If the crisis turns into a new Great Depression, it will most likely be due to a breakdown of cooperation among the major economies. But sustaining international cooperation requires domestic support; ignoring the demands of poor and middle-class citizens for relief will inflame more extreme anti-globalisation views, making international cooperation much more difficult.If the current crisis turns into a disaster on the order of the Great Depression, it will most likely be due to a breakdown of cooperation among the major economies. The history of the modern world economy—and especially of its collapse in the 1930s—makes clear that the principal powers have to work together if they are to maintain an integrated international economic order.
International cooperation needs domestic support for opennessYet governments are only able to make the sacrifices necessary to sustain international cooperation if they can rely, in turn, on domestic political support for an open world economy. National publics unconvinced of the value of international integration will not back policies—often costly and difficult policies—to maintain it. This can lead—again, as in the 1930s—to a perverse process in which global economic failure undermines support for economic openness, which leads governments to pursue uncooperative policies, which further weakens the global economy.
On both dimensions, international and domestic, we are in trouble. So far, despite high-sounding internationalist rhetoric, governments have responded to the crisis with policies that take little account of their impact on other nations. And the crisis has dramatically reduced domestic public support for globalisation, and for national policies to sustain it.Why reasonable governments do unreasonable thingsOn the international dimension, the threat is not so much of explicit protectionism but rather of nationally specific policies that impose costs on others, directly or indirectly.These beggar-thy-neighbour policies are not normally the result of some inexplicable bloody-mindedness on the part of venal governments, or of purposeful antagonism toward rivals. They are, instead, desperate attempts to defend national economies from gathering storms. But they impose negative externalities on other countries, and in so doing can provoke hostile reactions that can drag all parties concerned into bitter conflict.Not out of arrogant nationalism but out of domestic desperationDomestic constituents demand action, and governments have to respond, even at the expense of international cooperation. This can easily lead down a path toward conflict. Financial intervention to restore liquidity or solvency to the banking system can come at the expense of financial partners, sucking funds out of neighbours.The early-October Irish blanket deposit guarantee, implemented with the perfectly understandable goal of avoiding a bank panic in a small and vulnerable economy, nearly induced a run on British banks as British depositors rushed to transfer funds from British to Irish banks. The current American financial bailout is drawing capital from the rest of the world—including from emerging markets that urgently need it—not out of arrogant nationalism but out of domestic desperation. And the buy-American provisions of the current stimulus package demonstrate the ease with which well-intentioned policies can turn into uncooperative predation.
The range of policies of this type—sincere national initiatives with counter-productive international implications—is virtually endless.
Negative externalities galoreSupport for troubled national firms can turn into anti-competitive subsidies to national champions. Currency depreciation, a common recommendation for difficult times, can put competitive pressure on trading partners, leading to round after round of "competitive devaluations." Debt-averse governments can limit the size of their fiscal stimulus, thereby free riding on the deficit spending of neighbours. Countries with intolerable foreign debt burdens can seek debt write-downs that further cripple creditor-country financial markets. And all of these can interact to create powerful protectionist pressures. One country’s fiscal stimulus can "leak" into a neighbour, draw in a surge of imports from the neighbour, and provoke a bitter protectionist backlash.Even with the best of intentions, governments can act in ways that drive wedges among countries, block cooperative responses to the crisis, and ultimately make everyone worse off. And despite today’s flowery rhetoric, there is little evidence that national policymakers are willing or able to take into account the international implications of their actions.
If this pattern continues, it will be a major obstacle to a rapid recovery.Will anyone speak for the rest of the world? National governments rarely consider global consequences, because their constituents are domestic and national publics are very skeptical about the contemporary world economy.Even before the crisis hit, there had been real erosion in popular support for globalisation. Economic integration has come to be associated with job losses, competitive pressures, and a worsening of income distribution in developed and developing countries alike. Nearly universally, the lower registers of the income distribution are most dubious about the benefits of international economic integration, and these doubts are particularly widespread in more unequal societies.The crisis has heightened suspicion of a world economy that appears to be the source of much of our current predicament. There is increasing resentment that the expansion of the past ten years primarily helped the wealthy, while the poor and middle classes are being asked to sacrifice to deal with the hangover of the binge. This is coupled with similar resentment that governments appear to privilege the concerns of international banks and corporations. There is an advancing popular view that insulation will help reinforce national attempts to deal with the crisis.National publics will increasingly resist making national sacrifices in order to honour international economic obligations. Meanwhile, concentrated interests who support globalisation—such as the international financial and corporate sectors—have been undermined by international economic weakness. Broad popular sentiment is increasingly widespread and powerful that national responses to the crisis must take priority over international obligations.
Attention must be paid: Crisis’s impact on income distribution
The impact of the crisis on income distribution cannot be ignored, for it will determine much of the politics of government responses to the crisis. Ignoring the demands of poor and middle-class citizens for relief will inflame more extreme anti-globalisation views, making international cooperation that much more difficult.These two dimensions, the international and the domestic, are closely interrelated. The less domestic support there is for globalisation, the harder it will be for national governments to reach cooperative agreements with partners. The less international cooperation there is, the greater the likelihood of a deterioration in the global economy. As in the 1930s, beggar-thy-neighbour policies, distributional conflicts, and international economic stagnation could feed on each other in a downward dance.
Into the maelstrom?Governments have to act consciously to counteract this dismal possibilityAt the domestic level, governments need to work out an equitable and politically sustainable allocation of austerity across the population. This means ensuring that those sectors of society hit hardest by the crisis are not also the ones asked to bear the stiffest sacrifices. Societies with existing social safety nets will have to expand them and make sure they work for wider segments of the population than they were planned. Countries with weak or non-existent social programs for the victims of crises such as this will have to create them, and quickly. By the same token, basic principles of equity—and even more basic political realities—demand that those who received the main benefits of the boom have to bear their share of the costs of the bust. Governments that ignore the social and distributional implications of the crisis are likely to find themselves either driven toward extreme and counter-productive policies, or swept away.Even sustaining existing social programs is extraordinarily difficult in such hard times. This is true of all governments, which face powerful fiscal pressures as tax revenues dry up and demands for spending soar. The difficulties are especially challenging for developing countries, many of which have lost whatever access they may have had to external sources of capital. Yet governments that do not provide effective relief to those hardest hit by the crisis face the prospect of dramatically increased social and political strife, which will only deepen the disaster.At the international level, governments need to work just as consciously to coordinate not just words, but actions. This will not happen of its own accord. So far, the solidarity of OECD central bankers has been impressive. However, this builds upon a long-standing tradition of the solidarity of central bankers, and upon decades of institutionalised collaboration, and can only take us a very short part of the way. There is nothing analogous on other dimensions.The free interplay of government policies will not spontaneously bring forth international cooperationCollaboration among governments has to be intended, designed, and monitored. This almost certainly requires some international institutional framework, some set of agreed-upon rules and ways of enforcing them. The governments of the major economic centers need to consult regularly on the international dimensions of the crisis, and of its resolution. They need to hold each other to account, and they need some reasonably independent mechanism to identify policies that risk driving governments toward conflict rather than mutual assistance. Other foreign policy goals can and should be linked to supportive efforts on the economic front.ConclusionIf governments do not pay real attention to the domestic distributional impact of the emergency, and to the international implications of their national policies, the current calamity will feed on itself. The Great Depression of the 1930s was more a failure of national policy, and of international cooperation, than it was a failure of markets. Success in confronting the current crisis will similarly depend on socially responsive and viable national policies, and on globally responsive and viable international cooperation.Editors' note: This column is a Lead Commentary on Vox's Global Crisis Debate page; see further discussion on Vox’s Global Crisis Debate page.ReferencesFrieden, Jeffry A. 2006. Global Capitalism: Its Fall and Rise in the Twentieth Century. W.W. Norton.Frieden, Jeffry. 2007. "Will Global Capitalism Fall Again?" Bruegel Essay and Lecture Series (Brussels: Bruegel, 2007).Frieden, Jeffry. 2008. "Global Governance of Global Monetary Relations: Rationale and Feasibility." Economics. Discussion Paper number 2008-32.
