20th+

Tuesday, April 10, 2012

Stagflation

22-7-22 Stagflation - Inflation + Recession - EcEx > .

Phillips Curve - Inflation inversely proportional to unemployment - EcUnd > .

22-10-28 How China Is Helping to Reduce Inflation - Patrick Boyle > .

In economics, stagflation or recession-inflation is a situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high. It presents a dilemma for economic policy, since actions intended to lower inflation may exacerbate unemployment.

The term, a portmanteau of stagnation and inflation, is generally attributed to Iain Macleod, a British Conservative Party politician who became Chancellor of the Exchequer in 1970. Macleod used the word in a 1965 speech to Parliament during a period of simultaneously high inflation and unemployment in the United Kingdom. Warning the House of Commons of the gravity of the situation, he said:

"We now have the worst of both worlds—not just inflation on the one side or stagnation on the other, but both of them together. We have a sort of 'stagflation' situation. And history, in modern terms, is indeed being made."

Macleod used the term again on 7 July 1970, and the media began also to use it, for example in The Economist on 15 August 1970, and Newsweek on 19 March 1973. John Maynard Keynes did not use the term, but some of his work refers to the conditions that most would recognise as stagflation. In the version of Keynesian macroeconomic theory that was dominant between the end of World War II and the late 1970s, inflation and recession were regarded as mutually exclusive, the relationship between the two being described by the Phillips curve. Stagflation is very costly and difficult to eradicate once it starts, both in social terms and in budget deficits.

Monday, April 9, 2012

Ten Points - Washington Consensus

22-3-18 Washington Consensus in "Rather Pathetic Economy of Russia" - EcEx > .

23-1-16 Bretton Woods - Why it's Important - EEE > .

22-11-22 Why [the Ruscian Federation] cannot become a democracy - Caspian > .

22-12-8 Role of oligarchy in Russia | Pootinesque Corruption (subs) - MK > .

> Capitalism >>

> > Econopolitics > >

The Washington Consensus is a set of ten economic policy prescriptions considered to constitute the "standard" reform package promoted for crisis-wracked developing countries by Washington, D.C.-based institutions such as the International Monetary Fund (IMF), World Bank and United States Department of the Treasury. The term was first used in 1989 by English economist John Williamson. The prescriptions encompassed free-market promoting policies in such areas as macroeconomic stabilization, economic opening with respect to both trade and investment, and the expansion of market forces within the domestic economy.

Subsequent to Williamson's use of the terminology, and despite his emphatic opposition, the phrase Washington Consensus has come to be used fairly widely in a second, broader sense, to refer to a more general orientation towards a strongly market-based approach (sometimes described as market fundamentalism or neoliberalism).

Original sense: Williamson's Ten Points:

The concept and name of the Washington Consensus were first presented in 1989 by John Williamson, an economist from the Institute for International Economics, an international economic think tank based in Washington, D.C.

The consensus as originally stated by Williamson included ten broad sets of relatively specific policy recommendations:

Fiscal policy discipline, with avoidance of large fiscal deficits relative to GDP;
Redirection of public spending from subsidies ("especially indiscriminate subsidies") toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment;
Tax reform, broadening the tax base and adopting moderate marginal tax rates;
Interest rates that are market determined and positive (but moderate) in real terms;
Competitive exchange rates;
Trade liberalization: liberalization of imports, with particular emphasis on elimination of quantitative restrictions (licensing, etc.); any trade protection to be provided by low and relatively uniform tariffs;
Liberalization of inward foreign direct investment;
Privatization of state enterprises;
Deregulation: abolition of regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds, and prudential oversight of financial institutions;
Legal security for property rights.

In emphasizing the magnitude of the difference between the two alternative definitions, Williamson has argued (see § Origins of policy agenda and § Broad sense below) that his ten original, narrowly defined prescriptions have largely acquired the status of "motherhood and apple pie" (i.e., are broadly taken for granted), whereas the subsequent broader definition, representing a form of neoliberal manifesto, "never enjoyed a consensus [in Washington] or anywhere much else" and can reasonably be said to be dead.

Discussion of the Washington Consensus has long been contentious. Partly this reflects a lack of agreement over what is meant by the term, but there are also substantive differences over the merits and consequences of the policy prescriptions involved. Some critics take issue with the original Consensus's emphasis on the opening of developing countries to global markets, and/or with what they see as an excessive focus on strengthening the influence of domestic market forces, arguably at the expense of key functions of the state. For other commentators, the issue is more what is missing, including such areas as institution-building and targeted efforts to improve opportunities for the weakest in society.

American imperialism .
Beijing Consensus .
Bretton Woods system .
Central America Free Trade Agreement (CAFTA)
Democratic capitalism .
Economic growth .
The End of History and the Last Man .
Andre Gunder Frank .
Gross domestic product .
Hyperinflation .
Immanuel Wallerstein .
Lima Consensus .
Macroeconomics .
Mumbai Consensus .
North American Free Trade Agreement (NAFTA)
Poverty Reduction Strategy Paper .
Structural adjustment .
World Systems Theory .

