May 29th, 2021

We're Coming

LABOR SHORTAGES

Though the US economy remains about 10 million jobs short of its pre-pandemic levels, employers and commentators have begun to express fears over a reduction in the labor supply, prompting debates over the possible causes of this shortage.

A new article by JOSH BIVENS and HEIDI SHIERHOLZ questions the grounds for these fears using data from the most recent jobs report.

From the piece:

"Policymakers currently face a choice of guarding against growth constraints driven by demand or driven by supply. The Biden administration has chosen to zealously guard against demand shortfalls, even at the risk of running into some supply constraints in the near term. If policymakers change this orientation and reel back macroeconomic stimulus and cut off UI benefits, they will be making the other choice—guarding zealously against supply-constrained growth and being willing to risk growth running into demand constraints. This would be a huge mistake for human welfare, even if it were true that some workers were choosing to pass on available jobs due to enhanced UI benefits. A worker who is jobless because they have voluntarily decided that they’d rather wait out the next month or two on enhanced UI benefits—rather than throwing their caregiving responsibilities into disarray by taking on work in the face of continued school closures or braving a job they feel might be unsafe for them—suffers far less than a worker desperate for work who just can’t find it because the economy is unnecessarily running at too cool a pace.

Many face-to-face service-sector jobs have become unambiguously worse places to work over the past year. This has in no way been fully restored to the pre-COVID normal, as the coronavirus remains far from fully suppressed. Well-functioning labor markets should account for this degraded quality of jobs by offering higher wages to induce workers back. If enhanced UI benefits and a demand-increasing dose of fiscal stimulus are allowing these higher wages to be quickly offered in the face of supply constraints, then it seems like they’re improving labor market efficiency in this regard. Policy boosts to labor supply that aim to expand opportunities and remove key barriers to work—like the investments in care work provided in the American Jobs Plan and the American Families Plan—are excellent examples of this kind of progressive labor supply policy."

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May 22nd, 2021

In Praise Of

CONDITIONING AID

Recent events in Gaza and Colombia have led to calls for the conditioning of foreign aid—a controversial but longstanding element of the US foreign policy toolkit for pursuing economic and political aims abroad.

A 2007 article by STEVEN HOOK looks at the effort to condition foreign aid as part of the post-Soviet transition following the Cold War.

From the article:

"Upon the Cold War's demise, the global development aid regime coalesced around the overarching goal of sustainable development. Among other components of this goal, such as preventing ecological decay and restraining population growth, the promotion of democracy emerged as a primary concern. Bush and Clinton looked to foreign assistance as a primary vehicle to promote the expansion and consolidation of democratic rule. The stated objectives of the US Agency for International Development (USAID) were aligned with those of other major donors and international organizations, with themes related to all aspects of sustainable development assuming a high profile. Leaders of USAID announced new standards for aid qualification and reorganized the agency's bureaucratic structure, in Washington and in overseas field missions, around the new mission. In some cases, most notably former Zaire (now the Democratic Republic of the Congo), USAID missions were closed because their host governments had proven to be 'poor partners' in implementing reforms. The agency's central challenge became convincing a skeptical Congress and general public that global democratization was as vital to US national interests — and as worthy of the country's financial sacrifice — as was communist containment during the cold war.

The rhetorical alignment of US aid policy with that of the development aid regime represented a profound departure for the United States, which had long diverged from regime norms in the qualitative aspects of aid policy even while serving as the primary donor of aid at an absolute level. The uneven results of the US policy may thus be attributed to unresolved tensions between the principles advocated by the aid regime and the coexisting and often contradictory foreign-policy objectives of the US government. While changes in the international environment may alter the substantive foreign-policy priorities of donors, and while transnational regimes may impose pressures on donors to promote objectives that cross national boundaries, the ultimately political role of foreign aid as an instrument of foreign policy remains its distinguishing feature."

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May 15th, 2021

Hinged Landscape

CONSUMER CREDIT Use of the most recent government stimulus varied by income, with richer households saving the money and poorer ones using it to pay off debt. At the same time, the supply of consumer credit available to low-income households has …
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May 8th, 2021

The Spell of the Lake

LAND GRABS

In the late 2000s, the term "land grab" rose to prominence to describe large-scale acquisitions of farmland in Africa, Asia, and Latin America. Reports of "land grabs" also inspired debates around the specific functions of foreign investment, domestic policies in the global South, and commodity prices in development.

A 2012 article by LORENZO COTULA takes a critical approach towards "land grab" literature and distinguishes contemporary land acquisition patterns from their historical counterparts.