Seven years ago, in his State of the Union address on Jan. 29, 2002, U.S. President George W. Bush warned of an "axis of evil" that was engaged in assisting terrorists, acquiring weapons of mass destruction, and "arming to threaten the peace of the world." In Bush’s telling, this exclusive new club had three members: Iran, Iraq, and North Korea. Bush’s policy prescription for dealing with the axis of evil was preemption, and just over a year later he put this doctrine into action by invading Iraq.
The bad news for Bush’s successor, Barack Obama, is that he now faces a much larger and potentially more troubling axis—an axis of upheaval. This axis has at least nine members, and quite possibly more. What unites them is not so much their wicked intentions as their instability, which the global financial crisis only makes worse every day. Unfortunately, that same crisis is making it far from easy for the United States to respond to this new "grave and growing danger."When Bush’s speechwriters coined the phrase "axis of evil" (originally "axis of hatred"), they were drawing a parallel with the World War II alliance between Germany, Italy, and Japan, formalized in the Tripartite Pact of September 1940. The axis of upheaval, by contrast, is more reminiscent of the decade before the outbreak of World War II, when the Great Depression unleashed a wave of global political crises.The Bush years have of course revealed the perils of drawing facile parallels between the challenges of the present day and the great catastrophes of the 20th century. Nevertheless, there is reason to fear that the biggest financial crisis since the Great Depression could have comparable consequences for the international system.For more than a decade, I pondered the question of why the 20th century was characterized by so much brutal upheaval. I pored over primary and secondary literature. I wrote more than 800 pages on the subject. And ultimately I concluded, in The War of the World, that three factors made the location and timing of lethal organized violence more or less predictable in the last century. The first factor was ethnic disintegration: Violence was worst in areas of mounting ethnic tension. The second factor was economic volatility: The greater the magnitude of economic shocks, the more likely conflict was. And the third factor was empires in decline: When structures of imperial rule crumbled, battles for political power were most bloody.In at least one of the world’s regions—the greater Middle East—two of these three factors have been present for some time: Ethnic conflict has been rife there for decades, and following the difficulties and disappointments in Iraq and Afghanistan, the United States already seems likely to begin winding down its quasi-imperial presence in the region. It likely still will.
Now the third variable, economic volatility, has returned with a vengeance. U.S. Federal Reserve Chairman Ben Bernanke’s "Great Moderation"—the supposed decline of economic volatility that he hailed in a 2004 lecture—has been obliterated by a financial chain reaction, beginning in the U.S. subprime mortgage market, spreading through the banking system, reaching into the "shadow" system of credit based on securitization, and now triggering collapses in asset prices and economic activity around the world.After nearly a decade of unprecedented growth, the global economy will almost certainly sputter along in 2009, though probably not as much as it did in the early 1930s, because governments worldwide are frantically trying to repress this new depression. But no matter how low interest rates go or how high deficits rise, there will be a substantial increase in unemployment in most economies this year and a painful decline in incomes. Such economic pain nearly always has geopolitical consequences. Indeed, we can already see the first symptoms of the coming upheaval.In the essays that follow, Jeffrey Gettleman describes Somalia’s endless anarchy, Arkady Ostrovsky analyzes Russia’s new brand of aggression, and Sam Quinones explores Mexico’s drug-war-fueled misery. These, however, are just three case studies out of a possible nine or more.
In Gaza, Israel has engaged in a bloody effort to weaken Hamas. But whatever was achieved militarily must be set against the damage Israel did to its international image by killing innocent civilians that Hamas fighters use as human shields. Perhaps more importantly, social and economic conditions in Gaza, which were already bad enough, are now abysmal. This situation is hardly likely to strengthen the forces of moderation among Palestinians. Worst of all, events in Gaza have fanned the flames of Islamist radicalism throughout the region—not least in Egypt. From Cairo to Riyadh, governments will now think twice before committing themselves to any new Middle East peace initiative.
Iran, meanwhile, continues to support both Hamas and its Shiite counterpart in Lebanon, Hezbollah, and to pursue an alleged nuclear weapons program that Israelis legitimately see as a threat to their very existence. No one can say for sure what will happen next within Tehran’s complex political system, but it is likely that the radical faction around President Mahmoud Ahmadinejad will be strengthened by the Israeli onslaught in Gaza. Economically, however, Iran is in a hole that will only deepen as oil prices fall further. Strategically, the country risks disaster by proceeding with its nuclear program, because even a purely Israeli air offensive would be hugely disruptive. All this risk ought to point in the direction of conciliation, even accommodation, with the United States. But with presidential elections in June, Ahmadinejad has little incentive to be moderate.
On Iran’s eastern border, in Afghanistan, upheaval remains the disorder of the day. Fresh from the success of the "surge" in Iraq, Gen. David Petraeus, the new head of U.S. Central Command, is now grappling with the much more difficult problem of pacifying Afghanistan. The task is made especially difficult by the anarchy that prevails in neighboring Pakistan. India, meanwhile, accuses some in Pakistan of having had a hand in the Mumbai terrorist attacks of last November, spurring yet another South Asian war scare. Remember: The sabers they are rattling have nuclear tips.The democratic governments in Kabul and Islamabad are two of the weakest anywhere. Among the biggest risks the world faces this year is that one or both will break down amid escalating violence. Once again, the economic crisis is playing a crucial role. Pakistan’s small but politically powerful middle class has been slammed by the collapse of the country’s stock market. Meanwhile, a rising proportion of the country’s huge population of young men are staring unemployment in the face. It is not a recipe for political stability.
This club is anything but exclusive. Candidate members include Indonesia, Thailand, and Turkey, where there are already signs that the economic crisis is exacerbating domestic political conflicts. And let us not forget the plague of piracy in Somalia, the renewed civil war in the Democratic Republic of the Congo, the continuing violence in Sudan’s Darfur region, and the heart of darkness that is Zimbabwe under President Robert Mugabe. The axis of upheaval has many members. And it’s a fairly safe bet that the roster will grow even longer this year.
The problem is that, as in the 1930s, most countries are looking inward, grappling with the domestic consequences of the economic crisis and paying little attention to the wider world crisis. This is true even of the United States, which is now so preoccupied with its own economic problems that countering global upheaval looks like an expensive luxury. With the U.S. rate of GDP growth set to contract between 2 and 3 percentage points this year, and with the official unemployment rate likely to approach 10 percent, all attention in Washington will remain focused on a nearly $1 trillion stimulus package. Caution has been thrown to the wind by both the Federal Reserve and the Treasury. The projected deficit for 2009 is already soaring above the trillion-dollar mark, more than 8 percent of GDP. Few commentators are asking what all this means for U.S. foreign policy.The answer is obvious: The resources available for policing the world are certain to be reduced for the foreseeable future. That will be especially true if foreign investors start demanding higher yields on the bonds they buy from the United States or simply begin dumping dollars in exchange for other currencies.Economic volatility, plus ethnic disintegration, plus an empire in decline: That combination is about the most lethal in geopolitics. We now have all three. The age of upheaval starts now.
Forget Iran, Iraq, and North Korea—Bush’s "Axis of Evil." As economic calamity meets political and social turmoil, the world’s worst problems may come from countries like Somalia, Russia, and Mexico. And they’re just the beginning.
For immigrants, politics can play a significant role in determining whether and how they assimilate. In Bringing Outsiders In, leading social scientists present individual cases and work toward a comparative synthesis of how immigrants affect—and are affected by—civic life on both sides of the Atlantic.
