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2961. A G-20 caucus for East Asia

Author:
Stephen Grenville and Mark P Thirlwell
Publication Date:
10-2009
Content Type:
Policy Brief
Institution:
Lowy Institute for International Policy
Abstract:
In September 2009 the Pittsburgh Summit designated the G-20 as the world's premier forum for international cooperation. The G-20's arrival at the apex of the international economic architecture gives East Asia a much greater presence at the top table of the world economy: six regional economies, including Australia, are members of the G-20, in contrast to the G7, which only had room for Japan. This increase in representation creates important new opportunities for the region. But making use of these opportunities requires significant increases in policy-making resources. Unfortunately, in many Asian economies, such resources are in short supply relative to the wide variety of pressing problems the region currently faces.
Topic:
Economics, International Cooperation, and International Organization
Political Geography:
Japan, Israel, East Asia, and Australia/Pacific

2962. Getting the Story Right: The True Origin of the Financial Crisis

Author:
John H. Makin, Vincent R. Reinhart, and Peter J. Wallison
Publication Date:
09-2009
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
One year ago, on September 14, Lehman Brothers declared bankruptcy. The next day the Dow fell five hundred points. Soon thereafter, the government essentially nationalized AIG, made Goldman Sachs and Morgan Stanley into bank-holding companies, and petitioned Congress for aid. In early September, Fannie Mae and Freddie Mac had been placed in government conservatorship. These events followed the bursting of the housing bubble. We present here three essays written by AEI scholars in the spring and summer of 2009 on the origins of the financial crisis whose reverberations we continue to feel today. Vincent R. Reinhart sets the stage by reminding us of the importance of getting the story of what happened right, as policy recommendations flow from our understanding of what occurred. He also tells us that “the narrative first written about the Great Depression was wrong in many important respects.” John H. Makin and Peter J. Wallison focus on the misguided policies that contributed to the crisis. In a new Economic Outlook, Makin discusses three important lessons of the financial crisis that should be understood in order to enable a faster, more effective policy response to future crises.
Topic:
Economics, Markets, and Financial Crisis

2963. Flexible Employment, Flexible Families, and the Socialization of Reproduction

Author:
Wolfgang Streeck
Publication Date:
11-2009
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The progress of markets erodes traditional relations of social solidarity that are essential for the stability and performance of societies. As markets advance, pressures build on the state to replace informal social obligations with formal ones. Regulation may fail, however, which tends to give rise to demands for public services substituting for private reciprocity and compliance with institutionalized normative expectations. As a result, demands on public finances increase. The paper demonstrates this sequence by describing how the pressures and attractions of labor markets undermined the “Fordist family” of the 1960s; how the complex interaction between increasingly more flexible employment and loosening family structures resulted in declining fertility in a variety of modern societies; and how providing for societies' physical reproduction increasingly became a matter of public policy in some countries but not in others. Parallels are drawn to active labor market policy and the recent rescue of the money-making industry by Western governments. Moreover, special attention is paid to differences between countries, especially Sweden on the one hand and the United States on the other, in particular to the conditions under which governments apparently can afford not to heed calls for ever deeper and ever more expensive intervention in social relations. Exploring the increasingly negative relationship between fertility and “familialism,” the paper also shows how advanced commodification of labor and individualization of social life has effectively made it impossible to return to traditional social arrangements, such as the postwar family.
Topic:
Economics, Markets, Labor Issues, Sociology, and Governance
Political Geography:
United States

2964. The Double Asymmetry of European Integration Or: Why the EU Cannot Be a Social Market Economy

Author:
Fritz W. Scharpf
Publication Date:
11-2009
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
Judge-made law has played a crucial role in the process of European integration. In the vertical dimension, it has greatly reduced the range of autonomous policy choices in the member states, and it has helped to expand the reach of European competences. At the same time, however, “Integration through Law” does have a liberalizing and deregulatory impact on the socioeconomic regimes of EU member states. This effect is generally compatible with the status quo in liberal market economies, but it tends to undermine the institutions and policy legacies of Continental and Scandinavian social market economies. Given the high consensus requirements of European legislation, this structural asymmetry cannot be corrected through political action at the European level.
Topic:
Economics, Markets, and Regional Cooperation
Political Geography:
Europe

