Category Archive: Sources

  1. Ríos Navegables

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    This is an archived version of the PW Sources newsletter from Saturday, July 15. Sign up to receive PW Sources directly to your inbox here.

    DUTCH IMMIGRATION

    The Dutch coalition government collapsed last week, with Prime Minister Mark Rutte resigning after centrist coalition members refused to support highly restrictive policies for refugees. 

    In a 2020 chapter, RINUS PENNINX charts the history of post-war labor immigration in the Netherlands. 

    From the text:

    “By the end of the 1950s, the country’s postwar economic reconstruction was so successful that labour reserves decreased significantly and, in labour-intensive industries (metallurgy, food and textile industries and mining), it was difficult to find sufficient workers. From 1961, a state-organized official recruitment drive started to fill vacancies, mainly with un- or low- skilled workers. First came Italians, then Spaniards, Portuguese, Greeks and Yugoslavs; still later came Turks, Moroccans, Tunisians, and Algerians. Between 1961 and 1975, some 85,000 migrant workers were officially recruited until the drive was ended. However, many more came. Immigration Policy was dominated by the belief that foreign workers’ engagement was only temporary—which is why they were popularly called gastarbeiders (guestworkers). Initially (1960–1967) they were seen as a buffer for industrial sectors being restructured and for general fluctuations in economic activity. As a result of the brief economic recession in 1966/7, the concept of the foreign worker acting as a buffer receded but the temporary nature of ‘guestwork’ remained a basic policy premise. ‘The Netherlands is not an immigration country’ was the crucial sentence in the Memorandum on Foreign Workers of 1970. The government maintained that ‘guestwork’ would become redundant when the restructuring process was complete. During the boom years of recruitment (1969–1971), however, the stricter regulation of  admission proved to have little effect on the actual inflow of recruited workers. The increasing demand for labour made foreign workers indispensable until the economic crisis of 1973.” 

    +  “The Dutch government not only tried to prevent migration to the Netherlands; it also took measures to introduce settled immigrants to return. Even more ambitious was the idea of stimulating return migration by development programs for regions in the sending societies that were heavily dependent on migrant labor.” By Hans Van Amersfoort and Penninx. Link. 

    +  “Despite the fact that the Dutch job machine has been churning out jobs at a very high rate almost continually in the 1990s, unemployment among immigrants has remained relatively high.” By Robert Kloosterman, Joanne Van Der Leun, and Jan Rath. Link. 

    +  Aslan Zorlu and Joop Hartog on guest workers and “skilled” labor in the Dutch economy. Link. 

    NEW RESEARCHERS

    Climate change denial

    EDGARD DEWITTE is a PhD candidate in economics at SciencesPo Paris. In a recent paper, he explores the link between fossil fuel identities and beliefs around climate change.

    From the abstract: 

    “Almost half of U.S. citizens doubt the reality of human-made climate change, and this share has remained stable over the last three decades. This paper argues that the roots of this denial are, in part, to be found in the economic histories of communities. Using data on 3.6 million oil and gas wells drilled between 1859 and 2022, I show that long-term exposure to fossil fuel extraction negatively impacts present levels of climate change beliefs—independent of present production and employment. These effects are neither driven by ideological bundling of beliefs, nor by selective migration. Instead, building on archival and, in particular, historical local newspapers data, I document the development of persistent fossil fuel identities in communities linked to their extraction, and show how they interacted with the formation of beliefs.”

    + + +

    +  “As cash-rich institutions, multinational corporations are concerned not so much with access to funding but with obstacles posed by foreign exchange fluctuations, cash flows, and supply chain disruptions.” New on PW, Elham Saeidinezhad on the global payments system and the end of LIBOR. Link.

    +  “It’s more comfortable and politically convenient to continue to fight the culture war over higher education than to confront the facts about the causes and consequences of this ugly mountain of student debt.” In the New York Times, JFI’s Laura Beamer and Marshall Steinbaum on the student debt crisis. Link. And link to JFI’s report on the student loan repayment pause. 

    +  The thirtieth anniversary special issue of the Review of International Political Economy, featuring articles on gendered finance, Chinese high-speed rail, and company colonies, and more. Link. 

    +  “Honduras’ powerful elite families enjoy enormous tax privileges, and they have stridently opposed the introduction of progressive taxes.” By Sammy Castro. Link. 

    +  Ritu Dewan, Jashodhara Dasgupta, Sona Mitra, and Sruthi Kutty sketch out a feminist fiscal policy for India. Link.

    +  “Firms that used the Double Irish redirected $59 billion in royalty payments to the United States in 2020, the first year of full closure.” By Navodhya Samarakoon. Link. 

    +  Chiara Colesanti Senni, Maria Sole Pagliari, and Jens van‘t Klooster
    on the climate footprint of the European Central Bank’s Targeted Longer-Term Refinancing Operations program. Link.

    +  Saerom Han on “precarious workers’ collective actions” in Tunisia. Link.

    +  José Antonio Vega Araújo, Miquel Muñoz Cabré, Reinaldo Lerma, and Yismary Ramirez on “the social acceptance of wind energy among Indigenous Wayuu communities” in Colombia. Link.

    +  “From about the ninth century on, a geniza room was located in a synagogue in Fustat (old Cairo), where for centuries tens of thousands of documents were deposited. The room and its contents were eventually forgotten until the end of the last century, when the treasure was rediscovered. The geniza contains more than one thousand documents which reflect the eleventh-century Mediterranean trade. These documents depict this trade as free, private, and competitive. The authorities’ stance with respect to international trade reflected the tolerance and liberalism that characterized the period. Muslim rulers, especially the Fatimids (who ruled North Africa, Sicily, Egypt, and Palestine), sought to promote trade and no official restrictions fettered migration or the transfer of raw materials, finished goods, or money across the Mediterranean. Both transportation and mail delivery were competitive and largely private, and shipping was available even to a small merchant, who could rent storage space on a ship. The trade within each trade center was free and competitive, with many buyers and sellers interacting in bazaars and storehouses, where they negotiated and competed over prices, using brokers, open-bid auctions, and direct negotiation.” By Avner Greif. Link. 

  2. Domestic Movies

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    This is an archived version of the PW Sources newsletter from Saturday, July 8. Sign up to receive PW Sources directly to your inbox here.

    LAND REFORM

    Many post-colonial governments have attempted to pass land reforms to abolish feudal relations and promote equitable development. This process remains incomplete.

    In a 1996 article, REKHA BANDYOPADHYAY offers a global survey of land reform. 

    From the text:

    “Many countries experienced land reform along with revolution or just after revolution. Among them are China, Vietnam, Mexico, Bolivia, and Nicaragua. The non-revolutionary reform experiences originated either through the initiating efforts of allied occupational forces or through the re-organisational efforts arising out of decolonisation. Decolonisation induced reforms again varied according to the nature of involvement in and withdrawal of colonial power from the agrarian sector. In the cases of Algeria, Mozambiqie, and Angola, colonial rule introduced a settler population which was directly involved in the agrarian sector and introduced capitalism as the dominant mode of production co-existing with the indigenous traditional sector. In all these cases liberation came at the end of a bloody war after which the settlers felt sufficiently insecure in the face of a mobilised peasantry to abandon their farms quickly and seek refuge in the mother country, thus leaving a visible entrepreneurial vacuum in the agricultural sector. Similar direct involvement of settler authority had different types of implications on Kenya, Zimbabwe, and Tunisia because of gradual or ineffective withdrawal of colonial power. The countries where settler population had no direct involvement in the land but exercised their control over land through intermediaries can be grouped under a different category. In these countries the landlord group was allied to the colonial power and gave rise to an inefficient landownership pattern based on exploitation and maximal expropriation. All South Asian countries fall under this category: India, Pakistan, Sri Lanka, Philippines, and Bangladesh.” 