Just as in the United States, large immigrant minority communities have been emerging across Europe. While these communities usually make up less than one-tenth of national populations, they typically have a large presence in urban areas, sometimes approaching a majority. That immigrants can have an even greater political salience than their population might suggest has been demonstrated in recent years in places as diverse as Sweden and France. Attending to how local and national states encourage or discourage political participation, the authors assess the relative involvement of immigrants in a wide range of settings. Jennifer Hochschild and John Mollenkopf provide a context for the particular cases and comparisons and draw a set of analytic and empirical conclusions regarding incorporation.Download sample chapter: "Modeling Immigrant Political Incorporation" (PDF 80.84 KB) by Jennifer Hochschild and John Mollenkopf.
“Growing up, I don’t know if I ever thought of becoming a teacher,” said Erez Manela, recently tenured professor of history in the Faculty of Arts and Sciences. “I was always supposed to become a doctor or a lawyer.”Manela actually began by studying foreign languages as an undergraduate at the Hebrew University of Jerusalem, not far from his hometown of Haifa, Israel. He soon discovered that courses in East Asian and Middle Eastern history complemented his interests in Chinese, Arabic, and Persian. Though he saw a future in academia, history was not a field he had expected to pursue.
“I didn’t yet conceive of it as something you could do as a profession, but rather something you might study to know more about the world,” he said.
Previously the Dunwalke Associate Professor of American History, Manela now specializes in modern international history and the history of the United States in the world. His first book, “The Wilsonian Moment: Self-Determination and the International Origins of Anticolonial Nationalism” (Oxford, 2007), explored the impact of President Woodrow Wilson’s rhetoric on nationalist movements in Asia and the Middle East in the wake of World War I. Manela’s current research revolves around the global campaign to eradicate smallpox in the 1960s and ‘70s.Manela considers his undergraduate experience the source of some of his main intellectual questions.In college, “I realized that in the modern period—during the 19th and early 20th centuries—there were really fascinating parallels between the history of the Ottoman Empire and the history of East Asia, particularly China,” Manela said. “That really intrigued me…I kept wondering how I could study these parallels in a way that wasn’t simply comparative. I wanted to put everything into one big framework and tell the story as connected.”
Manela decided to concentrate on international history as a graduate student at Yale, partly because he was reluctant to give up studying any of the countries or languages he had embraced in college.“I couldn’t bear the thought of focusing on just one of them,” he said. “I wanted to put it all to good use.”
Studying international history has allowed Manela to break free of the nation as an analytical framework and devote new attention to transnational actors, organizations, and themes. When Manela arrived at Harvard in 2003, history professors Akira Iriye (now emeritus) and the late Ernest May served as inspirational figures for him, as they too were concerned with these pioneering directions in international history. (May even taught Manela the basics of PowerPoint by jotting a few commands on an index card during his first semester at Harvard.)
“Teaching with them…was a tremendously formative experience for me,” Manela said. “Together, they established an amazing tradition of international history in this department.”
A member of Harvard’s Weatherhead Center for International Affairs, Manela considers the interdisciplinary community of scholars and students his “second home” within the University. He served as the Weatherhead’s director of undergraduate student programs for four years, and is now director of graduate student programs.
Manela spends most of his free time with his three daughters, but sometimes revisits an old interest: chess. Occasionally he challenges the regulars in Harvard Square.
“Once upon a time I used to play chess fairly well,” he said, “but that’s history.”
Manela is grateful to have the chance to study a subject that many people can pursue only as a hobby, even though he never did live up to expectations of becoming a doctor or a lawyer.
“I think this is a decent alternative,” he said with a grin.
Even though Australia has experienced frequent and large commodity export price
shocks like the Third World, it seems to have dealt with the volatility better. Why? This
paper explores Australian terms of trade volatility since 1901. It identifies two major
price shock episodes before the recent mining-led boom and bust. It assesses their relative
magnitude, their de-industrialization and distributional impact, and policy responses. In
what way has Australia been different from other commodity exporters experiencing
Poor countries are more volatile than rich countries, and we know this volatility impedes their growth. We also know that commodity price volatility is a key source of those shocks. This paper explores commodity and manufactures price over the past three centuries to answer three questions: Has commodity price volatility increased over time? The answer is no: there is little evidence of trend since 1700. Have commodities always shown greater price volatility than manufactures? The answer is yes. Higher commodity price volatility is not the modern product of asymmetric industrial organizations - oligopolistic manufacturing versus competitive commodity markets - that only appeared with the industrial revolution. It was a fact of life deep into the 18th century. Does world market integration breed more or less commodity price volatility? The answer is less. Three centuries of history shows unambiguously that economic isolation caused by war or autarkic policy has been associated with much greater commodity price volatility, while world market integration associated with peace and pro-global policy has been associated with less commodity price volatility. Given specialization and comparative advantage, globalization has been good for growth in poor countries at least by diminishing price volatility. But comparative advantage has never been constant. Globalization increased poor country specialization in commodities when the world went open after the early 19th century; but it did not do so after the 1970s as the Third World shifted to labor-intensive manufactures. Whether price volatility or specialization dominates terms of trade and thus aggregate volatility in poor countries is thus conditional on the century.
Diversity is largely accepted as a positive value in American society. Nevertheless, policies to
encourage diversity, e.g. affirmative action, language policies and legalising illegal immigrants, are
still largely disputed, and often understood as having contradictory and largely negative
consequences. The implementation of diversity is still seen as a threat to meritocracy, national
cohesion, and democracy. This paper analyses how excellence and diversity are discussed in two
academic decision-making processes: admission at two elite public universities and the
distribution of competitive research fellowships. We argue that excellence and diversity are not
alternative but additive considerations in the allocation of resources. The administrators and
academics we studied factor diversity in as an additional consideration when decisions are to be
made between applicants of roughly equal standing.
In both the Acehnese and Indonesian languages, there is no single lexical term for “nightmare.” And yet findings from a large field research project in Aceh that examined post traumatic experience during Aceh’s nearly 30-year rebellion against the Indonesian state and current mental distress revealed a rich variety of dream narratives that connect directly and indirectly to respondents’ past traumatic experiences. The results reported below suggest that even in a society that has a very different cultural ideology about dreams, where “nightmares” as such are not considered dreams but rather the work of mischievous spirits called jin, they are still a significant part of the trauma process. We argue that it is productive to distinguish between terrifying and repetitive dreams that recreate the traumatic moment and the more ordinary varieties of dreams that Acehnese reported to their interviewers. Nightmares that refer back to conflict events do not appear as an elaborated feature of trauma as the condition is understood by people in Aceh, but when asked further about their dreams, respondents who reported symptoms suggestive of PTSD were more likely to report PTSD-like dreams, memory intrusions that repeat the political violence of the past.
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In 2006, Felipe Calderón narrowly defeated Andrés Manuel López Obrador in Mexico's hotly contested presidential election. Mexico's 2006 presidential race demonstrated the importance of contested elections in democratic consolidation. Consolidating Mexico's Democracy is at once a close examination of this historic election and an original contribution to the comparative study of elections throughout the world. The contributors to this volume—preeminent scholars from the fields of political science and government—make use of extensive research data to analyze the larger issues and voter practices at play in this election. With their exclusive use of panel surveys—where individuals are interviewed repeatedly to ascertain whether they have changed their voter preference during an election campaign—the contributors gather rich evidence that uniquely informs their assessment of the impact of the presidential campaign and the voting views of Mexican citizens.The contributors find that, regardless of the deep polarization between the presidential candidates, the voters expressed balanced and nuanced political views, focusing on the perceived competence of the candidates. The essays here suggest the 2006 election, which was only the second fully free and competitive presidential election allowed by the Mexican government, edged the country closer to the pattern of public opinion and voting behavior that is familiar in well-established democracies in North America and Western Europe.
