Over the last four years the U.S. trade deficit has persistently set new records, hitting $716.7 billion in 2005, equal to 5.7 percent of GDP. The trade deficit has both real and financial effects. Real effects refer to impacts on employment, incomes, and manufacturing capacity. Financial effects refer to the impact of accumulated indebtedness resulting from borrowing to finance the deficit. Read the rest of this entry »
The Economics and Politics of Trade Deficits
November 13th, 2006Replace Europe’s Growth and Stability Pact with Market Discipline and Democracy
October 30th, 2006As part of the euro’s introduction, European governments agreed to constrain their budget policies through the Growth and Stability Pact. Though euphemistically termed the “growth and stability†pact, it in fact delivers neither. Moreover, owing to the constraints the pact places on national economic sovereignty, it risks contributing to political strains that threaten to undermine support for the euro. For these reasons, it is time to abandon the pact. In its place, Europe should let democracy and financial markets arbitrate the long-term viability of government fiscal policies. Read the rest of this entry »
Globalization and IT: Setting the Record Straight
October 12th, 2006Over the last three years there has been an explosion of public concern about the wage and employment impacts of global outsourcing. As a result, worries about globalization have begun to move up the income ladder, infecting white-collar middle-class workers. For instance, a poll conducted in May 2004 for the Associated Press reported that sixty-nine percent of Americans believe outsourcing hurts the economy. Recognizing the potential threat this shift of public opinion poses to corporate globalization, business groups have been busy playing a game of catch-up seeking to allay these new more broadly shared public fears. Read the rest of this entry »
A Question of Power
September 28th, 2006Recently, there has been growing recognition of the enormous increase in U.S. income inequality that has occurred over the last twenty-five years, bringing back inequality levels not seen since 1929. Paul Krugman has written of the danger of a new oligarchy, whose wealth is such that it may be able to control an economy and society even as large as the United States. Read the rest of this entry »
Trade Deficits Matter
September 22nd, 2006Over the last several years the U.S. trade deficit has persistently set new records, hitting $717 billion in 2005, equal to almost 6 percent of GDP. China, in particular has contributed to the deficit, and now accounts for just shy of one-third of the total. By any historical standard, the economic warning lights are flashing red. Read the rest of this entry »
Fighting the Flat-Earthers
September 17th, 2006Progressives and trade unionists frequently complain about how globalization has tilted the playing field in favor of capital. By facilitating international trade and cross-border investment, globalization has enabled capital to go mobile. This has created multiple exit options for capital, and the credible threat of movement to other countries has raised capital’s economic and political bargaining power. Corporations, who control capital, have then used this increased power to shift income distribution in favor of profits, roll back taxes, and challenge policies promoting social protection and inclusion. Read the rest of this entry »
Globalization Tames the Left in Brazil
September 11th, 2006This October Brazilians will go to the polls in an election that constitutes a referendum on the presidency of Lula da Silva. As the candidate of the Workers Party, or Partido dos Trabalhadores (PT), Lula was elected in 2002 on a platform of progressive social democracy. Yet over the last four years, his macroeconomic policies have been marked by extreme caution and capitulation to the pressures of globalization. Consequently, Brazil has missed a golden opportunity provided by a robust global economy to chart a new and vibrant economic trajectory. Read the rest of this entry »
Why the World Pays Dollar Tribute
June 30th, 2006The U.S. dollar is much in the news these days and there is a sense that the world economy may have become excessively reliant on the dollar. This reliance smacks of dysfunctional co-dependence whereby the U.S. and the rest of the world both rely on the dollar’s strength, but neither is well served by it. Read the rest of this entry »
Markets and the Common Good
June 12th, 2006Like a modern-day Rip Van Winkle, there are indications that the Democratic Party may finally be awakening from its long slumber and realizing it lacks a compelling identity. That lack of identity is especially clear regarding the economy, and it contrasts with Republicans who have long emphasized free markets. The current moment of Republican unraveling offers Democrats an historic opportunity to close this identity gap and change the direction of American politics. Read the rest of this entry »
Time for a New Trade Agenda
May 26th, 2006The Doha round of trade liberalization negotiations is in deep trouble, and with good reason. Though positioned as a “development†round intended to benefit the world’s poorest countries, it in fact does little in that regard. On close examination Doha turns out to be a Trojan horse that pushes the type of trade liberalization that has made globalization so deeply unpopular and unfair. Read the rest of this entry »