Posts Tagged ‘Policy Network’

Weekend reading, 8 October 2010

Friday, October 8th, 2010


A version of this list of recommendations also comes out earlier in the day as part of the weekly Policy Progress e-newsletter.

“Begun the Currency wars have” – Raf Manji

Yves Smith (Naked Capitalism) – Currency War Threats Escalating
Matthew Yglesias – How I Learned to Stop Worrying and Love Currency Wars
Raj Manji -The Art of Currency War
David E. Sanger and Michael Wines (New York Times) – More Countries Adopt China’s Tactics on Currency
Phil Izzo (Wall Street Journal) – Stiglitz: Central Banks Creating ‘Chaos’
Matt Nolan (The Visible Hand in Economics)  - Race to the bottom actually race to the top
Bernard Hickey – Opinion: Why NZ can’t step aside and wait to be slaughtered in the currency wars to come
Bernard Hickey – Five ways to control the NZ$ and capital flows
So what has been the big news story this week? Paul Henry? Chris Carter? The Hobbit? Um, how about the threat of competitive currency devaluations amongst the leading economies? Last week Brazil’s finance minister Guido Mantega introduced the phrase “currency war” into the discussion and it seems to have stuck. The range of articles above provides a pretty good introduction to the issues and differing views about the implications (and they include links to further articles). (Note – Raf Manji is an occasional commenter here at Policy Progress.)

Amidst the potential turmoil, Bernard Hickey offers a New Zealand perspective:

There is a significant risk that as central banks in the Northern Hemisphere crank up into a series of competitive devaluations that the New Zealand dollar is pushed up vs the US dollar, the euro and the Japanese yen, but not versus the Australian dollar.

. . . Luckily for New Zealand exporters to Australia, the one currency more in demand than our own is the Australian dollar.

But in the end that won’t save us. Our trade with China, now our second largest trading partner, is in US dollars and the Chinese are reluctant to let their currency appreciate vs the US dollar.

. . . If the New Zealand dollar surges under the weight of capital inflows from carry-trading, yield-hunting investors and those hunting for safety away from the money printing, then the Reserve Bank needs to be ready to sell New Zealand dollars. It worked before in 2007 and made the taxpayer a tidy profit. It can work again.

Simon Kennedy (Bloomberg) - Wall Street Sees World Economy Decoupling From U.S.
B’vedeni Snapshot – Food, glorious food! Will food become the new crude?
Meanwhile, some other emerging signs on the world economy front look more hopeful. From Bloomberg:

A book published last week by the World Bank . . . “The Day After Tomorrow” concludes that developing nations aren’t only decoupling, they also are undergoing a “switchover” that will make them such locomotives for the world economy, they can help rescue advanced nations. Among the reasons for the revolution are greater trade between emerging markets, the rise of the middle class and higher commodity prices, the book said.

And from B’vedeni Private Wealth (hat-tip Alison):

A decade ago, it would have been hard to imagine a world where giant multinationals and cashed up venture capitalists were battling each other for a share of the world’s fertiliser, irrigation water, and soybean markets. Yet today almost everything to do with large scale agriculture and the marketing and processing of agricultural products is a much sought after investment prospect.

Patrick Diamond - Labour’s failed renewal campaign
The Policy Network’s Patrick Diamond was one of those who accused Eurpoean progressives of “the politics of evasion”. Here’s what he has had to say about the Labour leadership contest in the UK:

At a deeper level, the contest has suffered from lack of sustained reflection about why the theories of social democracy – a stakeholder economy, democratic reform and an ethical foreign policy – proved so difficult to achieve in practice, despite three huge majorities. That insufficient work was done in opposition before 1997 is all too apparent. Only in Mr Blair’s second term did he develop a compelling reform mission, but even then Labour proved notoriously reluctant to challenge powerful institutional interests in the City, the media and public services. New Labour’s mind-set was one in which making enemies risked ceding electoral advantage to the Conservatives. But why this was, and how it stopped it governing in the public interest, has barely been discussed. As a result, whoever emerges as leader will likely lack a mandate to overhaul Labour’s programme.

And:

. . .  the current contest could have done with louder calls, for instance, to escalate Britain’s faltering war on poverty. But the mind-set that the state and social justice are inescapably linked remains, when it should be discarded . . . Labour’s next leader must deliver a radical speech that breaks out of the impasse created by the campaign. Their task will not be to detoxify their brand, as Mr Cameron fought to do, but to seek a dramatic new Clause 4 moment – one that once and for all announces an end to Labour’s fixation with traditional state power, and makes it again the party of moral, not mechanical reform.