There is nothing like a really big economic crisis to separate the
Cassandras from the Panglosses, the horsemen of the apocalypse from the
Kool-Aid-swigging optimists. No, the last year has shown that all is
not for the best in the best of all possible worlds. On the contrary,
we might be doomed.At such times, we do well to remember that most of today’s public
intellectuals are mere dwarves, standing on the shoulders of giants.
So, if they had e-mail in the hereafter, which of the great thinkers of
the past would be entitled to send us a message with the subject line:
“I told you so”? And which would prefer to remain offline?It has, for example, been a bad
year for Adam Smith (1723-1790) and his “invisible hand,” which was supposed to
steer the global economy onward and upward to new heights of opulence through
the action of individual choice in unfettered markets. By contrast, it has been
a good year for Karl Marx (1818-1883), who always maintained that the internal
contradictions of capitalism, and particularly its tendency to increase the
inequality of the distribution of wealth, would lead to crisis and finally
collapse. A special mention is also due to early 20th-century Marxist theorist
Rudolf Hilferding (1877-1941), whose Das Finanzkapital foresaw the rise of
giant “too big to fail” financial institutions.Joining Smith in embarrassed
silence, you might think, is Friedrich von Hayek (1899-1992), who warned back
in 1944 that the welfare state would lead the West down the “road to serfdom.”
With a government-mandated expansion of health insurance likely to be enacted
in the United States, Hayek's libertarian fears appear to have receded, at
least in the Democratic Party. It has been a bumper year, on the other hand,
for Hayek's old enemy, John Maynard Keynes (1883-1946), whose 1936 work The General Theory of Employment,Interest and Money has become the new bible for finance ministers seeking to
reduce unemployment by means of fiscal stimuli. His biographer, Robert
Skidelsky, has hailed the “return of the master.” Keynes's self-appointed
representative on Earth, New York Times
columnist Paul Krugman, insists that the application of Keynesian theory, in
the form of giant government deficits, has saved the world from a second Great
Depression.The marketplace of ideas has not
been nearly so kind this year to the late Milton Friedman (1912-2006), the
diminutive doyen of free-market economics. “Inflation,” wrote Friedman in a
famous definition, “is always and everywhere a monetary phenomenon, in the
sense that it cannot occur without a more rapid increase in the quantity of
money than in output.” Well, since September of 2008, Ben Bernanke has been
printing dollars like mad at the U.S. Federal Reserve, more than doubling the
monetary base. And inflation? As I write, the headline consumer price inflation
rate is negative 2 percent. Better throw away that old copy of Friedman's Monetary History of the United States,
1867-1960 (co-authored with Anna J. Schwartz, who is happily still with
us).Invest, instead, in a spanking new
edition of The Great Transformation
by Karl Polanyi (1886-1964). We surely need Polanyi's more anthropological
approach to economics to explain the excesses of the boom and the hysteria of
the bust. For what in classical economics could possibly account for the
credulity of investors in Bernard Madoff's long-running Ponzi scheme? Or the
folly of Richard Fuld, who gambled his personal fortune and reputation on the
very slim chance that Lehman Brothers, unlike Bear Stearns and Merrill Lynch,
could survive the crisis without being sold to a competitor?The biggest intellectual losers of
all, however, must be the pioneers of the theory of efficient markets—economists
still with us, such as Harry M. Markowitz, the University of Chicago-trained
economist who developed the theory of portfolio diversification as the best
protection against economic volatility, and William Sharpe, inventor of the
capital asset pricing model. In two marvelously lucid books, the late Peter
Bernstein extolled their “capital ideas.” Now, with so many quantitative hedge
funds on the scrap heap, their ideas don't seem quite so capital.And the biggest winners, among
economists at least? Step forward the "Austrians" —economists like Ludwig von
Mises (1881-1973), who always saw credit-propelled asset bubbles as the biggest
threat to the stability of capitalism. Not many American economists carried
forward their work into the later 20th century, but one heterodox figure has
emerged as a posthumous beneficiary of this crisis: Hyman Minsky (1919-1996).
At a time when other University of Chicago-trained economists were forging the
neoclassical synthesis—Adam Smith plus applied math—Minsky developed his
own math-free “financial instability hypothesis.”Yet it would surely be wrong to
make the Top Dead Thinker of 2009 an economic theorist. The entire discipline
of economics has flopped too embarrassingly for that to be appropriate.
Instead, we should consider the claims of a historian, because history has
served as a far better guide to the current crisis than any economic model. My
nominee is the financial historian Charles Kindleberger (1910-2003), who drew
on Minsky's work to popularize the idea of financial crisis as a five-stage
process, from displacement and euphoric overtrading to full-fledged mania,
followed by growing concern and ending up with panic. (If those five steps to
financial hell sound familiar, they should. We just went down them, twice in
the space of 10 years.)Of course, history offers more than
just the lesson that financial accidents will happen. One of the most important
historical truths is that the first draft of history —the version that gets
written on the spot by journalists and other contemporaries —is nearly always
wrong. So though superficially this crisis seems like a defeat for Smith,
Hayek, and Friedman, and a victory for Marx, Keynes, and Polanyi, that might
well turn out to be wrong. Far from having been caused by unregulated free
markets, this crisis may have been caused by distortions of the market from
ill-advised government actions: explicit and implicit guarantees to supersize
banks, inappropriate empowerment of rating agencies, disastrously loose
monetary policy, bad regulation of big insurers, systematic encouragement of
reckless mortgage lending—not to mention distortions of currency markets by
central bankConsider this: The argument for
avoiding mass bank failures was made by Friedman, not Keynes. It was Friedman
who argued that the principal reason for the depth of the Depression was the
Fed's failure to avoid an epidemic of bank failures. It has been Friedman, more
than Keynes, who has been Bernanke’s inspiration over the past two years, as
the Fed chairman has honored a pledge he made shortly before Friedman's death
not to preside over another “great contraction.” Nor would Friedman have been
in the least worried about inflation at a time like this. The Fed's balance
sheet may have expanded rapidly, but broader measures of money are growing
slowly and credit is contracting. Deflation, not inflation, remains the
monetarist fear.From a free market perspective, the
vital thing is that legitimate emergency measures do not become established
practices. For it cannot possibly be a healthy state of affairs for the core
institutions of the Western financial system to be effectively guaranteed, if not
actually owned, by the government. The thinker who most clearly discerned the
problems associated with that kind of state intervention was Joseph Schumpeter
(1883-1950), whose “creative destruction” has been one of this year's most
commonly cited phrases.“[T]his evolutionary…impulse that
sets and keeps the capitalist engine in motion,” wrote Schumpeter in Capitalism, Socialism and Democracy, “comes
from…the new forms of industrial organization that capitalist enterprise
creates…This process of creative destruction is the essential fact about
capitalism.” This crisis has certainly unleashed enough economic destruction in
the world (though its creativity at this stage is still hard to discern). But
in the world of the big banks, there has been far too little destruction, and
about the only creative thing happening on Wall Street these days is the
accounting.“This economic system,” Schumpeter
wrote in his earlier The Theory of
Economic Development, “cannot do without the ultima ratio [final argument] of the complete destruction of those
existences which are irretrievably associated with the hopelessly unadapted.”
Indeed, he saw that the economy remained saddled with too many of “those firms
that are unfit to live.” That could serve as a painfully accurate description
of the Western financial system today.Yet all those allusions to
evolution and fitness to live serve as a reminder of the dead thinker we should
all have spent at least part of 2009 venerating: Charles Darwin (1809-1882).
This year was not only his bicentennial but the 150th birthday of his
paradigm-shifting On the Origin of
Species. Just reflect on these sentences from Darwin's seminal work:All organic beings are exposed to
severe competition.”“As more individuals are produced
than can possibly survive, there must in every case be a struggle for
existence.”“Each organic being…has to
struggle for life and to suffer great destruction.... The vigorous, the healthy,
and the happy survive and multiply.”Thanks in no small measure to the
efforts of his modern heirs, notably Richard Dawkins, we are all Darwinians now—except in the strange parallel worlds of fundamentalist Christianity and
state-guaranteed finance.Neither Cassandra nor Pangloss,
Darwin surely deserves to top any list of modern thinkers, dead or alive.
