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And Here I Had Some Faint Hope for Biden

Published by Anonymous (not verified) on Fri, 20/11/2020 - 10:03am in

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policy

After the election, Senate minority leader Schumer noted that Biden, using an administrative order, could wipe $50K worth of student debt off every student loan debtor. Coming from someone so senior, this seemed like a serious proposal. It was hard to believe Biden would do something like that (after all, the bankruptcy bill that made discharging student loans in bankruptcy was his baby), BUT he does need a win and Schumer isn’t exactly a radical left-winger.

So I held out some small hope Biden might actually do it; something wide-based which would make a huge difference in people’s lives. Something BIG and GOOD.

But Biden is a means-testing, caviling centrist to his core, apparently unable to even conceive of broad based popular actions:

President-elect Joe Biden affirmed his support for erasing some student debt “immediately.” The provision calls for the federal government to pay off up to $10,000 in private, nonfederal student loans for “economically distressed” borrowers.

Sigh.

This is okayish, and it will help some people, but no one is going to be singing Biden’s praises to the heavens. He was offered an easy win, with party centrist support, and he refused to do it.

It’s good politics, it’s good economics (it frees up a ton of demand), and it’s morally the right thing to do.

(I am fundraising to determine how much I’ll write this year. If you value my writing and want more of it, please consider donating.)

But, and this is important, Biden almost certainly doesn’t believe that. He believes in the sanctity of debts, that the government should knee-break (errr, “enforce”) for private lenders, and that only the most desperate or the richest Americans should get help from the government.

This is how he has acted throughout his career. This is what he thinks is right, and proper, so it is what he is doing. The idea, pushed by many liberals, that he could be pressured to implement or champion left-wing policies once he was elected was always ludicrous. Even more ludicrous were the comparisons with FDR. FDR was already a left-winger when he became President; as governor of New York, he had run the most aggressive relief program in the US.

When FDR said “Make me do it” what he meant was that he already wanted to do it, but needed public pressure and support. It was his way of saying “Make a lot of noise and demands, I want you to.”

Biden doesn’t want to do left wing populism. He never has during his career and he’s not going to change.

Again, that doesn’t mean he won’t be better on some things (Iran, national parks, Covid), just that he’s not going to govern the way progressives want. In Biden’s case, you truly WILL have to make him do things, like gays forced Obama to support them by both donation-striking and getting in his and his wife’s personal space, and making their lives uncomfortable.

Since most progressives aren’t willing to do that (gays remember AIDS and know their rights and power are a matter of life and death), very little will be gotten from Biden that is good. He is going to have a ton of pressure on him from the right, as well, and in his career he has shown much more willingness to give the right what it wants than the left. This, again, is because he actually believes the right is legitimate and that the left isn’t.

It’s going to be a long few years, though, given his frailty, we may wind up talking about President Harris.

Take care of yourselves, and don’t expect big help from the new administration.

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Reducing gender inequality and boosting the economy: fiscal policy after COVID-19

Published by Anonymous (not verified) on Wed, 30/09/2020 - 6:00am in

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Blog, Australia, policy

Introduction

The economic impacts of the COVID-19 health crisis have increased gender inequalities in the Australian labour market. With women over-represented in lower-paid, insecure and casual jobs, and shouldering the majority of unpaid domestic and care labour prior to the pandemic, the crisis has rapidly widened the gap between men and women’s economic security.1 The prolonged economic downturn is expected to deepen this pattern further. Economic stimulus policies that prioritise gender equality will be essential to building a recovery that is inclusive and maximises jobs, productivity and human capital formation.

Labour force survey data covering the immediate impact of the crisis show that women’s employment has been hardest hit, contracting by 7.4 per cent between February and May 2020 compared with 5.6 per cent for men, equating to 457,000 jobs lost by women.2 The female participation rate has also fallen sharply – down 3.5 per cent compared to 2.7 per cent for men. The withdrawal of so many women from the labour market reflects not only the severity of the economic contraction, but also the intensification of women’s domestic workload during the COVID crisis and complex household calculations about women’s labour supply. Current policy settings on the cost of early child- hood education and care (ECEC) are likely to further constrain women’s re-engagement in the labour market during the economic downturn.

Sustained unemployment and withdrawal of women from the Australian labour market will cost the Australian economy billions of dollars in lost productivity and growth, compromising women’s long-term economic security.3 The good news is that governments can use fiscal stimulus as a powerful policy tool to boost women’s employment while also strengthening economic growth.4 The remainder of this paper will highlight two areas of fiscal policy that can deliver a strong, gender-inclusive recovery.

