especially in the manufacturing industry and among the middle-skilled occupations such as plant and machine workers, craft and related workers, as well as clerks.”

    Link to the paper, link to Vu’s website. 

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

    + + +

    +   Join us on June 11 at 10am ET for the launch of Diminishing Returns, a new book on the politics of secular stagnation. Featuring: Mark Blyth, Isabella Weber, Lucio Baccaro, Oddný Helgadóttir, Eveleyne Hübscher, and Jonas Pontusson. Register here.

    +   “Brazil and China constitute two of the world’s largest logistics markets. Both experienced booms in road-based infrastructure investment during the past two decades. And in their road freight sectors, digitalization has advanced far more quickly than in the Global North.” New on the site, Jörg Nowak, Steven Rolf, and Wei Wei examine the growth of digital trucking platforms in Brazil and China, and their impacts on labor relations in the sector. Link.

    +   “The coming energy order will be defined by something that few analysts have fully appreciated: government intervention in the energy sector on a scale not seen in recent memory.” Jason Bordoff and Meghan L. O’Sullivan in Foreign Affairs. Link. 

    +   “Given vastly different starting conditions under slavery, racial wealth convergence would remain a distant scenario, even if wealth-accumulating conditions had been equal across the two groups since Emancipation.” Ellora Derenoncourt, Chi Hyun Kim, Moritz Kuhn & Moritz Schularick construct the first continuous series of the US racial wealth gap from 1860 to 2020. Link. 

    +   A study of tax enforcement and planning strategy in Chile, by Sebastián Bustos, Dina Pomeranz, Juan Carlos Suárez Serrato, José Vila-Belda, and Gabriel Zucman. Link. 

    +   Ben Fine and Seeraj Mohamed analyze industrial policy in late industrializing countries. Link. 

    +   “This paper seeks to answer the question of when is the long run in demand-led growth models.” By Ettore Gallo. Link. 

    +   “In this article we argue that Ming China had a fundamental impact on the rise and decline of the Spanish Empire. China’s demand for silver was of such magnitude that private mining profits in the Spanish Empire remained high until about 1640. The decline of these profits led to abandon production. Spain faced a deepening financial crisis due to the fall of silver’s value. The loss of purchasing power from the Crown’s American enterprise was inevitable and the state’s relentless pressure for increased taxation within Castile and elsewhere was mandatory in order to compensate for lost external purchasing power.” By Dennis O. Flynn and Arturo Giráldez. Link. 

  6. From Line

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    NETWORKS

    In recent decades, the global financial system has undergone a series of profound crises. While the impact of these crises has been felt globally, comprehensive reforms have been less immediate.

    In a 2013 article, THOMAS OATLEY, W. KINDRED WINECOFF, ANDREW PENNOCK, and SARAH BAUERLE DANZMAN consider structural change in the financial system through the lens of network theory.

    From the piece: 

    “The defining characteristic of financial interdependence is the inability to separate the system into independent national units or distinct levels of analysis. Horizontal ties connect states as they negotiate and implement regulatory structures. Other horizontal ties connect financial institutions in distinct national jurisdictions and connect private actors engaged in governance. Vertical relationships tie domestic policy-makers to domestic private financial actors, and link large money-center banks to small community banks. The system also contains ‘diagonal’ relationships, ties between public entities located in one jurisdiction and private entities located in another.

    The evolution of network topology has only recently received attention from network scholars. We draw on one approach which considers ‘fitness’ and ‘preferential attachment.’ Differences in node fitness provide an initial advantage, and preferential attachment reinforces this advantage via positive feedback. As the network develops over time, a hierarchical structure forms and is reinforced. Within this framework, the growth and evolution of the global financial network results from the interaction between country level characteristics and positive feedback. The more agents that are active in any national financial system, the more appealing the market becomes to other agents. A national financial system will thus attract new business because it already attracts a lot of business. As other national financial systems emerge as fit alternatives to the center, the fitness advantage that the existing center once enjoyed eventually disappears. Yet network externalities continue to pull portfolio investment to the center country, thereby maintaining the hierarchical structure. The system evolves gradually toward a condition in which an existing hierarchical structure no longer corresponds to the underlying distribution of fitness. Once this gap widens beyond some threshold, the system shifts abruptly to align network topology with the new fitness distribution.”