Note: (free) registration is required for access to this Financial Times article.

A few other dispatches from the UK, following on from our Ed Miliband special edition last week:

And, on the ‘To Read’ pile:

And finally, a reminder: if you haven’t voted in the local body elections yet, you can still hand-deliver your ballot paper to a polling booth by midday tomorrow; check your local council website for details. (And if you live in Wellington or in the neighbouring areas covered by Capital and Coast, then as an added bonus you can vote for me for election to the District Health Board!)

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Is the Left guilty of the “Politics of Evasion”? [re-post]

Monday, August 30th, 2010

Originally posted on 25 February 2010 (the first week of Policy Progress).

http://www.flickr.com/photos/35952250@N02/ / CC BY 2.0

The left in Europe has been guilty of what can be described as the “politics of evasion”: it has failed to confront the fundamental causes of its vulnerability, loss of trust and élan in past years . . .

If social democrats are to recover their ability to set the political agenda in an era of insecurity, complexity and constant change . . . we have to face up to hard truths and, if necessary, shatter the cosy and comfortable consensus that surrounds the deliberations of so many fora which social democratic parties inhabit.

So states the summary document of the Amsterdam process, a two-year project aimed at no less than the “ideological renewal of European Social Democracy” and a “new revisionism for the 21st century”.

It’s a collaboration between two European progressive think-tanks, the Wiardi Beckman Stichting (the “scientific bureau” of the Dutch Labour Party) and the UK-based Policy Network.

Their initial publication, the Policy Network’s Challenging the politics of evasion: the only way to renew European social democracy, continues this take-no-prisoners rhetoric.

The writers seem at first glance equally critical of the “third way” revisionists (“embarrassed by the various accommodations made in the mid-1990s with the perceived realities of international capitalism and globalisation”) and of traditionalists (accused of “complacency” in their demand for “a return to the eternal verities and truths that the revisionists allegedly lost”).

This impression is probably incorrect, however. The Policy Network is pretty closely associated with the Blairite wing of the UK Labour Party. Peter Mandelson is its president, and two of the three authors of Evasion, Patrick Diamond and Roger Liddle, have previously worked with or for both Mandelson and Tony Blair. The Policy Network is also the secretariat for the Progressive Governance Network, which has been bringing together progressive leaders from around the world (including New Zealand) for over a decade, so it is hardly on the fringes of recent trends in the movement.

As the report continues, it becomes apparent that what it is proposing is a refurbishment of the existing “revisionist” approach, amending some misjudgments and correcting some overreaches. Below are the five dimensions of their “way forward”, with some of my impressions of what they are proposing in each.

Greater clarity about the politics of globalisation: comprehensive reform of global economic governance; active measures to promote responsible business behaviour; and going beyond the ‘enabling state’-as-training-scheme to a “new era of industrial activism” — while stressing that none of this means that the “big state is back”.

Coming to terms with the centre-right response to the financial crisis: where conservatives capture traditional social democratic territory, such as the need for active government during the global recession, progressives should ’stand their ground’ rather than moving further left in response.

Understanding the weight of anxiety about moral and social decline: although rhetoric such as ‘broken Britain’ is exaggerated, progressives should acknowledge the unease it reflects by rediscovering traditional narratives about what makes a good citizen and the politics of virtue, perhaps drawing upon the work of US moral philosopher Michael Sandel.

Confronting confusion about the politics of redistribution and fairness: by framing welfare rights and responsibilities in a way that aligns with what UK Labour minister John Denham has called the “fairness code” of the general population, taking into account desert, opportunity, and the avoidance of material hardship.

A bold plan for the future that captures the imagination of social democracy’s natural allies, new and old: a coalition of modernising institutions, working with sister organisations and thinktanks throughout Europe, drawing on the experience of the US Democratic Leadership Council that helped to elect Bill Clinton.

Apart from perhaps the first of these, it’s not clear that this amounts to much change at the policy level (as opposed to strategy and messaging), but it does represent an attempt to articulate a clear and comprehensive post-crisis progressive programme.

It will be interesting to see where the Amsterdam process takes these initial broad-brush propositions.