    +  “Achieving an equitable balance in racial and national land ownership has been a key political objective of Zimbabwe’s land reform program.” By Sam Moyo. Link. And Antonio J. Ledesma compares land policies between the Government of South Vietnam and the Viet National Liberation Front. Link. 

    +  “All land reforms in Latin America during the twentieth century, excepting the Cuban, have had the purpose of fomenting the development of capitalism in agriculture.” By Alain De Janvry and Lynn Ground. Link. And an article on  Santiago López Rodríguez, Xara Lucia Chamorro, Manuel Alejandro Noriega, and Jahnisi Arley Cáceres on militancy and land reform in Colombia. Link. 

    +  “J&K’s special status meant that unlike other states, the region’s land policies were not restricted by Article 19 of the Indian Constitution, which prohibited land redistribution without paid compensation to landowners.” A new PW essay by Sehar Iqbal examines land reforms and legal autonomy in Jammu & Kashmir. Link. 

    NEW RESEARCHERS

    Child penalty

    MARTINA UCCIOLOI is a Ph.D candidate in economics at Massachusetts Institute of Technology. A recent paper co-written with Ludovica Ciasullo studies how working arrangements affect maternal labor supply. 

    From the abstract: 

    “Which working arrangements do mothers prefer, and how do these working arrangements affect the child penalty they experience? The Australian 2009 Fair Work Act explicitly entitled parents of young children to request a (reasonable) change in working arrangements. Leveraging variation in the timing of the law, timing of childbirth, and the bite of the law across different occupations and industries, we establish two main results. First, if allowed to request a change in working arrangements, new mothers ask for regularity in their schedule. Second, with regular schedules, working mothers’ child penalty declined from a 47 percent drop in hours worked to a 40 percent drop. For the most exposed mothers, the Fair Work Act led to both a doubling in schedule regularity, and a 30 percent decrease in the child penalty in hours of work.”

    + + +

    +  “The possibility of a new solar crash, echoing that of 2010, haunts Spain’s solar sector.” Ahead of July’s parliamentary elections, a new PW essay by Paolo Gerbaudo examines the politics of Spain’s solar power generation. Link.

    +  “Jammu & Kashmir’s distinct distributional history is intimately linked to its regional autonomy.” Also new on PW, Sehar Iqbal challenges the Indian government’s narrative of Kashmir. Link.

    +  JFI’s Laura Beamer in the New York Times, Boston Globe, and Al Jazeera on the US Supreme Court student loan decision. Link, link, and link. And link to JFI’s report on the repayment pause. 

    +  “A public bank could assist with construction loans, convert multifamily housing into affordable housing stock, provide mortgage assistance, and create accessory dwelling units.” JFI and Berggruen’s joint series on public banking in Los Angeles featured in the LA Times. Link to the article, link to the series.

    +  Rory Pilossof on gender relations and labor supply in Zimbabwe. Link. 

    +  “The US gun crisis is Haiti’s gun crisis.” By Jan Critchfield and Danny Shaw. Link. 

    +  “We provide evidence that when employees have more face-to-face interactions with their managers, they are promoted at a higher rate.” By Zoë Cullen and Ricardo Perez-Truglia. Link.

    +  Rebecca Prentice and Mahmudul H. Sumon on labor precarity in Bangladesh. Link. 

    +  “Mass incarceration significantly drives poverty and hinders social progress by making it more difficult for formerly incarcerated individuals to find employment, vote, or access public benefits.” By Brianna Borrelli. Link. 

    +  Isaac Abotebuno Akolgo on fintech and financial inclusion in Africa. Link.

    +  “Senegalese habitants who profited from the enslavement of people were, in many cases, able to use the compensation process to access new ways of making returns on capital after abolition. Compensated emancipation released capital for reinvestment in real estate and other capital investments, as well as in new commodity frontiers, while the continuation of enslaved labor beyond the colony’s borders allowed both urban and rural elites a flexibility regarding the mechanisms of exchange, debt, labor, and credit that facilitated the groundnut boom.” By Bronwen Everill and Khadidiatou Diedhiou. Link. 

  3. Gulf Stream

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    This is an archived version of the PW Sources newsletter from Saturday, July 1. Sign up to receive PW Sources directly to your inbox here.

    SOVEREIGN CREDIT RATINGS

    Sovereign credit ratings—typically issued by Moody’s, Fitch, and Standard and Poor’s—strongly determine the volume of credit extended to a government and on what terms.

    In a 2017 article, ZSÓSFIA BARTA and ALISON JOHNSTON examine how credit rating agencies discriminate against left governments.

    From the text:

    “In our quantitative analysis, we test for the presence of partisan bias in the ratings of each of the big three credit rating agencies (CRA) over as well as the market’s pricing of sovereign risk to gauge the extent to which different market actors employ partisan discrimination. We find that CRAs discriminate against the left, but markets do so only insofar as they incorporate partisan-biased credit ratings into their decisions. We employ a linear probability model (LPM) panel analysis of negative ratings decisions by S&P, Moody’s, and Fitch for 23 Organisation for Economic Co-Operation and Development (OECD) economies from 1995 to 2014, and then compare these results with an identical (ordinary least squares [OLS]) panel analysis of spreads on long-term government bonds (a proxy of market attitudes toward sovereign creditworthiness) for the same sample. We find that, ceteris paribus, downgrades were more likely from S&P and Moody’s under left-controlled executives (i.e., executives headed by left prime ministers). Fitch does not display similar biases against left prime ministers in their (negative) ratings decisions, but they do exhibit partisan bias in downgrades against executives with strongly left-oriented manifestos and cabinets with high shares of seats occupied by left parties (i.e., single-party left administrations). In addition, the probability of negative rating changes is even higher for S&P and Moody’s upon the election of nonincumbent left governments.” 

    + “Credit ratings are systematically and significantly negatively correlated with entitlements.” From a 2020 paper by Barta and Johnston. Link. And see Barta’s 2022 PW essay on the “Big Three” ratings agencies and financialization. Link. 

    +  “If the G20 countries are serious about improving developing countries’ debt positions during the COVID-19 crisis, they should begin by supporting the temporary suspension of credit ratings.” By Jayati Ghosh. Link. 

    +  “Africa has witnessed an avalanche of premature downgrades, usually more than what would be justified by the countries’ economic fundamentals.” From the 2022 “Africa Sovereign Credit Rating Review,” by Misheck Mutize. Link. And Mutize on the need for an African credit rating agency. Link. 

    NEW RESEARCHERS

    Wind and solar energy

    NATALIA D’AGOSTI is a PhD candidate in economics at Rutgers University. In her job market paper, she explores how the growth of wind and solar energy effects affects the electricity supply market. 

    From the abstract: 

    “Using hourly production data from Uruguay, a country which currently has 94% of its grid green, I study its electricity transition to renewables. In particular, I quantify how an increase in wind and solar production first, displaces thermal, hydro, and biomass production. Second, I analyze how this transition reduces CO2 emissions in a context of large hydro production; and third how it affects spot prices. I find that the increase in wind and solar production has several positive effects, (i) a displacement of thermal production, especially in winter; (ii) a reduction in the CO2 emissions; (iii) a spillover effect to the region due to an increase in exports to Argentina and Brazil; (iv) a decrease in spot prices caused by the shutting-off of the most (marginally) costly plants. However, the increase in wind and solar production is not enough to eradicate thermal entirely. These results show what countries can expect from increasing their production in renewables, how renewables interact with other electricity sources, and its effect on emissions, and spot prices.”