Stimulus investment in social infrastructure

Traditionally, economic stimulus has been focused on large-scale physical infrastructure projects that disproportionately employ men and leave women largely excluded from the immediate benefits of stimulus measures. However, a growing body of literature is pointing to the economic benefits of ‘gender-responsive fiscal measures’.5 New research on the employment gains of investment in social infrastructure, such as education, health and care services, show there are more employment-intensive and gender equitable forms of macro-economic stimulus available to governments during periods of economic crisis.6

A study of seven OECD countries shows that public investment equal to one per cent of GDP in labour intensive care industries generates more total employment, including indirect and induced employment, than investment in construction – especially for women, and almost as much employment for men.7 The economic simulation for the Australian economy shows that:

  • The boost to direct employment from a one per cent GDP investment in care industries is almost five times greater than the direct employment generated in construction;
  • The impact of one per cent GDP investment in care industries on the overall rate of employment (direct, indirect and induced)8 would be twice that of investment in the construction sector;
  • Women stand to gain two-thirds of the new jobs created under the care sector scenario but only one-third of jobs generated if the investment was in construction;
  • Investment in care reduces the gender pay gap whereas investment in the construction sector widens the existing gender employment gap in favour of men.

Other recent analysis reveals the employment and gender equality benefits of stimulus in labour intensive feminised sectors. Comparing a $1 million public investment in education, health and construction, Richardson and Denniss estimate the employment boost from stimulus in male-dominated construction to be minimal (only 1.2 jobs) compared to the female-dominated education (14.9) and health (10.2) sectors.9 Of the jobs created in education and health, the majority are estimated to go to women (10.6 and 7.9 respectively) with only 0.2 of the jobs in construction.10

Employment creation for men is also greater in education and health than in construction. This is not to suggest that stimulus should not be made in construction, only that government should take a more balanced approach to fiscal policy that reflects the contemporary structure of the economy, generates maximum employment outcomes per investment dollar and includes women.11

COVID recovery stimulus in the care, health and education sectors has additional economic benefits: it increases community wellbeing and human capital formation, boosting long term productivity; it frees those with caring responsibilities (mostly women) to engage in paid work by making care services more widely available; and the well-being impact of increased resourcing and jobs in health, education and care ameliorates broad patterns of socio-economic inequality and disadvantage that the pandemic crisis has exposed and increased.12

Subsidised early childhood education and care (ECEC)

Affordable and accessible high quality early childhood education and care (ECEC) is a critical piece of economic infrastructure in normal times, and even more so in the COVID recovery. The Prime Minister, Scott Morrison, acknowledged the sector’s ‘vital’ economic contribution as essential to ‘running Australia’ when he announced free ECEC as part of the child care relief package in April.13 But by early June, the government announced free ECEC would end, and introduced a transition package that reinstated the Child Care Subsidy (from 13 July 2020) under which many parents pay a gap fee.14 ECEC advocates, providers and researchers are concerned that the return to the previous system is not the most appropriate funding model for an economy with high rates of unemployment.15 Advocates are particularly concerned that if the out-of-pocket cost of ECEC for families facing unemployment or significant economic insecurity remains high, it will be women who forgo employment and retreat to the home to undertake child and other care duties that the pandemic has intensified.16 The slump in female workforce participation in April and May shows the crisis is already having a negative impact on women’s labour supply. The return of out-of-pocket fees for ECEC is likely to increase this trend, particularly given the high effective marginal tax rates that are a structural feature of the interaction between Australia’s ECEC system of subsidies and other family payments.17Results from initial surveys by the sector confirm this possibility and suggest the current structure of ECEC policy will not support a dynamic and gender inclusive economic recovery.18

Public subsidies for ECEC that provide universal access for all Australian children would deliver a triple-win for the Australian economy. First, they would support women’s labour force participation in the recovery period, generating billions of dollars in national wealth and boosting GDP.19 Second, the upswing in demand for ECEC would generate additional jobs in the ECEC sector, the majority of which would be done by women.20 Third, universal access to ECEC will promote the education, well-being and life-chances of all children, especially those from vulnerable households.

The interests of children have been largely missing from the debate about ECEC that the pandemic has sparked. UNICEF reports the number of vulnerable children has increased on account of pandemic-induced unemployment and the impact of the lockdown on health and schooling.21 ECEC can help prevent the long-term impact of this disruption on children’s learning and development outcomes. Stimulus investment in ECEC will pay strong economic dividends and curb intergenerational inequality.22

The conditions of the COVID crisis call for a more systematic review of public funding for ECEC. The pandemic provides government with an opportunity to review and reconstruct public funding for ECEC to deliver long term participation and productivity benefits that will support the recovery and deliver prosperity into the future.23

These gender-responsive fiscal measures do not stand alone. They must be supported by two other essential inputs: women’s inclusion in leadership for recovery planning24 and gendered employment analyses of all recovery policy options, including the impact of fiscal policy on unpaid work. Unpaid work must be included as part of the policy landscape given its massive contribution to economic growth and productivity.25 Failure to do so will distort policy making.

The economic cost of a gender-blind approach to the government’s COVID recovery strategy will be very high in terms of Australia’s economic growth and prosperity. It will compromise the efficiency of our labour markets, constrain productivity, and limit wellbeing while increasing economic insecurity and reducing labour force participation for women. Current fiscal policy settings will discourage women’s labour force participation, but it is not too late to change tack. The economic downturn is expected to be long and deep, leaving government plenty of opportunities to implement gender-responsive fiscal measures: Australia’s prosperity and wellbeing depends upon them doing so.