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Weekend Reading, 9 July 2010

Friday, July 9th, 2010


A version of this list of recommendations also comes out earlier in the day as part of the weekly Policy Progress e-newsletter.

My big exciting discovery for reading options this week was the Social Democracy Observatory that has been set up by the Policy Network in the UK (who you may remember from one of my earliest posts).

This includes “The classics of social democratic thought”, a series of new essays in which “prominent thinkers and policymakers revisit key texts and essays which have been seminal to progressive thinking.”

I think this is a great idea and am in full agreement with their reasoning for it:

As the centre-left wrestles with the tough questions of today, familiarity with the classics of social democratic thought can play a significant role in kicking-off a sustained period of revisionism and revival. In helping frame new narratives, they can contribute, for example, to substantiating current debates on market order, international capitalism and globalization, or on the balance between freedom, solidarity and redistribution.

Another worthwhile feature is “What We Are Reading” a selection of astute contemporary analyses from across the web, including some names familiar to regular Policy Progress readers, such as John Kay and James Purnell.

I’m likely to dip into the Observatory fairly regularly for future Weekend Reading posts, and I thought I’d start with two pieces by the same author. One is from “What We Are Reading” and the other is from “Classics” but both are pertinent to my recent ‘columns’ on Theoretical Foundations.

Sheri Berman - The early architects of Swedish social democracy: Ernst Wigforss, Nils Karleby and Per Albin Hansson
Sheri Berman – The Primacy of Economics versus the Primacy of Politics: Understanding the Ideological Dynamics of the Twentieth Century
I hadn’t discovered Columbia University academic Sheri Berman previously, but she’s definitely somebody worth reading on the history of progressive thought. The first of these readings picks up where I left off my brief discussion of Ernst Wigforss and the Swedish social democrats of the 1930s last week. The second paints on a much wider canvas and puts forward some interesting and provocative ideas that will be worth developing into the Theoretical Foundations work as it proceeds (and it also covers some of the same terrain as my recent column, e.g. the rejection of the WTB Plan in Germany):

a crucial reason for the rise and success of social democracy as well as of fascism and National Socialism during the late nineteenth and early twentieth centuries was their ability to supply what more economistic approaches [such as liberalism on the one hand and Marxism on the other] could not, namely a promise to control but not destroy capitalism and a communitarian vision of society. To put it another way, even though social democracy and fascism/ National Socialism diverge dramatically in many crucial respects, they nevertheless share a common pedigree as answers to a yearning left unfulfilled by their economistic and un-communitarian predecessors.

Treasury – Budget 2010 Information Release
Treasury yesterday dumped a wealth of information about this year’s Budget on their website (as they do each year around this time). If you really want to understand what this government is thinking about in terms of economic strategy and fiscal policy, then you’ll learn more from trawling through this than any number of newspaper articles — or, for that matter, the formal documentation that was released on Budget day. A good places to start is the October 2009 Treasury report Options for Allocating the Operating Allowance.

The Economist - Brazil’s presidential campaign: In Lula’s Footsteps
For me the most intriguing leader on the Left in Latin America in recent times is not the colourful and outrageous Hugo Chavez but the much quieter and more methodical Luiz Inácio Lula da Silva who has been President of Brazil since 2003. Lula is stepping down in this year’s election but is championing his former chief of staff Dilma Roussef to take his place. This Economist article looks at that electoral race and also at Lula’s record. Obviously, the Economist comes at such things from its own political perspective, but the fact that even they are pretty respectful indicates he’s done a pretty undeniably good job. A sample:

They credit Lula with Bolsa Família, a programme under which 12m of the poorest Brazilian families get a monthly stipend of up to 200 reais ($111), paid to mothers provided they keep their children in school and take them for health checks . . . His government turned Bolsa Família from a small-scale experiment into the world’s biggest conditional cash-transfer programme. He also raised the minimum wage by two-and-a-half times since 2003, taking its purchasing power to its highest level since 1979. This has not destroyed jobs: some 13m new jobs in the formal (ie, legally registered) economy have been created since 2003.

From a New Zealand perspective, the paragraphs towards the end about Gerry Brownlee’s friends at Petrobas may also be of particular interest.