    + + +

    +  “Over the past fifteen years, China’s parallel circuit of sovereign lending has emerged to sit uneasily alongside and largely disconnected from this regime.” New on PW, Nicholas Jepson examines Chinese and IMF-centered systems of lending. Link.

    +  “With no hard requirements to prioritize green investment, what will European countries do?” New on The Polycrisis newsletter, Kate Mackenzie and Tim Sahay on the prospects of a European green transition. Link. 

    +  Three on affirmative action: Danny Yagan on how affirmative action bans might reduce African American students’ applications to universities. Link. Rodrigo Zeidan, Silvio Luiz de Almeida, Inácio Bó, and Neil Lewis on affirmative action and Brazilian labor markets. Link. And Surendrakumar Bagde, Dennis Epple, and Lowell Taylor on how affirmative action at Indian engineering colleges increases attendance of female and disadvantaged caste students. Link. 

    +  Aditya Bahl on Indian capitalism and the Congress party. Link. 

    +  “China’s shadow reserves are big. Bigger than the formal reserves of the world’s second largest holder of reserves (Japan).” Brad Setser on China’s “shadow reserves.” Link. 

    +  “By contributing to significant changes in corporate strategies and governance through potential effects on jobs and wages, institutional investors in most OECD countries may have weakened the influence of trade unions.” By Yasmine Mohamed and Thibault Darcillon. Link. 

    +  Janet Muchai on Ghana’s public debt crisis. Link. 

    +  Yang He, Yun Ma, Meng Tang, and Lu Wang on local government debt and firm “zombification” in China. Link. 

    +  “The inter-regional competition between the US and the EU will also need to grapple with the current dominance of East Asia (Japan, Korea, and in particular China), in the production of components and related intermediates needed for the manufacture of EVs.”By Benjamin Jones, Viet Nguyen-Tien, Robert Elliott, and Gavin Harper. Link.

    +  “Despite the fact that the exact circumstances under which the mafia arose are not completely clear, we know that they thrived from offering protection to lemon and orange producers, from manipulating market prices, and from acting as intermediaries between producers and exporters. The protection services easily slipped into extortion where producers faced a direct threat of violence from the mafia if they refused to pay protection money. Why would the mafia focus on citrus production and not, for example, on the cultivation of wheat or wine? First, the market value and profitability of citrus fruits was unusually high at the time, certainly much higher than for basic food crops like wheat. Second, the large fixed costs associated with irrigation and the long time before trees matured, made producers sensitive to predation. A harvest of lemon fruits is very difficult to protect when the fruits are still on the trees. As a consequence, lemon groves were more vulnerable to predation, despite the frequent construction of walls and the use of dogs and guards.” By Arcangelo Dimico, Alessia Isopi, and Ola Olsson. Link. 

  4. Grasshopper

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    This is an archived version of the PW Sources newsletter from Saturday, June 24. Sign up to receive PW Sources directly to your inbox here.

    INDIA–US RELATIONS

    Indian Prime Minister Narendra Modi is currently on an official state visit to the United States. President Joe Biden is widely understood to be courting India as a strategic partner against China. 

    In a 2020 book, TANVI MADAN charts the tangled history of India-US-China relations from 1949 to the present.  

    From the text:


    “It was China, and not Pakistan’s military alliance with the US, as is commonly understood, that brought the Cold War to India’s doorstep. Between 1949 and 1956, China was a key driver of US-India divergence. The two countries’ differences were evident on questions such as the recognition of China, in the discussions over what to do about Tibet, and in the debate over China’s role in the Korean War. From 1956 to 1962, broad agreement on China was a significant reason for US-India engagement. There was a convergence on the nature and urgency of the China threat, as well as what was required to meet such a threat: close partnership with each other, and the strengthening of India’s military and economic capabilities. During the subsequent phase from 1963 to 1968, the two countries disagreed about the optimum balance of resources that should be devoted toward Indian development versus defense to strengthen the country against China. In a role reversal, the US believed that the China threat called for more Indian investment in its economy, and more American aid to India’s development rather than to its defense effort. On its part, the Indian government envisioned significantly more defense expenditure than before. Between 1969 and 1972, the US came to see India as hindering Sino-US rapprochement. After Sino-US rapprochement, between 1973 and 1979, the US framework for Asia reduced, if not eliminated, the US desire and need to seek an Indian role as a counterweight to China.” 

    + “Modi’s reinvention of India’s foreign economic policy, with its marked shift towards a new narrative of openness accompanied by a reticence to actually realize liberalization in key areas, were functions of a political compromise within his government and the broader Hindu nationalist movement, and of problems generated largely by China.” By Ian Hall. Link. 

    +  “For the last 20 years, the United States has mostly overlooked its divergences with India in multilateral forums as the relationship paid economic, strategic, and political dividends bilaterally.” By Chirayu Thakkar. Link. 

    +  “The Modi government will have to find a more nuanced and principled position on Ukraine if it does not want to see the G20 summit in September implode spectacularly in full public glare.” By Sushant Singh. Link. And seven scholars discuss the significance of Modi’s visit to the US. Link. 

    NEW RESEARCHERS

    Community water systems

    GRETCHEN SILEO is an assistant professor in economics at Temple University. In her job market paper, she compares proactive and reactive investment in community water systems.

    From the paper: 

    “Community water systems provide drinking water to over 310 million Americans, or about 94% of the population. In 2020, the Environmental Protection Agency found that 7% of community water systems reported at least one health-based violation. Each year roughly 19.5 million cases of waterborne illnesses can be attributed to contaminants in drinking water provided by water systems. Motivated by these facts, I construct a dynamic optimal stopping problem for water system managers to study managers’ proactive and reactive investment decisions, and whether infrastructure investments are sufficient for systems to provide safe drinking water now and in the future. The model is consistent with a number of empirical relationships that emerge from an analysis of data on infrastructure projects and water quality violations in Kentucky over 2007 2019. I then integrate these empirical relationships into the model and quantify the effectiveness of proactive and reactive projects. I find that proactive projects increase quality more than reactive projects for the same level of expenditure. I also determine that current levels of investment are insufficient to maintain water quality above health-based standards. Among a set of policy prescriptions that I consider, I find that subsidies for larger proactive projects lead to most systems overinvesting to maintain quality well above required levels, and leaves some systems vulnerable to extreme, unrecoverable emergencies.”

    + + +

    +  “Semiconductors have returned to their earlier status as a litmus test for symbol of American power and decline.” New on PW, Susannah Glickman on the history of Intel and US chipmaking. Link. 

    +  “The message from the global South is clear: Countries need more fiscal space to accelerate climate action and cannot achieve their policy objectives through austerity.” New on The Polycrisis, Patrick Bigger and Federico Sibaja on the Summit for a New Global Financing Pact. Link.

    +  Join JFI Friday June 30 at 1pm ET for a presentation and discussion on the mumbuca, a digital complementary currency introduced in Maricá, Brazil, as part of the city’s Solidarity Economy Program. Link to register for the event, and link to a new interactive report on the mumbuca, produced in collaboration with our colleagues at Fluminense Federal University. 

    +  “It’s going to quickly reverse all the progress that was made during the repayment pause.” The New York Times features JFI’s Laura Beamer on the end of the student debt repayment pause. Link. And read JFI’s report on the pandemic repayment pause, by Eduard Nilaj, Sérgio Pinto, Marshall Steinbaum, and Laura Beamer. Link.   