Endnotes

  1. Cooper, R. and S. Mosseri ‘Pandemic has impacted women most significantly’ June 5, 2020 https://www.smh.com.au/business/workplace/pandemic-has-impacted-women-most-significantly-20200604-p54ziu.html
  2. ABS labour force survey, Cat no. 6202.0 – Labour Force, Australia, May 2020. https://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0
  3. Gaps in gender equality pre-COVID have been estimated to cost the Australian economy approximately $225 Billion or 12% GDP, see McKinsey Global Institute, The Power of Parity: Advancing Women’s Equality in Asia Pacific, April 2018. https://www.mckinsey.com/featured-insights/gender-equality/the-power-of-parity-advancing-womens-equality-in-asia-pacific.  More targeted estimates have found that if an additional 6 per cent of women entered the workforce, up to $25 billion would be added to GDP (Grattan Institute, 2012, Game-changers: Economic reform priorities for Australia); and the OECD estimates that closing the gender participation gap by 75 per cent could increase growth in Australian GDP per capita ( OECD, 2012, Closing the Gender Gap: Act Now).
  4. Fabrizio, S, A Fruttero, D Gurara, L Kolovich, V Malta, M M Tavares and N Tchelishvili, 2020, ‘Women in the Labor Force: The Role of Fiscal Policies’, IMF Staff Discussion Note No. 20/03. https://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2020/02/11/Women-in-the-Labor-Force-The-Role-of-Fiscal-Policies-46237
  5. Ibid.
  6. See for example, Antonopoulos, R. and K Kijong, 2011. Public job-creation programs: The economic benefits of investing in social care? Case studies in South Africa and the United States, Working Paper, Levy Economics Institute, No. 671; Ilkkaracan, I., Kijong, K., and Kaya, T. 2015. The Impact of Public Investment in Social Care Services on Employment, Gender Equality and Poverty: The Turkish Case. İstanbul Technical University, Women’s Studies Center in Science, Engineering and Technology and Levy Bard Institute. http://www.levyinstitute.org/pubs/rpr_8_15.pdf
  7. de Henau, J and S. Himmelweit, 2020, ‘The gendered employment gains of investing in social vs. physical infrastructure: evidence from simulations across seven OECD countries’, IKD Working Paper No. 84 April 2020, http://www.open.ac.uk/ikd/sites/www.open.ac.uk.ikd/files/files/working-papers/DeHenauApril2020v3.pdf The study includes Australia, Denmark, Germany, Italy, Japan, the UK, and the USA.
  8. Direct employment includes employment created in the industry in which investment takes place; indirect employment refers to those jobs created by new demand in that sector; and induced employment includes the employment effects of increased household income generated by the initial investment.
  9. Richardson, D. and R. Denniss, 2020, ‘Gender experiences during the COVID-19 lockdown, The Australia Institute, June 2020. https://www.tai.org.au/sites/default/files/Gender%20experience%20during%20the%20COVID-19%20lockdown.pdf
  10. These results only refer to the direct employment effects of additional spending on each industry and does not include the indirect or ‘second round’ employment effects that can be expected over time.
  11. The Productivity Commission recently acknowledged that failure to include sectors such as healthcare and social assistance, education and training, and public administration and safety from assessments of national economic performance “is increasingly problematic given their increasing significance.”(2019, p5) https://www.pc.gov.au/research/ongoing/productivity-insights/2019/productivity-bulletin-2019.pdf
  12. Noble, K., P. Hurley and S. Macklin, June 7, 2020, ‘Number of Australia’s vulnerable children is set to double as COVID-19 takes its toll’ https://theconversation.com/number-of-australias-vulnerable-children-is-set-to-double-as-covid-19-takes-its-toll-140057; Andrew Leigh ‘The poor bear the burden of the coronavirus downturn, but inequality is not inevitable in Australia’ https://www.theguardian.com/commentisfree/2020/apr/13/the-poor-bear-the-burden-of-the-coronavirus-downturn-but-inequality-is-not-inevitable-in-australia
  13. On 2 April 2020, the Australian Government announced the Early Childhood Education and Care Relief Package. Prime Minister, Minister for Education, media release, April 2nd 2020 https://www.pm.gov.au/media/early-childhood-education-and-care-relief-package; 9 News, April 2nd https://www.youtube.com/watch?v=9mbi4rum9aI
  14. https://ministers.dese.gov.au/tehan/return-child-care-subsidy
  15. Early Childhood Australia, May 2020, Submission to the Senate Select Committee on COVID-19 and The Australian Work + Family Policy Roundtable, June 2020, Submission to the Senate Select Committee on COVID-19 https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/COVID-19/COVID19; Georgia Dent, 19 June 2020 ‘Dan Tehan: Please note more research showing families cannot afford pre-COVID19 childcare fees’, https://womensagenda.com.au/latest/dan-tehan-please-note-more-research-showing-families-cannot-afford-pre-covid19-childcare-fees/; June 5 2020 ‘1 in 4 families will face higher out of pocket fees for childcare in July’ https://womensagenda.com.au/latest/1-in-4-families-will-face-higher-out-of-pocket-fees-for-childcare-in-july/
  16. Priestly, A., 9 June 2020, ‘As childcare fees are reintroduced in July women’s participation will pay the cost.’ https://womensagenda.com.au/latest/as-childcare-fees-are-reintroduced-in-july-womens-participation-will-pay-the-cost/; The Parenthood, Media release 1 June 2020, https://d3n8a8pro7vhmx.cloudfront.net/theparenthood/pages/20/attachments/original/1590987325/200601_-_Full_survey_data_case_against_snap_back_MR.pdf?1590987325;
  17. Stewart, M. August 2018, ‘Personal income tax cuts and the new Child Care Subsidy: Do they address high effective marginal tax rates on women’s work?’, TTPI – Policy Brief 1/2018, https://taxpolicy.crawford.anu.edu.au/sites/default/files/uploads/taxstu...
  18. The Parenthood, Media release 1 June 2020, ibid; F. Hunter ‘Thousands of families could withdraw from childcare if fees reimposed’, The Sydney Morning Herald, May 29th https://www.smh.com.au/politics/federal/thousands-of-families-could-withdraw-from-childcare-if-fees-reimposed-20200529-p54xq9.html
  19. McKinsey Global Institute, 2018, ibid.
  20. More than 90% of ECEC workers are female. https://docs.education.gov.au/system/files/doc/other/2016_ecec_nwc_national_report_sep_2017_0.pdf
  21. Noble, K et al, 2020, ibid (footnote 8); UNICEF, April 3 2020, ‘Protecting the most vulnerable children from the impact of coronavirus: An agenda for action’, https://www.unicef.org/coronavirus/agenda-for-action
  22. Analysis commissioned by the Front Project, and conducted by PwC, showed that every dollar invested in pre-school education returns $2 in national economic benefit to the country, https://www.thefrontproject.org.au/initiatives/economic-analysis. US analysis finds access to high quality ECEC delivers an economic return as high as 13% per year, per child, over a lifetime, see https://www.nber.org/papers/w11331.pdf and https://heckmanequation.org/resource/13-roi-toolbox/
  23. Wood, D., K. Griffiths and O. Emslie, April 27, 2020, ‘ Permanently raising the Child Care Subsidy is an economic opportunity too good to miss’ https://theconversation.com/permanently-raising-the-child-care-subsidy-is-an-economic-opportunity-too-good-to-miss-136856
  24. United Nations, 9 April 2020, Policy Brief: The Impact of COVID-19 on Women, https://www.unwomen.org/en/digital-library/publications/2020/04/policy-brief-the-impact-of-covid-19-on-women; Garikipati, S. and U. Kambhampati, June 3,2020, ‘Leading the Fight Against the Pandemic: Does Gender ‘Really’ Matter?’. Available at SSRN: https://ssrn.com/abstract=3617953 or http://dx.doi.org/10.2139/ssrn.3617953
  25. Elson D. 2004, ‘Social Policy and Macroeconomic Performance: Integrating ‘the Economic’ and ‘the Social’’. In: Mkandawire T. (eds) Social Policy in a Development Context. Social Policy in a Development Context. Palgrave Macmillan, London, https://doi.org/10.1057/9780230523975_3