Two points about the current elections ought to be noted. First, a rather large number of parties, campaigning for votes, may give the appearance of chaos on the surface, but there is a dominant narrative that ties up the loose political threads. The central issue in these elections is: how will India’s power structure accommodate the nation’s key diversities? Second, though the overall political prognosis is confusing, some of the basic policies that will emerge are easily predictable.
The first issue—political incorporation of diversities—has, of course, never left India’s political process. Using politics to knit together a highly diverse nation has been a significant cornerstone of Indian democracy. Historically, India has had four underlying social diversities: language, tribe, religion and caste. The first two are geographically concentrated; the last two are present all over the country. Federalism is the main mechanism through which India has handled its geographically-centred diversities. However, because of their national spread, caste and religion do not submit themselves to a federal solution. Affirmative action for lower castes and personal laws for religious minorities have been the principal methods of political accommodation.In the ongoing elections, though all these diversities are playing a role, the primarily lower caste parties are especially important. Some like the Samajwadi Party (SP) and the Rashtriya Janata Dal (RJD) are regional in scope, while others like the Bahujan Samaj Party (BSP) are showing signs of national ambition. The BSP is running from more seats than even the Congress and BJP individually. And both the SP and RJD have demonstrated unexpected assertiveness. To understand these parties in terms of the political ambitions of their leaders alone is inadequate. Even the most overtly ambitious politicians must mobilise voting constituencies. Metropolitan India has no experience of how caste operates in small towns and rural India, which constitute over 85 per cent of the country. Outside India’s big cities, lower castes have been ill-treated for a very long time, and lower caste parties have historically sought to change that through the use of State power. Depending on the region, their fight is against the upper castes or the upper OBCs.
Poverty is not just a low-income category in India. For most poor people, it comes with the denial of human dignity. The largest proportion of the poor in India has historically come from the Dalits, OBCs and adivasis, groups that have customarily suffered humiliation and discrimination in a vertical Hindu social order. Being treated badly is not the same as being poor, and that’s why the politics of poverty has taken the form of the politics of dignity. To describe its political thrust, every lower caste party has always used some version of the term ‘samman ki raajniti’. (In the US, when issues like this arose with respect to the African Americans, it was called the politics of civil rights.)Sooner or later, democracy privileges numbers. The numerous lower castes are now exercising their democratically acquired political muscle. Achieving political power in South India since the 1950s and 1960s, the lower caste parties have also made a serious political entry in the North over the last two decades. Moreover, since each region mostly speaks a different language, these parties have fragmented the country’s party system. But they are not simply important in the regions; they are now playing a significant role in the formation of a national government. Basically, little Indias are trying to negotiate their overall place in the larger India.
Until India is 50 per cent urban and/or it reaches a per capita income of $5,000, which is a serious possibility in the next 15 years, the ‘little India’ pressures in politics will continue. Until then, the two national parties will have to find ways of incorporating the democratically-induced plebeian thrust. Unlike post-Mao China, India’s villages are not yet part of the bustling Indian economy that the world has celebrated over the last ten years and will take some time to get there. Their relative lack of incorporation in rising urban incomes leads to the continuing influence of lower caste parties. Regional lower caste parties are India's version of plebeian politics.
However, regardless of which government comes to power, or its composition, India’s foreign and economic policy will remain basically unaltered—just like under the Third Front government during 1996-98. There is no fundamental political dispute in India over the country’s new economic and foreign policy direction. Serious changes in these two policy realms can be expected only if the communists become central to the next government. For economic policy, that means embrace of markets, with regulations; and for foreign policy, the new consensus favours friendship with the US, albeit with hiccups, as the basic national interests of India and the US are increasingly beginning to converge.India’s big disputes are, and will be, over religion and caste. The three most wrenching political issues in the near future can be easily predicted: whether affirmative action should be expanded to the private sector; whether India should pay special attention to better integrating its Muslims in the socio-economic mainstream; and whether propagation of religious ideas and conversion can be free and without constraints, as the Constitution currently permits. These disputes will require political adroitness.
Fundamentally, elections in India are no longer about policy disputes. They have become an occasion for various communities to negotiate a better space in the power structure. Policy discussions acquire seriousness after elections are over and governments come to power.
Konstantinos P. Kavafis—known to the English-reading world as C. P. Cavafy—has been internationally recognized as an important poet and attracted the admiration of eminent literary figures such as E. M. Forster, F. T. Marinetti, W. H. Auden, George Seferis, and James Merrill. Cavafy's idiosyncratic poetry remains one of the most influential and perplexing voices of European modernism.Focusing on Cavafy's intriguing work, this book navigates new territories in critical theory and offers an interdisciplinary study of the construction of (homo)erotic desire in poetry in terms of metonymic discourse and anti-economic libidinal modalities. Panagiotis Roilos shows that problematizations of art production, market economy, and trafficability of erôs in diverse late nineteenth- and early twentieth-century European sociocultural and political contexts were re-articulated in Cavafy's poetry in new subversive ways that promoted an "unorthodox" discursive and libidinal anti-economy of jouissance.
The American Academy of Arts and Sciences (AAAS) today (April 20) announced the election of leaders in the sciences, the humanities and the arts, business, public affairs, and the nonprofit sector. The 210 new AAAS Fellows and 19 Foreign Honorary Members join one of the nation’s most prestigious honorary societies and a center for independent policy research. Included among this field are 17 Harvard faculty members and a Radcliffe Institute Fellow.
The academy, established in 1780 by founders of the nation, undertakes studies of complex and emerging problems. Current projects focus on science, technology, and global security; social policy and American institutions; the humanities and culture; and education. The academy’s membership of scholars and practitioners from many disciplines and professions gives it a unique capacity to conduct a wide range of interdisciplinary, long-term policy research endeavors.
Harvard’s new AAAS inductees include Philippe Aghion, Robert C. Waggoner Professor of Economics; Richard Cavanagh, adjunct lecturer on public policy; Scott Edwards, Alexander Agassiz Professor of Zoology and curator of ornithology at the Museum of Comparative Zoology; Paul Farmer, Maude and Lillian Presley Professor of Social Medicine in the Department of Global Health and Social Medicine; Benjamin Friedman, William Joseph Maier Professor of Political Economy; James Haber, fellow, Radcliffe Institute for Advanced Study; Jeffrey Hamburger, Kuno Francke Professor of German Art and Culture; Lene Hau, Mallinckrodt Professor of Physics and Applied Physics; Guido Imbens, professor of economics; Stein Jacobsen, professor of geochemistry; Jamaica Kincaid, visiting lecturer, African and African American studies and on English and American literature and language; Michael Klarman, Kirkland and Ellis Professor of Law; Carol Mancusi-Ungaro, founding director of Harvard’s Center for the Technical Study of Modern Art; Anjana Rao, professor of pathology; Mark J. Roe, David Berg Professor of Law; Gary Ruvkun, professor of genetics; Steven Shapin, Franklin L. Ford Professor of the History of Science; and Beth Simmons, director of the Weatherhead Center for International Affairs and Clarence Dillon Professor of International Affairs.The scholars, scientists, jurists, writers, artists, civic, corporate, and philanthropic leaders come from 28 states and 11 countries and range in age from 33 to 83. They represent universities, museums, national laboratories, private research institutes, businesses, and foundations. This year’s group also includes Nobel laureates and recipients of the Pulitzer and Pritzker prizes; MacArthur fellowships; Academy, Grammy, and Tony awards; and the National Medal of Arts.