    Link to the article.

    +  “The power of the global financial network is ‘sticky’—established structures of the network are historically durable, and embrace ascendant centers of economic power.” A new book by Daniel Haberly and Dariusz Wójcik considers the longterm trajectory of financial networks in the world economy. Link.

    +  “Through self-reinforcing behavioral patterns as a community, merchant busness culture formed a private-order institution that facilitated trade around the Atlantic during the turbulent period of 1750-1815.” Sheryllynne Haggerty on the integral role of merchant networks in shaping the Seven Years War, the American Revolution, and the Trans-Atlantic Slave Trade. Link.

    +  “Credit relations combine the personal and the impersonal, the informal and the formal, face-to-face contact and distance.” A 2012 article by Claire Lemercier and Claire Zalc on credit networks in modern history. Link.

    NEW RESEARCHERS

    Property Rights & Coal in India

    In a 2021 paper, MATTHEW SHUTZER examines the legal framework that governed rights and access to coal mining in India from 1870 to 1975, looking at continuities in agrarian regimes of property ownership. 

    From the paper:

    “In the area that would become colonial and postcolonial India’s most important site of energy extraction, mining firms in the 19th century encountered an agrarian property regime centered on the rule of a large landowning class known as zamindars. Zamindari control over the land stemmed from the colonial property system created by the East India Company in the 18th century, in which the Company delegated the rights of land revenue collection to regional elites under a legal framework intended to recognize preexisting hierarchies of agrarian custom. During the mining boom of the 1890s, the rush of subterranean property claims undercut the apparent juridical stability of these customary norms, as contradictory legal claims over the land revealed that the zamindari settlement lacked any recognition of coal as a formal property right.

    In reassembling the hitherto neglected archives of colonial mining firms and civil court judgements from before and after the boom, I document how this absence of legal certainty nevertheless allowed for the commodification of the geological wealth of the mining region. In the resource frontier of the coal region, the legal codification of coal as property did not precede the expansion of mining capital, but was, rather, recursively assembled within Indian civil courts during and after the commodity boom. Mining firms, landowners, company lawyers, and Indian jurists pushed at the limits of customary jurisprudence in order to legitimate new financial and extractive claims.”

    Link to the paper, link to Shutzer’s website. 

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

    + + +

    +   “Not content to demolish the mainstream neoclassical synthesis, Marglin charges into the wreckage to offer his own novel formalization of Keynesian theory, reconstructed by means of mathematical tools that its originator lacked.” New on PW, Nina Eichacker reviews Stephen Marglin’s Raising Keynes: A Twenty-First-Century General Theory. 

    +   “92.1 percent of US corporate equity and mutual fund value is owned by white households.” Lenore Palladino on corporate equity and the racial wealth gap. Link. 

    +   Callum Ward, Frances Brill, and Mike Raco on the Qatari Investment Authority’s role in London’s real estate market. Link. 

    +   “Are major advanced economies on the verge of a wage-price spiral?” A BIS report by Frederic Boissay, Fiorella De Fiore, Deniz Igan, Albert Pierres-Tejada, and Daniel Rees. Link. 

    +   Orazio Attanasio, Kieran Larkin, Morten O. Ravn, and Mario Padula examine consumption by tracking car purchases and loans after the Great Recession. Link. 

    +   “We construct an aggregate data set of sovereign debt holdings by foreign and domestic bank, non-bank private, and official investors for 95 countries over twenty years.” By Xiang Fang, Bryan Hardy, and Karen K. Lewis. Link. 

    +   Amir Lebdioui on Malaysia’s industrial policy in its petroleum, rubber, and palm oil sectors. Link. 