Originally published by the Committee for Economic Development of Australia (CEDA)

The post Reducing gender inequality and boosting the economy: fiscal policy after COVID-19 appeared first on Progress in Political Economy (PPE).

Between science and policy—Scrutinising the role of SAGE in providing scientific advice to government

Published by Anonymous (not verified) on Thu, 10/09/2020 - 4:59pm in

Reflecting on his role as chair of the Science and Technology Select Committee, Greg Clark MP, discusses the effectiveness of the UK’s scientific advisory body SAGE during the COVID-19 pandemic and considers the importance of transparency in assessing the extent to which scientific research can effectively guide government policy.   Since March, the Committee that … Continued

Why do we need to transform economics, and how do we do it?

Published by Anonymous (not verified) on Tue, 18/08/2020 - 2:21am in

In a profoundly invigorating keynote speech, Professor Jayati Ghosh, Chairperson of the Centre for Economic Studies and Planning at the of Jawaharlal Nehru University, urges young economists to to take initiative and transform their discipline. Outlining eight problems with the status quo, and providing five clear ways to combat them, she inspires the next generation of economists to forge alliances, gather strength, and most importantly: be bold.

Keynote Lecture to UNCTAD-YSI Summer School 2020 

By Jayati Ghosh | It’s truly a delight for me to be able to address the UNCTAD-YSI Summer School. This is not only because these are two groups that I have huge respect for and sympathy with. It’s also because the theme of this Summer School (“From the Transformation of Economics to Economic Transformation: Pathways to a Better Future”) is something very close to my heart, something I and some of my colleagues have been grappling with for decades. It’s really quite energising to realise that there are so many young people willing to engage in this project. So I am going to treat this as an opportunity for me to think through some of the concerns I have, in the hope that all of you are going to be the ones taking forward this transformation. 