    +  “Central to platforms corporate political strategies is the use of corporate grassroots lobbying (CGL), the selection, mobilization, resourcing and coordination of ordinary users and grassroots allies to influence the public and policy-making process.” By Luke Yates. Link. 

    +  “The transition to digital mail scanning produces troves of location-based and textual data on senders and recipients, further expanding the reach of prison surveillance.” Phillip Vance Smith II on prison communication. Link. 

    +  “The Qualified Small Business Stock exclusion exacerbates U.S. income and wealth inequality by targeting a tax break toward savvy and already wealthy high-tech investors and (often repeat) entrepreneurs.” By Manoj Viswanathan. Link. 

    +  A report from the Private Equity Stakeholder Project on the funding behind Atlanta’s Cop City. Link. 

    +  “The relationship between the US and Brazilian labor movements has proven to be long-lasting and institutionalized, yet also adaptable.” By Jana Silverman and Stanley Gacek. Link. 

    +  Two by Jethro Norman, on how how foreign aid and investment shape political conflict in Somaliland. Link and link.

    +  “Although Papal public debt was similar to that of other states on the Italian peninsula and in Europe, the manner of government in the Papal States, verging on absolute, and the nature of its electorate, however, could not help but influence the governing of its finances. A common denominator of careful administration is evident in the public-debt policy of all of the popes. The differences in their policies did not derive primarily from the ‘twofaced’ papal sovereignty, which saw the pope, on the one hand, as the ruler of a medium-sized Italian state, and, on the other, as the source of livelihood for the Roman populace. A state’s condition depended on its location, the variety and organization of its culture, and the class alliances that its creators were able to forge. Consequently, the way in which rulers, particularly Rome’s, dealt with the problem of public debt depended on the general policy of state-building that they adopted. The Roman market was a paragon of effective public-debt management because of the confidence that the Apostolic Camera was able to inspire, thanks to its low risk and its high returns relative to those of other financial instruments (though, truth be told, the area presented few significant investment alternatives).” By Donatella Strangio. Link. 

  5. Prince of the Lake

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    This is an archived version of the PW Sources newsletter from Saturday, June 17. Sign up to receive PW Sources directly to your inbox here.

    INPUT-OUTPUT

    Wassily Leontief (1906–99) was a Russian-born American economist who pioneered Input-Output analysis, which models the interdependence of an economy’s various productive sectors.

    In a 1953 article, he examined the relation between domestic production and foreign trade in the US economy. 

    From the text:

    “Contrary to widely held opinion, our exchange of domestically produced goods for competitive imports serves as a means to compensate for the comparative shortage of our domestic capital supply and a corresponding oversupply of American labor. Let me merely mention here a few questions whose answers might be seriously affected by the results of this preliminary investigation. Foremost is the problem of the changing position of the United States in the natural resources—as compared with capital and labor—that dominated our early development and our trade relations with foreign countries up to about 1910. From the fact that at the present time capital appears to be comparatively more scarce than labor, one might surmise that this scarcity has dominated our entire economic development until now. This would mean that our capital supply, while steadily growing, has still not caught up with the increase in our labor force, if the peculiarly high effectiveness of that labor force is taken into account. A larger supply of domestic capital, if not matched by a corresponding increase in domestic manpower, will in any case reduce rather than increase the comparative advantage in labor supply on which our present exchange of goods and services with foreign countries seems to be based. In other words, a more rapid rise in our average productive investment per worker would diminish rather than increase the advantage derived by the United States from its foreign trade.” 

    + “Accelerated development in developing regions is possible only under the condition that from 30 to 35% and in some cases up to 40%, of their gross product is used for capital investment.” A 1977 report by Leontief on the world economy. Link. 

    +  “The new technology diminishes the role of human labor in production to such an extent that it is bound to bring about not only long- run technological unemployment, but also a shift toward a more skewed and, because of that, socially unacceptable distribution of income.” A 1983 paper by Leontief on automation. Link. 

    +  “Leontief used the Soviet interest in input-output to plead his case for more funding and government investment in assembling the data needed to introduce more planning to the United States.” By Yakov Feygin. Link. A recent paper by Isabella Weber, Jesus Jauregui, Lucas Teixeira, and Luiza Nassif Pires takes an I/O approach to inflation and “sectorally significant prices.” Link. And a collection of papers by Leontief that use input-output models. Link. 

    NEW RESEARCHERS

    Electronic Tax Filing

    OYEBOLA OKUNOGBE is an economist in the World Bank Development Research Group. In a recent paper, she and co-author Victor Pouliquen examine how electronic tax filing has reduced corruption in Tajikistan.

    From the abstract: 

    “Many e-government initiatives introduce technology to improve efficiency and avoid potential human bias. Using experimental variation, we examine the impact of electronic tax filing (to replace in-person submission to tax officials) using data from Tajikistan firms. E-filing reduces the time firms spend on taxes by 40 percent. Further, among firms previously more likely to evade, e-filing doubles taxes paid. Conversely, evidence suggests that e-filing reduces tax payments among firms previously less likely to evade. These firms also pay fewer bribes, as e-filing reduces extortion opportunities. These patterns are consistent with differential treatment of firms by tax officials prior to e-filing.”

    + + +

    +  “Those countries that were quick to respond in unity to Russia’s invasion of Ukraine have been much slower to attend a summit addressing developing nations’ concerns about finance.” New from The Polycrisis newsletter, Kate Mackenzie and Tim Sahay on the New Global Financing Pact. Link. 

    +  “What BlackRock wants for their investment products is very different from how the IRA is structured.” Also new on The Polycrisis, a transcript of a panel discussion on “the varieties of derisking,” featuring Skanda Amarnath, Melanie Brusseler, Daniela Gabor, Chirag Lala, and JW Mason. Link. 

    +  “Focusing on child welfare and supporting families has been a really big selling point.” Two in the New York Times featuring JFI’s Halah Ahmad on Colorado’s new Child Tax Credit program. Link and link. 

    +  Melanie Ford Lemus on urban water infrastructure in Guatemala City. Link. 

    +  “The paper uses fifty social tables, ranging from Greece in 330 BC to Mexico in 1940, to estimate the share and level of income of the top 1 percent in pre-industrial societies.” By Branko Milanović. Link. 

    +  Krista Brown on Live Nation/Ticketmaster’s dominance of the live event industry. Link. 

    +  Velomahanina Razakamaharavo and Lalatiana Rakotondranaivo on the colonial legacy of Madagascar’s new foreign investment law. Link. 

    +  “Our evidence suggests that the Mexican Drug War affected local export growth by eroding the accumulation of productive capital, which in turn limited potential gains in labor productivity.” By Jesús Gorrín, José Morales-Arilla, and Bernardo Ricca. Link. 

    +  Andrew McNeil, Davide Luca, and Neil Lee on “birthplace economic adversity” in the UK. Link. 

    +  “Since the Treaty of Lisbon, the European Union already claims the following responsibilities: everything concerning the common market; key areas of economic, heath, industrial, regional, educational, pensions, and youth policies. Environment, climate, energy, research, technology, consumer protection, immigration and asylum, civil law, criminal law, internal security—no field is left untouched. The numerous examples speak for themselves. For instance, limits are laid down for ‘hand, arm and overall body vibrations’ for someone working with a pneumatic drill. But the Commission also passes judgement on rules for dentures. Which cheese is matured in brine has to be noted on the packaging. The case of the cucumber regulation (1677-88) has become famous. It rules that the ‘Extra’ grade of this vegetable many only be offered for sale if the curve does not not exceed 10 millimeters for every 10 centimeters. The producers’ associations of some countries with large agricultural sectors not only supported these criteria but also vigorously defended them. Only after 20 years was the Commission willing to abolish it, along with 25 of the 36 rules it had invented for beans, cauliflower and melons.” By Hans Magnus Enzensberger. Link. 