From the article:

"There is nothing new in the acquisition of land in the global South to produce crops for export to the global North, and some crops have a long history in tropical plantations (e.g. rubber). However, the biofuels boom has brought new actors (e.g. constellations of energy, agribusiness and biotech companies) and new crops (e.g. jatropha), or has reinvigorated interest in longstanding crops (e.g. sugar cane, palm oil). Carbon markets are changing the nature of the financial returns at stake and, more fundamentally, the very relationship between humankind and nature. The growing participation of financial players in the global land rush brings to the land arena a new set of players, motivations and investment models. In the words of Peluso and Lund, 'there is no one grand land grab, but a series of changing contexts, emergent processes and forces, and contestations that are producing new conditions and facilitating shifts in both de jure and de facto land control.'

However one looks at it, the land rush, if sustained over the next few years, will have profound implications for the future of world agriculture, including the roles of states and markets, of agribusiness and family farming, and of the global trading system. For example, as companies increase their degree of vertical integration and as governments acquire land overseas to import agricultural produce, a growing share of world agricultural trade will occur within the 'closed circuit' of corporate or country systems – deepening a trend that has emerged over the past few decades. In turn, this trend may have repercussions in multiple directions: to name a few, greater vertical integration of value chains can squeeze local operators; intra-firm transactions may increase opportunities for tax avoidance through transfer pricing; and mercantilist approaches to outsourcing agricultural production for national food security can ultimately undermine the multilateral trading system."

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May 1st, 2021

In The Act

REGULATING SUPPLY CHAINS

Millions of workers in global supply chains have lost their jobs as a result of the pandemic. The impact has been especially acute in the garment industry; in Bangladesh, more than 70% of apparel workers were sent home without pay in the early days of the pandemic.

These practices, along with the working conditions in many major industries, violate firms' regulatory standards. In a recent article, SAROSH KURUVILLA, MINGWEI LIU, CHUNYUN LI, AND WANSI CHEN consider the structural impediments to effective supply chain reform.

From the piece:

"Why is there a gap between the policies of private regulation and the labor standards of global supply chains? Two general explanations have been advanced. The first has focused on 'symbolic adoption,' whereby companies adopt private regulation primarily as a strategy to minimize reputational risk without seriously implementing it. A second explanation points to faulty assumptions underlying the model's design and implementation.

Our argument is that actor heterogeneity in private labor standard regulation generates opacity that decouples practice from outcomes. We develop three propositions demonstrating how heterogenous actors contribute towards field opacity: practice multiplicity (the diversity of practices adopted by actors across sociopolitical and geographic spaces), behavioral invisibility (the difficulty in assessing the behavior of suppliers) and causal complexity, whereby a 'multitude of interconnected actors and factors interacting in non-linear ways creates uncertainty about cause-effect relations.' Our contribution to the private regulation literature is to outline an alternative, systemic explanation for the performance gap; the complex ways in which actors interact play an important role."

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April 24th, 2021

The Electric Forest

AGRICULTURE AND TRADE

The US government spends upwards of $20 billion annually on domestic agricultural support programs, but with over 20 percent of farm products exported, these programs interact with trade policies that have fluctuated in the last century between protectionism and liberalization.

Investigating the origins of US agricultural trade policy, a 1989 article by JUDITH GOLDSTEIN looks to the New Deal to locate where a "divergence" emerged between policies for the agricultural and manufacturing sector.

From the article:

"Until the mid-1930s, both agriculture and manufactures were treated essentially alike: when either suffered economic decline, the usual state response was to increase trade barriers. The great economic decline of the 1930s undermined existing economic policy. [By the mid-1940s], a two-pronged strategy to address sectoral problems was enacted. The government was to help manufacturers gain access to foreign markets through a program of reciprocal tariff reductions. Agriculture was also to benefit from some tariff reductions, but largely it would be protected through a system of internal price supports and land-use policies. By the time the United States entered into negotiations over the workings of the trade regime, a decade of legislation had already established a policy of trade liberalization for industrial projects and trade protectionism to maintain farm incomes for agricultural products. A hegemonic position in the world economy did not ensure a consistent trade policy within the Unites States.

In this article, I trace this divergence in industrial and farm policies. I argue that the key difference in the two policies turned not only on political interests but also on the beliefs of policymakers. Agricultural trade had run deficits consistently since the mid-1920s. When considering a range of possible remedies, policymakers dismissed liberalization as an option for farm products while embracing that "idea" for manufactures. And although agricultural has had surpluses since the war and manufacturing has had deficits since the early 1970s, the decision of the 1930s continue to structure current policy."

