Analysis

Debt’s Political Fix

The IMF claims that the debt crisis is one of liquidity, requiring money thrown at the problem, rather than one of solvency, compelling debt forgiveness that should be absorbed by losses to the financiers. In Sri Lanka, this political fix is forcing a new government elected on the promise of change to accept the IMF’s debt restructuring program.

“Greenwashing” Structural Adjustment

In a global financial system underpinned by the US dollar, the Federal Reserve's interest rate hikes can push much of the global South to the brink of a full-blown debt crisis. The exposure of Southern countries to such external risks, as well as their need to incur dollar-denominated debts, result from an uneven and broken international financial architecture. How this crisis unfolds could have lasting consequences for the global energy transition. Not only does debt limit a country’s ability to finance an ambitious climate agenda, but now, it also makes the institution often at the center of debt negotiations—the International Monetary Fund (IMF)—increasingly relevant for global climate policy. 

Breaking Up Google

In late August, Judge Amit P. Mehta of US District Court for the District of Columbia found Google guilty of maintaining an illegal monopoly in online search. Google had paid billions to device manufacturers and browser developers—including Apple, Samsung and Mozilla—to install its search engine as the default in web browsers and smartphones, which allowed the company to hinder competition and enabled its search engine to dominate the market. This landmark ruling was followed by a Virginia judge formally initiating the trial of a second US Department of Justice (DOJ) antitrust suit against Google in September. This second lawsuit, originally filled in January 2023, denounced Google’s acquisitions related to its monopolistic digital ad technology.

Adaptation in the Sanctioned Economy

The oil boom of the late 2000s created significant headwinds for Iranian manufacturers. As the value of oil exports surged, the Iranian rial appreciated, real wages rose, and foreign goods flooded the Iranian market. Middle-class families relished in their newfound purchasing power, gladly buying French cosmetics, Korean appliances, and Turkish clothing while shunning domestic brands. This is how Iran caught a textbook case of “Dutch disease”—the oil bonanza undermined Iran’s manufacturing base. Programs initiated by populist president Mahmoud Ahmadinejad redistributed wealth to Iran’s lower classes and exacerbated the problem. But the  sanctions shock of 2012, when the Obama administration’s stringent financial and energy sector sanctions thrust Iran into a recession, altered the course. 

AMLO’s Surrender

Lopezobradorismo is without a doubt the most significant political movement to have emerged in Mexico over the past three decades. Since 2018, it has reconstituted the country’s post-authoritarian political system. The movement’s new leader, Claudia Sheinbaum won the Presidency with 60 percent of the votes in early June. With a two-thirds majority in both houses of Congress, the Movement for National Regeneration (Morena) will have the power to completely rewrite the country’s constitutional compact. 

Peripheral Conditionalities

The need to reorganize global governance so as to make space for a growing  China has long been apparent. With the financial crisis of 2008, another demand emerged: the reshaping of capitalism itself. The Covid-19 pandemic represented a strategic moment to advance this dual task. A decade after the announcement of Lehman Brothers’ bankruptcy, the health emergency provided an occasion for one international grouping to launch their plea for a post-neoliberal new world order, a plea that went hand in hand with calls to restructure global governance, particularly its economic dimension. This project became known as the “new Bretton Woods.”

Seeking Stability

Central banking has been described as a “quest for stability” and with good reason. Nearly every major central bank today is charged with securing price stability. The Fed sees itself as responsible for securing price stability and maximum sustainable employment. The European Central Bank was created by the Maastricht Treaty in 1993 with a primary mandate to maintain price stability. The Bank of Japan “decides and implements monetary policy with the aim of maintaining price stability” which is important “because it provides the foundation for the nation’s economic activity.” And so on. Since 2008, most central banks have become responsible not just for securing price stability but financial stability as well. 

Industry Preference

Despite their numerical minority as individual voters, in electoral democracies the economic elite wield significant political power. Through their investment decisions, those who control a nation’s wealth and credit have significant influence over its pace of economic growth, the value of its debts, and the exchange rate of its currency. On each of these rests the stability of a government and, ultimately, the legitimacy of its democratic institutions.