  6. Overpass

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    This is an archived version of the PW Sources newsletter from Saturday, June 10. Sign up to receive PW Sources directly to your inbox here.

    SNAP

    The farm bill, an omnibus package of legislation passed every five years, is due for reauthorization in September. Funds for the Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps, are tied to the bill. 

    In a 2019 article, MARION NESTLE charts the intertwined political history of the Farm Bill and SNAP.

    From the text:

    “SNAP may be critical to the health of participants, but it has always been subject to rules and funding set by congressional agriculture committees whose primary mandate is to promote agribusiness. This odd situation is attributable to to the program’s increasing integration into Farm Bills. Although Congress passed food stamp legislation in 1959, the program was not implemented until 1964, when President Lyndon B. Johnson orchestrated classic political ‘logrolling.’ Urban Democrats agreed to vote for wheat and cotton legislation only if rural Democrats would agree to vote for food stamps. As passed, the purpose of the Food Stamp Act of 1964 was to permit low-income households to ‘receive a greater share of the Nation’s food abundance.’ The act eliminated the surplus commodity requirement, excluded imported foods, and required participants to use the stamps only at qualified grocery stores at prevailing retail prices—a loss for farmers, but a win for retailers. After 1964, as the program grew in coverage and cost, Congress responded by introducing tighter eligibility standards, work requirements, penalties for nonworking participants, and measures to ensure accountability and prevent fraud. Congress also increasingly embedded food stamps in Farm Bills. The 1973 Farm Bill amended the 1964 Food Stamp Act, adding imported foods to the list of eligible items. The 1977 bill incorporated the entire Food Stamp Act as a separate title for ‘raising levels of nutrition among low-income households,’ and the 2008 bill renamed the program SNAP in view of its nutritional purpose and the replacement of stamps by EBT cards.” 

    +  “The outlook for any future farm bill necessarily begins with the political climate for SNAP in the House, the Senate, and the White House.” By Jonathan Coppess. Link. 

    +  “The 2023 fiscal year estimated SNAP spending is more than double the annual spending pre-COVID-19.” By Rosalie A. Peng. Link. And Jeehoon Han on SNAP work requirements. Link. 

    +  “Food assistance programs, such as SNAP, operate on a scale large enough to influence the overall economic viability of full-service grocery retailers in low-income neighborhoods.” By Helen H. Jensen and Parke E. Wilde. Link. 

    NEW RESEARCHERS

    Brazilian labor markets

    LARISSA da SILVA MARIONI is a senior economist at the National Institute of Economic and Social Research in London. In a recent paper, she examines under- and overeducation in Brazilian labor markets.

    From the paper: 

    “This paper examines the educational mismatch in a developing country and its effects on wage differentials. Using an employer-employee panel dataset for Brazil, I estimate the effect of under- and overeducation on workers’ wage. Moreover, I offer a first pass on the effects on aggregate wages by assessing the impact of correcting the mismatch. The results show that half of the Brazilian formal labour market is mismatched, with similar proportions of under- and overeducated workers. While overeducated workers suffer from a wage penalty, compared to their well-matched counterparts with the same educational level, undereducated workers receive a wage premium. The penalty for overeducation is half of the wage premium for going to university. That is, being overeducated only gives you half the wage premium for going to university and being undereducated only gives you half the wage premium for being in a job that requires going to university. Furthermore, I find that correcting the educational mismatch by reassigning workers into different jobs would increase aggregate wages, while switching their education would decrease aggregate wages.”

    + + +

    +  “Beneath the smoke and mirrors of US politics, a central proposition of ESG is being contested: namely, that investors can simultaneously do good (support sustainability) and do well (achieve profitability).” New on PW, Claire Parfitt and Gareth Bryant on ESG and defining risk. Link. 

    +  Watch a recording of this week’s Polycrisis panel on “the varieties of derisking,” featuring Skanda Amarnath, Melanie Brusseler, Daniela Gabor, Chirag Lala, and JW Mason. Link. 

    +  In the New Yorker, Zachary Carter profiles Isabella Weber. Link. See Weber’s op-ed on strategic price controls and her paper on sellers’ inflation, co-authored with Evan Wasner. Link, link. And read Weber’s two essays for Phenomenal World, on WWII price controls and global trade hierarchies. Link and link. 

    +  Suravee Nayak on a just transition in India’s coal fields. Link. 

    +  Franco Galdini on land decollectivization and the “Uzbek model.” Link. 

    +  “Ghana’s current bailout was necessitated by a combination of global shocks, as well as domestic factors, primarily a spending spree by the administration of President Nana Akufo-Addo that drove record levels of debt accumulation.” By Nana Ama Agyemang Asante. Link. 

    +  Myriam Vander Stichele on how Shell’s shareholders have chosen to “sacrifice the energy transition.” Link. 

    +  Nancy Folbre, Shawn Fremstad Pilar, and Gonalons-Pons offer an expansive view of care provision in the US. Link. And listen to an Odd Lots episode on broken care infrastructure. Link. 

    +  “Perhaps the most important product of the Roma’s educational exclusion is their economic marginality. One of the main features of the ongoing economic transformations in eastern Europe is the trimming of the labor force, a process that particularly affects unskilled laborers. Because 70-80 percent of the Roma are unskilled and because of deep-rooted prejudices in personnel departments, the Roma are nearly always the first to be dismissed. As a result, Romani unemployment has skyrocketed and averages 60-70 percent across the region although in some areas it approaches 100 percent. While in some countries, especially in the Czech Republic, Poland and Romania, xenophobes have claimed that some Romas’ ostentatious lifestyles are supported by black marketing, wealthy Roma are extremely rare. The circle of inadequate education and economic exclusion is completed by crime. Since the revolutions of 1989 crime rates have risen precipitously and, to a large extent, the Roma have been blamed for this phenomenon.” By Zoltan D. Barany. Link. 

  7. Jirijirimo

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    This is an archived version of the PW Sources newsletter from Saturday, June 3. Sign up to receive PW Sources directly to your inbox here.

    THAILAND’S ROYALS

    Last month, the liberal Move Forward party won the most seats in Thailand’s central elections. Its policy proposals include amending the lèse majesté law, which imposes long jail sentences on those convicted of insulting the royal family.  

    In a 2022 book, PUANGCHON UNCHANAM explores the financial basis of the Thai royal family’s power:

    From the text:

    “Under the facade of the ‘constitutional monarchy,’ the Thai crown since the late twentieth century has de facto played a hegemonic role in the economic, political, and cultural realms of the Thai state that might be supposed to be occupied by the bourgeoisie. In the national economy, the monarchy is simply the biggest capitalist enterprise in Thailand. King Rama IX was ranked in 2008 the richest royal in the world thanks to his estimated fortune of US $30 billion. Ascending the throne in 1946, during a nadir in the fortunes of the Thai monarchy, Rama IX and his royal family were able to regain their wealth a few decades later due to the business success of the Crown Property Bureau (CPB). As the largest corporate group not only in Thailand but in all of Southeast Asia, the CPB not only owns the largest and most valuable collection of commercial land in Thailand, but it also the biggest stockholder in the Siam Commercial Bank and the Siam Cement Group, respectively one of the country’s four latest banks and its largest industrial conglomerate. The wealth of the king is even more astonishing. When Rama IX breathed his last, he reportedly left both his role as monarch and the wealth of his throne, which according to different analysts varied between US $30 billion and US $60 billion, to his heir apparent. With this new fortune, the new monarch of Thailand could be numbered among the world’s richest capitalists along with Warren Buffet, Bill Gates, and Mark Zuckerberg.” 