    +   “Although local demand inspired the early development of a luxury cigarette industry in Egypt, it was demand from abroad that played a key role in the rapid growth of the industry. In 1889, S. Anagyros began to export the brand Egyptian Deities from Egypt to the United States. Nestor Gianaclis was perhaps the first Egyptian manufacturer to export cigarettes actively to the United States, and his Nestor cigarette was later branded ‘the original Egyptian.’ In the early 20th century, when he realized that exports from Egypt could not adequately supply the growing local demand, he opened a factory in Boston. Because the industry in the United States was initially developed by Armenian, Greek, and Turkish immigrants from the Ottoman Empire, Greece, and Egypt, handmade Eastern tobacco brands maintained their reputation and continued to enjoy popularity among consumers. As late as 1903, Eastern brands constituted about 25 percent of the national US market.” By Relli Shechter. Link. 

  7. Trick

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    LAND CONFLICT

    This weekend’s presidential elections in Colombia could result in the victory of the country’s first leftist leader, a center-right former mayor, or a right-wing populist. A central issue is the fate of the 2016 peace deal, with crucial questions around security, land ownership, and displacement. 

    In a 2005 article, NAZIH RICHANI links the intensification of the conflict to the increased presence of multinational corporations in the 1980s, looking at the case of BP in the department of Casanere. 

    From the article: 

    “The deagriculturalization of Casanare was evident in terms of the changes in the respective sectors’ contributions to the department’s GDP. Before the advent of BP, the agricultural sector constituted 51 percent of the GDP and oil production 12.5 percent. In the 1990s, with the expansion of the oil industry, the income from oil amounted to 44 percent of Casanare’s GDP, and agriculture sharply declined to only 9 percent. This rapid economic distortion, generated by BP, coincided with a process of land concentration in the form of extensive cattle ranching and large-scale ownership. Large parcels of land were acquired mostly by wealthy narcotics traffickers and the ’emerald mafia’ of Victor Carranza. In 1984, for example, large landholdings exceeding 100 hectares owned about 75 percent of the agricultural land; in 1988, large landownership acquired 85.5 percent of the land.  This rapid concentration of property in a span of four years aggravated conflict over land, and peasants obviously were on the losing end. Meanwhile, between 1984 and 1988 coca production and prices witnessed a boom. 

    The concentration of land and the inflationary pressures of the rentier economy precipitated by the Dutch disease also led some small landed and subsistence peasants to shift from traditional cash crops to more profitable poppy plantations. This process was facilitated by the protection provided to these peasants by the guerrillas, particularly in the municipalities where they had a presence. Therefore it is no surprise to note that the 18,000-combatant Fuerzas Armadas Revolucionarias de Colombia (FARC) increased its military presence in Casanare from 10 municipalities to 18, and the Ejercito de Liberacih Nacional (ELN) doubled its presence from 6 municipalities to 12 between 1990 and 1995, attracting recruits and social support among the peasants. Of course, the increased guerrilla presence triggered an increase in the number of paramilitary groups contracted by large landowners, cattle ranchers, and the narcobourgeoisie, which exacerbated the conflict in the department, making it the second most violent in the country after Arauca.”

    Link to the text.

    +  In a 2012 article, Richani investigates the roots of increased land concentration, focusing on 20th-century land laws and the emergence of powerful cattle
    ranchers. Link. And a 2017 Oxfam report found that Colombia had the most unequal land distribution in Latin America. Link. 

    +  “Simultaneous with trade liberalization and the increase in foreign investment, a thorough privatization of Colombia’s public resources and service providers was underway.” From Jasmin Hristov’s 2009 book on increasing paramilitarism in the country. Link.

    +  “When Uribe first took the reins in 2002, after winning an absolute majority in the first round, he did so in a country with a record of conservative hegemony unparalleled in Latin America: no left-wing, or even populist candidate had ever been elected to the Colombian presidency.” Mauricio Velásquez on the 2014 presidential election, from a 2015 essay in the New Left Review. Link.

    NEW RESEARCHERS

    Rent-to-Income Ratios

    In his job market paper, SAMUEL HUGHES looks at rent-to-income ratios, shedding light on barriers to housing affordability in the US. 

