Tag Archives: Government

A radical legal ideology nurtured our era of economic inequality

By Sanjukta Paul – Where does economic power come from? Does it exist independently of the law?

It seems obvious, even undeniable, that the answer is no. Law creates, defines and enforces property rights. Law enforces private contracts. It charters corporations and shields investors from liability. Law declares illegal certain contracts of economic cooperation between separate individuals – which it calls ‘price-fixing’ – but declares economically equivalent activity legal when it takes place within a business firm or is controlled by one.

Each one of these is a choice made by the law, on behalf of the public as a whole. Each of them creates or maintains someone’s economic power, and often undermines someone else’s. Each also plays a role in maintaining a particular distribution of economic power across society.

Yet generations of lawyers and judges educated at law schools in the United States have been taught to ignore this essential role of law in creating and sustaining economic power.

Instead, we are taught that the social process of economic competition results in certain outcomes that are ‘efficient’ – and that anything the law does to alter those outcomes is its only intervention.

These peculiar presumptions flow from the enormously powerful and influential ‘law and economics’ movement that dominates thinking in most areas of US law considered to be within the ‘economic’ sphere.

Bruce Ackerman, professor of law and political science at Yale University, recently called law and economics the most influential thing in legal education since the founding of Harvard Law School.

The Economics Institute for Federal Judges, founded by the legal scholar Henry Manne, has been a hugely influential training program in the law and economics approach. more>

Re-made in China

By Amy Hawkins and Jeffrey Wasserstrom – The dominant image of China in the West is of a closed, dark place; a country where what reigns supreme is an authoritarianism based on an ancient imperial past that today’s leaders claim to have renounced, while simultaneously extolling China’s 5,000-year history.

It’s not a wholly false perception, but the notion of China as a fortress state, impervious to foreign influence, is something of a smokescreen. So too – as the opposite but equally flawed assumption goes – is the perception of China as forever on the brink of being Westernized by the liberalizing forces of globalization and the free market, as if, whenever the fortress gates are opened, the country were barely capable of withstanding the influx of ‘contaminating’ or ‘corrupting’ ideas.

This idea of China received a powerful boost from Francis Fukuyama’s ‘End of History’ fantasy that the civilized world would converge around liberal democratic norms, leading many Western observers to believe that China’s economic boom and flirtation with freemarket forces was both inevitable, and would transform it completely.

In reality, China’s longstanding suspicion of foreign influence has not prevented the government or the people from becoming remarkably adept at marshalling the flow of overseas cultural touchstones into the country’s borders, remoulding them into something that isn’t entirely Chinese, but is also totally different from its original form.

Like authoritarian leaders everywhere, China’s are anxious about the population’s interaction with foreign ideas, and the state tries to police this closely, adapting cultural imports to fit national and regional needs. Still, the various ways that the government, villagers and city dwellers of different social classes and generations handle these mutations demonstrate that Chinese concepts of national identity are much more flexible than first impressions suggest.

Appreciating this is especially important now, as tensions between China and the United States rise. A strident form of Chinese nationalism is gaining ground. more>

The world is running out of time

By Bertrand Badré – In 2015, the international community launched a renewed effort to tackle collective global challenges under the auspices of the United Nations Sustainable Development Agenda and the Framework Convention on Climate Change (COP21). But after an initial flurry of interest, the progress that has been made toward achieving the Sustainable Development Goals and tackling climate change has tapered off. Around the world, many seem to have developed an allergy to increasingly stark warnings from the UN and other bodies about accelerating species extinctions, ecosystem collapse, and global warming.

Now is not the time to debate whether progress toward global goals is a matter of the glass being half-full or half-empty. Soon, there will no longer even be a glass to worry about. Despite global news coverage of civic and political action to address our mounting crises, the underlying trends are extremely frightening.

For decades, most of the major economies have relied on a form of capitalism that delivered considerable benefits. But we are now witnessing the implications of the Nobel laureate economist Milton Friedman’s famous mantra: “the social responsibility of business is to increase its profits.”

A corporate-governance model based on maximizing shareholder value has long dominated our economic system, shaping our accounting frameworks, tax regimes, and business-school curricula.

But we have now reached a point where leading economic thinkers are questioning the fundamentals of the prevailing system. Paul Collier’s The Future of CapitalismJoseph E. Stiglitz’s People, Power, and Profits, and Raghuram G. Rajan’s The Third Pillar all offer comprehensive assessments of the problem.

A capitalist system that is disconnected from most people and unmoored from the territories in which it operates is no longer acceptable. Systems do not work in isolation. Eventually, reality asserts itself: global trade tensions reemerge, populist nationalists win power, and natural disasters grow in frequency and intensity.