    +  “The Crown Property Bureau not only emerged from the 1997 Asian financial crisis bigger and stronger, but changed in another way. It became less parochial, more international.” By Porphant Ouyyanont. Link. 

    +  “From the 1980s, the wealth of military figures was largely ‘out of the barracks’ as activities and prospects changed with the diversification of the economy.” By Ukrist Pathmananda and Michael K. Connors. Link. And Paul Chambers on military capitalists in Thailand and Myanmar. Link. 

    +  “In Thailand, before an election, stocks which are linked to politics are bought and sold in unusually large quantities and values.” By Sarinee Achavanuntakul, Nathasit Rakkiattiwong, and Wanicha Direkudomsak. Link. 

    NEW RESEARCHERS

    Informality & Trade Liberalization in Peru

    CAMILA CISNEROS-ACEVEDO is an assistant professor of economics in the University of Tübingen. In a recent paper, she explores the effects of trade liberalization on informal employment in Peru.

    From the abstract: 

    “This paper studies the effect of an increase in import competition on informality along two margins. It considers the extensive margin, where workers are hired by unregistered employers, and the intensive margin, where even though jobs are carried out by registered firms, employees are off the books. Peru’s relentless informal employment and its unprecedented trade-driven growth provides an ideal case study. Using a rich household survey, this study finds that exposure to trade impacts on informality through two competing and contrasting mechanisms. On the one hand, extensive-informal employment declines as unregistered employers shrink or exit due to their low productivity. On the other hand, intensive-informal employment rises as registered employers reduce costs by hiring informal workers. Furthermore, results suggest that the intensive margin drives the overall effect. Hence, trade liberalization increases informality.”

    + + +

    +  Join the Polycrisis on Tuesday June 6 at 10 am ET for a panel on “the varieties of derisking,” discussing industrial policy, state capacity, macrofinance, and the green transition. The event will feature Skanda Amarnath, Melanie Brusseler, Daniela Gabor, and Chirag Lala, and it will be moderated by JW Mason. Register here, and read the panel brief here. 

    +  “If New Deal liberalism amounted to a diluted version of European social democracy, then supply-side progressivism is the American analogue of indicative planning.” New on PW, Justin Vassallo on Brent Cebul’s Illusions of Progress. Link. 

    +  “Efforts at economic transformation have historically been curtailed by a grave underestimation of the necessary scale and scope of the policy interventions.” Also new on PW, Isabel Estevez on development economics and industrial policy. Link. 

    +  Watch a recording of a conversation on “stewarding” the energy transition, featuring Madison Condon, Benjamin Braun, and JFI’s Nolan Lindquist. Link. And sign up for updates from the Center for Active Stewardship here. 

    +  “To African partners, Western engagement on the continent feels one-sided, insufficient, cumbersome, and oftentimes hypocritical.” JFI Fellow Theophile Pouget-Abadie and Atlantic Council Senior Fellow Rachel Rizzo on the battle for Africa’s green future. Link. 

    +  Tanya Matthan on “neoliberal interventions” in Indian agriculture. Link. 

    +  “Far from being a simple shortcoming, money laundering and illicit financial flows in the Baltic states are products of dependent financialization.” By Leonardo Pataccini. Link. 

    +  Evgeny Morozov on artifical intelligence and the new Cold War. Link. 

    +  “Is independent Sudan’s history the haunted tale of military generals meeting their fates on the economic paths they were trying to avoid?” By Selma El-Obeid. Link. 

    +  “Mass betting was the most successful example of working-class self-help in the modern era. It was at every stage a proletarian institution and bore all the characteristics of the British working class. Although illegal it was almost entirely honest; its corruption was confined to corrupting the police and it provided few opportunities for petty or large-scale crime. To some working-class families like the Stoddarts, it brought great wealth, to others some money to throw around and a certain flashy style. To the unemployed it sometimes meant a temporary job, and young boys were able to scrape a bit extra by operating on its margins. It is very difficult to say how many were employed in any capacity at all by gambling: the whole of the full- and part-time fraternity at most numbered 100,000, and probably considerably less.” By Ross McKibbin. Link. 

  8. Yesterday, Today, Tomorrow

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    This is an archived version of the PW Sources newsletter from Saturday, May 27. Sign up to receive PW Sources directly to your inbox here.

    DOLLAR HEGEMONY

    Since the invasion of Ukraine, a growing financial alliance between Russia and China has prompted discussions around threats to US dollar hegemony. But despite the rise of the Renminbi and other currencies, many argue that the dollar remains dominant.

    In a 2014 article, CARLA NORRLOF examines the power structures that have made dollar hegemony “persistent.”

    From the text:

    “By threatening, rewarding or persuading countries to choose a strategy other than their preferred one, the American government can preserve or raise private use of dollars as a unit of account. For example, as the single most coveted export destination in the world, the United States can threaten market closure, or promise increased openness, to incite others to open their markets or allow American firms to invest or open subsidiaries abroad. The United States could put pressure on other governments to adopt the dollar as the official unit of account by providing incentive to track the dollar. One way to achieve this would be to encourage ‘dollarization’—the wholesale adoption of the dollar as medium of exchange, unit of account and store of value—within a local economy so that the dollar would effectively become the official unit of account. In other cases, the United States has applied pressure to convince governments to adopt an alternative unit of account—for example loosening the renminbi’s quasi-fixed exchange rate regime against the dollar by branding China a ‘currency manipulator’ a threatening trade retaliation.” 

    +  “The renminbi’s share of trade finance has more than doubled since the invasion of Ukraine.” A policy brief by Otaviano Canuto. Link.  

    +  “For China to upend the dominance of the US dollar and replace it (even partially) with the renminbi would require major —and probably disruptive —changes in China’s financial markets and monetary policies.” Michael Pettis in 2022. Link. And a recent Foreign Affairs piece by Norrlof questions the probability of de-dollarization. Link.  

    +  “If we are in a new era called Bretton Woods III, it is the most weaponized form of the global dollar system yet.” Mona Ali’s 2022 essay in PW. Link. And for more on dollar hegemony, see past Phenomenal World essays by Yakov Fegyin, Dominik Leusder, and Herman Mark Schwartz Link, link.

    NEW RESEARCHERS

    Agricultural shocks

    PIERRE E. BISCAYE is a PhD candidate in agricultural and resource economics at UC Berkeley. In his job market paper, he explores the 
    relationship between agricultural shocks and conflict across Africa and the Arabian Peninsula.

    From the abstract: 

    “This paper tests the importance of changes in opportunity costs related to agriculture on the risk of violent conflict using data on locust swarms and conflict collapsed to annual 0.25 (approx. 28km2) grid cell observations across Africa and the Arabian peninsula. The identification exploits exogenous local variation in locust swarm exposure driven by patterns in swarm movements together with weather controls and grid cell and country-by-year fixed effects to identify causal impacts of these agricultural shocks. Locust swarms decrease the likelihood of violent conflict event in a given year by around 20%. Effects are driven by areas with crop and pasture land, and there is no evidence of conflict spillovers to nearby areas. The impacts are largest for swarms that arrive in the off-season or planting season for major crops, based on national crop calendars, and the patterns are not consistent with effects on conflict driven by changes in conflict opportunity costs related to agriculture. This points to the availability of non-agricultural livelihood opportunities and to alternative factors such as psychological impacts and relief efforts less often discussed in this literature as crucial in determining whether an agricultural shock increases conflict risk. In contrast to short term negative effects on conflict, cells affected by the 2003-2005 major desert locust upsurge were 62% more likely to experience any conflict in a given year afterward.”

