When the stakes are high, it is no surprise that battling political opponents use whatever support they can garner from economists and other researchers. That is what happened when conservative American politicians and European Union officials latched on to the work of two Harvard professors – Carmen Reinhart and Kenneth Rogoff – to justify their support of fiscal austerity.
Reinhart and Rogoff published a paper that appeared to show that public-debt levels above 90% of GDP significantly impede economic growth. Three economists from the University of Massachusetts at Amherst then did what academics are routinely supposed to do – replicate their colleagues’ work and subject it to criticism.
Along with a relatively minor spreadsheet error, they identified some methodological choices in the original Reinhart/Rogoff work that threw the robustness of their results into question. Most important, even though debt levels and growth remained negatively correlated, the evidence for a 90% threshold was revealed to be quite weak. And, as many have argued, the correlation itself could be the result of low growth leading to high indebtedness, rather than the other way around.
Reinhart and Rogoff have strongly contested accusations by many commentators that they were willing, if not willful, participants in a game of political deception. They have defended their empirical methods and insist that they are not the deficit hawks that their critics portray them to be.
The resulting firestorm has clouded a salutary process of scrutiny and refinement of economic research. Reinhart and Rogoff quickly acknowledged the Excel mistake they had made. The dueling analyses clarified the nature of the data, their limitations, and the difference that alternative methods of processing them made to the results. Ultimately, Reinhart and Rogoff were not that far apart from their critics on either what the evidence showed or what the policy implications were.
So the silver lining in this fracas is that it showed that economics can progress by the rules of science. No matter how far apart their political views may have been, the two sides shared a common language about what constitutes evidence and – for the most part – a common approach to resolving differences.
The problem lies elsewhere, in the way that economists and their research are used in public debate. The Reinhart/Rogoff affair was not just an academic quibble. Because the 90% threshold had become political fodder, its subsequent demolition also gained broader political meaning. Despite their protests, Reinhart and Rogoff were accused of providing scholarly cover for a set of policies for which there was, in fact, limited supporting evidence. One clear lesson is that we need better rules of engagement between economic researchers and policymakers.
A solution that will not work is for economists to second-guess how their ideas will be used or misused in public debate and to shade their public statements accordingly. For example, Reinhart and Rogoff might have downplayed their results – such as they were – in order to prevent them from being misused by deficit hawks. But few economists are sufficiently well attuned to have a clear idea of how the politics will play out.
Moreover, when economists adjust their message to fit their audience, the result is the opposite of what is intended: they rapidly lose credibility.
Consider what happens in international trade, where such shading of research is established practice. For fear of empowering the “protectionist barbarians,” trade economists are prone to exaggerate the benefits of trade and downplay its distributional and other costs. In practice, this often leads to their arguments being captured by interest groups on the other side – global corporations that seek to manipulate trade rules to their own advantage. As a result, economists are rarely viewed as honest brokers in the public debate about globalization.
But economists should match honesty about what their research says with honesty about the inherently provisional nature of what passes as evidence in their profession. Economics, unlike the natural sciences, rarely yields cut-and-dried results. For one thing, all economic reasoning is contextual, with as many conclusions as potential real-world circumstances. All economic propositions are “if-then” statements. Accordingly, figuring out which remedy works best in a particular setting is a craft rather than a science.
Second, empirical evidence is rarely reliable enough to settle decisively a controversy characterized by deeply divided opinion. This is particularly true in macroeconomics, of course, where data are few and open to diverse interpretations.
But even in microeconomics, where it is sometimes possible to generate precise empirical estimates using randomization techniques, the results must be extrapolated in order to be applied in other settings. New economic evidence serves at best to nudge the views – a little here, a little there – of those inclined to be open-minded.
In the memorable words of the World Bank’s chief economist, Kaushik Basu, “One thing that experts know, and that non-experts do not, is that they know less than non-experts think they do.” The implications go beyond not over-selling any particular research result. Journalists, politicians, and the general public have a tendency to attribute greater authority and precision to what economists say than economists should really feel comfortable with. Unfortunately, economists are rarely humble, especially in public.
There is one other thing that the public should know about economists: It is cleverness, not wisdom, that advances academic economists’ careers. Professors at the top universities distinguish themselves today not by being right about the real world, but by devising imaginative theoretical twists or developing novel evidence. If these skills also render them perceptive observers of real societies and provide them with sound judgment, it is hardly by design.
Dani Rodrick
Read more at http://www.project-syndicate.org/commentary/the-provisional-nature-of-economic-research-by-dani-rodrik#lRFIzPzXUxdVbSi5.99
sábado, 25 de mayo de 2013
domingo, 21 de abril de 2013
Deuda Publica y Crecimiento Economico
No hay que ser un águila para encontrar la conexión entre el comisario de Economía europeo, Olli Rehn, el ministro del Tesoro británico, George Osborne, y el congresista republicano Paul Ryan, que optó, sin éxito, a la vicepresidencia de EE UU. Los tres son bien conocidos por priorizar el recorte del déficit público. Los tres utilizaron un estudio de dos economistas de Harvard, Carmen Reinhart y Kenneth Rogoff, para dar empaque a sus posiciones.
Hasta aquí, nada raro: Reinhart y Rogoff (ex economista jefe del FMI), tenían bien ganada fama por Esta vez es diferente, un libro de 2009 en el que reconstruían las crisis financieras, y sus implicaciones, desde 1800. El estudio que vocearon Rehn, Osborne y Ryan, publicado un año después, concluía que el crecimiento se debilita de forma abrupta si la deuda pública supera el 90% del PIB. Ofrecía un número mágico, un caramelo para los adalides de la austeridad, que lo saborearon una y otra vez.
“Creo firmemente en investigaciones como las de Rogoff y Reinhart, que demuestran que, si alcanzas un determinado nivel de deuda pública, aumentar el déficit y la deuda no generan crecimiento, sino que lo dañan”, recitó en octubre el ministro de Finanzas alemán, Wolfgang Schäuble. Pero esta semana, otro estudio, de la Universidad de Massachusetts, desveló que los economistas de Harvard omitieron datos, que utilizaron una metodología muy discutible. Y el debate sobre si la austeridad es solución o condena entró en combustión.