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April 17th, 2021

Trooping the Colour

PETROSTATES

In January 2021, Crown Prince of Saudi Arabia Mohammed bin Salman unveiled plans to build ‘The Line’, a $/500bn futuristic 170km carbon-free city strip in Neom destined to be fully automated, fueled by clean energy, linked to neighboring Jordan and Egypt, and at the core of Vision 2030, a national development plan to diversify the heavily oil-dependent Saudi economy. Critics have argued that the project provides little more than a ‘mix of science fiction and corporate buzzwords’ and that Mohammed bin Salman ‘thinks that building cities will happen in the same way as it does in video games.

Over the past decade, plans for megaprojects encompassing futuristic cities and large-scale transnational connectivity infrastructure across the global South have come to embody fantastical promises of modernity, development, and economic integration. What can political economy tell us about the relationship between resource-rich economies and such developmental fantasies?

In a 1997 book, FERNANDO CORONIL explores how the circulation of oil rents shaped the process of state formation in Venezuela, where the national myths and the modern state were sealed with the particular properties of oil.

From the introduction:

"The acclaimed Venezuelan political commentator José Ignacio Carbujas related the state’s providential appearance to its worldly materiality and highlights the cultural and political effects of its extraordinary wealth. As if wishing to acknowledge and disavow the state's exalted self-representation, he notes that in Venezuela the state is a 'magnanimous sorcerer' endowed with the power to replace reality with fictions propped up by oil wealth. 'Oil is fantastic and induces fantasies,' Carbujas says. Its power to awaken fantasies enables state leaders to fashion political life into a dazzling spectacle of national progress through 'tricks of prestidigitation.' State representatives, the visible embodiments of the invisible powers of oil money, appear on the state's stage as powerful magicians who pull social reality, from public institutions to cosmogonies, out of a hat.

In this book, I explore the appearance of the Venezuelan state as a transcendent and unifying agent of the nation. I argue that the deification of the state took place as part of the transformation of Venezuela into an oil nation. Thus transformed into a petrostate, the Venezuelan state came to hold not only the monopoly of political violence but of the nation’s natural wealth. The state has exercised this monopoly dramaturgically, securing compliance through the spectacular display of its imperious presence. The Venezuelan state has been constituted as a unifying force by producing fantasies of collective integration into centralized political institutions. By manufacturing dazzling manufacturing projects that engender collective fantasies of progress, it casts its spell over audience and performers alike. As a 'magnanimous sorcerer,' the state seizes its subjects by inducing a condition or state of being receptive to its illusions—a magical state."

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April 10th, 2021

Watermelon

INTELLECTUAL PROPERTY

Amid the global Covid-19 vaccination campaign, a debate has emerged around intellectual property (IP) and stark inequalities in vaccine distribution. Wealthier nations have opposed a petition to waive the 1995 Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, which imposes a 20-year monopoly for pharmaceuticals among other global IP standards.

In her 2008 book, CAROLYN DEERE turns to the domestic implementation of the TRIPS agreement across developing countries, finding large variations in new IP governance structures and enforcement.

From the introduction:

"Amidst growing debates on globalization and inequality, TRIPS became a symbol of the vulnerability of developing countries to coercive pressures from the most powerful developed countries and galvanized critics of the influence of multinational corporations on global economic rules. While IP advocates insisted that stronger IP protection could serve as a ‘power tool for development’, a host of prominent international economists, such as Jagdish Bhagwati and Joseph Stiglitz, questioned the place of TRIPS in the WTO system (and continue to do so). Cambridge economist Ha-Joon Chang, among others, emphasized the costs to developing countries of introducing ‘irrelevant or unsuitable laws’ that restrict access to technologies and knowledge. Developing countries argued that TRIPS ignores the diversity of national needs and forces them to sacrifice the ‘policy space’ that richer countries harnessed in early stages of their growth.