    + + +

    +  “By removing incentives for market makers, regulators are harming market liquidity as we know it.” New on PW, Elham Saeidinezhad interviews Doug Cifu, the CEO of Virtu Financial, on newly proposed SEC regulations. Link. This interview is the latest from Saeidinezhad’s new series on market microstructures, examining the origins of financial crisis and market stability. Read the rest of the series here.

    +  “The ECB’s 2009 refusal to support struggling member states stands as an exception in twentieth-century central banking practice.” Also new on PW, Will Bateman and Jens Van ‘t Klooster on the now “taboo” practice of monetary financing—issuing public money for public expenditure. Link. 

    +  On Tuesday, May 30 at 12 pm ET, join JFI and the Center for Active Stewardship for a conversation on “stewarding” the energy transition, featuring Madison Condon, Benjamin Braun, and JFI’s Nolan Lindquist. Register here. 

    + “The LA Department of Water and Power must make large scale investments into developing both new generation sources and capacity. This is a significant financing challenge that could be a major, or even exclusive, purpose of a Los Angeles Municipal Bank or Lending Fund.” The latest from JFI and Berggruen’s joint report series, by Yakov Feygin, Chirag Lala, Leila Lorenzo, and Patrick Robbins. Link. 

    +  Luisa Palacios on the ESG risks of national oil companies. Link

    +  “With modest income differences and virtually no private wealth four decades ago, China’s inequalities of income and wealth are now almost as extreme as in the United States and Russia.” By Andrew G. Walder. Link.

    +  Katrina Burgess and Javier Corrales on “traumatic decarbonization” in Venezuela and Ecuador. Link. 

    +  “A paternalist political rationality, which melds paternalist logics in neoliberalism and the government’s Hindutva civilizationalist politics, underpins India’s flagship economic policy.” By Priya Chacko. Link. 

    +  “Target countries are not the only ones feeling the economic effects of sanctions: senders also pay a price.” By Jerg Gutmann, Matthias Neuenkirch, and Florian Neumeier. Link. 

    +  “In the Mughal military establishment, the responsibility for maintaining soldiers, war-animals and servants was delegated to the rank-holding officials of the state (mansabdars) on the basis of guidelines issued by the imperial administration. The officials held a dual rank (mansab). Their personal rank (zat) denoted their position in the administrative hierarchy by a number (5,000 zat, for instance), and their obligation to maintain soldiers and war animals in their personal contingent (khasa). Their military rank (sawar) determined the number of cavalry troopers (tabinan) they were expected to bring to muster (5,000 sawars, for instance). The mansabdars received separate salaries and allowances for zat and sawar in accordance with their personal ranks, ethnic groupings, the number of cavalry troopers they theoretically maintained or brought to muster and the number and quality of horses (both khasa and tabinan). It was out of these salaries and personal allowances that the wages of the labour force employed in the military sector were paid.” By Najaf Haider. Link. 

  9. Palissade de Chantier

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    This is an archived version of the PW Sources newsletter from Saturday, May 20. Sign up to receive PW Sources directly to your inbox here.

    IMPERIAL LABOR TIME

    The first international labor convention in 1919 declared the adoption of an 8-hour work day or a 48-hour work week. But for decades following, labor time standards varied greatly throughout European colonies, reflecting different forms colonial rule across and within empires.

    In a new paper, MAGNUS BERGLI RASMUSSEN and CARL HENRIK KNUTSEN explain how the First World War marked a turning point in imperial labor regulation. 

    From the text:

    “The finding that colonial empires—often built off the back of forced local labor or other labor exploitation—would regulate work hours may appear very surprising. We do show that European colonial empires were, historically, less likely to regulate work hours, but only up to a certain point in time. In the 19th and early 20th centuries, independent countries were, on average, more likely to standardize working hours compared to colonial possessions. Starting in 1919, however, our new data show that regulations in colonies started to catch up and eventually even outpace those in independent states. To help explain the inflection point and trends of convergence after 1919, we argue that colonial administrators were more likely to accept working time standardization once they faced increased costs and challenges of different kinds—internationally, in the metropole, or in the colony—from continuing the status quo policy. Plausible candidates for major such costs and challenges increasing after 1919 include: 1) costs of repression to maintain labor exploitation are high, facilitating the need to establish voluntary labor markets and labor codes, 2) international legitimacy challenges arise (when combined with the metropole’s minimum level of sensitivity to international norms), 3) domestic legitimacy challenges to imperial rule at home arise, following democratization or increasing worker power in the metropole, 4) the need to co-opt native worker movements is high (following a regime threat), and, finally 5) as result of political inclusion of native groups in colonial rule.” 

    +  “None of the pre-war ILO regulations applied applied to situations which that organization considered universal and normal in the neocolonial world, such as regulating work hours and providing for social security.” By Frederick Cooper. Link. 

    +  “Evidence from planters’ own documents as well as from other sources strongly suggests that planters had to negotiate wages, hours, and benefits with their former slaves, and that they objected to their recently diminished authority.” By Madhavi Kale. Link. 

    +  “The conquest of the eight-hour day became the norm between 1917 and 1919, in the wake of the revolutions in Russia and in Germany.” From Pietro Basso’s Modern Times, Ancient Hours: Working Lives in the Twenty-First Century. Link. 

    NEW RESEARCHERS

    Divided cities in Europe

    KETEVANI KAPANADZEIS is a PhD student in the Center for Economic Research and Graduate Education in Prague. In her job market paper, she explores the spatial concentration of economic activity in formerly divided European cities. 

    From the abstract: 

    “This paper explores a unique quasi-natural experiment of opening borders within cities that were historically a single urban entity and were divided due to border shift  following major historical conflicts. After inter-city borders were opened, I find that local economic activities, measured by remotely sensed nightlight, became more concentrated close to the pre-division city centers. This raises an important question: what type of border opening is more important in spurring agglomeration, the free movement of goods or of people? When looking into potential mechanisms behind the impact, using national business register databases, I find that proximity to former historical centers is more prominent, particularly after allowance of the free movement of people as a part of the Schengen agreement in 2008, whereas gaining broader market access following the 2004 EU enlargement is less important. I account for two main channels. First, I show that firms in the consumption sectors are more exposed to the free movement of people and are more likely to start operating closer to historical city centers than are firms in the production sectors, which are less affected by local market potentials. Second, I show that cities in which cultural and language differences are not barriers to cross-border cooperation are more influenced by the free movement of people than cities where these barriers still exist.”

    + + +

    +  “Green industrial strategy as implemented in the US is bigger than in Europe, more impactful than in Australia, Canada or India, and more reliant on private sector investment than in Japan, Korea, or China.” New on The Polycrisis, Lachlan Carey on the IRA & Biden’s climate spending. Link. 

    +  “While the New Washington Consensus offers allies carte blanche on the interventionist economic tools they seek to apply domestically, it’s up to them to ‘crowd in’ private investment and find fiscal space.” Also new from The Polycrisis newsletter, Kate Mackenzie and Tim Sahay on the new Washington Consensus. Link. 

    +  Phenomenal World is hiring an editorial intern for the summer. This part-time, paid opportunity is open to all CUNY undergrads. See more details and apply here. 

    + “A Los Angeles public bank could finance the transition of nearly 1,500 workers to shared business owners within the first ten years.” The latest from JFI and Berggruen’s joint report series, by Halah Ahmad, Yakov Feygin, Jack Landry, Alison Lingane, and Eric Medrano. Link. 