Mainstream economics, why do I not love thee? Let me count the ways. 

First, a lot of it is simply wrong: that is, it is misleading about how economies work and the implications of economic policies and processes. For decades now, a significant and powerful lobby within the discipline has peddled half-truths and absolute falsehoods on many critical issues: 

  • how financial markets work and whether they are or can be “efficient” without regulation; 
  • the role and nature of fiscal policy and the implications of austerity; 
  • what impact the deregulation of labour markets and wages actually has on employment and unemployment; 
  • how patterns of international trade and investment affect livelihoods and possibilities of industrialisation and diversification; 
  • the distributive effects of different macroeconomic policies; 
  • the extent to which private investment responds positively (or not) to policy incentives like tax breaks and subsidies or negatively to increased government spending; 
  • the effects of multinational investment and global value chains on producers and consumers in particular countries; 
  • the ecological damage created by patterns of production and consumption; 
  • whether tighter intellectual property rights are really necessary to promote invention and innovation; 

And so on—I could go on and on, these are just some of the more evident examples, and you can probably think of many more if you just take the time to do so. But if these are so wrong, why is this not widely known, and how are they so widely propagated? This is done through a fearsome combination of explicit and implicit controls within the discipline (which I will talk about) and without in the wider world through media and by imbuing policy circles with these mistaken notions. 

Some of this comes from the second major problem I have with the discipline: too much of it is in the service of power.

And the power that it increasingly serves is that of large capital and its supporting states: effectively the power of kleptocracy, at national and international levels. Many of the theoretical premises and empirical investigations of mainstream economics are conducted in ways that either divert attention from more critical issues, or assume them away, and thereby produce “results” and associated policy recommendations that reinforce existing power structures and imbalances. Therefore notions of exploitation of labour by capital and the unsustainable exploitation of nature by forms of economic activity, of labour market segmentation by social categories that allows for differential exploitation of different types of workers, of the appropriation of value, of the abuse of market power and rent-seeking behaviour by large capital, of the use of political power to push economic interests including of cronies, of the distributive impact of fiscal and monetary policies—all these are swept aside, covered up and rarely brought out as the focus of analysis. The deep and continuing concerns with GDP as a measure of progress are similarly ignored, and despite the conceptual and methodological flaws in its calculation, it simply continues to be used as the basic indicator to track, just because it’s there. All these slights of hand occur at the global level with regard to the international economic and financial architecture; they happens within countries at the level of macroeconomic policies; and they are evident in a lot of microeconomic analysis and in the development industry that claims to focus on poverty reduction. 

Once again, you will all be able to find many more examples of this tendency from your own study and experience—but the problem is that often these tendencies to reinforce underlying power imbalances are not immediately evident unless we actively look for them. They are reinforced because they are simply assumed away in the modelling and not accounted for in empirical analysis. And then the discussion on theoretical models or econometric results is shifted onto a purely technical arena, that moves away from their relevance to the actual world or their viability in explaining economic phenomena. 

This is related to the third big problem: the tendency to underplay the significance of assumptions in deriving analytical results, and most of all in presenting those results to a wider audience especially in policy debates.

Talk to most mainstream theoretical economists, and they will tell you that they have moved far away from the early neoclassical assumptions like perfect competition, constant returns to scale, full employment, etc., which bear no relation to actual economic functioning anywhere. But these assumptions still persist in the models that are explicitly or implicitly used to undergird far too many policy prescriptions, whether on trade and industrial policies, or macroeconomic policies or “poverty reduction” strategies. These are what give rise to so many of the myths that the next sessions are going to debunk. But because they are repeated so constantly, and because this repetition is done not only by the media but by people in authority, they get taken as axiomatic. 

For example, across the world, there were Finance Ministers and other leaders who took it for granted that a public debt level of more than 90 per cent would result in a financial crisis—even though the empirical research that supposedly generated that result was quickly exposed as deeply flawed to the point that the result not only contained spreadsheet errors, but also vanished completely if just one country’s data were removed. While on that topic, it’s interesting to note that many of the governments in advanced countries, which had earlier refused to entertain the possibility of larger fiscal deficits to deal with unemployment because they would add to public debt, completely changed track when confronted with the pandemic. Suddenly large deficits were okay and rising levels of public debt were not a problem—not because the economics of this had actually changed, but because large capital and even finance capital now found it to be necessary. 

Being in the service of power requires the enforcement of strict power hierarchies within the discipline, and a system of marginalising and disincentivising alternative theories, explanations and analysis.

This gives rise to the fourth problem: the power structures within the profession that reinforce the dominant (mainstream) thinking, even—and possibly especially—when it is less relevant and applicable.

One way this works is through the tyranny of “top journals” and their gatekeepers. Academic jobs, as well as jobs as economists in other organisations, are dependent on the applicant’s publications; these publications are “ranked” according to the supposed quality of the journal they are in, in a system that openly and aggressively keeps out journals that publish articles from alternative perspectives; promotions and further success in the profession depend on these markers, which in turn continue to disincentivise those who would like to extend their analysis or break away from this mould. Certainly, for young economists, there’s no doubt that professional incentive structures are heavily loaded in favour of staying firmly within the mainstream. 