Also:
New York Times – Economists Who Did Their Homework (800 Years of It)
British Medical Journal – How cognitive biases affect our interpretation of political messages
Bernard Hickey – How de-leveraging is pressing down on economic growth, house prices and debt in NZ and elsewhere
Big Cake – Tunnel vision over wealth measures exposed by international prosperity survey – we come 10th
Tim Harford – A marginal victory for the well-meaning environmentalist
Suzy Khimm – Are Liberals Less Liberal Than They Think?
Will Hutton - Without any fear for the future, boys have given up their ambition

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The Failure of Market Failure

Thursday, April 8th, 2010

The idea for the Theoretical Foundations work programme topic came from reading John Kay.

John Kay is a British economist and writer. He has been director of the Institute for Fiscal Studies and a columnist for the Financial Times. His most famous book is probably The Truth about Markets (2003), which I haven’t yet read.

But I have read “Market Failure”, a chapter in a book called Beyond New Labour: The future of social democracy in Britain edited by our old friends Patrick Diamond and Roger Liddle, that covers some of the same ground.

In this chapter, Kay discusses how modern progressives – he is focussing on New Labour in the UK but the lessons go wider – have embraced the doctrine of ‘market failure’ as a way of squaring an acceptance of a market economy with a continued desire to address inequality. This, he says, has been a mistake.

Under the market failure doctrine, effective market outcomes rely upon the following four conditions, and there is an ‘efficiency justification’ for state intervention if any of them are breached:

  1. A competitive environment
  2. Consumers have good information about their needs and the services available
  3. No ‘externalities’ (the good or service affects only the producer and the consumer, not any third parties)
  4. No ‘public goods’ (producers can identify the consumers of the service, and can quantify the consumption and charge for it).

We can probably all think of instances where such breaches occur. A number of environmental issues for instance, including the climate challenge, are situations where condition 3 does not hold.

The market failure doctrine therefore seems to offer plenty of scope for progressive action, while also feeling quite prudent and economically literate. It is understandable that it would have seemed an attractive approach for modernising progressive parties.

But, according to Kay, market failure is a bad argument for progressives to buy into. “By conceding too much to market fundamentalists it loses both intellectual coherence and political resonance.” (p. 74)

Kay mounts a comprehensive critique of the market failure doctrine thoughout his chapter, but the theoretical core of his argument can be found in the following paragraph (p. 76):

The basic philosophical differences that divide left and right concern the priority that should be given to claims of individual rights and private property relative to those of solidarity and social justice. The left insists, and the right denies, that the public interest is more than an aggregation of private interests. The model that underpins the market failure doctrine answers these questions, and others, in the right’s favour. A particular philosophy is inherent in the mathematics. The model takes individual preferences as given, along with personal resources and property rights, and sees social welfare as an aggregation of individual preferences. The primacy of material incentives as determinants of economic behaviour is not a prediction of the model, but an assumption.

Moreover, because the modern left has invested so much in market failure as its rationale for action, there is a temptation to frame everything they want to do as a response to market failure, however tenuous the basis for this may be. Kay cites the example of health, where Gordon Brown insisted on explaining his commitment to a tax-financed National Health Service by reference to market failures that, while real, did not actually justify the particular model he supports.

“More importantly, they have nothing to do with the real reasons why most people – including Brown – support a publicly funded NHS. These reasons begin from ethical concepts such as compassion and fairness rather than economic concepts such as information asymmetry.” (p. 76)

And this is the crux of the problem. “The notion that some economic choices are essentially collective, and cannot be described as a summation of personal of personal preferences, strikes at the heart of the market failure doctrine.” (p. 77)

I can relate to this. Back when I worked for NZUSA in the late 1990s there was a lot of debate about the extent to which tertiary education was a private good and should be privately funded through student fees. The students wanted to maintain that tertiary education was a public good and should be fully publicly funded. I was keen to dissuade them from this – while they had good arguments against particular claims about the private benefits from tertiary study, by buying into the public/private benefit argument, they undermined their own position. There is clearly some private benefit from study so you couldn’t argue for free education on public/private benefit terms.

Instead, I argued, they should seek to frame tertiary education as a collective good, i.e. one which society should agree to fund collectively as it does for school education.

John Kay makes a similar point: “The majority of contested economic policy issues reflect disputes about the nature of entitlements, or they occur when parties look to the government to fill in the implicit terms of imperfectly specified contracts.” (p. 81)

And, indeed, first amongst his list of illustrative recent policy issues is tertiary fees, framed not as public/private benefit or as (market failure) barriers to participation, but as “What rights of access do individuals have to higher education, and on what terms?”