Simply put, our approach to capitalism has exacerbated previously manageable social and environmental problems and sowed deep social divisions. The explosion in inequality and the laser focus on short-term results (that is, quarterly earnings) are just two symptoms of a broken system. more>

Globalization’s Wrong Turn

And How It Hurt America
By Dani Rodrik – Globalization is in trouble. A populist backlash, personified by U.S. President Donald Trump, is in full swing. A simmering trade war between China and the United States could easily boil over. Countries across Europe are shutting their borders to immigrants. Even globalization’s biggest boosters now concede that it has produced lopsided benefits and that something will have to change.

Today’s woes have their roots in the 1990s, when policymakers set the world on its current, hyperglobalist path, requiring domestic economies to be put in the service of the world economy instead of the other way around. In trade, the transformation was signaled by the creation of the World Trade Organization, in 1995. The WTO not only made it harder for countries to shield themselves from international competition but also reached into policy areas that international trade rules had not previously touched: agriculture, services, intellectual property, industrial policy, and health and sanitary regulations. Even more ambitious regional trade deals, such as the North American Free Trade Agreement, took off around the same time.

In finance, the change was marked by a fundamental shift in governments’ attitudes away from managing capital flows and toward liberalization. Pushed by the United States and global organizations such as the International Monetary Fund and the Organization for Economic Cooperation and Development, countries freed up vast quantities of short-term finance to slosh across borders in search of higher returns. more>

Transatlantic Relations: Difficult Decisions Ahead

By Gordon D. Sondland – The EU often espouses the rhetoric of supporting free trade, while simultaneously employing numerous non-tariff barriers to its markets. While these NTBs take many forms, prominent among them are the EU’s unjustified and trade restrictive policies with respect to agricultural and food products, notably unwarranted bans not based on science or actual risk.

It is not a coincidence that the United States has an agricultural trade surplus with the world of $22 billion and a deficit with the EU of $15 billion. The EU’s tariffs are also higher than the United States.

Historically, the United States has been there for Europe for more than seven decades. Our commitment to a free, prosperous and secure Europe has come in many forms, from American dollars to American lives. The United States decided to make a strategic, long-term investment in this transatlantic relationship.

Hundreds of billions of dollars have flowed into Europe, along with the incalculable investment into Europe’s security via non-obligatory defense spending. At the same time, we have opened our lucrative markets and welcomed European trade and investment throughout our economy.

Against this backdrop, I arrived in Brussels last July highly optimistic.

Fast-forward six months. I am deeply disappointed we have not seen faster, deeper progress on the wide number of areas where European rules prevent U.S. firms from fair access to European markets. This lack of demonstrable progress on real and tangible U.S. concerns presents a serious challenge to the transatlantic relationship at a time when it is more important than ever that we be working together.

Rest assured, President Trump is committed to fixing the imbalance in our trade relationship so it will not burden yet another American administration. more>

Climate change is becoming a defining issue of 2020

Democratic voters actually care about climate change. 2020 candidates are responding.
By Ella Nilsen – Rep. Alexandria Ocasio-Cortez thinks former Vice President Joe Biden’s $5 trillion climate plan — one of the first major policies his campaign has released — is a “start,” albeit one that needs to be scaled up dramatically.

“I think what that has shown is a dramatic shift in the right direction, but we need to keep pushing for a plan that is at the scale of the problem,” Ocasio-Cortez, progressive superstar and co-sponsor of the Green New Deal, told reporters on Tuesday. (For the record, she thinks the plan that gets closest is Washington Gov. Jay Inslee’s, which she called the “gold standard.”)

But the very fact that Biden felt the need to release a climate plan near the start of his policy rollout shows the influence and success of Ocasio-Cortez and her allies in the climate movement.

Five candidates, including Biden, Inslee, Sen. Elizabeth Warren, and former Reps. Beto O’Rourke and John Delaney have all released massive plans to combat climate change, ranging from $1.5 trillion to $3 trillion in federal investment over a decade. Candidates are factoring in the spur of private investments as well, hence the jump to $5 trillion in Biden’s plan.

“It’s a recognition of where the electorate is,” Monmouth University polling director Patrick Murray told Vox. “This popped out from the very beginning. Climate change and the environment in general was the No. 2 issue after health care for Democratic voters.

“I think it’s just becoming a zeitgeist for Democrats,” Murray added.

Over the past eight months, climate change has shot up as a core Democratic issue in polls. more>

A primer on how Chinese law might enforce a US-China trade deal

By Jamie P. Horsley – As recently as early May, optimism ran high that the United States and China were nearing an agreement to resolve their escalating trade dispute. But talks have hit an impasse, with both sides announcing new rounds of tariffs over the past few days.

In an interview on Fox News Sunday, White House economic adviser Larry Kudlow explained that a key point of contention is U.S. insistence that Chinese commitments be “codified by law in China, not just a State Council announcement.” According to Kudlow, the U.S. seeks “very strong enforcement provisions” to correct past Chinese behavior on trade, which he characterized as unfair, nonreciprocal, and sometimes unlawful.

