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Is Doing Business Really Dead?

15 hours ago

The World Bank’s recent decision to stop publishing its annual Doing Business report is an understandable initial reaction to revelations of data manipulation in favor of certain countries. But the Bank should use this interruption to develop a better report, rather than ending it for good.

ITHACA – Recent days have brought me a storm of emails and calls about the collapse of the World Bank’s most widely watched annual report, Doing Business (DB), which ranks countries by how easily and efficiently small businesses can operate in them. On September 16, the bank announced that it would discontinue the report after an independent investigation by the law firm WilmerHale revealed the Bank’s sordid efforts, starting in

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Can Economics Keep Up?

26 days ago

As technology advances and the environment changes, some of the key assumptions underpinning mainstream economic thinking will become obsolete. To reverse the public’s loss of confidence in the discipline, economists must get back to doing what made the field so valuable in the first place.

NEW YORK – When the sitar maestro Ravi Shankar and Nobel laureate economist Amartya Sen received the Bharat Ratna, India’s highest civilian award, a journalist is said to have asked them, “Between the two of you, who is the more talented?” Comparing musical and economic talent is in many ways meaningless. But Shankar offered an interesting response: “Teach me economics for a week and ask me to give a lecture; I will manage it

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The Changing Map of Economics

July 23, 2021

The global economy and capitalism are at a crossroads, owing to the COVID-19 pandemic, climate change, the rise of digital technology, and the changing nature of labor markets. Understanding this new world will require major breakthroughs in economic thinking, and closer scrutiny of some of the discipline’s core assumptions.

NEW YORK – The International Economic Association’s triennial World Congress has long been one of the most important global gatherings of economists, owing to its success in bringing together researchers and policymakers from the poorest to the wealthiest corners of the world. The 19th edition of the event earlier this month, albeit held via Zoom instead of in person, was no exception.

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Three Warnings for Emerging Economies

June 24, 2021

The most recent World Bank outlook for emerging markets and developing economies is especially significant because of the cautionary messages it contains. Whereas rich countries appear set to return to or even exceed their pre-pandemic growth rates, the developing world’s prospects are more mixed.

ITHACA – The World Bank’s Global Economic Prospects (GEP) report, published twice a year, is the most important source for evaluating the current and future outlook for emerging markets and developing economies (EMDEs). The recently released June edition is especially significant because of the warnings it contains.
The End of the Islamic Republic

Majid Saeedi/Getty Images

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The Post-Pandemic Whiplash Awaiting the World’s Poor

May 27, 2021

Unlike a pandemic that puts rich and poor alike at risk, the kind of economic crisis currently simmering in much of the developing world is easy to ignore. But unless national governments and multilateral organizations act quickly, today’s looming threat will be tomorrow’s front-page news.

ITHACA – The world is currently transfixed by the second wave of the COVID-19 pandemic sweeping through many regions, especially Asia, Africa, and South America. But, focused as we are on the public-health crisis, we risk overlooking pandemic-related economic problems that could plague developing countries long after the wave has receded.

America, Human Rights, and Israel’s War on Palestine

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Morals and the Vaccine Market

April 30, 2021

The glaring global inequity in access to COVID-19 vaccines is both an intellectual and moral failure. The pandemic is a clarion call to start thinking beyond the narrow confines of economic rationality and identify others’ interests as part of our own.

ITHACA – As the second wave of the COVID-19 pandemic outstrips the severity of the first, a clear global bifurcation is emerging. The pandemic is abating, gradually and unevenly, across richer countries, but flaring up in several developing and emerging economies, most notably India, but also to varying degrees in countries such as Bangladesh, Pakistan, Turkey, the Philippines, Ethiopia, and Kenya.

Share the Intellectual Property on COVID-19

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India’s Farm Laws Are a Global Problem

February 17, 2021

Market fundamentalism never works as well as actual markets do, because it offers “choices” that no one would willingly choose. The Indian government should repeal its new farm laws and, through a careful deliberative process, craft legislation that stands the test of reason and can benefit poor farmers and consumers most of all.

ITHACA – India’s three new farm laws, enacted in September 2020 with little public or parliamentary debate, have attracted enormous global interest. Prime Minister Narendra Modi’s government described the measures as a gift to farmers, but farmers in several Indian states, led by smallholders in Punjab and Haryana, have refused to accept them. Sustained and highly polarizing protests have

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This Decade’s Growth Champions

February 1, 2021

Which countries will be the big economic success stories of the next ten years? South Korea is a safe pick, while Vietnam and Mexico also are poised to prosper, whereas India’s divisive politics put that country out of the running for the time being.