    From the abstract:

    “Rent-to-income ratios have risen over the past two decades with large increases at the bottom of the income distribution, prompting concern about a housing affordability crisis. This paper uses minimum wage changes as a natural experiment to study the relationship between housing demand & policies affecting low-wage households. If their housing demand is relatively inelastic, an increase in income will causally decrease rent-to-income ratios. The results suggest a 10% increase in minimum wages increases income for affected households by 1.9%, increases housing consumption by 0.5%, and decreases rent-to-income ratios by 1.4%. These estimates suggest that housing demand is fairly income inelastic, and preferences over housing demand are non-homothetic. In a modeling exercise, this paper suggests that homothetic models may not match housing demand behavior and may underestimate welfare gains to low-wage households.”

    Link to the paper, link to Hughes’ website. 

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

    + + +

    +   “A second oil shock in 1979 convinced policymakers to do away with controls and helped spawn a militarized commitment to ‘securing’ the oil of the Middle East, the blowback of which we continue to confront today.” In the second installment of the price controls series, Gregory Brew on the long history of oil prices. Link. View the ongoing series here. 

    +   “The expansion of industrial agriculture in Brazil has been an international affair, linking pension funds, university endowments, and major financial actors across the world.” A new piece on PW by Maria Luisa Mendonça explores land grabbing and economic interests in Brazilian agribusiness. Link.

    +   “For as long as powerful firearms remain easily available to private citizens, the United States is likely to remain well above the OECD average when it comes to violent death.” A 2017 piece by Kieran Healy. Link. In the FT, a chart maps the steady growth of mass shooting events in the US since 1982. Link.

    +   “If American policymakers want to limit Chinese financial might, issuing a US CBDC is not the way to do it.” Chris Hughes in the FT. Link. And see Hughes’s report on designing the digital dollar. link. 

    +   Laurent Bouton, Julia Cagé, Edgard Dewitte, and Vincent Pons analyze 340 million individual campaign donations in the US from 2005 to 2020. Link. 

    +   “Green Energy Jobs in the US: What Are They, and Where Are They?” New analysis by E. Mark Curtis and Ioana Marinescu. Link. 

    +   “This shift away from standardized pay rates accelerated the decline in real wages experienced by blue collar workers in the 1980s.” Maxim Massenkoff and Nathan Wilmers on discretionary wage-setting from 1974 to 1991. Link. 

    +   “Inequality increases faster and more persistently in the aftermath of recessions.” A new BIS report by Luiz Awazu Pereira da Silva, Enisse Kharroubi, Emanuel Kohlscheen, Marco Jacopo Lombardi, and Benoit Mojon on inequality hysteresis. Link. 

    +   “I use new evidence from servant contracts, 1610–1890, to estimate male farm wages and the length of the work year in Japan. I show Japanese laborers were surprisingly poor and could only sustain 2–3 adults relative to 7 adults for the English. Japanese wages were the lowest among pre-industrial societies and this was driven by Malthusian population pressures. I also estimate the work year and find peasants worked 325 days a year by 1700, predating the ‘industrious’ revolution in Europe. The findings imply Japan had a distinct labor-intensive path to industrialization, utilizing cheap labor over a long work year.” By Yuzuru Kumon. Link. 

  8. Zarathustra II

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    LABOR MARKET COMPOSITION

    This week, labor markets across the US and Europe exhibited seemingly inconsistent trends: while unemployment is at historic lows, claims for unemployment benefits are on the rise, and despite rising overall incomes, many workers face increased financial stress.

    In a new report by the Resolution Foundation, NYE COMINETTI, KARL HANDSCOMB, HANNAH SLAUGHTER, and GREG THWAITE consider how post-pandemic changes in the workforce have contributed to the confusion.

    From the text: 

    “Since the summer, the labour market has tightened on three headline measures: the unemployment rate is close to record lows, the unemployment-to-vacancies ratio is the lowest on record, and workers are moving jobs voluntarily at record-high rates. Both the Office for Budget Responsibility (OBR) and the Bank of England have pointed to this tight labour market as a driver of nominal pay growth, as employers raise wages to attract and retain workers.