"These remarkable men and women have made singular contributions to their fields, and to the world," said Academy President Emilio Bizzi. "By electing them as members, the academy honors them and their work, and they, in turn, honor us."The new class will be inducted at a ceremony on Oct. 10, at the academy’s headquarters in Cambridge, Mass.
During the 64 years of Qianlong’s rule, China’s population more than doubled, its territory increased by one-third, its cities flourished, and its manufactures — tea, silk, porcelain — were principal items of international commerce. Based on original Chinese and Manchu-language sources, and drawing on the latest scholarship, this is the biography of the man who, in presiding over imperial China’s last golden epoch, created the geographic and demographic framework of modern China.
This accessible account describes the personal struggles and public drama surrounding one of the major political figures of the early modern age, with special consideration given to the emperor’s efforts to rise above ethnic divisions and to encompass the political and religious traditions of Han Chinese, Mongols, Tibetans, Turks, and other peoples of his realm.
In addition to becoming familiar with one of the most remarkable figures in world history, readers will find that learning about Emperor Qianlong will add greatly to their appreciation of China’s place in the world of the eighteenth century and will deepen their understanding of China’s place in the world today.
The book offers a comprehensive account of how the world evolved to its
present state in which humans now exercise a powerful, in many cases
dominant, influence for global environmental change. It outlines the
history that led to this position of dominance, in particular the role
played by our increasing reliance on fossil sources of energy, on coal,
oil and natural gas, and the problems that we are now forced to confront
as a result of this history. The concentration of carbon dioxide in the
atmosphere is greater now than at any time over at least the past
650,000 years with prospects to increase over the next few decades to
levels not seen since dinosaurs roamed the Earth 65 million years ago.
Comparable changes are evident also for methane and nitrous oxide and
for a variety of other constituents of the atmosphere including species
such as the ozone depleting chlorofluorocarbons for which there are no
natural analogues. Increases in the concentrations of so-called
greenhouse gases in the atmosphere are responsible for important changes
in global and regional climate with consequences for the future of
global society which, though difficult to predict in detail, are
potentially catastrophic for a world poorly equipped to cope. Changes
of climate in the past were repetitively responsible for the demise of
important civilizations. These changes, however, were generally natural
in origin in contrast to the changes now underway for which humans are
directly responsible. The challenge is to transition to a new energy
economy in which fossil fuels will play a much smaller role. We need as a
matter of urgency to cut back on emissions of climate altering gases
such as carbon dioxide while at the same time reducing our dependence on
unreliable, potentially disruptive, though currently indispensable,
sources of energy such as oil, the lifeblood of the global
transportation system. The book concludes with a discussion of options
for a more sustainable energy future, highlighting the potential for
contributions from wind, sun, biomass, geothermal and nuclear,
supplanting currently unsustainable reliance on coal, oil and natural
A new focus within both social epidemiology and political sociology investigates how political systems and
priorities shape health inequities. To advance—and better integrate—research on political determinants of health
inequities, the authors conducted a systematic search of the ISI Web of Knowledge and PubMed databases and
identified 45 studies, commencing in 1992, that explicitly and empirically tested, in relation to an a priori political
hypothesis, for either 1) changes in the magnitude of health inequities or 2) significant cross-national differences in
the magnitude of health inequities. Overall, 84% of the studies focused on the global North, and all clustered
around 4 political factors: 1) the transition to a capitalist economy; 2) neoliberal restructuring; 3) welfare states; and
4) political incorporation of subordinated racial/ethnic, indigenous, and gender groups. The evidence suggested
that the first 2 factors probably increase health inequities, the third is inconsistently related, and the fourth helps
reduce them. In this review, the authors critically summarize these studies’ findings, consider methodological
limitations, and propose a research agenda—with careful attention to spatiotemporal scale, level, time frame
(e.g., life course, historical generation), choice of health outcomes, inclusion of polities, and specification of political
mechanisms—to address the enormous gaps in knowledge that were identified.
Andy Rose (2000), followed by many others, has used the gravity model of bilateral trade on a large data set to estimate the trade effects of monetary unions among small countries. The finding has been large estimates: Trade among members seems to double or triple, that is, to increase by 100-200%. After the advent of EMU in 1999, Micco, Ordoñez and Stein and others used the gravity model on a much smaller data set to estimate the effects of the euro on trade among its members. The estimates tend to be statistically significant, but far smaller in magnitude: on the order of 10-20% during the first four years. What explains the discrepancy? This paper seeks to address two questions. First, do the effects on intra-euroland trade that were estimated in the euro’s first four years hold up in the second four years? The answer is yes. Second, and more complicated, what is the reason for the big discrepancy vis-à-vis other currency unions? We investigate three prominent possible explanations for the gap between 15% and 200%. First, lags. The euro is still very young. Second, size. The European countries are much bigger on average than most of those who had formed currency unions in the past. Third, endogeneity of the decision to adopt an institutional currency link. Perhaps the high correlations estimated in earlier studies were spurious, an artifact of reverse causality. We test the hypotheses regarding lags and size directly; and we address the endogeneity problem by means of a natural experiment involving trade between the CFA countries of Africa and the euro countries of Europe. Contrary to expectations, we find little evidence that any of these factors explains a substantial share of the gap, let alone all of it.
Presented at NBER conference "Europe and the Euro," October 17-18, 2008.Download PDF
The debate on whether to return to Nato’s permanent command structure that has recently been unleashed in France—43 years after Charles de Gaulle pulled his country out—has impassioned its political class much more than the wider public.The opposition has seized the opportunity to attack President Nicolas Sarkozy on an issue where his governing centre-right party happens to be divided. But if one goes beyond the political calculations and ideological reflexes of this debate and considers the long-term strategic implications, what is at stake?In the first place common sense requires that an anachronism be eliminated and that the appropriate lessons be drawn from the fundamental changes happening in today’s world, in the US as well as in Europe. By remaining a member of Nato without taking part in its integrated military structure France has first and foremost penalised itself.
Precisely because the future of Nato’s strategy is at stake and legitimate questions must be raised about the choices to be made regarding Afghanistan, France should assume its responsibilities inside Nato and thereby increase Europe’s weight in redefining western strategy. Only from inside will France be able to assert its own interests.
But the developments in the international environment make a change of France's status inside Nato seem even more advisable, indeed necessary. The world has changed profoundly; the west is no longer as dominant as it has been for two centuries, either economically or in terms of strategic importance. The economic crisis, though global in nature, is accelerating the historic shift from the west to Asia.Moreover, Europe’s primary problem is no longer to define itself as distinct from, if not at times in opposition to, the US. That is an obsolete mindset. Today’s challenge is to form a common front by asserting our values, not against others but in co-operation with them and in recognition of an emerging multi-polarity.
Since the election of Barack Obama as president of the US these changes have been accompanied by a revolution: not only has there been a big change in the image of America in the world but the behaviour of the US vis á vis its allies has changed even more radically. Though it is too early to know whether President Obama will succeed in reinvigorating the US economy, it is not too early to support his measures and efforts to relaunch multilateralism with strong action taken by our two countries.The French population as well as the Germans—we remember the enthusiastic crowds that cheered him in Berlin—strongly support Mr Obama. France should seize the hand extended by America. Its return as a full member of Nato would constitute a strong symbolic and political act, sealing a historic reconciliation of two allies that are willing to put their common challenges above the quarrels and prejudices of the past.Europe itself is changing before our eyes. There is no contradiction between the desire to advance European defence and to "normalise" France’s status inside Nato; on the contrary, France’s position thereby would come closer to that of Britain and Germany. A stronger France inside the alliance would strengthen the European defence effort. The return of France to Nato is not a guarantee of a successful European defence, but it certainly is a necessary precondition.