Progressives in New Zealand have not made as extensive or explicit use of market failure as a theoretical framework as appears to have been the case in the UK. Nevertheless, these and other market-oriented economic concepts have permeated policy discussion pretty thoroughly in this country for the last twenty-five years, and to a large extent progressive policy thinking has accommodated itself within that discourse.

In the Theoretical Foundations work programme topic, I want to take a step back from that and have a look at the theoretical arguments we progressives rely upon to justify our actions and initiatives. Are they fit for purpose, or, like the market failure doctrine, do we end up either making tenuous linkages and/or conceding significant intellectual terrain to our opponents?

In Tuesday’s post, I’ll survey Kay’s proposed alternative to the market failure doctrine.

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Is the Left guilty of the “Politics of Evasion”?

Thursday, February 25th, 2010

http://www.flickr.com/photos/35952250@N02/ / CC BY 2.0

The left in Europe has been guilty of what can be described as the “politics of evasion”: it has failed to confront the fundamental causes of its vulnerability, loss of trust and élan in past years . . .

If social democrats are to recover their ability to set the political agenda in an era of insecurity, complexity and constant change . . . we have to face up to hard truths and, if necessary, shatter the cosy and comfortable consensus that surrounds the deliberations of so many fora which social democratic parties inhabit.

So states the summary document of the Amsterdam process, a two-year project aimed at no less than the “ideological renewal of European Social Democracy” and a “new revisionism for the 21st century”.

It’s a collaboration between two European progressive think-tanks, the Wiardi Beckman Stichting (the “scientific bureau” of the Dutch Labour Party) and the UK-based Policy Network.

Their initial publication, the Policy Network’s Challenging the politics of evasion: the only way to renew European social democracy, continues this take-no-prisoners rhetoric.

The writers seem at first glance equally critical of the “third way” revisionists (“embarrassed by the various accommodations made in the mid-1990s with the perceived realities of international capitalism and globalisation”) and of traditionalists (accused of “complacency” in their demand for “a return to the eternal verities and truths that the revisionists allegedly lost”).

This impression is probably incorrect, however. The Policy Network is pretty closely associated with the Blairite wing of the UK Labour Party. Peter Mandelson is its president, and two of the three authors of Evasion, Patrick Diamond and Roger Liddle, have previously worked with or for both Mandelson and Tony Blair. The Policy Network is also the secretariat for the Progressive Governance Network, which has been bringing together progressive leaders from around the world (including New Zealand) for over a decade, so it is hardly on the fringes of recent trends in the movement.

As the report continues, it becomes apparent that what it is proposing is a refurbishment of the existing “revisionist” approach, amending some misjudgments and correcting some overreaches. Below are the five dimensions of their “way forward”, with some of my impressions of what they are proposing in each.

Greater clarity about the politics of globalisation: comprehensive reform of global economic governance; active measures to promote responsible business behaviour; and going beyond the ‘enabling state’-as-training-scheme to a “new era of industrial activism” — while stressing that none of this means that the “big state is back”.

Coming to terms with the centre-right response to the financial crisis: where conservatives capture traditional social democratic territory, such as the need for active government during the global recession, progressives should ’stand their ground’ rather than moving further left in response.

Understanding the weight of anxiety about moral and social decline: although rhetoric such as ‘broken Britain’ is exaggerated, progressives should acknowledge the unease it reflects by rediscovering traditional narratives about what makes a good citizen and the politics of virtue, perhaps drawing upon the work of US moral philosopher Michael Sandel.

Confronting confusion about the politics of redistribution and fairness: by framing welfare rights and responsibilities in a way that aligns with what UK Labour minister John Denham has called the “fairness code” of the general population, taking into account desert, opportunity, and the avoidance of material hardship.

A bold plan for the future that captures the imagination of social democracy’s natural allies, new and old: a coalition of modernising institutions, working with sister organisations and thinktanks throughout Europe, drawing on the experience of the US Democratic Leadership Council that helped to elect Bill Clinton.

Apart from perhaps the first of these, it’s not clear that this amounts to much change at the policy level (as opposed to strategy and messaging), but it does represent an attempt to articulate a clear and comprehensive post-crisis progressive programme.

It will be interesting to see where the Amsterdam process takes these initial broad-brush propositions.

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Posted in Worldwatch | 4 Comments »