    Pay data during the pandemic has not always been straightforward to interpret, however. One reason is that many workers who were furloughed under the Job Retention Scheme received only 80% or less of their usual pay unless their employer topped up their wages. Average weekly earnings year-on-year growth was 3.9 per cent in Q4 2021 – but 0.9 percentage points of that was accounted for by furloughed workers moving back onto their full pay. The changing composition of the workforce may also matter: as the pandemic struck, job losses were concentrated among lower-paid workers, pushing up observed pay growth. As the economy reopens, we may expect this effect to reverse. While the composition of the workforce continues to adjust in the aftermath of the pandemic, nominal wages are still not growing fast enough to keep pace with price rises. Earnings are set to fall in real terms for the rest of this year and most of next.”

    Link to the text.

    +  “The pandemic labor market has distorted our picture of wage growth.” A recent EPI report by Elise Gould and Jori Kandra considers the state of the American economy in light of its changing labor composition. Link.

    +  “Declining labor force participation now accounts for almost all of the ‘missing employment’ in the US today.” Harry J. Holzer examines the implications of worker dissatisfaction. Link.

    +  A recent IMF report outlines the “sizeable shift in sectoral employment composition” aniticipated across European economies in the coming years, and its implications for workers. Link.

    NEW RESEARCHERS

    Unemployment Insurance & Crime

    DIOGO BRITTO is a postdoc researcher in economics at Bocconi University. A recent paper co-authored with Paolo Pinotti and Breno Sampaio examines links between job loss, unemployment insurance, and crime in Brazil. 

    From the abstract:

    “We investigate the impact of job loss on crime and the mitigating role of unemployment benefits, exploiting detailed individual-level data linking employment careers, criminal records, and welfare registries for the universe of male workers in Brazil. The probability of committing crimes increases on average by 23% for workers displaced by mass layoffs, and by slightly less for their cohabiting sons. Using causal forests, we show that the effect is entirely driven by young and low-tenure workers, while there is no heterogeneity by education and income. Regression discontinuity estimates indicate that unemployment benefit eligibility completely offsets potential crime increases upon job loss, but this effect vanishes completely immediately after benefit expiration. Our findings point to liquidity constraints and psychological stress as the main drivers of criminal behavior upon job loss, while substitution between time on the job and leisure does not seem to play an important role.” 

    Link to the paper, link to Britto’s website. 

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

    + + +

    +   “The legal scheme and intellectual priority given to inflation’s macroeconomic causes shapes our social world.” Andrew Yamakawa Elrod introduces a new Phenomenal World series on the politics of price controls. Read the essay here, and see the series here. Stay tuned for upcoming essays from Gregory Brew, Isabella Weber, Elham Saeidinezhad, Uwe Fuhrmann, and others. 

    +   “The two criteria by which this debt cancellation might be limited—by income and by total amount—risk undoing the practical and political benefits cancellation is aimed to achieve.” A new brief from JFI and the Debt Collective, by Sparky Abraham, Jalil Mustaffa Bishop, Daniel Collier, Eduard Nilaj, Marshall Steinbaum, and Astra Taylor, makes a data-driven case for student debt cancellation. Link. 

    +   In case you missed it, watch a recording of yesterday’s Phenomenal World panel on the IMF and the legacy of Bretton Woods, featuring Mona Ali, Karina Patricio Ferreira Lima, Richard Kozul-Wright, Chris Marsh, and Lara Merling. Link.

    +   Our friends at Dezernat Zukunft are seeking policy fellows for their work on German and EU fiscal policy. Link to more information.

    +   “Preferred explanations for the past twelve months of inflation tend to fall short of capturing where exactly the bottlenecks in the economy are located. Today’s inflationary pressures are best understood as the result of a physical capacity shortage (PCS), both domestically and abroad.” At Employ America, Alex Williams on inflation. Link.

    +   An ECB report on climate-related financial risks in an “orderly” and “disorderly” low-carbon transition, by Régis Gourdel, Irene Monasterolo, Nepomuk Dunz, Andrea Mazzocchetti, and Laura Parisi. Link. 

