September 18th, 2021

Developmentalisms

The forgotten ancestors of East Asian developmentalism

2021 marked the centenary of the creation of the Chinese Communist Party, born of the May Fourth Movement of 1919. History textbooks tend to claim that the Movement emerged out of a widespread realization that China’s rights as a victorious power during WWI had been sold out at the Paris Peace Conference by the European Powers. Students were angered by elite collusion with Japan and the corruption of the early Chinese Republic—also known as the “Beiyang Regime.” The activists found hope in the new Soviet model, and May Fourth is credited with bringing Bolshevism to China and beginning its socialist phase.

In Japan, conversely, state-led economic development has often been attributed to a deliberate attempt to mimic the West industrially and militarily since the Meiji era. Japanese developmentalism is perceived to be strategic and straightforward, enabled after WWII by a foundation of free market capitalism.

In fact, state driven economic development in both countries is the product of a long and complex ideological history. In the late nineteenth century, Chinese and Japanese economists drew inspiration from Hamiltonianism (also known as the “American School”) and German State Socialism

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August 31st, 2021

How Schools Lie

The deceptive financial aid system at America's colleges

When prospective students navigate the process of choosing a college, financing is a central and often determining factor in the final decision of enrollment. Students first turn to college websites and the College Board to look at cost data, and many then apply for financial aid through FAFSA, which relies on cost estimates provided directly by colleges to determine aid packages. Prospective students know that college is a steep investment—they take seriously the decision of where and what to study and the costs it incurs. No matter how talented, hard working, and committed a student is, if financing falls through, the dream of obtaining higher education can be dashed. But much of the financial data that prospective students receive is misleading. In the cost information offered to prospective students, higher ed institutions consistently underestimate the non-tuition costs of attending college, and overestimate the amount of incoming aid from grants and scholarships. Discrepancies between estimated and real prices can add up to thousands of dollars in unanticipated costs, burdening students who already struggle to afford college.

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August 24th, 2021

Legitimacy Gap

We live in the age of the central bank. The financial crisis of 2008 and the COVID-19 crash of last year have made visible the central role of the US Federal Reserve and its overseas counterparts in the international financial system, and their dramatic actions earned them applause for avoiding a second and third Great Depression. Rescuing banks and preventing financial collapse are the tasks of central banks, and their success brought relief to the economy. But these actions bore a distributional impact. Most of the financial policies adopted in response to the crisis—quantitative easing, bond purchases, and low interest rates—have protected wealth without creating opportunities to accrue new wealth for those who don’t possess it. As the “K-shaped“ charts of the 2020 recovery made plain, a market rebound did not spell economic wellbeing for ordinary people.

The outsize role of central banks—especially the Fed—in the international financial system has led to some of skepticism about central banks and their independence.

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August 11th, 2021

Built Trades

Employer claims of unavailable labor are rooted in an unwillingness to raise wages and the long-term decline of the nation’s system of training and allocating labor.

As the American economy reopened in the first half of 2021, reports of a “labor shortage” have spread throughout US industries. But there was one sector where employer panic about hiring was old news: the massive and decentralized US construction industry. According to industry surveys, the share of homebuilders who rank the “cost and availability of labor” as their most significant problem has increased every year since 2011. This summer, the complaints continue.

What can the construction example tell us about the increasingly widespread idea of a “labor shortage”? Mark Erlich, the former Executive Secretary-Treasurer (EST) of the New England Regional Council of Carpenters, now a fellow at the Harvard Labor and Worklife Program, laughs at employer claims: “Labor shortage” has been a “chronic cry for decades.

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July 20th, 2021

Path Persistence

Global trade hierarchies across two eras of globalization

During the first era of globalization (1870–1913), the global division of labor was stark. Britain and other Western nations largely produced manufactured goods, but they also exported a whole range of temperate agricultural goods like wheat, beef and barley. Elsewhere in the European colonial empires, products like cotton, cocoa and coffee were exported, often at very low prices and sometimes with forced labor, to sate a growing demand in the global economic core for tropical luxuries. More than a century has passed since World War I heralded the collapse of this world order. Today, the globalization wave that has shaped the world since the 1980s is ebbing.

What is the legacy of the First Globalization of the late nineteenth- and early twentieth-centuries on the economic fortunes of countries during the Second Globalization? To what extent have countries’ positions in the international economic order been persistent across the two globalizations, with some trapped at the bottom and others comfortably on top?

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July 12th, 2021

Long Crises

An interview with Benjamin Holtzman

With the victory of Eric Adams in the Democratic mayoral primary, New York City stands at a crossroads. How will the city negotiate the changes brought about by Covid-19? What will be the lasting legacy of Black Lives Matter? How will the metropolis—and other American cities—evolve in the years to come?

As New Yorkers grapple with an uncertain future, the fiscal crisis of the 1970s and its aftermath are often invoked by the press and politicians. Today, “New York in the 1970s” is shorthand for a city facing poverty and crime, running out of money, and suddenly confronting the end of one social order and the rocky emergence of another.