En su investigación, traspasar el 90% de deuda pública lleva al desplome del PIB
Para contar esta historia, muy popular estos días en la Asamblea del FMI, en los departamentos universitarios y en los blogs de académicos, conviene tomar distancia. En este caso, lo mejor es situarse en las antípodas. Sí, en Nueva Zelanda. Porque son los datos de este país los que, según los profesores Thomas Herndon, Michael Ash y Robert Pollin, hacen tambalear el edificio teórico construido por Reinhart y Rogoff.
Los economistas de Harvard analizaban la relación entre crecimiento y deuda pública a partir de la base de datos que habían elaborado. Entre otras cosas, fijaban su atención en lo que ha pasado con 20 países avanzados entre 1946 y 2009. Y llegaban a la conclusión de que cuando la deuda pública cruza el “umbral” del 90% del PIB, el resultado es un crecimiento “notablemente más bajo”: antes de llegar a ese umbral de deuda, el PIB avanza a una tasa anual que oscilaba entre el 3% y el 4%; después de traspasarlo, la media se desploma al -0,1%.
Tres años después, los profesores de la Universidad de Massachusetts encuentran cosas raras en Nueva Zelanda: Rogoff y Reinhart usan el dato de 1951, cuando la deuda pública en este país superó el 90% y el PIB bajó un 7,6%. Pero no los de 1946-1949, en los que también se superó el umbral del 90%, aunque con tasas de crecimiento elevadas. De haberlo hecho, la variación del PIB de Nueva Zelanda habría sido del +2,6% y no del -7,6%.
Las consecuencias de esa omisión, se multiplica por la metodología empleada por Rogoff y Reinhart. Porque lo que decidieron fue hacer la media del crecimiento de todos los años en los que un país superaba el 90% de deuda. Es decir, el 2,4% de crecimiento medio que registró Reino Unido durante los 19 años en los que traspasó el umbral de deuda tienen el mismo peso que el -7,6% registrado en un año por Nueva Zelanda.
“Creo firmemente en estudios como el de Reinhart y Rogoff”, proclamó Schäuble
Además, en la hoja de cálculo del programa Excel que emplearon Rogoff y Reinhart, dejaron fuera por error los datos de cinco países. Es lo que menos incidencia tiene, pero lo que más llama la atención por lo elemental de la equivocación. Tras la revisión, los profesores de la Universidad de Massachusetts concluyen que el crecimiento medio en los años con una deuda superior al 90% habría sido del 2,2%, no del -0,1%, como mantenían Rogoff y Reinhart. “Esto debería llevarnos a revisar los planes de austeridad en Europa y Estados Unidos”, concluyen Herndon, Ash y Pollin, defensores de aumentar el gasto público para luchar contra el desempleo masivo en recesión.
El estudio de Rogoff y Reinhart se publicó en American Review of Economics (AER), una prestigiosa revista científica. Pero los errores y las omisiones solo se detectaron tres años después, cuando los economistas de Harvard accedieron a compartir su hoja de cálculo con los profesores de Massachusetts. “La AER es muy estricta en sus normas de publicación. Además de una evaluación previa de los artículos, siempre obliga a hacer públicos los datos y el software que utilizas”, señala Jesús Fernández-Villaverde, catedrático de la Universidad de Pensilvania. Pero, matiza, el estudio de Rogoff y Reinhart, se publicó en un número especial, en el que no rigen esas exigencias. “Es un número en el que se resumen las ponencias de la conferencia anual de la American Economics Association. Es para plantear ideas provocadoras, aunque estén a medio desarrollar”, añade.
Para Fernández-Villaverde, el “único error real” se produjo en la hoja de cálculo. Además, apuntilla, el uso del popular programa Excel es mucho menos frecuente entre los investigadores universitarios. “Solemos emplear lenguajes estadísticos más serios”. Cree que la decisión de omitir algunos países puede defenderse “si hay un problema con la calidad de los datos”. Y que la metodología empleada (dar el mismo peso a cada país) es un “criterio”, aunque sus evidentes problemas “podían haberse minimizado con técnicas estadísticas más sofisticadas”.
El catedrático de la Universidad de Pensilvania relativiza la importancia de la revisión del influyente estudio de Rogoff y Reinhart en el debate sobre la austeridad. “Los políticos que querían justificar esa posición habrían encontrado otros informes que dicen cosas similares”, recalca.
En un correo electrónico enviado a varios medios, Reinhart y Rogoff asumen el “error” en el manejo de la hoja de cálculo. Pero sostienen que eso no desvirtúa el “mensaje central” de su estudio. Y rechazan el resto de críticas. “Estamos seguros de que los autores de la revisión no querían insinuar que manipulamos los datos para exagerar nuestros resultados”, contraatacan.
Los economistas de Harvard justifican que no se incluyeran los datos de Nueva Zelanda entre 1946 y 1949 en el estudio porque en 2010 no les había dado tiempo a “contrastar la compatibilidad y la calidad de esos datos”, algo que sí hicieron más adelante en otros trabajos. Y defienden la metodología que eligieron, aunque optaron por otro enfoque en un estudio posterior.
En este estudio, del año pasado, las diferencias detectadas por Rogoff y Reinhart en la media de crecimiento económico para países por encima (3,5%) y por debajo del 90% de deuda (2,4%) son muy similares a las calculadas por los profesores de Massachusetts en su revisión (del 3,2% al 2,2%). “Es extremadamente equivocado presentar una diferencia anual el 1% en episodios de deuda elevada que dura entre 10 y 25 años como pequeña”, agregan Rogoff y Reinhart.
Pero lo que ya no se produce, ni en la revisión de los profesores de Massachusetts, ni en el último estudio de los propios economistas de Harvard, es ese precipicio en el crecimiento al pasar el 90% de deuda. En las múltiples conferencias y artículos que protagonizaron en estos tres últimos años, Reinhart y Rogoff no abanderaron la austeridad a ultranza, incluso advirtieron contra un ajuste excesivo en Europa. Pero sí alertaron de las implicaciones de aumentar el gasto público (y la deuda) para reactivar la economía.