    +   “Behind Fink’s careful positioning is the story of BlackRock and Zambia, and how debt is preventing lower-income countries from protecting themselves against the worst effects of climate change.” Vanessa Nakate in the FT. Link. 

    +   Matthias Matthijs on Kindleberger and hegemonic stability. Link. 

    +   “We estimate that a 10% rise in oil prices driven by lower global oil supply lowers the level of GDP for the average advanced economy by around 0.5% after two years.” A new BIS report by Deniz Igan, Emanuel Kohlscheen, Gabriela Nodari and Daniel Rees. Link. 

    +   Leticia Muñiz Terra and Gabriela Rubilar compare welfare models, labor policies, and class trajectories in Argentina and Chile. Link. 

    +   “Between 1922 and 1940, roughly 40,000 Italian farmers settled in Libya. These colonists, who relied mostly on private capital until the early 1930s, and increasingly on state-financed settlement projects thereafter, formed a farming elite capable of deploying substantial amounts of capital and new technologies. These features set them apart from traditional Libyan farming and split the country between an Italian commercial sector and a Libyan subsistence one. Through regression analysis on a novel village dataset covering the entire country, I show that, in 1939, proximity to Italian farms was associated with significantly lower land productivity relative to distant locations. Lower yields can be explained by the adoption of land-extensive cultivation techniques, implemented by indigenous farmers to counteract a labour drain operated by Italian farms through factor markets.” By Mattia C. Bertazzini. Link. 


  9. Le Lampe

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    ABORTION

    News around the potential reversal of Roe v. Wade in the United States has brought renewed attention to abortion rights movements in other parts of the globe, and in particular, Latin America. After decades of court cases, legislative efforts, and mass protests, the past two years have seen the decriminalization of abortion in Argentina, Mexico, and Colombia. 

    In a 2013 paper, DEBORA LOPRIETE places the debate around abortion in Argentina within the larger context of welfare and gender policy after the end of the dictatorship in 1983. 

    From the introduction: 

    “Although the democratization of Argentina in 1983 was a political opportunity for the advancement of women’s rights, the neoliberalism and social conservatism of the 1990s created obstacles to the subsequent development of gender policies. A gender-equality agenda was initiated with the ratification in 1985 of the UN’s Convention on the Elimination of All Forms of Discrimination against Women, the establishment in 1991 of a quota of a minimum of 30 percent women candidates for the Congress, and the creation in 1992 of the Consejo Nacional de la Mujer (National Women’s Council—CNM [since 2009 known as the Consejo Nacional de las Mujeres]).

    The founding of the CNM was part of a global process of establishment of mechanisms for promoting and monitoring a gender perspective in public policy. The goal of this process, known as ‘gender mainstreaming,’ was gender equality through policies that advanced women’s rights in the areas of violence against women, equal pay for equal work, reproductive rights, and the participation of women in decision making. However, welfare retrenchment during the 1990s was directed at the family allowance system, many women were suddenly incorporated into the labor market, and President Carlos Menem, supported by the Vatican, opposed reproductive rights. The 2001–2002 economic crises launched a post-neoliberal framework based on poverty reduction and social inclusion and created some opportunities for women to advance their rights, fostering programs for sexual health and responsible procreation, but social assistance for poor mothers and family support was dominated by maternalism. As the CNM took on more responsibility for delivering social assistance, it abandoned its original gender-equality mandate.”

    Link to the text.

    +  “The common failure of Latin American countries to liberalize abortion, in spite of their openness to gender-related policy changes in other areas, confirms that gender policy issues need to be disaggregated.” In her 2003 book, Mala Htun compares abortion and family policy in Argentina, Brazil, and Chile. Link. And Merike Blofield looks at the role of the Church in abortion politics in eleven countries. Link.  

    +  “The need to increase the population, either through an increase in the fertility rate, decrease in the mortality, or the promotion of immigration, was part of the aims of the Triennial Plan for Reconstruction and National Liberation (1974-1977).” Karina Alejandra Felitti on the “pronatalism” of the third Peronist government. Link (in Spanish).

