Tuesday, July 1, 2008

Observations on the 15th World Congress of the IEA

The International Economic Association was formed in 1956 from a UNESCO mandate, with an initial idea being to increase East-West communication, and with a key person pushing its establishment being the late Austen E.G. Robinson of Cambridge University, the husband of Joan Robinson. Every several years the IEA has a world congress, and the 15th was held this past week in Istanbul, Turkey. About 1,000 participants attended representing 53 countries, with the president of Turkey speaking in the opening session. This is the fifth of these I have attended and make some observations here.

1) About half the participants were from the host country, a good deal higher than I have seen in the past. Also, quite a few people I have always seen at these things were not there.

2) Many sessions were on international debt crises and balance of payments issues, with the current president, Guillermo Calvo, giving an address on recent crises. He mostly focused on Mexico, Russia, Argentina, and Turkey, arguing that all these countries bounced back well after their crises and massive devaluations, although he said that we do not really understand why as many things that should have been happening to bring this about did not happen. He seemed not very able to link all this to the current crises.

3) Chinese attendance was low. Some speculated that this was due to Calvo having apparently criticized them for not revaluing their currency more. As in the past there was substantial Russian participation, with several of their top people there, such as Victor Polterovich.

4) There were several major sessions and addresses on India.

5) Joseph Stiglitz spoke twice, once in an invited session on international financial crises and in the final plenary on global warming and social justice. In the former he went further than Calvo and called for a clear lender of last resort at the global level and the establishment of a new global currency along the lines of the "bancor" proposed by Keynes at Bretton Woods. He said the dollar is doomed, but the euro is not up to the task, and a combo of the two would be an unstable disaster.

Regarding global warming he advocates an important push on deforestation, which I support. He also is hot for a "carbon added tax" and strongly criticizes cap and trade solutions. I find him analyzing a CAT based on its theoretical virtues while ignoring its practical problems while doing just the opposite with cap and trade. Given that at Kyoto the US shoved cap and trade down the rest of the world's throat, there is no way the rest of the world is now going to follow the US to get rid of cap and trade in favor of a carbon tax (which would have serious problems passing the US Congress anyway).

7) Dani Rodrik of Harvard, but of Turkish origin, gave a plenary on his "One Economics, Many Recipes" paper. For those who have not seen it, he defends orthodoxy in economic theory, but says that a single approach to theory is compatible with a variety of policy approaches, including very unorthodox ones. I have sympathy with him, but think he overdoes his defense of standard economic theory.

2 comments:

Brenda Rosser said...

[Stiglitz] "advocates an important push on deforestation.."

Good to hear about this. But this move has come after decades of astronimical levels of deforestation associated with high levels of foreign debt from petrodollar recycling.

Debt that has often been pushed onto nations and then followed by vicious neoliberal global 'market' reforms. ['Markets' created through forest rape that have been organised through the process of exclusion of local communities access to natural resources in nation after nation. 'Resource guarantees' for multinational corporations along with extremely high taxpayer subsidies instead.]

The excessive planting of tree monocultures in Australia by some of these same corporations has resulted in the drying up of agricultural dams and water courses. The cap and trade provides further profits to be made from even more trees, to earn carbon "offset credits". All the meanwhile the Australian Greenhouse Office is fabricating figures for carbon offset to whatever the industry wants. Deep capture, just like in the financial markets.

"CSIRO forest scientist John Raison said carbon lost in burns of clear-felled mature forests would definitely not be taken up by the replanted forest.Mr Raison said clear-fell and burn of mature forests and regeneration amounted to a carbon pollution source."The simple assumption that has been made is that carbon dioxide produced is balanced by the carbon dioxide used by the plantation, but this is wrong," he said. "It might apply to plantations on savanna grasslands but not on mature forests." Mr Raison said replanted forests would have to be left in the ground for hundreds of years to reclaim the equivalent carbon lost in the burn. Centuries worth of carbon were released in a matter of weeks during a forestry burn...

Australia: Tasmania forest carbon not listed. Date: April 4, 2005
http://forests.org/shared/reader/welcome.aspx?linkid=40525&keybold=carbon%20Tasmania

And
"...there will be profits to be made from planting trees to earn carbon "offset credits", which are sold to polluters. . .

Carbon scheming will be neither free nor easy. * Clancy Yeates * June 28, 2008
http://business.smh.com.au/carbon-scheming-will-be-neither-free-nor-easy-20080627-2y32.html?page=fullpage#contentSwap1

And
Australian Greens Senator Christine Milne: the cement companies, the aluminium companies, the energy corporations - can effectively use their profits to take land [and water] out of agricultural production [to establish plantations of trees] in the context of setting up a national carbon emissions market …"You have logging going on in primary forests in Tasmania, Victoria and south-east NSW. You are knocking down primary forests and you now [propose] giving tax deductions to the big emitters to drive farmers off their land and take more water out of the system. You cannot intervene to distort the carbon market, to porkbarrel the forest industry and the big emitters at the expense of farmers...."

Chip off the old block appalls unlikely allies
http://www.smh.com.au/articles/2008/06/27/1214472765340.html?page=fullpage#contentSwap1
Alan Ramsey. June 28, 2008

rosserjb@jmu.edu said...

BTW, it was not just Chinese attendance that was low, but so was American, especially outside of plenary speakers like Stiglitz and Maurice Obstfeld. Of course things were a bit confusing as one's name tag listed one's country rather than affiliation, and there were a number of people from US universities originally from elsewhere. So, Kaushik Basu was listed as "India," although he has been at Cornell University for 14 years, with the same going for "Turkish" Dani Rodrik of Harvard and "Argentine" Guillermo Calvo of Columbia University. The program gave neither countries or affiliations for participants in regular sessions, but I must say that I did not see any "United States" on name tags in the coffee breaks aside from the few celebs. Maybe it was the bad exchange rate.

Barkley