Labor’s Gains?

In 2023, a “banner year” for labor in many regards, only 115,551 workers voted in National Labor Relations Board (NLRB) representation elections, out of roughly 160 million workers in the United States labor force. In FY 2018, that number was 84,505, and in FY 2013, 85,290. Union density today sits at an historic low of 10 percent, with only 6 percent density in the private sector. A mere 1 percent increase in union density would mean that a fresh 1.6 million workers are organized with no losses elsewhere, before accounting for growth in the labor force. Even if unions won every 2023 NLRB election (which they did not), this rate of growth would have been far less than the increase in the civilian labor force, which, in the full employment years of 2015–19, averaged around 1.5 million new workers annually. 

Taking Money Seriously

The relationship between money world and the concrete social and material world is a long-standing, though not always explicit, question in the history of economic thought. Do the money payments and prices we see all around us have their own independent existence, distinct from the objects they are attached to? Can things that happen in money world affect the real world?

Patronage Partitions

In South Africa’s watershed election last May, the African National Congress (ANC) failed to secure an outright majority for the first time in the country’s democratic history, sinking 17 percentage points from five years prior, obtaining just 40.18 percent of the vote. Opponents of the ruling party celebrated the sudden shift in popular sentiment. The ANC’s ‘“liberation dividend”—the condition-free support it has been granted in appreciation for its role in delivering democracy—appeared to have expired. The ANC was becoming an ordinary party, in an ordinary country. 

The World’s Stockyard

In the age of climate emergency, the developmental drawbacks of being a primary goods exporter may intensify. Besides barriers to climbing the value chain on the world market, the economic cost of becoming the world’s stockyard is compounded by its environmental impacts.

Mansfield is Open for Business

In 2017, the town of Mansfield pointed the way for the Conservative Party. The Conservative candidate defeated a longstanding Labour incumbent who had tried, among other things, to sue the Mansfield Town FC supporters’ association. Amid the density of local experience it was easy to dismiss the loss as a fluke result for an unpopular candidate, but the same was happening in Middlesbrough South and East Cleveland, in Stoke-on-Trent South and in Walsall. This reflected not just local issues and not even Brexit per se, but a longer-term secular decline in Labour support among voters in areas with declining manufacturing employment, which progressives soon dubbed Labour’s “Mansfield problem.” For locals, the drift was palpable. Left commentators were initially optimistic that Mansfield could be regained at the next elections, propelled by an impressive Momentum mobilization for a sympathetic local candidate. But the public image of Jeremy Corbyn proved to be increasingly repellent to many local voters. Speaking to people in Mansfield in the Corbyn years, it was not uncommon to hear them wish him dead. In 2019, Labour got trounced here, winning 31 percent of the vote to the Conservatives’ whopping 64 percent.

Why So High?

The clashes between Lula and Campos Neto illustrate something of the complex and controversial issue of interest-rate setting in Brazil.

Strategic Interdependence

Geopolitical rivalry and strategic competition are now common parlance in describing international politics and global business. Yet, a large part of misconception stems from a severe lack of understanding about the degree of interdependencies and healthy competition permeating important supply chains that are so vital in the world economy today. Supply chains offer an alternative perspective on the continuities in foreign policy and economic diplomacy, taming exaggerated claims about Cold War rivalry and inevitability of conflicts. The advanced chip-making industry presents a highly globalized sector, with major players beyond China and the US and firms which take a leading role in shaping our responses to a new international context—one marked by economic security and industrial policy as the backbone of economic governance in the second quarter of the twenty-first century. 

Terms of Investment

Now two years old, the federal Inflation Reduction Act (IRA) sets the stage for billions of federal dollars to flow toward home energy upgrades through home energy rebates, grants, and tax credits. But in the US rental market, both the quality of housing and the terms of tenancy are largely left in the hands of landlords.