Analysis

The Renters’ Constituency

In developed economies around the world, housing has been transformed into a major asset. It is no coincidence that rates of homeownership have precipitously increased at the same time as governments in formerly social-democratic countries have reduced basic social safety nets. As state support has been withdrawn, one’s home—now cast as a fixed asset—has taken on responsibility for providing the capital needed for reproduction, illness, and retirement. At the same time, a widespread housing shortage has taken shape in these rich economies, and almost all countries in the OECD are facing a housing affordability crisis. Canada, New Zealand, and the UK all typify this new state of affairs, but the case of Australia provides a particularly stark example of the rapid acceleration of homeownership on a national scale—and the political recalibrations that are emerging from it. 

Downstream Industries

A pillar of Indonesia’s unprecedented economic growth over the last decade has been its ban on the export of raw nickel ore. This national experiment in downstream industrial policy began with the 2009 Mining Law signed by former president Susilo Bambang Yudhoyono, which mandated the domestic processing of all commodities mined in the country. The export ban on nickel was only partially implemented in 2014 amid widespread opposition from the mining sector, and it came into full effect in 2020. 

Crisis in the Bread Basket

In the run-up to the general elections of 2014, Narendra Modi was hailed across mainstream quarters of journalism and policy-making as the crusader of economic reform and growth in India, a spirit that was only bolstered by the resounding majority his party, the Bharatiya Janata Party (BJP), received. Almost a decade on, the spell has worn off—contrary to his initial image as the “strongman” who can “unleash” India, Modi’s economic interventions can only be described as policy misadventures. Overall, investment in the Indian economy has declined, while foreign capital inflows have increasingly come in the form of short-term private equity or venture capital. While industrial growth has been slow for decades, recent indicators suggest that the country may be actively deindustrializing. After two decades of “jobless growth,” a record high unemployment rate suggests that the economy may be actively shedding jobs. 

Labor’s Green Capital

Global investment in solar energy has skyrocketed in recent decades: from 1 TWh of solar power in 2000 to 1,284 TWh in 2022. The trend is likely to be magnified in the United States by the Inflation Reduction Act (IRA), which includes a wide array of tax credits and new sources of investment for renewable energy. Much of the investment in solar remains tied to private asset managers with little obligation to operate in line with the public interest. Among these investors, however, lies one group with duties to a broad swath of the public—pension funds. 

The IRA and Public Schools

Public school buildings in the United States are crumbling. National school infrastructure received a D+ rating from the American Society of Civil Engineers in 2021, and in serious cases, learning environments have become toxic. Given the segregated and unequal nature of public schooling, building quality is closely tied to racial and class-based inequalities, with schools in lower-income communities confronting the most serious health and safety consequences. In addition to these unsafe working environments for teachers and students, a recent study by scholars at the Harvard School of Education finds that schools are one of the largest consumers of energy within the US public sector, consuming energy equivalent to eighteen coal-fired power plants or fifteen million cars each year. This is both costly and necessitates involving schools within the broader project of decarbonization. 

Coercion and Inequality

“Plumbing” is an oft-used metaphor for understanding how sanctions work. Sanctions are intended to stop the flow of money to the targeted government; reserves are frozen, trade is blocked, export revenues dry up, and government budgets are drained. Even the evasion of sanctions is discussed in hydraulic terms. When asked about the circumvention of sanctions against Russia earlier this year, Linda Thomas-Greenfield, the United States representative to the United Nations, replied that the Biden administration was “looking at that leakage.” “Every place we see leakage,” she said, “we’re stopping it up.” On some occasions, talk of plumbing becomes literal. EU export controls ban the export of “bidets, toilets, cisterns and similar plumbing fixtures” to Russia.

Elusive Boundaries

In April 2021, private investors gathered at B3, Brazil’s stock exchange, to bid for water concessions in Rio de Janeiro. The former capital city and its surrounding municipalities had been divided into four “concession blocks,” all of which were up for grabs. Among the bidders were firms owned by private equity and institutional investors, including state-led investment funds. In total, 22.7 billion reais were raised: the largest ever auction of water and wastewater services in the country.

The Agribusiness Pact

Over the past two decades, Brazilian media and political discourse have exalted the uncontroversial success of a magical entity known as “agribusiness.” Closely associated with the rise of commodity exports such as soy, sugarcane, and corn, “agribusiness” has come to define the nation’s dominant agrarian system. The term itself, however, requires greater clarification.

Global Payments

The last day of June marked the final printing of the London Inter-Bank Offered Rate (LIBOR)—an average of anticipated interest rates among London banks which has thus far served as the benchmark for short term and off-shore lending around the world. LIBOR dictated the rate for all dollar-denominated loans, determining interest rate swaps and consumer loan rates. LIBOR has been replaced by the Secured Overnight Financing Rate (SOFR), a measure based on real transactions in the US Treasury repurchase market. SOFR is thought to be better than LIBOR because it is based on observable rates rather than anticipated ones. 

Solar Ambitions

In Spain’s forthcoming snap elections, the energy transition is high on the agenda, and solar power at the forefront. Prime Minister Pedro Sanchez has often expressed ambitions to make Spain the lead producer of solar electricity on the continent, positioning renewables as a cornerstone of the country’s “transformation in this decade.” By exploiting Spain’s great potential in solar power generation, the Spanish center-left coalition intends to upgrade the Spanish economy and reorient it towards higher value-added activities, in order to create well-paid jobs and appeal to manufacturing firms through low energy prices. 

Parallel Systems

At the start of her three-nation tour of Africa this January,  US Treasury Secretary Janet Yellen spoke to the Associated Press in Senegal, bemoaning the “piling, unsustainable debt” that, she said, “plagued” many African countries. This was a “problem,” she argued, that was “related to Chinese investments in Africa.” Two days later Yellen was in Zambia, a country which,  having defaulted on its external debt in 2020, was still trying to clinch a final deal with creditors more than two years later. In 2021 the G20 had agreed on the Common Framework, a vague set of guidelines meant to smooth such restructuring talks among low-income debtors and a variety of creditors, each with sometimes contradictory demands. If successful, Yellen stressed, such negotiations would unlock much needed disbursements from a $1.3 billion International Monetary Fund (IMF) loan. The problem, according to Yellen, was that China had become a “barrier to concluding the negotiations.” Back in the US, World Bank President David Malpass told Bloomberg that “China is asking lots of questions in the creditors committees, and that causes delays, that strings out the process.” The following day, the Chinese Embassy in Lusaka released a statement defending China’s role in the Zambian talks, chiding Yellen over US debt ceiling uncertainties and advising that “the biggest contribution that the US can make to the debt issues outside the country is to act on responsible monetary policies, cope with its own debt problem, and stop sabotaging other sovereign countries’' active efforts to solve their debt issues.” In this context, it is hardly surprising that ex-Zambian trade minister Dipak Patel has complained of his country becoming a pawn in a “Common Framework Cold War.”

Semi-Politics

Since the late 1970s, cutting edge semiconductors have figured at the heart of the political economy of the United States. Often called the “crude oil of the information age,” they have become increasingly ubiquitous and are now considered the basic building blocks of a broad swath of industry, including telecommunications, automobiles, and military systems. By the 1980s, semiconductors had become so significant to the economy that they came to be seen as symbolic of American power itself, and the essential element in the country’s post-Cold War future. By 2003, a National Academies of Science Report could refer to the pervasiveness of semiconductors as “the premier general-purpose technology of our post-industrial era. In its impact, the semiconductor is in many ways analogous to the steam engine of the first industrial revolution.”