↳ Logistics

August 25th, 2020

↳ Logistics

Escaping the Bleak

DIGITAL CURRENCIES

Covid is accelerating the transition away from cash and encouraging the development of state-backed digital currencies. In the past two weeks, the People's Bank of China launched a trial run for digital renminbis in three major cities, and the Boston Fed announced a research initiative examining the technicalities of a Central Bank Digital Currency (CBDC) in the United States.

Despite its purported benefits, the shift threatens to fundamentally alter the priorities of central banks, the structure of payment markets, and the regulatory framework required to ensure financial stability. A 2018 paper by SHEILA DOW considers the limitations of CBDCs for this latter aim.

From the piece:

"The development of Central Bank Digital Currencies feeds into a more general debate on the state’s role in the financial sector. Markets price according to evidence of the past, but also according to conventional judgements about that evidence. Since these conventional bases for pricing are vulnerable to discrete changes which spread across markets, there is considerable scope for financial instability. Innovation in payments systems and digital currency assets is just part of an ongoing process of financial innovation outside the current boundaries of regulation.

Governments have placed the full onus for macroeconomic policy on monetary policy, with fiscal policy restricted to reductions in budgetary deficits and the size of the state. Ironically, since fiscal austerity policies held down aggregate demand and elevated expectations of risk attached to real projects, increases in the money supply were accompanied by low inflation. Consequently, monopoly control of the money supply in order to promote monetary stability seems to be beside the point. Rather the focus needs to be on how the financial sector might be regulated in such a way as to generate credit for useful projects and liquidity as a refuge from uncertainty. Central bank digital currencies may pose benefits, but to consider them the core of a generalised policy to avert future crises is to look in the wrong place."

Link to the article.

  • "Time and effort would be better spent on upgrading existing payment networks rather than pursuing options that, for all their innovation, could create more problems than they solve." This week's FT editorial urges caution in rolling out CBDCs mid-crisis. Link. And a Philadelphia Fed working paper from June preempts these concerns, warning that the introduction of digital currencies may turn central banks into "deposit monopolists." Link.
  • "If banks are no longer willing to act as financial intermediaries, central banks should consider using CBDCs to circumvent the banking system and inject liquidity directly to those who need it the most." Elham Saeidinezhad and Jack Krupinski present an alternative view on digital currency creation as crisis management (stay tuned for Saeidinezhad's forthcoming piece on Phenomenal World). Link.
  • In a series of collected essays published by the European Money and Finance Forum at Bocconi University, analyses of CBDC pilots in Uruguay and Sweden. Link.
  • From 2017, Ole Bjerg on the "Policy Trilemma of CBDCs." Link.
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August 20th, 2020

Logistics, Labor, and State Power

An interview with Laleh Khalili

Laleh Khalili is a professor of International Politics at Queen Mary University of London and the author of the books Heroes and Martyrs of Palestine: The Politics of National Commemoration, Time in the Shadows: Confinement in Counterinsurgency and the co-edited volume Policing and Prisons in the Middle East: Formations of Coercion.

Her latest book is Sinews of War and Trade. In it, she connects the themes of war making in the Middle East found in her earlier work with an examination of the contested role of capital, labor and the state in the region—via the infrastructure of maritime logistics.

Breathtaking in ambition, Khalili's analysis draws on a wide range of materials to provide long-view historical perspective on the economic and political development of the Arabian peninsula through the unequal playing field of global maritime trade. Through thematically-organized chapters on the region, Khalili examines the emergence of maritime routes; the development of landside port, road and rail infrastructure; the role of the law in structuring and securing international investment and ownership; the making of economic and political elites; the working conditions and modes of resistance by both seafarers and landside laborers; and the ways in which all of the above are tangled up with war making.

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March 16th, 2020

Study for a Club Scene

BUNDLED SPREAD

Supply chains and geographical dispersion

At present it's difficult to think of much else beyond the fragility of our global economic infrastructure. A 2012 discussion paper by RICHARD BALDWIN looks at global supply chains: their history, future, and policy implications.

From the paper:

"Globalization’s second unbundling and the global supply chains it spawned have produced and continue to produce changes that alter all aspects of international relations: economic, political and even military. Supply chain fractionalization—the functional unbundling of production processes—is governed by a fundamental trade-off between specialization and coordination costs. Supply chain dispersion—the geographical unbundling of stages of production—is governed by a balance between dispersion forces and agglomeration forces.

The future of global supply chains will be influenced by four key determinants: 1) improvements in coordination technology that lowers the cost of functional and geographical unbundling, 2) improvements in computer integrated manufacturing that lowers the benefits of specialization and shifts stages toward greater skill-, capital, and technology-intensity, 3) narrowing of wage gaps that reduces the benefit of North-South offshoring to nations like China, and 4) the price of oil that raises the cost of unbundling."

Link to the paper.

  • "If the virus continues to spread at the same rate, supply chains will inevitably break apart and factories will start to close." From February, the FT editorial board on the "decoupling of global trade." Link.
  • A paper from the Institute for Global Law and Policy "asserts the centrality of legal regimes and private ordering mechanisms to the creation, structure, geography, distributive effects and governance of global value chains." Link. See also: a LPE Blog symposium based on the paper. Link.
  • "Capital is thoroughly globalized. Could it now be labor’s turn?" Peter Evans on a global strategy for organized labor. Link. And a new paper by Adrien Thomas "looks at strategies adopted by trade unions to unionize migrant workers, and discusses tensions related to the diversification of trade union policies and organizational structures in response to labor migration." Link.

h/t the one and only Francis Tseng for many of these links.

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