This becomes all the more true considering the new challenges facing Europe such as the return of Russia, now seeking a more powerful role in the international system. We should not allow Russia to exploit potential differences between Europe and Nato. But at the same time we must seek to open a dialogue with Russia on the necessary reopening of arms control negotiations in Europe, hopefully building a new partnership. These negotiations require strong and harmonised positions within Nato.The authors of this article have devoted an important part of their lives to Franco-German rapprochement, which they consider to be a key to European unification. They regard the complete return of France to Nato as a logical step towards the European goal.They are convinced that General de Gaulle, with his pragmatic and realist vision of the world and of a Europe based on the Franco-German relationship, would be shocked to hear that his name is evoked today to oppose an adjustment that he himself would have considered natural, given the profound changes that are happening in the world.
Industry representatives would have you believe that the Credit Card Accountability, Responsibility and Disclosure Act enacted last month spells the end of the credit card as we know it. President Obama’s proposal last week to create a Consumer Financial Protection Agency to enforce the law has increased the industry’s concerns.
But the example of cards issued by credit unions puts the lie to these claims. Credit unions largely conform to the new rules already, while profitably maintaining the basic features that users know and love.The credit card act is under fire for limiting a number of fees commonly used in credit card contracts, like the charge for going over the credit limit and the increased interest rate that applies once a borrower has missed a payment. These changes might look like a boon for the average card user, but industry advocates claim that fees on delinquent borrowers subsidize the perks for those who pay on time. Take away the lucrative fees, the argument goes, and credit card issuers will be forced to ax free plane rides, slash generous credit limits and impose hefty annual dues for all.Some in the industry even say that profitability would require issuers to charge interest from the moment of purchase, thus eliminating the grace period of interest-free lending that borrowers have long enjoyed.These fears are largely unfounded. We have performed a study that compared credit cards issued by investor-owned banks to those issued by customer-owned credit unions. We found that credit unions are less likely to charge the fees and penalties that the new act hopes to eliminate — and when they do, they charge less than other issuers.
While virtually all banks and other for-profit issuers increase the interest rate if the borrower fails to make a minimum payment on time, most credit unions do not. Similarly, credit union fees for exceeding the credit limit are on average just half those of other issuers. But contrary to industry assertions, more responsible card users don’t pay the price. Credit union cards actually offer lower annual fees and longer grace periods than regular cards.Is the lending model used by credit unions feasible for banks and other issuers? Absolutely. Banks and credit unions compete for customers in the same market. The primary distinguishing characteristic of credit unions is that they answer to a different group of owners: profits that are not reinvested are paid to the union’s shareholder-customers as a dividend, much as investor-owned banks reinvest or pay dividends to their shareholder-investors.
True, unlike typical banks, credit unions have the advantage of being exempt from corporate income taxes, thus some might argue that this gives them an edge. But this is a proportional tax on profits. In other words, if credit unions were not exempt from the tax, their model would still make profits, they would just retain less of them.Credit union cards are a great test case for how regular cards will perform under the new law. The evidence so far suggests that the credit card act is likely to bring about moderate, and even positive, changes. Card issuers, after all, need to retain customers. Any bank that attempts to pad its bottom line by, say, levying large annual fees will likely see its customers flee to credit unions or to banks that emulate the credit union model.To be sure, the new law will require some sacrifices. Our data indicate that rewards programs, for example, may become less generous or less common. But is this necessarily a bad thing? While you may be reluctant to sacrifice your airline miles, rewards programs are anything but free for the nation as a whole. Debt-laden and often low-income borrowers tend to pay high fees to subsidize the vacations of those who manage to pay on time.Credit union cards demonstrate that punishing fees are not an essential ingredient of profitable lending. This should help assuage fears that the credit card act will bring disaster for credit cards. Rather, it should nudge them toward the gentler credit union model that many Americans already enjoy.
Most analysts of the modern Latin American economy hold to a pessimistic belief in
historical persistence—they believe that Latin America has always had very high levels
of inequality, suggesting it will be hard for modern social policy to create a more
egalitarian society. This paper argues that this conclusion is not supported by what little
evidence we have. The persistence view is based on an historical literature which has
made little or no effort to be comparative. Modern analysts see a more unequal Latin
America compared with Asia and the rich post-industrial nations and then assume that
this must always have been true. Indeed, some have argued that high inequality appeared
very early in the post-conquest Americas, and that this fact supported rent-seeking and
anti-growth institutions which help explain the disappointing growth performance we
observe there even today. This paper argues to the contrary. Compared with the rest of
the world, inequality was not high in pre-conquest 1491, nor was it high in the postconquest
decades following 1492. Indeed, it was not even high in the mid-19th century
just prior Latin America’s belle époque. It only became high thereafter. Historical
persistence in Latin American inequality is a myth.
Bruno Cousin and Michèle Lamont say
academics at France's public universities need to rethink their
strategy after this year's protests alienated the public and had little
impact on the Government.
var pgtitle = "The French disconnection";
var byline = "";Between
February and June 2009, French universities were the theatre of an
exceptional protest movement against the latest flavour of governmental
reform concerning academic careers. Protest sometimes seems to be a way
of life in the French academy, and in France at large, but this time
the situation is serious, with potentially huge consequences for the
future of the sector. Indeed, the nation that gave birth to je pense, donc je suis is in a deep crisis on the intellectual front, and nowhere is this as obvious as in academic evaluation.The protest movement did not take off in the grandes écoles (which train much of the French elite), or in professional and technical schools. Instead, it took off in the 80 comprehensive universités—the public institutions that are the backbone of the French
educational system. Until two years ago, they were required to admit
any high-school graduate on a first-come, first-served basis. A
selection process was recently introduced, but even today most students
are there because they could not gain entry elsewhere. Faculty work
conditions are generally poor, as their institutions are chronically
underfunded. Classes are large and programmes are understaffed. More
than half of all students leave without any kind of diploma.Public
universities can be very different from each other and are
research-intensive in varying degrees, but they carry out the bulk of
French scientific research. Research is largely conducted in centres
that are located within these institutions, and which often bring
together overworked university teachers and full-time researchers who
are attached to national institutes such as the Centre National de la
Recherche Scientifique (CNRS). In a context where the output of these
joint centres is not, or is only partially, covered by international
ratings, French academics feel doubly underrated owing to the
combination of low salaries and low ratings.This feeling was
exacerbated on 22 January when President Nicolas Sarkozy declared that
the poor performance of French universities in international rankings
was, above all, the consequence of the absence of continuous
evaluation, which encourages sloth. Of course, he was displeased that
the extensive set of higher education reforms undertaken by his
Government during the preceding two years were met with opposition by
large segments of the academic community.Everyone agrees that
the current system poses a great many problems, but there is no
agreement on how to improve it and get beyond the current gridlock. It
is la société bloquée all over again. To wit:- While
most academics believe that the system is far too centralised, a 2007
law establishing the progressive financial “autonomy” (and
accountability) of universities has been met with criticism and
resistance, because it is perceived to be part of a strategy of
withdrawal on the part of the State that will result in fewer resources
being available for higher education. A number of scholars also fear
that the increased decision-making power conferred on university
presidents is a threat to the autonomy of faculty members.-
While there is a need to design new, more universalistic procedures for
evaluating performance and distributing resources, many academics are
sceptical of the new institutions recently created to do this, namely
the national agencies for the evaluation of universities and research
units (Agence d'Evaluation de la Recherche et de l'Enseignement
Superieur, or AERES) and research projects (Agence Nationale de la
Recherche, or ANR). The former, in particular, has been criticised for
its reliance on bibliometrics (publication and citation counts), even
if the agency is now moving towards using less quantitative standards.
Moreover, whereas the former mechanisms for distributing research funds
depended on the decisions of elected peers (for instance, on the
national committee of the CNRS), AERES appoints its panel members, and
this is seen as a blow to researchers' autonomy. For this and other
reasons, many academics have refused to serve on its evaluation panels.-
While academics often agree that the old CNRS needed further
integration with the universities, many denounce its gradual downsizing
and transformation from a comprehensive research institution to a
simple funding and programming agency as the work of uninformed
politicians and technocrats intent on dismantling what works best in
French research. In 2004, a widespread national protest arose against
this dismantling, with 74,000 scholars signing a petition against it.