    +  Amita Arudpragasam on the economic crisis in Sri Lanka’s northern and eastern regions. Link

    +  Two on pharmaceuticals. A report from American Economic Liberties Project and I-MAK on how the pharmaceutical industry perpetuates monopolies. And Amy Kapczynski on the political economy of market power in pharmaceuticals. Link and link. 

    +  “The employment-related costs for mothers of providing unpaid care to minor children and parents, parents-in-law, and spouses (including unmarried partners) with care needs average $295,000 over a lifetime.” By Richard W. Johnson, Karen E. Smith, and Barbara A. Butrica. Link.

    +  Yanis Varoufakis on central bank digital currencies. Link. 

    +  “Overall defense spending of NATO plus candidate Sweden will top 1.2 trillion euros, or 2.6% of total GDP.” By Florian Dorn, Niklas Potrafke, and Marcel Schlepper. Link.

    +  “The 1903 Herrán-Hay Treaty offered Colombia a $10 million one-off payment for the right to build and operate the Panama Canal and, once the canal was operating, an annual payment of $250,000 for 14 years. The treaty was rejected by Colombia’s congress, and in November 1903 the U.S. government supported the secession of Panama and subsequently negotiated construction of the canal with Panama’s. After Panama’s secession the relationship between Colombia and America soured. Between 1903 and 1913 the only attempt to normalize Colombian-American relations was the 1909 Root-Cortez agreement that offered Colombia $2.5 million in reparation to U.S. support to Panama’s secession. The small amount the treaty involved caused fury in Colombia’s congress. Rafael Reyes, Colombia’s president, who had negotiated the agreement, was accused of treason, and under mounting pressure, resigned and left the country in exile.” By Xavier Duran and Marcelo Bucheli. Link. 

  10. Nurses and Cranes

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    This is an archived version of the PW Sources newsletter from Saturday, May 13. Sign up to receive PW Sources directly to your inbox here.

    LATE INDUSTRIALIZATION

    Alice H. Amsden (1943-2012) was a pathbreaking developmental economist who examined East Asia’s economic rise in the late twentieth century. 

    Her classic 1992 study, Asia’s Next Giant: South Korea and Late Industrialization, argued that state involvement was key to the country’s growth. 

    From the text:

    “South Korea’s growth is a classic example of late industrialization. It has involved a high degree of state intervention to get relative prices “wrong” in order to overcome the penalties of lateness, the growth of large diversified business groups to transcend the hardships of having to compete without the advantages of novel technology, the emergence of salaried managers responsible for exploiting the borrowed technology, and a focus on shop floor management to optimize technology transfer. In other countries—in Turkey and India, for example—subsidies have been dispensed primarily as giveaways. In South Korea the wrong prices have been right because government discipline over business has enabled subsidies and protection to be less than elsewhere and more effective. If the big business groups of South Korea have been loaned long term capital at negative real interest rates, the government has demanded that they use the borrowed capital productively, not speculatively. If they have been allowed to sell in protected domestic markets, they have had to produce and sell in the export market. Discipline over business as well as labor provided the starting point for high growth rates of productivity, which allowed Korea to borrow extensively in international capital markets without overextending itself financially.” 

    +  “The transition in Taiwan from inward foreign investment, to national ownership, to outward foreign investment by nationally owned firms was systematically planned and institutionally driven.” From Amsden and Wan-wen Chu’s Beyond Late Development: Taiwan’s Upgrading Policies. Link. 

    +  “The rise of the financial services sector, the triumph of the Treasury over the State Department in foreign economic affairs, and the plunge in Third World growth rates are all closely connected.” From Amsden’s Escape From Empire: The Developing World’s Journey through Heaven and Hell. Link. 

    +  “Amsden found that foreign investors typically arrived on the scene after an industry had already been started, and the progression from the arrival of foreign investment to the emergence of nationally owned firms did not occur spontaneously.” By Justin Lin. Link. And Antonio Andreoni and Ha-Joon Chang on Amsden’s legacy for a new developmentalist agenda. Link. 

    NEW RESEARCHERS

    Drug Cartels in Mexico

    ITZEL DE HARO LOPEZ is a PhD student at the department of agricultural and applied economics at the University of Wisconsin-Madison. In her job market paper, she explores the relationship between trade and crime in Mexico’s avocado sector. 

    From the abstract: 

    “This paper aims to answer whether declining drug revenues have motivated cartels to target licit businesses, such as avocado farms, rather than continue specializing in the production and distribution of illicit drugs. To do this, I exploit exogenous variation in the demand for pure heroin in the U.S. between 2011 and 2019. In particular, I use the introduction of Fentanyl in the U.S. as a proxy for the reduction in the demand for pure heroin in Mexico to answer whether this led to an increase in homicides and cartel presence in avocado and poppy-growing municipalities. Using municipal level data, I show that the decrease in the demand for heroin increased homicide rates (including those of agricultural workers) in avocado-growing municipalities. I find no evidence of higher cartel presence in these municipalities, suggesting that, while DTOs do not seem to be moving into these municipalities, they have become more violent toward civilians. Furthermore, I find that the fall in the demand for heroin led to a decrease in cartel presence and homicide rates in poppy-growing municipalities. Overall, this paper provides evidence of inter-sector spillovers resulting from drug demand changes.”

    + + +

    +  Phenomenal World is hiring an editorial intern for the summer. This part-time, paid opportunity is open to all CUNY undergrads. See more details and apply here. And please share widely!

    +  “Surveying the contemporary landscape of sovereign debt and IMF lending programs reveals pervasive inequalities in the Bretton Woods system.” New on PW, Mona Ali on reforming the IMF. Link. 

    +  “In the contemporary global economy, asset prices are much more sensitive to interest rate adjustments than consumer prices.”Also new on PW, Josh Ryan-Collins on the paradox of contemporary monetary policy. Link. 

    + “A public bank in Los Angeles could support the city’s broader infrastructure, housing, and sustainability goals.” The second publication in JFI and Berggruen’s joint report series on public banking in Los Angeles, by Halah Ahmad, Jack Landry, and Paul Williams. Link. And read the latest release by Michael McCarthy on democratic governance for public banks here. 

    +  Shahla Al-Kli and Jared Miller on decarbonization and political transformation in Iraq. Link

    +  “Brexit has blown a sizeable hole in Britain’s economic model, and major reforms are needed to recover lost ground.” By John Springford. Link. 

    +  Matthew Archer on the “green spirit” of asset manager capitalism. Link. And see a 2021 PW essay on asset managers, by Benjamin Braun and Adrienne Buller. Link. 

    +  “The report concludes that the small amount of revenue LA Metro may lose by implementing a universal fareless policy could be recouped by eliminating TAP and divesting from fare enforcement.” By Strategic Actions for a Just Economy. Link.

    +  A report from Rift Valley Institute on privatization from below in Somali cities. Link.

    +  “Two aspects of the Central Asian slave trade contributed to its decentralized character. First, a significant portion of the trade took place between nomads and other nomads. Second, the nature of slavery itself in the region was distinctly rural: eyewitness accounts as well as studies of the region’s urban economies have confirmed that the predominant type of work that slaves performed was agricultural. The demographic of slaves from India, once prominent in the region, was fast disappearing by the eighteenth century, as an influx of Iranian Shῑʿite slaves from Khurasan took its place. The Turkmen deserts north of Khurasan became increasingly prominent zones of captivity, transport, trade, and sale. By the late nineteenth century, Iranian Shῑʿites would, by all accounts, constitute the overwhelming majority of the region’s slaves. Through the northward trajectory of these trade networks, they came to form a significant demographic in Khwarazm and Bukhara.” By Jeff Eden. Link.