Given the vocal concern expressed by developing countries during the TRIPS negotiations and after it came into force, one would reasonably expect them to have taken full advantage of the possibilities the Agreement provides to tailor implementation to respond to national economic and social priorities. Careful examination of the empirical evidence from 1995 to 2007, however, reveals a more complex picture of how developing countries responded to this room for maneuver. There was striking diversity in the approach developing countries took to the implementation of TRIPS rights and obligations. Most notably, developing countries took varying advantage of the legal safeguards, options, and ambiguities in TRIPS, now commonly referred to as the TRIPS ‘flexibilities’. Further, a surprising number of developing country WTO members implemented even higher IP standards than those required by TRIPS. By contrast, some developing countries took advantage of a range of TRIPS flexibilities, but their approaches varied according to the type of IP (e.g. copyright or industrial property). Further, many developing countries missed their deadlines for bringing their laws into conformity with TRIPS, thus effectively claiming more flexibility than provided for in the Agreement. Across the developing world, governments struggled to upgrade institutional capacity and resources to effectively administer and enforce their IP laws."

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April 3rd, 2021

Birth of the Wolves

CANALS

Earlier this week, the blockage of the Suez Canal by the giant Ever Given container ship prompted renewed discussions on the weakness of our supply chain infrastructure, the future of globalization, and the region's colonial past.

In her 2013 book, VALESKA HUBER explores how the canal selectively shaped the movement of people and goods from its construction in 1869 until the First World War.

From the introduction:

"Mobility and acceleration are conventionally seen as central processes in shaping the history of globalisation. The Suez Canal appears in the literature on global history and the history of globalisation as soon as the ‘timespace compression’ starting in the second half of the nineteenth century is mentioned. In works on imperial expansion, the Suez Canal is equally present. Yet the increasingly rapid mobility which the Suez Canal came to symbolise had two sides: on the one hand a modernising force in the eyes of western observers, on the other a force that was difficult to control and which was connected with problems such as the worldwide propagation of disease or the movement of unruly individuals or groups. The period around 1900 was neither an era of unhampered acceleration, nor one of hardening borders and increasing controls. Rather it was characterised by the differentiation, regulation and bureaucratisation of different kinds of movement.

The maritime shortcut of the Suez Canal has become a symbol of the ‘shortening’ of distances around 1900 and of the triumphant version of acceleration that stressed the transformation of a desert by means of modern technology. Yet it also highlighted the dangers and anxieties connected with this same acceleration. At this very location colonial traffic and troop transportation crossed the circuits of tourists, the journeys of pilgrims to Mecca, the trajectories of nomads and caravans, the work-related movements of seamen and coal heavers and the illicit passages of stowaways, smugglers and microbes. This kaleidoscope of movement shows how, in the context of the technological innovations of the second half of the nineteenth century, mobility became a marker of Western modernity. But it also makes clear how certain forms of mobility were increasingly regulated and stigmatised. While acceleration is often taken for granted, multiple processes of exclusion and deceleration were in fact in play."

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March 27th, 2021

The Calligrapher

GUN CONTROL

Frequent mass shootings and recurring political struggle over gun control measures are uniquely American social phenomena. The earliest proposals for US federal gun control legislation were met with an emergent organized opposition, whose effectiveness triumphed over wide approval for control measures among the public.

In a 1981 article, CAROL SKALNIK LEFF and MARK LEFF examine the origins of this opposition and the eventual passage of “ineffective” firearms legislation during the interwar period.

From the article:

"The interwar period is notable less for the pervasive impact of its legislation than for the coalescence of the interest group matrix that has resisted firearms legislation ever since. Although the Justice Department preferred to put the onus for opposition to regulation onto the gun manufacturers, whose unpopularity as 'merchants of death' peaked between the wars, the most rigorous and effectual resistance came from sportsmen's and wildlife organizations, and rifle, pistol, and revolver associations. Jointly, these groups were to play a decisive role in determining the scope of gun control efforts in the 1920s and 30s. The crux of the balance of power between regulators and antiregulators in the interwar period was that the Justice Department fought its gun control crusade with less intense and less mobilized allies, while facing a committed and organized resistance. The consequence was that the nascent gun lobby was in a strong position, not only to fight gun control, but to co-opt or redefine initiatives that seemed likely to gain a following.

It was in the 1930s that gun control opponents faced their decisive test. To trace their response to mounting interest in federal regulation, it is most useful to focus on the organization that had moved to the forefront of the antiregulation movement, the NRA. The timing of the NRA's emergence as a national force testifies to the galvanizing impact of the federal movement towards firearms regulation. From a roster of 3500 in the early 1920s, the NRA membership rolls expanded to 10 times that many by the time of the legislative debates of 1934. In one fundamental sense, the perspective on gun control as a cultural issue can be distorting if it at all implies that the individualist ethos extends to the methods utilized to wage antiregulation campaigns. Champions of individual rights were decidedly more organized than the regulators."

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