La primera respuesta de los Gobiernos ante la Gran Recesión de 2009 fue, precisamente, un estímulo fiscal sin precedentes. En mayo de 2010, cuando Reinhart y Rogoff, publicaron su artículo, las tornas ya habían cambiado: los mercados fijaron su atención en los países europeos con bajas expectativas de crecimiento y alta deuda. La respuesta, sobre todo en la zona euro, fue dar prioridad a la reducción del déficit, abandonar la política de gasto público. Después de tres años de austeridad intensiva, el viento del debate vuelve a rolar. Y la revisión crítica del estudio de Reinhart y Rogoff es ahora un caramelo que saborean con fruición los partidarios de una intervención masiva de los Estados.
EL PAIS http://economia.elpais.com/economia/2013/04/19/actualidad/1366400243_360561.html
domingo, 31 de marzo de 2013
Control de capitales y crisis financieras
interesante articulo de Krugman sobre el tema
Independientemente de cuáles sean las consecuencias finales de la crisis de Chipre —sabemos que van a ser negativas; simplemente no sabemos con exactitud la forma negativa que adoptarán—, hay algo que parece seguro: por el momento, y probablemente en los años venideros, la nación isleña tendrá que mantener unos controles bastante draconianos sobre los movimientos de capital hacia dentro y fuera del país. De hecho, es muy posible que los controles ya estén en vigor cuando ustedes lean esto. Y eso no es todo: dependiendo de cómo evolucione esto exactamente, es muy posible que los controles chipriotas sobre el capital cuenten con la bendición del Fondo Monetario Internacional (FMI), que ya respaldó controles similares en Islandia.
Este es un giro bastante sorprendente. Señalará el fin de una era para Chipre, que a efectos prácticos se ha pasado la última década anunciándose como un lugar en el que los ricos que quisieran evitar los impuestos y el escrutinio podían aparcar su dinero de forma segura, sin que se les hiciesen preguntas. Pero puede que también señale al menos el principio del fin de algo mucho más grande: la época en la que el libre movimiento de capitales se consideraba una norma deseable en todo el mundo.
No siempre fue así. Durante las dos primeras décadas después de la Segunda Guerra Mundial, los límites a los flujos de dinero transfronterizos se consideraban en general una buena política; eran más o menos universales en los países más pobres y también estaban presentes en la mayoría de los países más ricos. Reino Unido, por ejemplo, limitó las inversiones en el extranjero de sus residentes hasta 1979; otros países desarrollados mantuvieron las restricciones hasta bien entrada la década de los ochenta. Incluso EE UU limitó brevemente las salidas de capital durante los años sesenta.
Con el tiempo, sin embargo, estas restricciones dejaron de estar de moda. En cierta medida, esto reflejaba el hecho de que los controles sobre el capital pueden tener ciertos costes: imponen una carga adicional de trámites burocráticos, dificultan las operaciones de las empresas, y los análisis económicos convencionales dicen que deberían tener un efecto negativo en el crecimiento (aunque en las cifras resulta difícil detectar este efecto). Pero también reflejaba el auge de la ideología del libre mercado, la suposición de que si los mercados financieros quieren mover dinero a través de las fronteras, deben tener una buena razón para ello, y los burócratas no deben interponerse en su camino.
Chipre tendrá que mantener unos controles bastante draconianos sobre los movimientos de capital hacia dentro y fuera del país
Como consecuencia, a los países que tomaron medidas para limitar los flujos de capital —como Malasia, que impuso el equivalente a un toque de queda para las fugas de capital en 1998— se les trató casi como a parias. ¡Sin duda serían castigados por desafiar a los dioses del mercado!
Pero lo cierto, por mucho que a los ideólogos les cueste aceptarlo, es que el libre movimiento de capitales cada vez se parece más a un experimento fallido.
Ahora resulta difícil de imaginar, pero durante más de tres décadas tras la Segunda Guerra Mundial apenas se produjeron crisis financieras como estas a las que últimamente nos hemos acostumbrado tanto. Sin embargo, desde 1980 la lista es impresionante: México, Brasil, Argentina y Chile en 1982; Suecia y Finlandia en 1991; México otra vez en 1995; Tailandia, Malasia, Indonesia y Corea en 1998; Argentina otra vez en 2002. Y, por supuesto, la oleada de desastres más reciente: Islandia, Irlanda, Grecia, Portugal, España, Italia, Chipre.
¿Cuál es el denominador común de estos episodios? Generalmente se le echa la culpa al despilfarro fiscal; pero de toda esta lista, ese argumento solo sirve para un país: Grecia. Los banqueros sin control son un argumento mejor; desempeñaron una función importante en varias de estas crisis, desde Chile hasta Chipre, pasando por Suecia. Pero el mejor indicio para predecir una crisis son las grandes entradas de capital extranjero: en todos salvo en dos de los casos que acabo de mencionar, la crisis fue consecuencia de la llegada al país de una avalancha de inversores extranjeros, seguida de su desaparición repentina.
Naturalmente, no soy el primero que se da cuenta de la correlación existente entre la liberación de los capitales mundiales y la proliferación de las crisis financieras; Dani Rodrick, de Harvard, empezó a dar la voz de alarma allá por los años noventa. Sin embargo, hasta hace poco tiempo era posible sostener que el problema de las crisis se restringía a los países más pobres, que las economías más ricas eran de algún modo inmunes a los vaivenes provocados por esos inversores mundiales que pasan del amor al odio. Aquel era un pensamiento reconfortante; pero los apuros de Europa demuestran que era solo una ilusión.
Y no se trata solo de Europa. En la última década, también EE UU ha conocido una enorme burbuja inmobiliaria alimentada por el dinero extranjero, seguida de una horrible resaca tras el estallido de la burbuja. El daño se ha visto mitigado por el hecho de que los préstamos los adquirimos en nuestra propia moneda, pero, aun así, ha sido nuestra peor crisis desde los años treinta.
¿Y ahora qué? No espero ver un rechazo repentino y generalizado de la idea de que el dinero debe ser libre para ir adonde quiera cuando quiera. Sin embargo, sí puede que haya un proceso de erosión, a medida que los Gobiernos intervengan para limitar tanto el ritmo de entrada del dinero como la velocidad de salida. Podría decirse que el capitalismo mundial va camino de volverse considerablemente menos mundial.
Y eso está bien. Ahora mismo, los viejos tiempos en los que no era tan fácil mover grandes cantidades de dinero a través de las fronteras nos parecen bastante buenos.
Paul Krugman es profesor de Economía de Princeton y premio Nobel de 2008.