    +  A 2020 article by Jasmine Gideon, Marianna Leite, and Gabriela Alvarez Minte probes the contradiction between the state-led expansion of healthcare services and persistent, poor healthcare outcomes for women in Chile and Brazil. Link. 

    NEW RESEARCHERS

    Caste and Agricultural Labor

    Instructor in economics at the University of Manitoba SRISTHI YADAV studies caste and agrarian change in India. A new paper analyzes agrarian class relations and economic diversification in Haryana. 

    From the abstract:

    “This paper seeks to analyse agrarian class relations in Sangli, a village in Rewari district, southern Haryana, in light of the linkages of agricultural households with non-agricultural economic activities. I find that better-off households that are primarily dependent on agriculture are the most likely to re-invest in agriculture. Agricultural surpluses allow upper caste landowning households to diversify into businesses or formal employment; alternatively, landownership provides a failsafe against precarious daily wage work, which is the only type of work available to lower caste landless households who lack economic and social capital. This segmentation of diversification opportunities is understood as conjugated oppression resting on caste and land ownership.”

    Link to the paper. 

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

    + + + 

    +   Following the 50-year anniversary of the collapse of Bretton Woods, how has the global monetary system transformed? Join Phenomenal World for a discussion on the past, present, and future of the IMF, featuring Mona Ali, Karina Patricio Ferreira Lima, Richard Kozul-Wright, Chris Marsh, and Lara Merling. Register here. 

    +   “The Auxilio Brasil preserves a developmental tradition adapted from Portuguese colonialism to the 21st century.” New on PW, Benjamin Selwyn examines Bolsonaro’s cash-transfer program. Link. 

    +   “Many education scholars refer to these discriminatory practices as resource hoarding, but ‘kleptocracy’ explicitly names stealing of resources from disadvantaged communities, emphasizing the relational mechanisms of dispossessions rather than wealth accumulation alone.” Also new on PW, Esther Cyna analyzes the origins of school finance inequality in the US. Link. 

    +   “Financial and supply networks have chokepoints, which powerful states can use to punish individuals, businesses and even nations.” Henry Farrell and Abraham L. Newman on Russia and the weaponization of networks. Link. 

    +   Alexis Montambault Trudelle on sovereign wealth management in Saudi Arabia. Link. 

    +   “Like sieges, country-wide sanctions do not distinguish between armed actors and civilians, and all too often lead to starvation.” By Joshua Craze. Link. 

    +   Oleg Itskhoki & Dmitry Mukhin on sanctions and exchange rates. Link. 

    +   Regan Deonanan and Daren Conrad on the long-term effects of foreign direct investment in Guyana. Link. 

    +   “The Indian non-financial corporate sector, rather than the commercial banking system, came to be the conduit integrating the Indian economy with international financial markets.” By Arpan Ganguly and Ramaa Vasudevan. Link. 

    +   “This paper investigates the role of sentiment in the US economy from 1920 to 1934 using digitised articles from The Wall Street Journal. We hypothesise that newspaper articles of the time contain both information related to the state of emotions or confidence of economic agents and factual information about or related to the fundamentals of the economy. In our model, the emotion or ‘sentiment’ component can have independent effects on the economy that are not directly related to the fundamentals they describe. We derive a monthly sentiment index and use a 10-variable vector error correction model to identify sentiment shocks that are orthogonal to fundamentals. Intermittent impacts of up to 15 per cent on industrial production, 10 per cent on the S&P 500 and bank loans, and 37 basis points for the credit risk spread suggest a large role for sentiment.” By Ali Kabiri, Harold James, John Landon-Lane, David Tuckett, and Rickard Nyman. Link. 

  10. Friendship

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    THE TURKISH LIRA

    Since 2018, the Turkish lira has suffered repeated devaluation shocks, increasing rates of loan default and unemployment. These have only been compounded by the pandemic and the Russian invasion of Ukraine—this week, inflation rates in Turkey have skyrocketed to nearly 70 percent just as the country gears up for a contentious election.

