The Washington Consensus 2.0? +++ The New-Economy-Ticker +++

The Washington consensus has for long time been the symbol of market liberalism. Now, there may be a „new Washington consensus“, writes Martin Sandbu from the Financial Times based on what the International Monetary Fund and the World Bank argue in recent publications around their traditional spring meetings.

 

12.04.2021
While 30 years ago both the IMF and the World Bank were prominent advocates of free-market economic policies and fiscal discipline, today the agenda of these institutions seems to have changed drastically. Martin Sandbu describes this transition as a „conversion that could put Saul of Tarsus to shame“.

Not only are the multilateral institutions‘ economists relaxed about the massive deficit spending by rich countries connected to rescue packages due to the pandemic, but they are also in favour of spending on education or redistributive measures. The International Monetary Fund, for instance, has proposed a ‘solidarity’ tax on high earners and very profitable companies in order to pay up to bolster social cohesion in light of the pandemic.

Quoting Martin: „New Consensus: Spend big on public health. Fiscal probity, long the core of IMF prescriptions (the joke was that the initials stand for “it’s mostly fiscal”), is no longer about reining in public spending but about getting value for money — and spending more where the value can be found.“

The full article can be found here.

19.03.2021
Hewlett Foundation expands support to develop a new intellectual paradigm to replace neoliberalism

The new Economy and Society Initiative (EIS) will help develop a new “common sense” about how the relationship between governments, markets, and people should be structured to meet society’s biggest challenges.

After a two-year, $10 million exploratory grantmaking effort to examine potential successors to neoliberalism, the Hewlett Foundation’s board approved a further five-year, $50 million initiative to continue the development of a new paradigm.

Read more about the five year initiative – here.  The entire grant making strategy of the EIS is available – here.

10.03.2021

Nobel Laureate Economists Call for Vaccine Equity, Pandemic Debt Relief for Global South – A report from INET´s Commission on Global Economic Transformation 

Report release on Thursday, March 11 at 8:00 AM EST (13:00 GMT) 

In the report, INET´s Commission on Global Economic Transformation calls on developed countries to ensure vaccine equity, debt relief, and fiscal capacity for the Global South in response to the COVID-19 pandemic and economic crisis. Register here for the press conference featuring Joseph Stiglitz (co-chairing the CGET), INET President Rob Johnson, and Commissioners Jayati Ghosh, Rohinton P. Medhora, and Michael Spence.

09.03.2021

“The $1.9 trillion stimulus should be large because the need is large” – Claudia Sahm´s call for the Congress not to listen to “inflation hawks” and to go big with its stimulus package in her latest contribution for INET

In a recent contribution for INET, Claudia Sahm says that the Congress should refrain from following the unfunded fears of  “inflation hawks” as that would result in doing too little – and the disastrous consequences of a timid policy response, such as that of the Great Recession are all too vivid and provide a valid ground for not running that risk anymore. The risks that an insufficient relief package could leave millions of American families unattended, increase inequality, and needlessly prolong the recovery are too high and, conversely the prospects of  overheating the economy are too little to justify the risk of letting a big chunk of the population suffer the consequences of the pandemic driven crisis.

Check out the essay where the author goes through the main points informing the debate around the topic and proves the Congress has indeed solid grounds for going big.

25.2.2021

THE DEFICIT MYTH?

Thursday 25 February, 3:00 p.m.- 4:00 p.m.

Stephanie Kelton

Stephanie Kelton is a professor of economics and public policy at Stony Brook University and a Senior Fellow at the Schwartz Center for Economic Policy Analysis.  She is a leading expert on Modern Monetary Theory and a former Chief Economist on the U.S. Senate Budget Committee.

Abstract

Vice-president Dick Cheney famously boasted, “Reagan proved deficits don’t matter.” Was he right? Do deficits matter? Stephanie Kelton leads a debate on whether deficits matter and how we think about government spending today and the implications for future generations. Can deficits be used to sustain life and build a more just economy that works for the many and not just the few?

Watch the webcast

Join by zoom

Topic: NAEC seminar with Stephanie Kelton

Time: 25 Feb, 2020 15:00 Paris

Join Zoom With a Computer (Zoom Client)

Or with Chrome https://meetoecd1.zoom.us/j/99003586761?pwd=TW9JVmtIaVBjYS92M1VoQ3ozWWpKZz09

Join Zoom with a tablet or smartphone (download Zoom app IOS or Android – Wifi and 3G/4G)

Meeting ID: 990 0358 6761

Password: VUTh5&Lh2d

Or with chrome https://meetoecd1.zoom.us/j/99003586761?pwd=TW9JVmtIaVBjYS92M1VoQ3ozWWpKZz09

17.2.2021

Yuval Noah Harari & Rutger Bregman discuss the need for a new paradigm

The conversation on global challenges and their implications was moderated by Zanny Minton Beddoes, editor-in-chief of The Economist.