Critics also say that the ongoing reorganisation of the CNRS into
disciplinary institutes will reinforce the separation between the
sciences, reorient research towards more applied fields and work
against the interdisciplinary collaborations that are crucial to
innovation in many fields.- While many agree on the need to
improve teaching, moves to increase the number of teaching hours are
among the most strongly contested reforms. French academics, who very
rarely have sabbaticals, already perceive themselves as overworked in a
system where time for research is increasingly scarce. These factors
help to explain the resistance to expanded classroom hours and new
administrative duties.In the longest strike ever organised by
the French scientific community, tens of thousands of lecturers and
researchers began in early February to hold protests over a period of
several weeks, demonstrating in the streets and (with the support of
some students) blocking access to some university campuses. Many also
participated in a national debate via print, online and broadcast
media, and in general meetings. Some faculty members held teach-ins and
action-oriented “alternative courses” for students. Several
universities saw their final exams and summer holidays delayed and many
foreign exchange students were called back by their home institutions.
Despite this frontal assault, the Government did not back down: the
much disparaged decree reorganising academic careers (with regard to
recruitment, teaching loads, evaluations and promotions) and giving
more prerogatives and autonomy to university presidents came into
effect on 23 April.This outcome will
probably lead academics and their unions to rethink their strategies
and repertoires of collective action. The traditional protest forms are
losing legitimacy. As the dust settles, it is becoming clear that
demonstrating has little traction in a context where the French public
increasingly perceives academics as an elite bent on defending its
privileges, even if it requires depriving students of their courses.
Negotiation is also perceived as ineffectual, as many suspect that
governmental consultations were conducted to buy time until the end of
the academic year, when mobilisation would peter out. A third strategy—the radical option that would have prevented the scheduling of exams
and the handing out of diplomas at the end of this spring—was ruled
out even on the campuses most committed to the cause for fear of
alienating the public even further.As yet, however, no clear
alternative has surfaced. We are now witnessing a cleavage between
those who voice their opposition (in the main, scholars in the
humanities) and the increasing number of academics (primarily
scientists) who espouse a “wait-and-see” or a collaborative position as
the only realistic path to improving the situation in their own
universities. If the majority of academics appear to share the same
diagnosis about what needs to be changed in the French system, they
disagree on the solution (and on its scale—national or local). The
root of the crisis lies not only in the Government's difficulties in
generating consensus, but also in the academics' own scepticism,
cynicism or fatalism about meritocracy, the absence of the
administrative resources needed to support proper evaluation, the
possibility of impartial evaluation, and the system's ability to
recognise and reward merit.Deep problems remain in the
institutions charged with evaluating the work of academics. The
interference of political power, and the (admittedly diminishing)
influence of trade unions and corporatist associations have long been
viewed as obstacles to a collegial system of academic evaluation. The
legitimacy of the 70 disciplinary sections of the Conseil National des
Universites (CNU)—charged with certifying individuals as eligible for
faculty positions, and with directly granting some promotions—is
under question. Some of its committee members are appointed by the
Government and as such are suspected of being second-rate, of
benefiting from governmental patronage, or of defending governmental
interests. Others are chosen from electoral lists that include a
disproportionate number of partisan members, who are often perceived to
be there because of their political involvement rather than because of
their scientific status.The legitimacy of these committees is
further called into question because they include only academics
employed by French institutions and are often viewed as perpetuating a
longstanding tradition of favouritism. To give only one particularly
scandalous example: in June, panellists in the sociology section
allocated to themselves half of the promotions that they were charged
with assigning across the entire discipline of sociology. This led to
the resignation of the rest of the commission and to multiple protests.
Such an occurrence sent deep waves of distrust not only between
academics, but also towards the civil servants charged with reforming a
system that is increasingly viewed as flawed.Peer review is also in crisis at the local level. While selecting young doctoral recipients to be maîtres de conférences
(the entry level permanent position in the French academy, similar to
the British lecturer), French universities on average fill 30 per cent
of available posts with their own graduates, to the point where local
clientelism is often decried as symbolising the corruption of the
entire system. The typical (and only) job interview for such a post
lasts 20 to 30 minutes—probably the European record for brevity and
surely too short to determine whether an individual deserves what is
essentially a lifelong appointment. Many view the selection process as
little more than a means to legitimise the appointment of pre-selected
candidates—although the extent to which this is genuinely the case
varies across institutions.What is to be done? Because both the
CNU and the local selection committees have recently been reorganised
or granted new responsibilities, it seems the right moment to think
about how to improve the evaluation processes in very practical ways.
As part of a new start, academics should aim to generate a system of
true self-governance at each level, grounded in more explicit
principles for peer review. This would put them in a position to defend
academic autonomy against the much-feared and maligned governmental or
managerial control. While this is certainly occurring in some
disciplines and institutions, progress is far from being equally spread
across the sector.Obvious and costless regulatory measures could
easily be implemented—for instance, discouraging universities from
hiring their own PhD graduates (as AERES recently started to), or
forbidding selection committees from promoting their own members. One
could also look abroad for examples of “best practice”. The UK's
Economic and Social Research Council has created colleges of trained
academic evaluators who are charged with maintaining academic and
ethical standards in peer review; although not all aspects of the
British approach to academic reform should be emulated, this one is
particularly worthy.The Deutsche Forschungsgemeinschaft (German
Research Foundation) uses teams of elected experts to evaluate
proposals, and academic reputation weighs heavily in determining which
names will be put on electoral lists and who will serve on evaluation
panels. Canada's Social Sciences and Humanities Research Council
recently asked an independent panel of international experts to
evaluate its peer review process in order to improve impartiality and
effectiveness.In a recent book on peer review in the US, one of
the present authors (Michele Lamont) showed the ways in which American
social scientists and humanists operate to maintain their faith in the
idea that peer review works and that the academic system of evaluation
is fair. In this case, academics exercise their right as the only
legitimate evaluators of knowledge by providing detailed assessment of
intellectual production in light of their extensive expertise in
specialised topics. The exercise of peer evaluation sustains and
expresses professional status and professional autonomy. But it
requires significant time (and thus good working conditions) and moral
commitment—time spent comparing dossiers, making principled decisions
about when it is necessary to withdraw on the grounds of personal
interest, and so forth. Of course no peer review works perfectly, but
US academics, while being aware of its limitations, appear to view the
system as relatively healthy and they engage in many actions that
contribute to sustaining this faith.In our view, fixing the
current flaws in the French system does not merely demand
organisational reforms, including giving academics more time to
evaluate the research of colleagues and candidates properly. It may
also require French academics to think long and hard about their own
cynicism and fatalism concerning their ability to make judgments about
quality that would not be driven by cronyism or particularism, and that
would honour their own expertise and connoisseurship.Not that
proper governmental reform is not needed, but sometimes blaming the
Government may be an easy way out. Above all, it is increasingly a very
ineffectual way of tackling a substantial part of the problem. A little
more collaborative thinking and a little less cynicism among both
academics and administrators—if at all possible - may very well help
French universities find a way out of the crisis. And it will help the
French academic and research community to become, once again, much more
than the sum of its parts.
Bruno Cousin is postdoctoral research scholar in sociology at Harvard
University and Sciences Po Paris. Michèle Lamont is Robert I. Goldman
professor of European studies and professor of sociology and African
and African-American studies at Harvard University. She is the author
of How Professors Think: Inside the Curious World of Academic Judgment
(2009). She chaired the 2008 international panel of experts evaluating
peer review practices at the Social Science and Humanities Research
Council of Canada.
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