© New York Times Service 2013.
Traducción de News Clips.
martes, 5 de marzo de 2013
Europe, Unemployment and Instability
The global financial crisis of 2008 has slowly yielded to a global unemployment crisis. This unemployment crisis will, fairly quickly, give way to a political crisis. The crisis involves all three of the major pillars of the global system -- Europe, China and the United States. The level of intensity differs, the political response differs and the relationship to the financial crisis differs. But there is a common element, which is that unemployment is increasingly replacing finance as the central problem of the financial system.
Europe is the focal point of this crisis. Last week Italy held elections , and the party that won the most votes -- with about a quarter of the total -- was a brand-new group called the Five Star Movement that is led by a professional comedian. Two things are of interest about this movement. First, one of its central pillars is the call for defaulting on a part of Italy's debt as the lesser of evils. The second is that Italy, with 11.2 percent unemployment, is far from the worst case of unemployment in the European Union. Nevertheless, Italy is breeding radical parties deeply opposed to the austerity policies currently in place.
The core debate in Europe has been how to solve the sovereign debt crisis and the resulting threat to Europe's banks. The issue was who would bear the burden of stabilizing the system. The argument that won the day, particularly among Europe's elites, was that what Europe needed was austerity, that government spending had to be dramatically restrained so that sovereign debt -- however restructured it might be -- would not default.
One of the consequences of austerity is recession. The economies of many European countries, especially those in the eurozone, are now contracting, since austerity obviously means that less money will be available to purchase goods and services. If the primary goal is to stabilize the financial system, it makes sense. But whether financial stability can remain the primary goal depends on a consensus involving broad sectors of society. When unemployment emerges, that consensus shifts and the focus shifts with it. When unemployment becomes intense, then the entire political system can shift. From my point of view, the Italian election was the first, but expected, tremor.
A Pattern Emerges in Europe
Consider the geography of unemployment. Only four countries in Europe are at or below 6 percent unemployment: the geographically contiguous countries of Germany, Austria, the Netherlands and Luxembourg. The immediate periphery has much higher unemployment; Denmark at 7.4 percent, the United Kingdom at 7.7 percent, France at 10.6 percent and Poland at 10.6 percent. In the far periphery, Italy is at 11.7 percent, Lithuania is at 13.3 percent, Ireland is at 14.7 percent, Portugal is at 17.6 percent, Spain is at 26.2 percent and Greece is at 27 percent.
Germany, the world's fourth-largest economy, is at the center of gravity of Europe. Exports of goods and services are the equivalent of 51 percent of Germany's gross domestic product, and more than half of Germany's exports go to other European countries. Germany sees the European Union's free trade zone as essential for its survival. Without free access to these markets, its exports would contract dramatically and unemployment would soar. The euro is a tool that Germany, with its outsized influence, uses to manage its trade relations -- and this management puts other members of the eurozone at a disadvantage. Countries with relatively low wages ought to have a competitive advantage over German exports. However, many have negative balances of trade. Thus, when the financial crisis hit, their ability to manage was insufficient and led to sovereign debt crises, which in turn further undermined their position via austerity, especially as their membership in the eurozone doesn't allow them to apply their own monetary policies.
This doesn't mean that they were not profligate in their social spending, but the underlying cause of their failure was much more complex. Ultimately it was rooted in the rare case of a free trade zone being built around a massive economy that depended on exports. (Germany is the third-largest exporter in the world, ranking after China and the United States.) The North American Free Trade Agreement is built around a net importer. Britain was a net importer from the Empire. German power unbalances the entire system. Comparing the unemployment rate of the German bloc with that of Southern Europe, it is difficult to imagine these countries are members of the same trade group.
Even France, which has a relatively low unemployment rate, has a more complex story. Unemployment in France is concentrated in two major poles in the north and the south, with the southeast of France being the largest of them. Thus, if you look at the map, the southern tier of Europe has been hit extraordinarily hard with unemployment, and Eastern Europe not quite as badly, but Germany, Austria, the Netherlands and Luxembourg have been left relatively unscathed. How long this will last, given the recession in Germany, is another matter, but the contrast tells us a great deal about the emerging geopolitics of the region.
Portugal, Spain and Greece are in a depression. Their unemployment rate is roughly that of the United States in the midst of the Great Depression. A rule I use is that for each person unemployed, three others are affected, whether spouses, children or whomever. That means that when you hit 25 percent unemployment virtually everyone is affected. At 11 percent unemployment about 44 percent are affected.
It can be argued that the numbers are not quite as bad as they seem since people are working in the informal economy . That may be true, but in Greece, for example, pharmaceuticals are now in short supply since cash for importing goods has dried up. Spain's local governments are about to lay off more employees. These countries have reached a tipping point from which it is difficult to imagine recovering. In the rest of Europe's periphery, the unemployment crisis is intensifying. The precise numbers matter far less than the visible impact of societies that are tottering.
The Political Consequences of High Unemployment
It is important to understand the consequences of this kind of unemployment. There is the long-term unemployment of the underclass. This wave of unemployment has hit middle and upper-middle class workers. Consider an architect I know in Spain who lost his job. Married with children, he has been unemployed for so long that he has plunged into a totally different and unexpected lifestyle. Poverty is hard enough to manage, but when it is also linked to loss of status, the pain is compounded and a politically potent power arises.
The idea that the Germany-mandated austerity regime will be able to survive politically is difficult to imagine. In Italy, with "only" 11.7 percent unemployment, the success of the Five Star Movement represents an inevitable response to the crisis. Until recently, default was the primary fear of Europeans, at least of the financial, political and journalistic elite. They have come a long way toward solving the banking problem . But they have done it by generating a massive social crisis. That social crisis generates a political backlash that will prevent the German strategy from being carried out. For Southern Europe, where the social crisis is settling in for the long term, as well as for Eastern Europe, it is not clear how paying off their debt benefits them. They may be frozen out of the capital markets, but the cost of remaining in it is shared so unequally that the political base in favor of austerity is dissolving.
This is compounded by deepening hostility to Germany. Germany sees itself as virtuous for its frugality. Others see it as rapacious in its aggressive exporting, with the most important export now being unemployment. Which one is right is immaterial. The fact that we are seeing growing differentiation between the German bloc and the rest of Europe is one of the most significant developments since the crisis began.