ITHACA – With 2021 still young, and hope in the air thanks to new COVID-19 vaccines and a new occupant of the White House, we can finally stop covering our eyes in horror and peer furtively into the future. As the decade unfolds, which countries are likely to be the biggest economic success stories?

Can Cheap Countries Catch Up?

MANAN VATSYAYANA/AFP via Getty Images

Biden Goes

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For a Post-Nationalist Biden

December 28, 2020

America can lead a global turn away from nationalism if it actively engages with the world once again, and not only out of self-interest. To make the world a better place requires President-elect Joe Biden to set his sights higher than America.

ITHACA – The first step in establishing an authoritarian culture in a country is to train its citizens to misread statistics. This is actually not hard to do; the rest is smooth sailing. Luckily for the United States, President Donald Trump will leave the White House in January before the curriculum could be completed.

The Gift of a COVID Vaccine?

The Big Picture

Joseph Prezioso/AFP via Getty Images

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Language and Lockdowns

December 1, 2020

Reducing the policy discussion on COVID-19 lockdowns to a simple binary debate – yes or no – oversimplifies a complex problem. At least until a safe, effective vaccine becomes available, all countries need different forms of tailored, limited lockdowns and rules of behavior.

ITHACA – Our recent experience with COVID-19 and the word “lockdown” once again illustrates the power of language to influence our lives and well-being. The infinite variety of reality, and the finite number of words and phrases we have to describe it, creates an inescapable philosophical challenge to articulating policy. Adding to the challenge is our tendency to regard a person’s usage of certain words as a signal of their political ideology.

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America’s Moral Tipping Point

October 27, 2020

Rarely have the stakes for the United States and the world been as high as they are on the eve of the 2020 presidential election. If US Republicans still stand for anything at all, they must come out in opposition to Donald Trump, a man who openly disparages all the values they once held dear.

ITHACA – Within the space of the next month, as the autumn leaves here in the northeastern United States are swept away by the winds of approaching winter, the country will make a choice as consequential as any we have seen in recent history. The US election on November 3 will have global implications as dangerous as the looming climate crisis, or as promising as a major scientific breakthrough that enables shared prosperity.

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The Rise of Covidnomics

September 17, 2020

The COVID-19 pandemic is forcing medical professionals and economists alike to grapple with issues that cross the normal boundaries of their respective disciplines. Recognizing this creates scope for policy interventions that can contain the pandemic without crushing the economy.

ITHACA – Boundaries between academic disciplines are always artificial creations intended to facilitate analysis, given our limitations. But as the economist Albert Hirschman once argued, there are times when it is incumbent on us to trespass them. The ongoing battle against COVID-19 and its economic fallout is such a time.

The Roots of American Misery

PS OnPoint

Brad

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The Global Responsibility of Biden and Harris

August 24, 2020

One of the most damaging consequences of Donald Trump’s presidency has been the loss of America’s global stature. Should the Democrats triumph in November, the new president and vice-president must adopt an internationalist mindset and seek to build a better future for all of humanity.

ITHACA – Neither Joe Biden nor Kamala Harris was my first choice among the contenders for the Democratic presidential nomination in the United States. But when Biden, by then the party’s presumptive nominee, announced earlier this month that Senator Harris would be his vice-presidential running mate, it felt like a breath of fresh air.

Belarus’s Revolution of Dignity

PS OnPoint

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COVID and Common Sense

August 4, 2020

Social norms are often more effective than government mandates, because they allow a degree of flexibility that statutes cannot provide. As the world learns more about the new coronavirus and how it spreads, people should have more leeway to modify their behavior where appropriate.

ITHACA – As the COVID-19 pandemic rages on, our understanding of it is improving. Through a combination of epidemiology and physics – including knowledge of the virus’s character and how aerosols float in the air – we are learning more about how the microbe infects new hosts.

How to Prevent the Looming Sovereign-Debt Crisis

Teradat Santivivut/Getty Images

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How the Pandemic Should Shake up Economics

June 22, 2020

Economists typically ignore the social norms and customs on which markets depend and treat them as part of the woodwork, because they are so unchanging in normal times. But a disruption such as the one caused by COVID-19 makes these tacit assumptions explicit, reminding us how much we take for granted.

ITHACA – The COVID-19 pandemic has caused massive disruptions to markets, supply chains, and world trade. This has forced a reckoning with many traditional policies and should be treated as an opportunity to rethink some of the ideas that economists have long taken for granted – including the basic notion of what makes an economy function efficiently.

Hard Data for Hard Choices

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Who’s Afraid of COVID-19?