The fifth problem could have emerged from this: because of these pressures and incentives, many of the brightest minds are diverted away from a genuine study of the economy, to try to understand its workings and their implications for people, into what can only be called trivial pursuits.

Too many so-called “top” academic journals contain esoteric models that provide additional “value” only by relaxing one small assumption or providing a slightly different econometric test of some earlier versions. Yet in most cases they leave out some critical aspects that would actually provide a better understanding of the economic reality, because it would make it harder to model or because it might generate inconvenient truths. Since economists mainly talk to each other (and then proselytise their findings among policy makers) they are rarely forced to interrogate this approach. Instead, at the “apex” of the discipline, the more mathematically sophisticated the approach, the better it is taken to be. So economic forces that are necessarily complex, muddied with the impact of many different variables and reflecting the effects of history, society and politics, cannot be studied while recognising all this complexity. Instead they have to be squeezed into a mould that will make them mathematically tractable, even if this means that they cease to have any resemblance to the actual economic reality. This has gone so far that even some of the most successful mainstream economists have railed against this tendency—but with little effect so far on the gatekeepers of the profession. Given the seriousness of the economic and other problems facing humanity, and the importance of developing economic analysis and strategies to confront them, this is probably much worse than Nero fiddling while Rome burnt; it amounts to spending the time looking for little pieces of tinder to fan the flames. 

This lack of interest in other disciplines has meant a major and growing impoverishment of economics, leading to the sixth concern. The lack of a strong sense of history (which should imbue any current social and economic analysis) is a major drawback.

Recently it has become fashionable for economists to dabble in psychology, with the rise of behavioural economics and the “nudgers”. But this too is very often presented ahistorically and without a sense of the varying social and political contexts that affect how people actually behave and respond in particular circumstances. Over several decades, this also led to a shift in the discipline away from trying to understand evolutionary processes and macro tendencies to a focus on the particular, to microeconomic patterns and proclivities that effectively erase the background and context that shapes economic behaviour and responses. And of course, the underlying and deeply problematic underpinning of methodological individualism remains: it is unfortunately still taken for granted, because (unlike those who began the study of political economy) so few economists go anywhere near a philosophical assessment of their own approach and work. 

The short-termism and indeed short-sightedness, not just of some economists but also of the discipline as a whole also deserves to be highlighted, as the seventh problem.

It is true that John Maynard Keynes famously said “in the long run we are all dead”, but he also thought about “economic possibilities for our grandchildren”. But most contemporary economists, despite paying some lip service to issues like climate change mainly because they have to, display hardly any concern for issues that stretch into the future. The most egregious example of this is the inadequate factoring in of ecological damage and climate change concerns into assessments of policy choices and future trajectories. 

How can economists keep doing this, making such huge blunders and ignoring so much essential reality? Partly because of the eighth problem: arrogance.

Economics is a very arrogant discipline, even though this is completely unjustified. Most mainstream (and male) economists are especially and appallingly arrogant, whether consciously or unconsciously so, and are either openly or subtly into hierarchies. This arrogance is just one of the reasons that Claudia Sahm (the macroeconomist who formerly worked with the US Federal Reserve) declared that “economics is a disgrace”. There is a marked sense of superiority and unwillingness to engage with and learn from other areas of knowledge, especially other social sciences and humanities, which are brushed aside as “soft”. Several economists who have done so and thereby hugely enriched their own analysis and their contribution to broader economic insights, have been displaced from standard Economics departments and relegated to Sociology or Politics, joining the “second division” teams rather than the front runners of the discipline in terms of perception. 

There is of course a strong machismo to all of this, and so it is no surprise that a macho ethos permeates the mainstream discipline, just as an atmosphere of clever aggression dominates a lot of mainstream economics conferences. Male domination (similar to chimpanzee societies) has very much been part of this as well, whereby males compete aggressively with one another but also bond together and gang up to dominate over females. Some strong young women with voice in the profession are just beginning to make inroads into this—and more power to them! —but the spread of patriarchy is still vast and deep. It’s not just machismo, of course: the adverse impact of relational power also affects other socially marginalised categories, whether according to class, race, ethnicity, language, and so on. And then there is the huge impact of location: the mainstream discipline is completely dominated by the North Atlantic, whether in terms of prestige, influence or the ability to determine the content and direction of what is globally accepted in the discipline. Just as an example, all the 84 prizes awarded by the Swedish Central Bank Prize in memory of Alfred Nobel (falsely called the Economics Nobel Prize) have gone to economists resident in the North, and essentially living and working in the US and Europe. The North Atlantic still dominates in publications and in setting the research and policy agenda. The enormous knowledge, insights and contributions to economic analysis that are made by economists located in the Global South are largely ignored, almost certainly by those in the North, but even (sadly) by economists in other parts of the South. There is an even worse tendency in development economics, of treating the South as the objects of study and policy action (with its economists often becoming glorified research assistants in international research projects), while “real” knowledge is supposedly created in the North and disseminated outwards. 

