Links. The value of assets, Worldbank rhetorics and an answer. Two graphs.
1) Do we know how rich we are? One of the problems with the (invaluable) work of Piketty is how to value assets. GDP accounts basically use transaction prices – but many assets are not traded and we have to use other values or prices like book value, assessed market prices, rebuilding value or something like that. Think of the valuation of natural reserves of oil or dikes (the discounted value of assessed future streams of income is not used by statisticians, as this measure is too fickle – if measurable at all, as in the case of dikes). This means that assessed asset values can be quite volatile – as shown by the estimated value of Dutch net international assets (graph) – using another assessment method of the stock value leads to a 100 billion difference – even though estimated current account surpluses (a flow) stayed basically stable. Not that despite decades of current account surpluses in 2008 the Netherlands had a negative international investment position (the ‘Dutch black hole’, caused by bad investments…). The large change in the net position is also caused by the fact that it is… a net position. A relatively small change in total assets or liabilities can show up as a relatively large change in the net position. Even then, 100 billion is a lot…
“Greece has been roundly criticized for behavior that caused trust to break down, threatening to tear the union apart. And now it seems Austria may join Greece in the naughty corner….the new head of the German regulator BAFIN, Felix Hufeld, regards Austria’s behavior as tantamount to sovereign default:
“It was “indeed a challenge for European countries” when a core EU member decides not to honor its debts, Hufeld said.
And he went on to observe that sovereign debt cannot be regarded as risk-free any more. Though of course it never was risk-free, was it? Amusingly, the architect of this “default”, Austrian Finance Minister Schelling, is critical of Greece. He says that Eurozone countries can’t trust Greece. No doubt Heta bondholders – and perhaps the German government – would say that they can’t trust Finance Minister Schelling.”
3) A magnificent New Left Review article about the changing rhetorics of the Worldbank:
“In the case of ‘the reduction of poverty’, to keep using that example, if you know what the individual words mean, you also know what the expression means: the whole is just the sum of its parts. But ‘poverty reduction’, like ‘disaster prevention’, or ‘competition policies’, is not just the sum of its parts; as we have seen, it is an expression in code—the code of ‘management discourse’—whose meaning has more to do with ‘approaches’ and ‘frameworks’ than with ‘employment’ and ‘income’. … And the point is, the World Bank wants to communicate in code … there were 1,198 occurrences of ‘poverty reduction’, and only 38 of ‘the reduction of poverty’. Which … makes perfectly clear that for the World Bank pre- and post-modification are not equivalent, and that its preference goes unabashedly to the more cryptic of the two constructions … How could such a tortuous form of expression become a leading discourse on the contemporary world? … The key move, write Latour and Woolgar, consists in ‘freeing’ a statement from ‘all determinants of place and time, and all reference to its producers’ …> Figures 10–11 show how decisively the World Bank has dealt with such ‘determinants’.”
4) (In German) Norbert Häring got an answer to his questions to the ARD (A German state broadcasting organization) about their misconceptions about Greece. He’s not entirely satisfied with their answer (my summary: “it doesn’t matter, as we have programs which show the truth, too”).