Given these dynamics at play, the publication of Benjamin Holtzman’s The Long Crisis: New York City and the Path to Neoliberalism could not have come at a more opportune time. The book tells the story of New York City in the years that preceded and then followed the fiscal crisis and near-bankruptcy of the city in the 1970s. Holtzman reveals how—with the absence of effective government responses—ordinary political wisdom changed to favor private, market-based solutions, whereas earlier generations might have looked to the city government or collective institutions such as unions. He shows that New York City’s history during this time went beyond austerity, constituting a whole new approach to government. This shift to the right was not just a matter of ideology, nor was it driven entirely by elite actors. Rather, it was built by many different political participants and communities on the ground, ranging from park volunteers, to business groups, to neighborhood patrols and beyond. Raising key questions about the city’s history, The Long Crisis is a critical work for understanding the origins of contemporary New York City—and thinking about where we go from here.

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July 8th, 2021

Phenomenal Works: Davarian Baldwin

Black Metropolis

Even 75 years later, St. Clair Drake and Horace R. Cayton Jr.’s 1945 tome Black Metropolis: A Study of Negro Life in the Northern City remains my aspirational model for social scientific scholarship. Written by two graduate students, with an introduction from their comrade and friend Richard Wright, the text uses interdisciplinary methods strategically to offer a rare materialist analysis of urban inequality and community formation. Their work disrupts the dominant human ecology vision of the day, led by their mentors of the “Chicago School,” which saw the organization of cities emerging from an organic process dictated by the cultural tastes and temperaments of racial groups, rather than being driven by the accumulation of socioeconomic power. Drake and Cayton’s work directly challenged not only those who controlled their immediate professional fate, but also scholars who propped up the segregationist outlook of both the real estate industry and public policymakers in the Federal Housing Administration.

With the text at just under 800 pages, it’s easy to lose sight of the pathbreaking methodological brilliance found in Black Metropolis. For example, Drake and Cayton drew from South Side activists in the 1930s to offer one of the first academic uses of the term “ghetto” as an analytic for engaging the state-sanctioned racial segregation of African Americans in cities. Their “Black Ghetto” chapter overwhelms the dominant human ecological paradigm of their Chicago forbearers with detailed sociological data to document racial disparities in housing, labor, health, income, and other metrics—challenging any claims about the organic structure of cities. Before US politicians and scholars turned their eyes to Nazi Germany, Drake and Cayton used the term “ghetto” to shed light on municipal policies like racially restrictive housing covenants, white vigilante violence, and financial divestment from Black communities to argue that the racial organization of urban space looked not like a human ecology but fascism. Still, the authors immediately placed this sociological rendering of the “Black Ghetto” in conversation with an ethnographic account of what residents called “Bronzeville.”

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July 2nd, 2021

Repressing Labor, Empowering China

Cheap money will boost inequality and geopolitical tension but not inflation

Though the lockdown in 2020 threw many workers out of work, the big fiscal stimulus, fueled by government debt and an unprecedentedly large monetary expansion, offered stimulus checks and elevated unemployment benefits to millions of Americans. In 2020, US federal spending grew by 50 percent, making the deficit share of GDP the largest since 1945, and the M2 in the economy grew by 26 percent—the largest annual increase since 1943. Such fiscal and monetary expansion prevented a collapse in consumption. After an initial fall in Spring 2020, US household consumption bounced back and grew by more than 40 percent in the third quarter.

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June 24th, 2021

Preferred Shares

Inflation, wages, and the fifty-year crisis

In one of her first statements as Treasury Secretary, Janet Yellen said that the United States faced “an economic crisis that has been building for fifty years.” The formulation is intriguing but enigmatic. The last half-century is piled so high with economic wreckage that it is not obvious how to name the long crisis, much less how to pull the fragments together into a narrative. One place to start is with the distribution of national income between labor and capital (or, looked at another way, between the wage share and the profit share of national income). About fifty years ago, the share of income going to labor began to decline, forming a statistical record of the epochal collapse of working class power. Episodes of high employment in the 1990s and the late 2010s did not reverse the long-term pattern. Even today, with a combination of easy money and fiscal stimulus unprecedented since World War II, it is unclear what it would take to reverse the trend in distribution.

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June 18th, 2021

Investment and Decarbonization

A conversation on investment strategies for the green transition

In late March, the Biden administration announced the $2 trillion American Jobs Plan, with approximately half of the sum dedicated to fighting the climate crisis. While the legislation would mark sea change in federal action to avert climate catastrophe, many have argued that it falls dramatically short of the amount required to usher in a green transformation of our infrastructure and energy systems.

Responding to this large investment gap, a recent Phenomenal World essay by Anusar Farooqui and Tim Sahay proposes a plan for a public ratings agency for green finance, which would “be mandated to assess the economic viability and contribution towards decarbonization of project proposals” and “serve as a public signal for the state, investors, cities, and firms to back, fund, and undertake projects that are both viable and contribute significantly to decarbonization and resilience against climate change.”

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