The growing tension between France and Germany is particularly important. Franco-German relations were not only one of the founding principles of the European Union but one of the reasons the union exists. After the two world wars, it was understood that the peace of Europe depended on unity between France and Germany. The relationship is far from shattered, but it is strained. Germany wants to see the European Central Bank continue its policy of focusing on controlling inflation. This is in Germany's interest. France, with close to 11 percent unemployment, needs the European Central Bank to stimulate the European economy in order to reduce unemployment. This is not an arcane debate. It is a debate over who controls the European Central Bank, what the priorities of Europe are and, ultimately, how Europe can exist with such vast differences in unemployment.
One answer may be that Germany's unemployment rate will surge. That might mitigate anti-German feeling, but it won't solve the problem. Unemployment at the levels many countries are reaching and appear to be remaining at undermines the political power of the governments to pursue policies needed to manage the financial system. The Five Star Movement's argument in favor of default is not coming from a marginal party. The elite may hold the movement in contempt, but it won 25 percent of the vote. And recall that the hero of the Europhiles, Mario Monti, barely won 10 percent of the vote just a year after Europe celebrated him.
Fascism had its roots in Europe in massive economic failures in which the financial elites failed to recognize the political consequences of unemployment. They laughed at parties led by men who had been vagabonds selling post cards on the street and promising economic miracles if only those responsible for the misery of the country were purged. Men and women, plunged from the comfortable life of the petite bourgeoisie, did not laugh, but responded eagerly to that hope. The result was governments who enclosed their economies from the world and managed their performance through directive and manipulation.
This is what happened after World War I. It did not happen after World War II because Europe was occupied. But when we look at the unemployment rates today, the differentials between regions, the fact that there is no promise of improvement and that the middle class is being hurled into the ranks of the dispossessed, we can see the patterns forming.
History does not repeat itself so neatly. Fascism in the 1920s and 1930s sense is dead. But the emergence of new political parties speaking for the unemployed and the newly poor is something that is hard to imagine not occurring. Whether it is the Golden Dawn party in Greece or the Catalan independence movements, the growth of parties wanting to redefine the system that has tilted so far against the middle class is inevitable. Italy was simply, once again, the first to try it out.
It is difficult to see not only how this is contained within countries, but also how another financial crisis can be avoided, since the political will to endure austerity is broken. It is even difficult to see how the free trade zone will survive in the face of the urgent German need to export as much as it can to sustain itself. The divergence between German interests and those of Southern and Eastern Europe has been profound and has increased the more it appeared that a compromise was possible to save the banks. That is because the compromise had the unintended consequence of triggering the very force that would undermine it: unemployment.
It is difficult to imagine a common European policy at this point. There still is one, in a sense, but how a country with 5.2 percent unemployment creates a common economic policy with one that has 11 or 14 or 27 percent unemployment is hard to see. In addition, with unemployment comes lowered demand for goods and less appetite for German exports. How Germany deals with that is also a mystery.
The crisis of unemployment is a political crisis, and that political crisis will undermine all of the institutions Europe has worked so hard to craft. For 17 years Europe thrived, but that was during one of the most prosperous times in history. It has not encountered one of the nightmares of all countries and an old and deep European nightmare: unemployment on a massive scale. The test of Europe is not sovereign debt. It is whether it can avoid old and bad habits rooted in unemployment.
Stratfor
By George Friedman
Founder and Chairman
Europe is the focal point of this crisis. Last week Italy held elections , and the party that won the most votes -- with about a quarter of the total -- was a brand-new group called the Five Star Movement that is led by a professional comedian. Two things are of interest about this movement. First, one of its central pillars is the call for defaulting on a part of Italy's debt as the lesser of evils. The second is that Italy, with 11.2 percent unemployment, is far from the worst case of unemployment in the European Union. Nevertheless, Italy is breeding radical parties deeply opposed to the austerity policies currently in place.
The core debate in Europe has been how to solve the sovereign debt crisis and the resulting threat to Europe's banks. The issue was who would bear the burden of stabilizing the system. The argument that won the day, particularly among Europe's elites, was that what Europe needed was austerity, that government spending had to be dramatically restrained so that sovereign debt -- however restructured it might be -- would not default.
One of the consequences of austerity is recession. The economies of many European countries, especially those in the eurozone, are now contracting, since austerity obviously means that less money will be available to purchase goods and services. If the primary goal is to stabilize the financial system, it makes sense. But whether financial stability can remain the primary goal depends on a consensus involving broad sectors of society. When unemployment emerges, that consensus shifts and the focus shifts with it. When unemployment becomes intense, then the entire political system can shift. From my point of view, the Italian election was the first, but expected, tremor.
A Pattern Emerges in Europe
Consider the geography of unemployment. Only four countries in Europe are at or below 6 percent unemployment: the geographically contiguous countries of Germany, Austria, the Netherlands and Luxembourg. The immediate periphery has much higher unemployment; Denmark at 7.4 percent, the United Kingdom at 7.7 percent, France at 10.6 percent and Poland at 10.6 percent. In the far periphery, Italy is at 11.7 percent, Lithuania is at 13.3 percent, Ireland is at 14.7 percent, Portugal is at 17.6 percent, Spain is at 26.2 percent and Greece is at 27 percent.
Germany, the world's fourth-largest economy, is at the center of gravity of Europe. Exports of goods and services are the equivalent of 51 percent of Germany's gross domestic product, and more than half of Germany's exports go to other European countries. Germany sees the European Union's free trade zone as essential for its survival. Without free access to these markets, its exports would contract dramatically and unemployment would soar. The euro is a tool that Germany, with its outsized influence, uses to manage its trade relations -- and this management puts other members of the eurozone at a disadvantage. Countries with relatively low wages ought to have a competitive advantage over German exports. However, many have negative balances of trade. Thus, when the financial crisis hit, their ability to manage was insufficient and led to sovereign debt crises, which in turn further undermined their position via austerity, especially as their membership in the eurozone doesn't allow them to apply their own monetary policies.