May 6, 2020

Dismissing or downplaying the risks of COVID-19 is a grave mistake. But so is embracing fear-based policies, which ultimately generate more risks – such as economic hardship, food insecurity, and generalized anxiety – than they mitigate.

MUMBAI – Humans are bad at assessing risk even in the best of times. During a pandemic – when the disease is unfamiliar, people are isolated and stressed, and the death toll is rising – our risk perception becomes even more distorted, with fear often overwhelming reason. This is a recipe for disastrous policy mistakes.

How Will the Great Cessation End?

PS OnPoint

Olivier Douliery/AFP via Getty Images

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The Great Whiplash

April 14, 2020

Before we become swept up in collective hysteria, we should remember that we were foolish to remain complacent in the initial months after COVID-19 emerged. Dizzy with whiplash, we may prove similarly foolish in assuming that only disaster lies ahead.

MUMBAI – We know from history the devastation caused by the Great Depression of the 1930s, and most of us know from experience the Great Recession following the 2008 global financial crisis. But we have never seen anything like the COVID-19 crisis. The pandemic will leave deep psychological scars, but its most striking feature is the speed and ferocity with which containment efforts have hit the global economy. Call it the Great Whiplash.

The

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Epidemics and Economic Policy

March 9, 2020

A far-reaching global crisis demands a comprehensive global response. A multilateral organization such as the World Bank or the International Monetary Fund should urgently establish a task force comprising, say, 20 economists with diverse specialties, as well as experts in health and geopolitics.

NEW YORK – The number of daily new cases of the COVID-19 coronavirus is finally declining in China. But the number is increasing in the rest of the world, from South Korea to Iran to Italy. However the epidemic unfolds – even if it is soon brought under control globally – it is likely to do much more economic damage than policymakers seem to realize.
Plagued by Trumpism

Sean Gallup/Getty

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Understanding Sanders

February 27, 2020

US Senator Bernie Sanders’s repeated attacks on inequality show a commitment to democracy and to giving people a voice. In fact, he is a social democrat, and thus closer to his fellow senator, Elizabeth Warren, one of his rivals for the Democratic presidential nomination, than their rhetorical differences might suggest.

NEW YORK – When US Senator Bernie Sanders describes himself as a “democratic socialist,” he arguably is using those words in a different way than many other people. Once that becomes clear, more American voters should have reason to support him than currently do.
Solidarity Now

PS OnPoint

Spencer Platt/Getty Images

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The Approaching Debt Wave

January 31, 2020

The World Bank has warned that a massive debt wave is building worldwide. There is no telling who will be hit the hardest, but if vulnerable countries, from the United Kingdom to India, do not act soon, they may face severe economic damage.

NEW YORK – Over the last decade, the world economy has experienced a steady build-up of debt, now amounting to 230% of global GDP. The last three waves of debt caused massive downturns in economies across the world.
Can Sanders Do it?

PS OnPoint

Ralph Freso/Getty Images

Britain Enters the Unknown

Peter Summers/Getty Images

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A Low, Dishonest Decade

December 27, 2019

Eighty years ago, the poet W.H. Auden wrote that “Waves of anger and fear / Circulate over the bright / And darkened lands of the earth.” Like Auden in 1939, we must accept the possibility that things could become far worse than they already are.

MUMBAI – I write this not as a professional economist, nor as a policymaker, but as a citizen of a tiny planet that is spinning through a vast universe that we barely understand. I write this “As the clever hopes expire / Of a low dishonest decade,” and as “Waves of anger and fear / Circulate over the bright / And darkened lands of the earth.” It was 80 years ago that W.H. Auden wrote those lines, in his poem “September 1, 1939.” We find ourselves in a similar position today.

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What Should Economists Be Doing?

November 28, 2019

Economics is now at a stage when we need to examine the assumptions in the woodwork that are hindering our ability to understand and map the new world of digital technology and inter-linkages that we are just beginning to inhabit. “Normal science” must continue, but it also is time for paradigmatic thinking.

ITHACA – The unexpected financial crash of 2008, the persistence of the slowdown that occurred in its wake, the failure of conventional monetary and fiscal policies to revive economies, and the cracks in global trade that we are witnessing now have all given rise to a widespread disquiet about conventional economics. As David Graeber wrote in a recent review of Robert Skidelsky’s new book Money and Government:

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How to Tame Big Tech

October 31, 2019

The US presidential candidates Bernie Sanders and Elizabeth Warren are right to call for stronger action to rein in powerful tech companies like Amazon and Facebook. But a successful strategy will have to look beyond antitrust laws.