And finally, there is the proclivity of economists to play God. In perhaps no other discipline is there so much power to engage in what can only be called social engineering, couched in technocratic terms so as to make it largely incomprehensible to ordinary people who are told and persuaded that rigid economic laws make particular economic strategies the only possible choice. Increasingly, this attitude verges on or collapses into the unethical. The recent craze in development economics personified by the randomistas exemplifies this. There has been a lot of valid outcry and disgust about some Randomised Control Trials being conducted (inevitably) on poor people in the developing world, that have involved cutting off water supply to see if that incentivises bill payments, or checking whether poor parents will send only their better performing children to school once they are informed about their results. Clearly, quite apart from the numerous methodological problems with such studies, this shows the extent to which at least some economists have completely lost moral compass, and the strong class/region forces at work whereby the poor, and especially those in developing countries, can be experimented on in this way. The rot goes beyond those conducting such studies, to the research funders, the international organisations, the editors of journals and the university teachers who put such studies into their course material. 

But I want to remind you that while such RCTs and the underlying neo-colonial attitudes they carry are certainly objectionable and distasteful, that this is only the latest example of economists playing God, trying out their pet theories of what will make economic processes change, often regardless of the impact on human lives. Think of the shock therapy so blithely imposed on Eastern Europe and the former Soviet Union, and the human tragedies they generated as well as the oligarchies they ultimately gave rise to. Think of the structural adjustment measures in Africa that reduced public health spending and created systemic fragilities that cost so many lives in previous epidemics like Ebola and have rendered health systems completely unfit to deal with the current pandemic. You get the idea: this is not the first time that economists have played with the lives and livelihoods of masses of people, secure in the knowledge that there will be no impact on their own safely distant lives and no accountability for their prescriptions. 

So here’s the thing—economics is too important for the present and future of humanity to be left in this appalling state.

It’s certainly true that economics is too important to be left to economists, and that greater genuine economic literacy is required through society to enable people to call the bluff on supposedly technocratic decisions that only favour particular groups. But even within the economics discipline, we simply cannot let one stream, which is currently unfortunately the mainstream, dominate and colour everyone else’ views on how economies work. Fortunately, this is not the only stream: and over the course of the next few days you will be exposed to some of the finest minds who have made important contributions in developing realistic and applicable analyses of economic phenomena. It’s sad that we still have to refer to them and to ourselves as “heterodox” and “non-mainstream”, but that only reflects the power imbalances in economics and in economies, that I have already talked about. 

So how do we change all this?

At first sight it appears almost impossible: the structures are so entrenched; the vested interests are so strong; there is so much at stake for global capital and the ruling powers that they will most certainly resist efforts to change. Let me also be honest and admit to you that I speak to you from a position of relative failure, as someone who has tried for nearly four decades but without much success, to make a dent in this power structure and to change both the content and the direction of the economics discipline to a limited extent. The need for drastic change in the discipline has never been so drastic and so urgent. We are facing major existential crises as a species; the global economy was already limping and fragile and is now effectively devastated by the latest blow of the pandemic; environmental threats are already translating into awful reality; inequalities that seemed impossibly large have grown even more, creating societies that will soon become dysfunctional to the point of becoming unliveable. All this requires urgent, major economic action. Yet mainstream economics persists in doing business as usual, as if tinkering at the margins with minor changes will have an impact on these fundamental problems. 

The good news is that there are apparently winds of change blowing. The world— and the world economy—may be in an unbelievable mess, but we have more economists, especially young economists, recognising this and thinking about how to avert the immediate dangers and transform the future. There are movements that have been led by students, demanding that the discipline and the pedagogy change, like Post Autistic Economics that transformed into Real World Economics. There are hundreds of you who have registered for the Summer School from across the world, suggesting that there is a real intellectual hunger for change. The Young Scholars Initiative and similar groups have huge potential, and I’m hoping that many of you who are based in developing countries will also get more involved in International Development Economics Associates (IDEAs) to take that network forward in raising the voice and enabling exchange between economists based in the Global South. 

It’s clear from my earlier interactions with YSI and some young dynamic economists who are at the forefront of these movements, that you don’t really need advice from people like me. Nevertheless, let me offer whatever little insight I have gleaned from my years of trying to do this. 

First, something I think you all already know: diversity matters.

Diversity of gender, of race, of class background, of ethnicity and so on: these are essential to enrich the discipline and have now been widely commented on. Currently there is a raging discussion on social media about this, with expected pushback from those accustomed to their privileged positions. But there is also the aspect that is often overlooked, diversity of location, which I mentioned and which is also necessary for enriching the discipline. So I request all of you, in your own work, search out readings by scholars and economists from different parts of the world, even if your teachers have not made you aware of them. Fortunately, the internet now makes this much more possible than ever before. Be mindful of whom you quote or refer to when writing up your research. Don’t look only for “empirical validation” from Southern economists while taking your theoretical knowledge from the North: many economists based in the developing world have made far more insightful and profound contributions to economic understanding, even if they have not found a place in the so-called “top” journals and rarely find their way into reading lists. 