This doesn't mean that they were not profligate in their social spending, but the underlying cause of their failure was much more complex. Ultimately it was rooted in the rare case of a free trade zone being built around a massive economy that depended on exports. (Germany is the third-largest exporter in the world, ranking after China and the United States.) The North American Free Trade Agreement is built around a net importer. Britain was a net importer from the Empire. German power unbalances the entire system. Comparing the unemployment rate of the German bloc with that of Southern Europe, it is difficult to imagine these countries are members of the same trade group.
Even France, which has a relatively low unemployment rate, has a more complex story. Unemployment in France is concentrated in two major poles in the north and the south, with the southeast of France being the largest of them. Thus, if you look at the map, the southern tier of Europe has been hit extraordinarily hard with unemployment, and Eastern Europe not quite as badly, but Germany, Austria, the Netherlands and Luxembourg have been left relatively unscathed. How long this will last, given the recession in Germany, is another matter, but the contrast tells us a great deal about the emerging geopolitics of the region.
Portugal, Spain and Greece are in a depression. Their unemployment rate is roughly that of the United States in the midst of the Great Depression. A rule I use is that for each person unemployed, three others are affected, whether spouses, children or whomever. That means that when you hit 25 percent unemployment virtually everyone is affected. At 11 percent unemployment about 44 percent are affected.
It can be argued that the numbers are not quite as bad as they seem since people are working in the informal economy . That may be true, but in Greece, for example, pharmaceuticals are now in short supply since cash for importing goods has dried up. Spain's local governments are about to lay off more employees. These countries have reached a tipping point from which it is difficult to imagine recovering. In the rest of Europe's periphery, the unemployment crisis is intensifying. The precise numbers matter far less than the visible impact of societies that are tottering.
The Political Consequences of High Unemployment
It is important to understand the consequences of this kind of unemployment. There is the long-term unemployment of the underclass. This wave of unemployment has hit middle and upper-middle class workers. Consider an architect I know in Spain who lost his job. Married with children, he has been unemployed for so long that he has plunged into a totally different and unexpected lifestyle. Poverty is hard enough to manage, but when it is also linked to loss of status, the pain is compounded and a politically potent power arises.
The idea that the Germany-mandated austerity regime will be able to survive politically is difficult to imagine. In Italy, with "only" 11.7 percent unemployment, the success of the Five Star Movement represents an inevitable response to the crisis. Until recently, default was the primary fear of Europeans, at least of the financial, political and journalistic elite. They have come a long way toward solving the banking problem . But they have done it by generating a massive social crisis. That social crisis generates a political backlash that will prevent the German strategy from being carried out. For Southern Europe, where the social crisis is settling in for the long term, as well as for Eastern Europe, it is not clear how paying off their debt benefits them. They may be frozen out of the capital markets, but the cost of remaining in it is shared so unequally that the political base in favor of austerity is dissolving.
This is compounded by deepening hostility to Germany. Germany sees itself as virtuous for its frugality. Others see it as rapacious in its aggressive exporting, with the most important export now being unemployment. Which one is right is immaterial. The fact that we are seeing growing differentiation between the German bloc and the rest of Europe is one of the most significant developments since the crisis began.
The growing tension between France and Germany is particularly important. Franco-German relations were not only one of the founding principles of the European Union but one of the reasons the union exists. After the two world wars, it was understood that the peace of Europe depended on unity between France and Germany. The relationship is far from shattered, but it is strained. Germany wants to see the European Central Bank continue its policy of focusing on controlling inflation. This is in Germany's interest. France, with close to 11 percent unemployment, needs the European Central Bank to stimulate the European economy in order to reduce unemployment. This is not an arcane debate. It is a debate over who controls the European Central Bank, what the priorities of Europe are and, ultimately, how Europe can exist with such vast differences in unemployment.
One answer may be that Germany's unemployment rate will surge. That might mitigate anti-German feeling, but it won't solve the problem. Unemployment at the levels many countries are reaching and appear to be remaining at undermines the political power of the governments to pursue policies needed to manage the financial system. The Five Star Movement's argument in favor of default is not coming from a marginal party. The elite may hold the movement in contempt, but it won 25 percent of the vote. And recall that the hero of the Europhiles, Mario Monti, barely won 10 percent of the vote just a year after Europe celebrated him.
Fascism had its roots in Europe in massive economic failures in which the financial elites failed to recognize the political consequences of unemployment. They laughed at parties led by men who had been vagabonds selling post cards on the street and promising economic miracles if only those responsible for the misery of the country were purged. Men and women, plunged from the comfortable life of the petite bourgeoisie, did not laugh, but responded eagerly to that hope. The result was governments who enclosed their economies from the world and managed their performance through directive and manipulation.
This is what happened after World War I. It did not happen after World War II because Europe was occupied. But when we look at the unemployment rates today, the differentials between regions, the fact that there is no promise of improvement and that the middle class is being hurled into the ranks of the dispossessed, we can see the patterns forming.
History does not repeat itself so neatly. Fascism in the 1920s and 1930s sense is dead. But the emergence of new political parties speaking for the unemployed and the newly poor is something that is hard to imagine not occurring. Whether it is the Golden Dawn party in Greece or the Catalan independence movements, the growth of parties wanting to redefine the system that has tilted so far against the middle class is inevitable. Italy was simply, once again, the first to try it out.
It is difficult to see not only how this is contained within countries, but also how another financial crisis can be avoided, since the political will to endure austerity is broken. It is even difficult to see how the free trade zone will survive in the face of the urgent German need to export as much as it can to sustain itself. The divergence between German interests and those of Southern and Eastern Europe has been profound and has increased the more it appeared that a compromise was possible to save the banks. That is because the compromise had the unintended consequence of triggering the very force that would undermine it: unemployment.
It is difficult to imagine a common European policy at this point. There still is one, in a sense, but how a country with 5.2 percent unemployment creates a common economic policy with one that has 11 or 14 or 27 percent unemployment is hard to see. In addition, with unemployment comes lowered demand for goods and less appetite for German exports. How Germany deals with that is also a mystery.
The crisis of unemployment is a political crisis, and that political crisis will undermine all of the institutions Europe has worked so hard to craft. For 17 years Europe thrived, but that was during one of the most prosperous times in history. It has not encountered one of the nightmares of all countries and an old and deep European nightmare: unemployment on a massive scale. The test of Europe is not sovereign debt. It is whether it can avoid old and bad habits rooted in unemployment.