2965. Die Anspruchsinflation des Wirtschaftssystems

Author:
Jens Beckert
Publication Date:
09-2009
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The paper takes a theoretical look at the current financial and economic crisis, drawing on existing theories on crises of capitalism. I develop the thesis that the theories of “ungovernability” and “late capitalism” were wrong in locating the origins of crises in contemporary capitalism only indirectly in the economy. The theory of late capitalism, however, rightfully pointed out that the state cannot reduce its influence over the economy without endangering the functioning of markets themselves. This is due less, however, to the difficulty of maintaining loyalty, i.e. political support for the capitalist system than to the more immediate challenge of sustaining the preconditions for the system's economic viability. Today, a theory of the crises of capitalism must devote much more attention to the intrasystemic preconditions of the economic system.
Topic:
Economics, Markets, Political Theory, and Financial Crisis

2966. The International Monetary Fund and Regulatory Challenges

Author:
Edwin M. Truman
Publication Date:
12-2009
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The International Monetary Fund (IMF) plays a substantial regulatory role in the international monetary and financial system. The IMF has been assigned a formal regulatory role in a limited number of areas such as obligations covering exchange rate policies. The Fund has a broader informal regulatory role derived from the voluntary consent of its members such as in surveillance over members' financial sector policies and international payments imbalances. The IMF's regulatory role is unlike that of its member governments within their own jurisdictions. The Fund's formal and informal regulation must be constantly nurtured and renewed via peer-review processes.
Topic:
Debt, Economics, International Organization, International Trade and Finance, International Monetary Fund, and Monetary Policy

2967. Reconciling Climate Change and Trade Policy

Author:
Arvind Subramanian, Aaditya Mattoo, Dominique van der Mensbrugghe, and Jianwu He
Publication Date:
12-2009
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
There is growing clamor in industrial countries for additional border taxes on imports from countries with lower carbon prices. While this paper confirms the findings of other research that unilateral emissions cuts by industrial countries will have minimal carbon leakage effects, output and exports of energy-intensive manufactures are projected to decline, potentially creating pressure for trade action. A key factor affecting the impact of any border taxes is whether they are based on the carbon content of imports or the carbon content of domestic production. The paper's quantitative estimates suggest that the former action when applied to all merchandise imports would address competitiveness and environmental concerns in high income countries but with serious consequences for trading partners. Border tax adjustment based on the carbon content in domestic production would broadly address the competitiveness concerns of producers in high income countries and less seriously damage developing country trade.
Topic:
Climate Change, Economics, Energy Policy, Environment, and International Trade and Finance
Political Geography:
China

2968. It Should Be a Breeze: Harnessing the Potential of Open Trade and Investment Flows in the Wind Energy Industry

Author:
Jacob Funk Kirkegaard, Thilo Hanemann, and Lutz Weischer
Publication Date:
12-2009
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This working paper maps out the structure and value chains of the wind industry, analyzes the wind industry's increasing global integration via cross-border trade and investment flows, and offers recommendations to policymakers for the design of investment and trade policies to help realize wind energy's potential. We find that demand for wind energy through long-term government support policies creates the basis for local supply of wind capital equipment and services and associated local job creation; policies that put a price on carbon will further help to make wind energy more competitive and increase the overall demand for turbines and equipment. Cross-border investment rather than trade is the dominant mode of the wind industry's global integration. Principal barriers to global integration are nontariff trade barriers and formal and informal barriers that distort firms' investment decisions. These include local content requirements, divergent national industrial standards and licensing demands, and in particular political expectations. Intellectual property accounts for only a very small part of cost in the wind industry, and wind technology is widely available for licensing. Intellectual property rights are correspondingly not a major impediment for market participation. Credible long-term commitments coupled with a reduction or elimination of existing barriers to cross-border trade and investment are necessary to harness the full potential of global integration in reducing wind industry prices and increase worldwide deployment of wind energy.
Topic:
Economics, Energy Policy, Environment, and Foreign Direct Investment

2969. The Dollar and the Deficits

Author:
C. Fred Bergsten
Publication Date:
11-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
The global economic crisis has revealed the folly of large U.S. budget and trade deficits, as well as of the strong dollar that makes them possible. If it is serious about recovery, the United States must balance the budget, stimulate private saving, and embrace a declining dollar.
Topic:
Economics and Monetary Policy
Political Geography:
United States

2970. Turkey's Transformers

Author:
Morton I. Abramowitz and Henri J. Barkey
Publication Date:
11-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
Turkey hopes to be a global power, but it has not yet become even the regional player that the ruling AKP declares it to be. Can the AKP do better, or will it be held back by its Islamist past and the conservative inclinations of its core constituents?
Topic:
Economics
Political Geography:
Europe and Turkey