8.2.2021

As Communication and Research Associate your role will be to support the Forum in coordinating its external communication and media activities, as well as in contributing to content work and organizational tasks, reporting to the Forum’s Director. Find a detailed jobn description — here.

Location: Berlin

Start date: As soon as possible

How to apply: Please upload your CV and a short cover letter here: https://bit.ly/3cxE8ZE

4.2.2021

Süddeutsche Zeitung cites loneliness study by Julia Becker (University of Osnabrück): Loneliness and well-being dependent on social system.

What happens to people when the economy and society are organized according to free market principles and state intervention in the economy is minimized? Prof. Dr. Julia Becker from the University of Osnabrück in cooperation with the University of Queensland, (Australia) investigates this question in a new study entitled “Neoliberalism can reduce well-being by promoting a sense of social disconnection, competition and loneliness”. The study was quoted in the Süddeutsche Zeitung (3.2.2021), among others. The authors ask to what extent neoliberalism influences the individual sense of loneliness. Neoliberalism is the idea that progress is best achieved through individual responsibilities and freedom from competition.

The conclusion of the studies is that loneliness and mental health do not occur in a vacuum, but are dependent on the social climate. The neoliberal idea of free competition and individual accountability can lead people to see themselves more in competition with others, feeling less supported by their social groups and networks, which in turn leads to increased loneliness and poorer mental health.

Becker, J.C., Hartwich, L., & Haslam, S.A. (in press). Neoliberalism can reduce well-being by promoting a sense of social disconnection, competition and loneliness. British Journal of Social Psychology.
Link: https://bpspsychub.onlinelibrary.wiley.com/doi/full/10.1111/bjso.12438

29.01.2020

John Cassidy: GameStop-Stock boom shows how U.S. markets are currently in the grip of the “the madness of crowds.”

The surge of speculative investing in GameStop stock is just one example of how the U.S. markets are currently in the grip of the ‘the madness of crowds’“, writes journalist John Cassidy in the New Yorker, reminding us of how outdated the old paradigm of believing in the hyper-efficiency of financial markets actually is. Instead, we should take a deeper look at the theories of Hyman Minsky and Charles Kindleberger to understand and eventually tame such phenomena as the current exuberant stock market boom. Cassidy, in fact, suggests that the Federal Reserve System should act, for example, by imposing margin requirements on equity traders.

 

15.01.2020

Transformative Responses to the Crisis – Next Generation Central Banking

In March 2020, central banks have once again proven to be the first line of defense in crisis-ridden times. With their far reaching actions they prevented the world from experiencing a collapse of financial markets on top of the severe health and economic crisis caused by Covid-19. Since the global financial crisis, central banks’ roles and repertoire have vastly changed.

The Federal Reserve has recently adopted a new strategy of average inflation targeting for its monetary policy and the European Central Bank is currently conducting the first strategy review in 17 years – President Lagarde has made it very clear that the ECB intends to address this new role.

“Transformative Responses to the Crisis” believes that this calls for a wider debate on the role of central banks in times of financial instability, growing inequality and an escalating climate crisis. Central banks have powerful tools at their disposal. Should they – and if so, how – support policy goals beyond their traditional price stability mandate? The conference “Next Generation Central Banking: Climate change, inequality, financial instability” on 3-5. February 2021 will provide a forum on these timely questions.

For Registration and the agenda to the event, click here!

Katharina Pistor – The Code of Capital

18.12.2020

Shortly after the financial crisis of 2008, it suddenly seemed possible to change fundamental aspects of capitalism. The positions of Thomas Piketty and “Occupy Wall Street” seemed capable of gaining majority support, but in the end the system was only stabilised by a few adjusting screws. Pistor explains the developmental tendency of growing inequality, which was statistically proven to capitalism by Piketty, through the history of its legal constitution. In this way, she also opens up a clarifying view of notorious business practices and corporate structures that have become notorious in the course of the financial crisis. In the SZ, Katharina Pistor from Columbia Law School gives an insight into her work “The Code of Capital”, which is now also available in German.

15.12.2020

Open Position at Laudes Foundation

The Laudes Foundation is looking for a Programme Manager for the Financial and Capital Market transformation. The person would be mainly responsible for identifying, supporting and scaling capital market interventions – particularly those related to the New Economic Thinking work stream – that improve global equality and address the threat of climate change, whilst incorporating the Foundation’s definition of value and working towards the Paris Compliance.