Various U.S. media reported that the Chinese side was averse to the idea of a foreign country dictating Chinese law. Instead, negotiators from Beijing reportedly offered to codify the agreement through regulatory and administrative actions. The standoff raises an important question: If the other substantive issues can be resolved, would an agreement be enforceable even if it falls short of being codified in national laws?

National laws, local regulations, State Council regulations, and rules are all part of what is collectively called “legislation” (lifa). National laws (falü) are adopted by China’s National People’s Congress (NPC) and the NPC Standing Committee pursuant to formal procedures—including public notice and comment—set forth in the Legislation Law.

Similarly, local regulations (difangxing fagui) are adopted by the people’s congress operating in a particular province or autonomous region. State Council regulations (xingzheng fagui), which are legally binding and enforceable, are also governed by the Legislation Law and subject to public comment and other procedures stipulated in State Council implementing regulations (colloquially, the “Rulemaking Regulations”).

The same applies to rules (guizhang), which are promulgated by central departments and local governments. more>

The free market is not the answer

By Jochen Steinhilber – We are discussing the digital transformation, which will profoundly change how we live, work and participate in politics and society in the decades to come.

The political and social significance of digital networking, smart factories and big data depends on how technology is used. It can deepen social inequalities and cement domination and profit maximization, or it can improve working and living conditions and facilitate participation. That is why digitalization needs political direction and should be based on social agreements.

But how can this be achieved without, for example, bringing those companies under tighter democratic control that, for many years, have been engaged in secret negotiations on international trade policy to ‘protect’ the digital and services agenda from all state intervention for years to come?

Also, those who will rightly champion the ecological transformation in the coming years and want to pursue it in a maximally inclusive way will have to ask themselves how this can be achieved under the current relations of power between the economy, politics and democracy—especially under lower growth rates that allow less space for redistribution.

Anyone who now claims that, considering the challenges of climate protection, a debate on economic democracy is a diversionary tactic and at best of theoretical rather than political interest, ignores the fact that the important strategic decisions must be taken at the economic level.

Do we really want to leave crucial questions—where can growth continue because it serves the common good? what must be dismantled because it is ecologically and socially harmful? and who pays for the change?—for the most part to the dominant market players?

And finally, the frequently-invoked crisis of democracy at least suggests that we need to rethink how the economy works. more>

Socialism: A short primer

By E.J. Dionne, Jr. and William A. Galston – Something new is happening in American politics.

Although most Americans continue to oppose socialism, it has reentered electoral politics and is enjoying an upsurge in public support unseen since the days of Eugene V. Debs.

The three questions we will be focusing on are: Why has this happened? What does today’s “democratic socialism” mean in contrast with past versions? And what are the political implications?

It’s worth recalling how important socialism once was at the ballot box to understand that this tradition has deeper roots in our history than many imagine. In the 1912 presidential election, Debs secured six percent of the popular vote, and Socialists held 1,200 offices in 340 cities, their ranks including 79 mayors.

The crash of 2008, rising inequality, and an intensifying critique of how contemporary capitalism works has brought socialism back into the mainstream—in some ways even more powerfully than in Debs’ time, since those who use the label have become an influential force in the Democratic Party.

Running as a democratic socialist, Sen. Bernie Sanders received 45 percent of the Democratic primary vote in 2016, and in the 2018 mid-term elections, members of Democratic Socialists of America were among the prominent Democratic victors. Their ranks included Alexandria Ocasio-Cortez, who quickly became one of the country’s best-known politicians.

The economic and financial collapse of 2008-2009 undermined the claim that the economy had entered a new era of stability and moderation. Experts who had preached the virtues of self-regulation were forced to recant. The slow recovery from the Great Recession left many Americans wondering whether they would ever regain the income and wealth they had lost. more>

What’s Great Power Competition? No One Really Knows

By Katie Bo Williams – More than a year since the new National Defense Strategy refocused the U.S. military away from counterinsurgency and back towards the country’s greatest strategic competitors, some policy and strategy experts say the Pentagon hasn’t yet figured out how to “compete” with Russia and China.

In fact, it hasn’t even settled on a definition for the “competition” in “great power competition.”

The uncertainty has left former officials scratching their heads about how, specifically, the Defense Department plans to counter China and Russia beneath the threshold of armed conflict. It also appears to be pulling the Pentagon’s policy planners beyond their traditional purview of fighting and winning wars.

“The NDS has two pieces to it: it says you have to compete with China and Russia and prepare for conflict with China and Russia,” said Mara Karlin, a former deputy assistant defense secretary for strategy and force development. “Those are different. The way you would manage and develop your force is different depending on which one you are biasing towards.” more>