Stratfor
By George Friedman
Founder and Chairman
jueves, 28 de febrero de 2013
Globalización, Estado y Mercados
¿Todavía quedan dudas de cual es el mejor modelo económico y social?
Recientemente estuve en un seminario en Harvard sobre los elementos claves para el crecimiento económico. Siempre es una satisfacción poder ver como se abren nuevas líneas de investigación sobre el crecimiento económico y ciertamente se cubrieron las expectativas que tenia, con nuevas ideas, con mapas de la complejidad económica muy útiles para identificar ventajas competitivas para cada país. El manejo de grandes cantidades de datos con aplicaciones inteligentes son capaces de darnos una gran cantidad de información sobre productos y mercados.
Si bien se evidencian sesgos claramente ideológicos y poco fundamentados cuando se reflexiona sobre el papel del estado y de los mercados en la economía globalizada en la que vivimos.
Antes de la actual crisis de 2008 se podía argumentar que los mercados estaban produciendo una gran cantidad de riqueza, sobre todo en el mundo desarrollado pero también en el subdesarrollado: básicamente en China y en India, que se llevan una gran parte del crecimiento económico de estos países. Sin embargo los mercados no fueron tan eficientes en la distribución de estos ingresos. La concentración de riqueza en un a parte muy pequeña de la población sigue aumentando tanto en Estados Unidos como en China. No creo que haya que dar evidencias sobre esto porque no se discute.
Si consideramos que el objetivo de la ciencia económica no es otro que alcanzar un nivel óptimo de bienestar para el conjunto de la población, no podemos dejar de admitir el fallo de los mercados en alcanzar este objetivo. Pero a partir de 2008, con la crisis financiera, la libertad de los mercados no solo no alcanza este objetivo sino que ha dado lugar a la mayor crisis que se ha conocido desde la gran depresión: crisis bancaria, crisis económica, desempleo y aumento de pobreza, en países desarrollados sobre todo. Podemos observar que los países en vías de desarrollo han sido menos afectados, unos porque tienen mercados financieros menos sofisticados, el caso de Latinoamérica y otros por tener un estado e instituciones fuertes como es el caso de los países nórdicos o incluso un estado que interviene fuertemente la economía, el caso de China.
La mera observación de estos fenómenos nos lleva a concluir que hay una necesidad evidente de instituciones fuertes que regulen los enormes fallos de los mercados, y que de otra manera la economía global va a estar sujeta en el futuro a crisis, como la que ahora vivimos, que pone en riesgo el contrato social de los estados con sus ciudadanos.
El caso de los países europeos es un claro ejemplo de cómo los gobiernos se han visto obligados por los mercados a poner en marcha políticas económicas y sociales que no benefician a la población en su conjunto y que arriesgan el modelo de estado del bienestar que tantos años ha costado construir. Dejando además tasas de desempleo y desamparo difícilmente aceptables por la sociedad.
En esta situación se deben plantear algunas preguntas: ¿Es legítimo que los mercados impongan las políticas económicas y sociales a estados soberanos e independientes? ¿ Se debe restringir la libertad de los mercados y de los actores que los manejan en aras de mantener el contrato social de los estados? ¿Cómo se puede definir un modelo económico y social que permita el crecimiento económico y a la vez garantice el bienestar social?
Es inaceptable que los mercados estén por encima del poder político y le estén obligando a actuar en contra de sus sociedades y del bienestar de sus ciudadanos. Mas pronto que tarde se tendrán que tomar las medidas adecuadas para volver a poner a los mercados en su lugar que no es otro que la subordinación al poder político que democráticamente elegido debe definir los modelos económicos y sociales que mejor sirve al conjunto de la población.
En cuanto a los economistas, solo recordar un comentario de Dani Rodrik en el seminario antes mencionado y en el que se refirió a que los economistas que recetan medidas preestablecidas no son economistas son otra cosa. La economía solo es una caja de herramientas que hay que utilizar en función de cada situación en concreto y después de un diagnostico adecuado de la realidad de cada país. Mucho me temo que si aplicamos esta regla muchos economistas perderían su trabajo y quizás revisarían, en su condición de desempleados, sus análisis económicos.
viernes, 31 de agosto de 2012
Economic growth in the future
How economic growth will be in the next decades? interesting article of Rodrik
No More Growth Miracles
CAMBRIDGE – A year ago, economic analysts were giddy with optimism about the prospects for economic growth in the developing world. In contrast to the United States and Europe, where the growth outlook looked weak at best, emerging markets were expected to sustain their strong performance from the decade preceding the global financial crisis, and thus become the engine of the global economy.
Economists at Citigroup, for example, boldly concluded that circumstances had never been this conducive to broad, sustained growth around the world, and projected rapidly rising global output until 2050, led by developing countries in Asia and Africa. The accounting and consulting firm PwC predicted that per capita GDP growth in China, India, and Nigeria would exceed 4.5% well into the middle of the century. The consulting firm McKinsey & Company christened Africa, long synonymous with economic failure, the land of “lions on the move.”
Today, such talk has been displaced by concern about what The Economist calls “the great slowdown.” Recent economic data in China, India, Brazil, and Turkey point to the weakest growth performance in these countries in years. Optimism has given way to doubt.
Of course, just as it was inappropriate to extrapolate from the previous decade of strong growth, one should not read too much into short-term fluctuations. Nevertheless, there are strong reasons to believe that rapid growth will prove the exception rather than the rule in the decades ahead.
To see why, we need to understand how “growth miracles” are made. Except for a handful of small countries that benefited from natural-resource bonanzas, all of the successful economies of the last six decades owe their growth to rapid industrialization. If there is one thing that everyone agrees on about the East Asian recipe, it is that Japan, South Korea, Singapore, Taiwan, and of course China all were exceptionally good at moving their labor from the countryside (or informal activities) to organized manufacturing. Earlier cases of successful economic catch-up, such as the US or Germany, were no different.
Manufacturing enables rapid catch-up because it is relatively easy to copy and implement foreign production technologies, even in poor countries that suffer from multiple disadvantages. Remarkably, my research shows that manufacturing industries tend to close the gap with the technology frontier at the rate of about 3% per year regardless of policies, institutions, or geography. Consequently, countries that are able to transform farmers into factory workers reap a huge growth bonus.
