Is a more inclusive and sustainable development possible in Brazil? – a WEA online conference:

This conference on sustainable development is now open and you are invited to leave comments on the papers on the conference site.
click here to leave comments

For an introduction to the background to the conference and the themes of the call for papers click here ›

THR PAPERS 

Twenty years since NAFTA: Mexico could have done worse, but it’s not clear how

from Mark Weisbrot

It was 20 years ago that the North American Free Trade Agreement (NAFTA) between the U.S., Canada, and Mexico was implemented. Here in Washington, D.C., the date coincided with an outbreak of the bacteria cryptosporidium in the city’s water supply, with residents having to boil their water before drinking it. The joke in town was, “See what happens, NAFTA takes effect and you can’t drink the water here.”

Our neglected infrastructure aside, it is easy to see that NAFTA was a bad deal [PDF] for most Americans. The promised trade surpluses with Mexico turned out to be deficits, some hundreds of thousands of jobs were lost, and there was downward pressure on U.S. wages – which was, after all, the purpose of the agreement. This was not like the European Union’s (pre-eurozone) economic integration, which allocated hundreds of billions of dollars of development aid to the poorer countries of Europe so as to pull their living standards up toward the average. The idea was to push U.S. wages downward, toward Mexico’s, and to create new rights for corporations within the trade area: these lucky multinational enterprises could now sue governments directly before a corporate-friendly international tribunal, unaccountable to any national judicial system, for regulations (e.g. environmental) that infringed upon their profit-making potential.

But what about Mexico?

The China syndrome and Paul Krugman’s latest

from David Ruccio

Readers will remember the China syndrome: the fear of a nuclear meltdown in the West, in which reactor components melt through their containment structures and into the underlying earth, “all the way to China.” Now, to judge by Paul Krugman’s latest, the fear seems to be running in the opposite direction: the fear is that an economic meltdown in China will make its way “all the way to the West.”

The fact is, mainstream economists in the West have a particularly difficult time making sense of the Chinese economy, based on the fear that the West has failed in its mission to show China and the rest of the world its future. Last year, it was Daron Acemoglu who worried that the development of capitalism in China was based not on a “happy connection between prosperity and democracy” but, instead, on a system in which “rulers have been able to deliver strong economic growth without surrendering political and social control.” Krugman’s fear is a bit different: that the period of massive investment based on low wages is coming to an end and what China needs, but is failing to engineer, is an increase in private consumption.

Stiglitz explains how patent protection both slows growth and increases inequality

from Dean Baker

Very nice column from one of my favorite Nobel prize winning economists. Stiglitz explains some of the ways in which patent protection impedes growth and increases inequality.

It’s great to see Stiglitz raising alternatives to patents for financing research, but I would disagree with the prize for patent buyouts that he proposes as being the best alternative. I have always preferred a system of direct upfront funding, which could be done through private firms operating on long-term contracts. In response to a number of requests, here is the argument in brief. (Here‘s a little longer discussion.)

The economics behind the killings of South African mine workers

from Deniz Kellecioglu

“We were only tolerated simply because our cheap labour is needed.” (Steve Biko)

The killings of 34 demonstrating mine workers in South Africa last month has several background factors, but two of them stand out: police brutality and the exploitation of workers. And they are interlinked.

The aggressiveness of the security forces’ represent the conditioning produced by the governmentality of national and international elites. Thus, the assault in Marikana, South Africa is not an isolated event, it’s a global phenomenon. One major difference is the explicitness of this event – workers usually perish in silence due to, for instance, poor health or social violence, away from the cameras.

The economics behind this governmentality propose that the labour market has to be “flexible” to the demands of “the market”. In other words,

Argentina and the magic soybean: the commodity export boom that wasn’t

from Mark Weisbrot

One of the great myths about the Argentine economy that is repeated nearly every day is that the rapid growth of the Argentine economy during the past decade has been a “commodity export boom.” For example, The New York Times reported last week:

“Riding an export boom for commodities like soybeans, Argentina’s economy grew at an average rate of 7.7 percent from 2004 to 2010, almost twice the average annual growth of 4.3 percent in Chile, a country often cited as a model for economic policies, over the same period.”

Michael Shifter, the President of the Inter-American Dialogue and probably the most-quoted source on Latin America in the U.S. press, wrote in a disparaging article about Argentina this week that

“If the sales and price of soybean, Argentina’s principal export (mainly to China), remain high, then the country may be able to continue its path of economic growth. “

I haven’t seen any economists make the claim that Argentina’s remarkable economic growth over the past nine years – which has brought record levels of employment and a two-thirds reduction in poverty – has been driven by soybeans or a commodities export boom. Maybe that’s because it’s not true. 

The re-colonisation of the Arab world

from Ali Kadri

Despite vast financial wealth, natural and human resources, the Arab World remains underdeveloped and more than half the population is condemned to a life of poverty. Instead of underdevelopment, a more fitting concept that would capture the recent historical phase would be that of reverse development or de-development. De-development represents a combination of retrogression in the build-up of physical capital and a denial of the right of people to struggle to build a better life by repression and absolute authoritarianism. Although capital accumulation entails a blend of expansion of market driven forces (commodity realisation) and development by encroachment and dispossession (control by violent means including imperial plunder of third world resources), in the Arab world, the latter pattern of accumulation held primacy, hence, determining the pace of development altogether.