Global economics

The BRICS just became impossible to ignore. At the close of the Fifth annual BRICS Summit in Durban, South Africa last week, there was little question that this group of five fast-growing economies was underwriting an overhaul of the global economic and political order. The eThekwini Declaration issued at summit’s end was couched in non-confrontational language, but it was manifestly clear that western hegemony and unipolarity were being targeted at this meeting. The BRICS hit some major western sore spots by announcing the formation of a $50 billion jointly-funded development bank to rival the IMF and World Bank. Deals were signed to increase inter-BRICS trade in their own currencies, further eroding the US dollar’s status as the world’s reserve currency. A series of unmistakable challenges were dealt to old world leaders: reform your institutions and economies – or we’ll do it ourselves. Intent on filling a leadership void in global...

Partyocracy-Technocracy-Autocracy-Bankocracy…? There is a crisis in the Western or more particularly the Indo-European political system – for reasons to be made clear. The system is referred to as “democracy”, meaning rule with the consent of the ruled; of, by and for the people. In practice this is interpreted as multi-party national elections for a national assembly, and majority rule in its two major forms, presidential and parliamentary democracy. The minority is given the role as “loyal opposition”. The sovereign, people, are given choices not between positions on issues, but “platforms”, issue-bundles; and not between candidates, but candidate-bundles, “lists”, designed not by the parties, but by executive committees, officers, even by one officer, the boss. And this choice the sovereign can make only once every four years when a power window opens one or two days, 8-10 hours, called elections. The system is better referred to as partyocracy than democracy, a...

/10/jonathanpower2.jpg”> Go Into the casino in Tanzania’s capital, Dar Es Salaam and what strikes you? The overwhelming number of players is Chinese. If the Chinese are not quite everywhere in Africa their numbers, their investments and their trade has mushroomed over the last ten years. If one compares Chinese and US investment in Tanzania there is no contest despite Tanzania being one of the US’s favourites. Overlooked is that China has been in Africa twice before.

A crisis so massive–with the health network in Greece collapsing and 50 percent of Spanish youth unemployed–begs for big causes. Some unknown planet with great gravitation pull, some super-radioactive element not yet identified? Probably; there may be more causes lining up–efforts to destroy the welfare state and to save the US$ as the world currency-but for the time being we have to do with what we have. Here are Four Big ones:

/10/jonathanpower2.jpg”> The Germans are at it again. As Mario Monti, Italy’s prime minister, quipped: for Germany “economics is a branch of moral philosophy”- i.e. punish the sinners. Unless the southern nations- Italy, Spain, Portugal and Greece- admit their past wickedness and purge themselves until it hurts, even tortures them, they will never recover. Forgotten are such German sins as its own banks investing heavily in the Spanish housing boom which when it bust dragged down the whole economy, taking government revenues with it or being the first country in Europe the agreed 3% limit on budget deficits.

Keynote Speech at the UN Human Rights Council SOCIAL FORUM  Your Excellencies! The title for this Sixth Social Forum – in the context of the 10 Articles of the UN Declaration on the Right to Development of 4 December 1986 – is very well chosen. The focus is on people-centered development – as opposed to system – centered economic growth. And on globalization, a challenging process involving all states and regions, nations and civilizations, humans and nature – as opposed to a globalized market with only three free flows, of capital, goods and services, not labor; increasing the global economic gap. And this in the context of rampant poverty, widening domestic inequalities, economic crises due to the disconnect between real and finance economies and greedy speculation, rising unemployment and popular unrest. Yesterday’s map dividing the world in developed and developing countries makes little sense when many of the developed are...

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The chairman of Britain’s Financial Services Authority argues that in the decades before the collapse of Western financial markets in 2007, too many economists were practicing a wrong-headed kind of economics. Their obsession with designing intricate mathematical models pushed moral, ethical and practical considerations too far into the background. It is high time for that to change. In a short article in “The Globalist” Lord Turner discusses some of these issues. Due to its significance to our understanding of what has gone wrong, I have reprinted it below for your keen interest. Before you begin to read Lord Turner’s wise words, I want to share something coming from my heart with you. It saddens me that when about 15 years ago, I began to say very similar things to what Lord Turner is saying now, my so-called fellow academic colleagues accused me of having gone mad. They told me, if...

From Jondal, Norway Writes Eduardo Porter on The New York Times: “Perhaps the most surprising aspect of the Libor scandal is how familiar it seems. Sure, for some of the world’s leading banks to try to manipulate one of the most important interest rates in contemporary finance is clearly egregious. But is that worse than packaging billions of dollars worth of dubious mortgages into a bond and having it stamped with a Triple-A rating to sell to some dupe down the road while betting against it? Or how about forging documents on an industrial scale to foreclose fraudulently on countless homeowners?” A useful summary of the situation as of today. But, a summary of what? What is this? We have been through many answers starting with credit squeeze, then a real estate bubble that burst, toxic assets, credit swaps, hedge funds, derivatives – bets with the money of other people,...

It was only a few years ago that Europe was being praised as the savior of world order, and heralded as the hope for the future of world order. Books with such titles as The European Superpower and Why Europe Will Run the 21st Century were widely read. They celebrated the realities of a European post-colonial recovery, even a new type of ascendancy, results that were welcomed by many who hoped for a more peaceful and equitable world. I shared much of this enthusiasm, believing that the European Union was a bold and generally progressive experiment in regionalism that was better suited to our era of intensifying globalization than a state-centric world of sovereign territorial communities habituated to the dynamics of warfare.

The UN Alliance of Civilization (AOC) was initiated by Kofi Annan in 2005 while he was Secretary General of the UN with the joint sponsorship of Turkey and Spain, with its principal center of operations in Istanbul. It was formed under the dark skies that existed after the 9/11 attacks, and seeks to provide an alternative narrative to that of inter-civilizational war, that starkly negative scenario of Islam versus the West associated with the inflammatory views of Bernard Lewis and Samuel Huntington that continues to provide fuel for Islamophobia that burns ever more brightly in Europe and North America. It was several years since I had heard as many references to Huntington’s ‘clash of civilizations’ thesis as I did during the discussions and presentations at the Istanbul Forum, which was opened by speeches made by Recep Tayyip Erdogan, the Prime Minister of Turkey, and Ban Ki Moon, the current UN...

/10/jonathanpower2.jpg”> Last week as we watched Mitt Romney win the right to challenge Barack Obama in November’s general election the last thing that most people were thinking about were sea and oceans. Yet the last Republican president, George W. Bush, at this point in the electoral cycle announced that, if elected, he would move to ratify the UN’s Law of the Sea. He never did. But also last week Secretary of State Hillary Clinton flanked by the senior brass from the military announced that this Administration was immediately going to push Congress to vote for the long delayed ratification of the treaty. All the road blocks of the last thirty years since President Reagan decided to torpedo the treaty have been removed and Congress is poised to give the White House the green light on ratification.