To be sure, some modern service activities are capable of productivity convergence as well. But most high-productivity services require a wide array of skills and institutional capabilities that developing economies accumulate only gradually. A poor country can easily compete with Sweden in a wide range of manufactures; but it takes many decades, if not centuries, to catch up with Sweden’s institutions.
Consider India, which demonstrates the limitations of relying on services rather than industry in the early stages of development. The country has developed remarkable strengths in IT services, such as software and call centers. But the bulk of the Indian labor force lacks the skills and education to be absorbed into such sectors. In East Asia, unskilled workers were put to work in urban factories, making several times what they earned in the countryside. In India, they remain on the land or move to petty services where their productivity is not much higher.
Successful long-term development therefore requires a two-pronged push. It requires an industrialization drive, accompanied by the steady accumulation of human capital and institutional capabilities to sustain services-driven growth once industrialization reaches its limits. Without the industrialization drive, economic takeoff becomes quite difficult. Without sustained investments in human capital and institution-building, growth is condemned to peter out.
But this time-tested recipe has become a lot less effective these days, owing to changes in manufacturing technologies and the global context. First, technological advances have rendered manufacturing much more skill- and capital-intensive than it was in the past, even at the low-quality end of the spectrum. As a result, the capacity of manufacturing to absorb labor has become much more limited. It will be impossible for the next generation of industrializing countries to move 25% or more of their workforce into manufacturing, as East Asian economies did.
Second, globalization in general, and the rise of China in particular, has greatly increased competition on world markets, making it difficult for newcomers to make space for themselves. Although Chinese labor is becoming more expensive, China remains a formidable competitor for any country contemplating entry into manufactures.
Moreover, rich countries are unlikely to be as permissive towards industrialization policies as they were in the past. Policymakers in the industrial core looked the other way as rapidly growing East Asian countries acquired Western technologies and industrial capabilities through unorthodox policies such as subsidies, local content requirements, reverse engineering, and currency undervaluation. Core countries also kept their domestic markets open, allowing East Asian countries to export freely the manufactured products that resulted.
Now, however, as rich countries struggle under the combined weight of high debt, low growth, unemployment, and inequality, they will apply greater pressure on developing nations to abide by World Trade Organization rules, which narrow the space for industrial subsidies. Currency undervaluation à la China will not go unnoticed. Protectionism, even if not in overt form, will be politically difficult to resist.
Manufacturing industries will remain poor countries’ “escalator industries,” but the escalator will neither move as rapidly, nor go as high. Growth will need to rely to a much greater extent on sustained improvements in human capital, institutions, and governance. And that means that growth will remain slow and difficult at best.
Dani Rodrik
sábado, 21 de julio de 2012
España: el fallo de un pais en un mundo en cambio
Interesante articulo sobre las causas profundas de el fracaso de la economia española
La flexibilización del límite de déficit para 2012 que previsiblemente aprobará este miércoles el Ecofin no resuelve los problemas de España. Nuestro país afronta un reto nacional que va mucho más allá de la reducción del déficit. Un modelo de crecimiento se ha agotado y aún no ha surgido otro que lo reemplace. Enfrentarse a esta tormenta nunca hubiese sido fácil, pero la actual coyuntura lo hace titánico. En realidad, no vivimos una crisis sino una convergencia de crisis que se retroalimentan. Un agotamiento de nuestro modelo de crecimiento, dentro de una recesión económica internacional, que ha catalizado la primera gran crisis del euro; todo ello envuelto en un gran cambio geopolítico, sin el cual no se puede comprender lo que nos está pasando.
De hecho, la crisis tuvo su origen en tres fenómenos directamente relacionados con este cambio geopolítico y sus efectos en la globalización económica: desequilibrios macroeconómicos globales, que hicieron posible las burbujas de crédito y de precios de activos, especialmente inmobiliarios; la globalización financiera, que generó ingentes y desestabilizadores flujos financieros mundiales e incitó a la desregulación financiera al limitar la capacidad de acción de los Estados; y un estancamiento de las rentas salariales que empujó a muchos a tener que recurrir al crédito.
La crisis ha acelerado otras tendencias que ya estaban en marcha y que la agravan, como el desplazamiento del poder económico y riqueza a Asia o la creación de un orden monetario multidivisa. Países que representan a tres quintos de la población mundial se están incorporando al sistema económico global, lo que va a generar inevitablemente dislocaciones económicas y sociales cuya verdadera magnitud no estamos sino empezando a atisbar.
En suma, España afronta, no una tormenta, sino un cambio climático y nuestro país no tiene mimbres para hacer frente a este tsunami. La nuestra es una economía poco competitiva, caracterizada por una excesiva concentración en sectores de baja productividad y por una clase empresarial poco dinámica e innovadora. No tiene recursos naturales, ni ventajas competitivas en sectores de alto potencial de crecimiento y empleo. Padece de una escasa cultura de la competencia y un insano corporativismo, facilitados por una excesiva y perniciosa connivencia entre lo público y lo privado. La entrada en la UE, el euro y la inmigración permitieron estirar durante años este modelo económico. Pero esto se ha acabado; la enorme transformación económica que crea la eclosión de las economías emergentes implica reformarse o languidecer.
Y para ello ese esencial tomar conciencia de la gravedad de la situación y la necesidad de afrontar el reto colectivamente. Pues, si es cierto que el país ha dejado de funcionar, también lo es que todos hemos tenido responsabilidad en ello. Sin duda, mayor de las élites, y no sólo la política, sino también de las económicas, que han llevado al país al borde de la quiebra y no crearon una estructura económica dinámica basada en la innovación y la formación del capital humano. Pero también ha fallado la sociedad al no hacer responsables a estas élites de sus desmanes y haber vivido demasiado tiempo mirando hacia otro lado, disfrutando con cierta complacencia de nuestra supuesta riqueza. Ha habido en suma, un fallo de país y sólo su reconocimiento puede servir de base para afrontar la dura tarea colectiva que queda por delante.
.Por Ángel Pascual-Ramsay es Director of Global Risks en el ESADE
geo-Center for Global Economy and Geopolitics. Es autor, junto con Andrés Ortega, del libro ¿Qué nos ha pasado? El fallo de un país.
geo-Center for Global Economy and Geopolitics. Es autor, junto con Andrés Ortega, del libro ¿Qué nos ha pasado? El fallo de un país.
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