ITHACA – The Internet was once hailed as a powerful democratizing force – enabling innovative start-ups to compete with established businesses, disrupt entire industries, and create new ones. But as some of those startups grew into behemoths, they turned this force on its head. Far from leveling the playing field, Big Tech now largely owns it, and rather than democratizing the economy, the Internet has ended up exacerbating the world’s inequality problem.
What Happens

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America’s Argentina Risk

September 26, 2019

Argentina was one of the world’s richest economies in the first few decades of the twentieth century, but subsequently became a cautionary tale of how a wealthy country can lose its way. By peddling policies that bring about short-term highs at a huge long-run cost, US President Donald Trump risks taking America down a similar path.

ITHACA – There is a growing belief that the United States is heading for a recession, possibly before the 2020 presidential election. Current economic data and statistical trends indicate that many parts of the US economy are apparently under strain. It is not evident to me, however, that a recession is around the corner. In fact, the real danger for America is more serious, and is best

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Corrupt Anti-Corruption Campaigns

August 28, 2019

The crisis in the Amazon is a stark example of the damage that can be done when governments bow unequivocally to business. But it also highlights a related, damaging, and increasingly common phenomenon: the cynical manipulation of anti-corruption efforts to undermine democracy and advance an authoritarian political agenda.

ITHACA – The Amazon rainforest has been burning for weeks. Yet Brazil’s right-wing president, Jair Bolsonaro, mobilized the armed forces to help contain the fires only in the last few days – in the face of European leaders’ threat to suspend a major trade deal and the possibility of a far-reaching boycott of Brazilian products. And though the Bolsonaro government’s rollback and weak

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The Language of Conflict

July 24, 2019

Digital technology and social media are increasing the scope for conflict and political mischief by bringing together large numbers of people from different cultural and political backgrounds. For many, the same word may have a different emotional or political valence, and the same sequence of words may be interpreted in contradictory ways.

NEW DELHI – I was having lunch in an Ithaca restaurant with my mother-in-law, who was visiting from India, when the Chinese waitress serving us asked her where she came from. “Kolhapur,” my mother-in-law replied, referring to the small town in Maharashtra where she was born. Much to my surprise, the waitress looked overjoyed. “I lived there for several years,” she

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Why Policymakers Should Fear Libra

June 27, 2019

It is currently unclear how popular Libra, Facebook’s proposed new global cryptocurrency, might become, and what problems this may cause. But inflation – and policymakers’ reduced ability to control it – has to figure prominently on the list of possible risks.

MUMBAI – Facebook’s new global digital currency, Libra, which the company plans to launch as early as 2020, could transform the world. But no one – including the founders of this ambitious economic engineering project – can fully anticipate the currency’s possible ramifications. And monetary policymakers should be especially worried, because they may find it much harder to control unemployment and inflation in a Libra world.

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Why Policymakers Should Fear Libra

June 27, 2019

It is currently unclear how popular Libra, Facebook’s proposed new global cryptocurrency, might become, and what problems this may cause. But inflation – and policymakers’ reduced ability to control it – has to figure prominently on the list of possible risks.

MUMBAI – Facebook’s new global digital currency, Libra, which the company plans to launch as early as 2020, could transform the world. But no one – including the founders of this ambitious economic engineering project – can fully anticipate the currency’s possible ramifications. And monetary policymakers should be especially worried, because they may find it much harder to control unemployment and inflation in a Libra world.

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Why the Trade Arithmetic Favors China

May 31, 2019

US President Donald Trump’s decision to increase tariffs on Chinese goods risks disproportionately harming the US economy. Besides raising prices for American consumers, higher tariffs will make key production inputs more expensive or scarcer – seriously damaging US productivity and competitiveness in the long run.

NUREMBERG – The biggest risks facing the world economy today stem from the escalating trade war between the United States and China. In the past few weeks, the threat has gained greater salience: as negotiations have stalled and tariffs have risen, markets around the world have registered tremors of concern. Yet most commentators fail to recognize the kind of effect an all-out clash

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The Case for a Global Constitution

April 18, 2019

After decades of globalization, there are more conflicts and disputes spanning multiple jurisdictions than ever before, and they will not be resolved by paying lip service to our shared humanity. The international community needs a new compact of agreed rules, formalized in writing, and enforceable by a designated third party. 

NEW YORK – In my book The Republic of Beliefs: A New Approach to Law and Economics, I was eager to demonstrate how the methods that have emerged from the long and fruitful dialogue between these fields could, with a little help from game theory, be applied to multilateral disputes and multi-jurisdictional conflicts. So, I included a section on the challenge of creating a global constitution.

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