    Rising prices may in part be attributable to Erdogan’s heretical approach to monetary policy, which insists that low interest rates will reduce inflation and attract capital flows by altering the country’s current account balance in the long run.

    In a recent paper, ÜMIT AKÇAY and ALI RIZA GÜNGEN examine the country’s economic turmoil in light of its position in the global financial system.

    From the paper: 

    “Economists tend to explain the 2018–19 crisis through the erosion of central bank independence. In contrast, we argue that the recent crisis was the manifestation of the dependent financialisation of the Turkish economy. Dependent financialisation developed in four phases. The first phase began in 1989 with the liberalisation of capital movements. During this period, high public debt became one of the most distressing economic issues, peaking at 74% of GDP during the 2001 crisis. The second phase, which began after the 2001 crisis, was marked by a shift from state-centred to mass-based financialisation. The key developments during this period were the establishment of an inflation targeting system and the CBRT’s gaining independence from the government. It was also characterized by skyrocketing capital inflows.

    The third phase began after the 2008–09 global financial crisis and lasted until mid-2013. After 2001, policymakers repeatedly voiced concerns about creating alternative financing mechanisms for corporations. The government’s medium term responses to Turkey’s 2008–09 crisis focused on reinforcing securitisation and strengthening non-bank finance. The fourth phase of dependent financialisation, which began after 2013, is characterised by slow-motion drift. Household indebtedness peaked in 2013 before declining due to increasing nominal interest rates resulting from the adverse international financial conditions for ECCs after the Fed’s tapering. Turkey’s 2018–19 crisis had two distinctive features: first, public debt was not critically important. Second, the private sector’s unhedged foreign exchange dominated loans became the main driver of the deepening economic crisis following the currency crisis of 2018.” 

    Link to the text.

    +  “By the start of 2017, the banks controlled 81% of the financial sector’s total assets. Total bank loans have expanded even more dramatically: From a post-2001 crisis nadir of 17% of GDP to a post-2008–09 crisis zenith of nearly 70% in 2015.” A 2018 book chapter by Ali Riza Güngen and Thomas Marois examine changes in Turkey’s banking center since 2001. Link.

    +  “Turkish officials believe that high interest rates cause inflation, so they claim that there is causation in the other direction. Lowering interest rates, the Turkish authorities say, should reduce inflation.” Şebnem Kalemli-Özcan reflects on the neo-Fisherian origins of Erdoğan’s monetary policy. Link.

    +  Jennifer Hattam reports on the recent uptick in labor activity: “At least 108 strikes were staged in January and February—more than the average annual total seen in recent years.” Link.

    NEW RESEARCHERS

    Labor Mobility & Trade-in-Service

    Mathilde Muñoz is a PhD candidate at the Paris School of Economics. In her job market paper, she examines the labor effects of posting policies that allowed for trade-in-services across the EU. 

    From the abstract:

    “Are local services jobs, such as plumbers or drivers, sheltered from globalization? Posting policies, that were first introduced in the European Union, allow firms in one country to send (‘post’) their workers to perform such services in another country. I show that the staggered liberalization of posting to low wage countries permanently increased trade in services in Europe: 2% of EU GDP is offshored ‘on-site’ through posting, mostly in ‘non-tradable’ sectors, while within-EU geographic mobility is twice as large once accounting for posted workers. In receiving countries, domestic employment in exposed sectors and local labor markets differentially decreased following the liberalization. These market-level employment effects are driven by posted workers being substitutes for domestic blue collar workers at receiving firms, and posting services being cheaper. Firms in formerly ‘non-tradable’ sectors increase their sales, profits and wages when accessing foreign markets through posting. I finally quantify that the liberalization increased European consumers’ welfare by 0.3% on average. My results suggest that expanding the range of tradable jobs through posting policies, as proposed in several major recent trade agreements, hurts low-paid workers in high wage countries, benefits sending firms in low wage countries, and has small efficiency effects for consumers.”

    Link to the paper, link to Muñoz’s website.

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

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