Second, remember to be respectful of diversity of approaches, which is really what being “heterodox” is all about.

Recently there has been some discussion about whether this is a useful term at all, and a tendency to be slightly shamefaced about it, which I believe is completely misplaced. To me, a heterodox approach is defined by pluralism, which means that I may adopt a particular theoretical framework to understand how the economy works, but I should be willing to learn from other different approaches. The whole point is that we should be willing to engage with diverse perspectives and draw insights from one another without getting locked into sectarian squabbles. This doesn’t mean that we can’t have arguments, which are of course essential; only that we should try to be as inclusive as possible and encourage diversity in as many ways as possible. 

Third, —and this is really important—don’t let identity substitute for analysis.

It’s essential to hold ourselves and our work to the highest standards of rigour and careful, systematic research. This rigour need not be mathematical, but it must be logical, and it must be empirically grounded and aware of history. 

Fourth, don’t be too purist and don’t obsess about classifying everyone into their own little methodological boxes.

Try to make allies, across other disciplines, in wider society and also among mainstream economists who are beginning to see its limitations. In searching for and finding allies, it’s also necessary to make ourselves easily comprehensible as well, and not create a miasma of verbiage or formulas that can obscure the argument. In this regard, I have a simple “grandmother rule” for my students: you can be as complicated, nuanced and sophisticated as you like in your work, but ultimately you must be able to state your basic argument in words comprehensible to your grandmother (who is usually a very smart woman, even if she is not as educated in economics). Try it: it’s not as easy as it sounds. 

Finally, be bold!

Don’t be afraid to ask awkward questions of anyone, don’t let anyone slap you down using the well-worn techniques of the socially powerful, don’t be intimidated by institutional hierarchies and power structures. The more fearless you are, the more you accomplish; and the more other people whom you can persuade to be fearless with you, the more unstoppable you will be. And also, I think, the more fun the whole process will be. 

So here’s hoping that you will indeed be unstoppable and that this Summer School becomes another step in forging alliances and gathering strength to transform the discipline of economics and make it once more the moral yet worldly philosophy it was originally intended to be. 

About UNCTAD | UNCTAD is a permanent intergovernmental body established by the United Nations General Assembly in 1964. The organization is governed by its 194 member States and is the United Nations body responsible for dealing with economic and sustainable development issues with a focus on trade, finance, investment and technology. It helps developing countriesto participate equitably in the global economy. UNCTAD carries out economic research, produces innovative analyses and makes policy recommendations to support government decision-making.

UNCTAD YSI Summer School | Entitled “From the Transformation of Economics to Economic Transformation: Pathways to a Better Future”, this year’s summer school took place from August 15-23,2020. It’s aim is to connect the intellectual challenge of rethinking economic analysis to the practical challenge of building a healthier, more resilient, more equal and greener future for all.

The post Why do we need to transform economics, and how do we do it? appeared first on Economic Questions.

Philosophers, Epidemiologists & Others Call for Human Challenge Trials for COVID-19 Vaccine

Published by Anonymous (not verified) on Fri, 17/07/2020 - 12:23am in

125 experts in various fields have signed a letter to the director of the National Institutes of Health (NIH), Francis Collins, calling for the U.S. government “to undertake immediate preparations for human challenge trials” for a vaccine for COVID-19.


[photo by J. Weinberg]

Human challenge trials would involve intentionally exposing human subjects to COVID-19 in order to help scientists learn more about it and develop and test vaccines for it.

The authors, among whom were a number of a philosophers, write:

The rationale for human challenge trials is that they can greatly accelerate the development of a COVID-19 vaccine.

Human challenge trials can provide information much faster than conventional efficacy trials, which take months longer.  In such trials, volunteers still receive the vaccine candidate or a control.  Instead of resuming life as usual and waiting to “catch” a virus, volunteers are deliberately exposed to the pathogen under controlled conditions. Beyond being faster than conventional trials, a challenge test is likelier to conclude with interpretable results, e.g. should the presence of virus around the study site begin to fade over time.

If challenge trials can safely and effectively speed the vaccine development process, there is a formidable presumption in favor of their use, which would require a very compelling ethical justification to overcome. 

The authors also include in the letter a number of principles for conducting the trials effectively and ethically, including:

  • Trial participants should be relatively young and in good health. 
  • Trial participants [should] be provided the highest quality medical care with frequent monitoring.
  • Ethical and scientific review must be of the highest quality.
  • The autonomy of the volunteers is of paramount concern. 

Some elaboration of each of these is in the full letter.

The initial 18 signatories of the letter include Arthur Caplan (NYU), Nir Eyal (Rutgers), Peter Singer (Princeton), and Daniel Wikler (Harvard). There are many other philosophers listed among the remaining signatories.

The letter is hosted at the site 1 Day Sooner, which advocates for COVID-19 human challenge trials and solicits volunteers for them.

The post Philosophers, Epidemiologists & Others Call for Human Challenge Trials for COVID-19 Vaccine appeared first on Daily Nous.

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