ToC - Elinor Ostrom vs Tragedy of the Commons

.The Tragedy of the Commons - mru > .

Common Resources and Tragedy of the Commons - Lessons > .

What Is the Tragedy of the Commons? - mru >> .

Elinor Ostrom | Women in Economics - mru > .

Elinor Ostrom and the Theory of Governing the Commons Explained - VaBi > .

Elinor Ostrom's Design Principles - Bottom-Up Strategies, Env Gov - VaBi > .

Developmental Economics | Elinor Ostrom - mru > .

Free-Rider Problem - Prisoner's Dilemma, Cooperation, Environmental Gov > .

Big Think interview with Elinor Ostrom - bt > .

Ending The Tragedy of The Commons - Patrick Boyle > .

● Economic Principles ..

Common goods deplete over time, as more people use them. It's difficult to exclude people from using these goods, hence their name. This non-excludability, plus depletion, leads to an issue called the tragedy of the commons – the tendency for common goods to be overused, and under-maintained. It’s a thorny issue. Other dilemmas are related to goods — such as the free rider and forced rider problems, which challenge both private markets and the public sector.

"Commons" is a term used in resource economics to describe types of goods that can be accessed by anyone but their use by one party limits their availability to others. Examples of common-pool resources include pasture lands, freshwater, fisheries, forests, etc. Through her research with different communities across the world, Elinor Ostrom showed that it is possible for local communities to sustainably manage their common resources without any external intervention like state control or privatization.

Elinor Claire "Lin" Ostrom (née Awan; August 7, 1933 – June 12, 2012) was an American political economist whose work was associated with the New Institutional Economics and the resurgence of political economy.

Design principles for Common Pool Resource (CPR) institution
Ostrom identified eight "design principles" of stable local common pool resource management:

Clearly defined (clear definition of the contents of the common pool resource and effective exclusion of external un-entitled parties);
The appropriation and provision of common resources that are adapted to local conditions;
Collective-choice arrangements that allow most resource appropriators to participate in the decision-making process;
Effective monitoring by monitors who are part of or accountable to the appropriators;
A scale of graduated sanctions for resource appropriators who violate community rules;
Mechanisms of conflict resolution that are cheap and of easy access;
Self-determination of the community recognized by higher-level authorities; and
In the case of larger common-pool resources, organization in the form of multiple layers of nested enterprises, with small local CPRs at the base level.

These principles have since been slightly modified and expanded to include a number of additional variables believed to affect the success of self-organized governance systems, including effective communication, internal trust and reciprocity, and the nature of the resource system as a whole.

Ostrom and her many co-researchers have developed a comprehensive "Social-Ecological Systems (SES) framework", within which much of the still-evolving theory of common-pool resources and collective self-governance is now located.

Ostrom's law is an adage that represents how Elinor Ostrom's works in economics challenge previous theoretical frameworks and assumptions about property, especially the commons. Ostrom's detailed analyses of functional examples of the commons create an alternative view of the arrangement of resources that are both practically and theoretically possible. This eponymous law is stated succinctly by Lee Anne Fennell as:

A resource arrangement that works in practice can work in theory.

Elinor Ostrom's 8 Design Principles:

0:00 Intro
2:02 Clearly Defined Boundaries
2:29 Proportional Equivalence of Costs and Benefits
3:02 Participation
3:22 Monitoring of Activities
3:46 Graduated Sanctions
4:28 Conflict Resolution
4:58 Recognition of Rights
5:30 Nested Enterprises

In 2009, Ostrom was awarded the Nobel Memorial Prize in Economic Sciences for her "analysis of economic governance, especially the commons", which she shared with Oliver E. Williamson. To date, she remains the first of only two women to win the Nobel Prize in Economics, the other being Esther Duflo.

After graduating with a B.A. and Ph.D. from UCLA, Ostrom lived in Bloomington, Indiana, and served on the faculty of Indiana University, with a late-career affiliation with Arizona State University. She was Distinguished Professor at Indiana University and the Arthur F. Bentley Professor of Political Science and co-director of the Workshop in Political Theory and Policy Analysis at Indiana University, as well as research professor and the founding director of the Center for the Study of Institutional Diversity at Arizona State University in Tempe. She was a lead researcher for the Sustainable Agriculture and Natural Resource Management Collaborative Research Support Program (SANREM CRSP), managed by Virginia Tech and funded by USAID. Beginning in 2008, she and her husband Vincent Ostrom advised the journal Transnational Corporations Review.

Since the 60s, Ostrom was involved in resource management policy and created a research center, which attracted scientists from different disciplines from around the world. Working and teaching at her center was created on the principle of a workshop, rather than a university with lectures and a strict hierarchy.

Ostrom studied the interaction of people and ecosystems for many years and showed that the use of exhaustible resources by groups of people (communities, cooperatives, trusts, trade unions) can be rational and prevent depletion of the resource without government intervention.