You can apply here.

27th Nov 2020

How hard has the Corona crisis hit the economy and with what degree of confidence can one look into the future. In the context of the new OECD Economic Outlook, Philipp Steinberg, BMWi, Otto Fricke, MdB (FDP), Cancel Kiziltepe, MdB (SPD), Lisa Paus, MdB (BÜNDNIS 90/DIE GRÜNEN) and Joachim Pfeiffer, MdB (CDU) will discuss this issue. The discussion will begin after a keynote speech by OECD Berlin Director Nicola Brandt and will be led by Thomas Fricke. For registration please click here.

Quick & New – INET Debt Talks – Do We Need a Debt Jubilee?

25th Nov 2020

Should we cancel some of our debt? The private or the public debt?These and many other question will be discussed in the fourth edition of the INET Debt Talks with Moritz Schularick. This time including the following experts: Sebnem Kalemli-Ozcan (Senior Policy Advisor, International Monetary Fund), Astra Taylor (Documentary Filmaker, and Author) und Richard Vague (Acting Secretary of Banking and Securities, Commonwealth of Pennsylvania; Chair, The Governor’s Woods Foundation).

Tune in on 25th Nov at 6 p.m. CET: https://www.ineteconomics.org/events/debt-talks-episode-4-do-we-need-a-debt-jubilee

Quick & New: Wolfgang Schäuble sees uncontrolled capitalism as a threat

16. November 2020

“The virus has taught us that we need more resilience,” says the former advocate of asuterity measures in the euro crisis, calling for capitalism to be curbed.

Wolfgang Schäuble, father of the black zero, former Minister of the Interior and Finance and now President of the German Bundestag, is worried about the current economic system. In an interview with Die Welt he warns that “we have forgotten something in the globalisation frenzy”. Schäuble warns against excessive free world trade, the disproportionate power of the financial industry and questionable conditions in global supply chains. Schäuble also joins in the recurrent debate about GDP as a proper welfare indicator and calls for a more comprehensive indicator to measure prosperity. New tones from one of the key architects of austerity measures in southern European countries during the euro crisis. Schäuble also continues to believe in the meaningfulness of the black zero in terms of generational equity and, given that the CDU continues to drag the supply chain law, Schäuble’s words regarding global supply chains also seem interesting.

Read the full interview in German with Die Welt here.

Quick & New: YSI 2020 Plenary – New Economic Questions

10. November 2020

What are the 100 most pertinent economic questions facing our global society? Our partner organization, INET’s Young Scholars Initiative is hosting a virtual plenary with numerous top speakers including George Akerlof, Joseph E. Stiglitz, Adair Turner, Yanis Varoufakis and many more. You can join the virtual world — here.

Quick & New: Was the World Bank’s Doing-Business-Index manipulated?

In 2018 chief economist of the World Bank Paul Romer told the Wall Street Journal, that he has lost faith in the integrity of the Doing-Business-Index. Now the WOrld Bank has stopped the publication of its „Doing-Business“-Index (DB). Helmut Reisen argues in IPG that the German government should also develop and calibrate new indicators. Read the full article — here.

Quick & New: Fiscal standards for Europe

At yesterday’s Economic Policy Panel Meeting at Germany’s Federal Ministry of Finance Olivier Blanchard, Alvaro Leandro and Jeromin Zettelmeyer presented their new paper on “How to redesign the EU’s approach to public debt sustainability”

After almost 30 years from their conception, most economists and EU policy-makers agree that the European Union´s fiscal rules need to be reformed. Olivier Blanchard, former IMF chief economist, advocates instead for a fundamental rethinking of the premises underlying the EU´s fiscal framework. Incremental reforms – he claims – will not suffice.

In their new research report, Olivier Blanchard together with Jeromin Zettelmeyer and Alvaro Leandro put forward the idea that the European Union should abandon the fiscal rules currently regulating national budgetary policies and embrace fiscal standards which would allow more room for maneuver. The rationale behind the authors´ argument is that fiscal rules are unable to anticipate and embed the complex time- and country-specific features of public debt sustainability. Standards, unlike rules, would in fact allow for a qualitative rather than numerical assessment of national behaviours. An independent institution would then determine ex post whether said standards or qualitative prescriptions have been satisfied. This way, mistakes bound to complexity-simplifyng rules could be avoided.

The full paper can be downloaded — here.

Watch the video recording of yesterday’s panel below:

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