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America’s Moral Tipping Point

2 days ago

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


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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.


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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

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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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The Rich Can Fight Inequality, Too

March 22, 2019

Many wealthy people in the United States and elsewhere support the objective of curbing extreme economic inequality. They should not allow allow themselves to be silenced by right-wing accusations of hypocrisy.

NEW DELHI – When wealthy people espouse left-wing causes, such as redistribution of wealth, those on the right often label them hypocrites. “If you are so concerned about equality, why don’t you give up some of your own income first?” is the usual retort.

Jose Luis Pelaez Inc/Getty Images

Wojtek Radwanski/AFP/Getty Images


This response can have a powerful dampening effect. Most people do not like to think of

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Ending America’s World Bank Monopoly

February 18, 2019

David Malpass, US President Donald Trump’s nominee to lead the flagship development bank, appears distinctly unsuited to the job. To protect the World Bank ‘s work– and the interests of the world’s poor – it may be time to end the tradition whereby the American candidate always wins.

NEW YORK – The nomination earlier this month of David Malpass, a senior US Treasury Department official, for the post of World Bank president came as something of a relief. Malpass is, after all, the choice of US President Donald Trump, who is known for backing extreme and unqualified job candidates. But that does not mean that Malpass is the ideal choice for the job.

Wojtek Radwanski/AFP/Getty Images

Photographer is my

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The Sorry State of the World Economy

January 30, 2019

Data released in January paint a bleak picture of advanced-economy prospects. Even if some emerging economies – which face serious challenges of their own – manage to pick up some of the slack, the world economy will remain encumbered by the combination of economic interconnectedness and political balkanization.

NEW YORK – January is traditionally a time for assessing the developments of the previous year, in order to anticipate what the new one has in store. Unfortunately, even though we may be at a turning point for the better politically, the data that have emerged in the last month do not paint a promising picture of the global economy’s short-term prospects.

Fred Dufour – Pool/Getty Images


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A Thimbleful of Optimism for 2019

December 31, 2018

Amid today’s global conflicts, debasement of public debate, attacks on democratic institutions, and escalating geopolitical tensions, it is hard to find much cause for hope. But it is still possible to restore faith in our shared humanity.

KOLKATA – At the end of this year of political trauma and conflict, I found myself feeling an unexpected sense of hope, sitting in Mumbai, where I could see the Arabian Sea stretching westward toward the Gulf of Aden and Africa, as well as the vast Indian subcontinent extending eastward to the Bay of Bengal and the lands beyond.

Win McNamee/Getty Images

Chip Somodevilla/Getty Images

Spencer Platt/Getty Images


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Pollution by the Numbers

November 27, 2018

Our only hope of overcoming the environmental challenges we face is to use every tool we can. That means collecting detailed data on issues like air quality, and using what we learn to design the right rules and incentives.

MEXICO CITY – The Great Chinese Famine, which peaked in 1960, was the world’s largest on record. But the effects of that famine – including its toll of more than 30 million deaths – were not quantified until long after the fact. That was partly because government officials were afraid to bring whatever information they had to the attention of Mao Zedong, whose Great Leap Forward policy had played a role in causing the famine. But it was also because so few people actually understood the scale of the problem,

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Why is Democracy Faltering?

October 25, 2018

While technological progress has brought important gains, it has also left many segments of the population feeling vulnerable, anxious, and angry, fueling a crisis of democratic legitimacy. Though it is not immediately clear how we can confront this crisis, it is clear that business as usual won’t cut it.

NEW YORK – Jair Bolsonaro, the frontrunner for the Brazilian presidency, is a far-right, gun-loving, media-baiting hyper-nationalist. The fact that he would be right at home among many of today’s global leaders – including the leaders of some of the world’s major democracies – should worry us all. This compels us to address the question: Why is democracy faltering?


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Profit Sharing Now

September 28, 2018

Recent proposals to grant workers equity in the economy have been met with skepticism by those who fear that radical intervention in the market inevitably paves the road to serfdom. But profit-sharing schemes, if designed properly, could be an ideal response to today’s dangerously high levels of inequality.

NEW YORK – At the British Labour Party’s annual conference in Liverpool this month, the shadow chancellor of the exchequer, John McDonnell, proposed a profit-sharing scheme that would grant workers equity in the firms where they are employed. McDonnell raised this idea in what was decidedly a political speech; and policy experts and economists have reacted skeptically. While a poorly executed profit-sharing program could do serious

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How to Prevent Winner-Takes-All Democracy

August 22, 2018

Across advanced democracies, digital technologies and other developments have created structural incentives for corporations and political parties to win at any cost. But ordinary citizens can counter this tendency by exercising the moral options that are still available to them.

NEW DELHI – Democracy is in crisis. Fake news – and fake allegations of fake news – now plagues civil discourse, and political parties have proved increasingly willing to use xenophobia and other malign strategies to win elections. At the same time, revisionist powers like Vladimir Putin’s Russia have been stepping up their efforts to interfere in elections across the West. Rarely has the United States witnessed such brazen attacks on its political

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A Currency Crash Course for Politicians

July 24, 2018

US President Donald Trump has imposed duties on a range of Chinese goods because he thinks that China is still holding down the renminbi’s exchange rate to boost its exports. But China no longer needs to sell its goods at below-cost prices, and it has been unloading its dollar-denominated foreign-exchange reserves since 2014.

MUMBAI – One major impetus behind US President Donald Trump’s protectionist policies is his belief that China has artificially weakened its currency in order to dump goods in the United States. Trump harped on this issue often during his presidential campaign. But now that he is taking action to reduce America’s bilateral trade deficit with China, there could be grave consequences for the world economy.

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Trade, Technology, and Xi Jinping’s Question

July 6, 2018

Despite unprecedented technology-enabled development, the world is beset with challenges, from violent conflict to rising inequality. The underlying reason for these problems may be that we have reached a turning point in the march of technological progress – and we are navigating it very badly.

NEW YORK – “It was the best of times; it was the worst of times,” said President Xi Jinping, quoting Charles Dickens’ famous line to open his speech at the 2017 World Economic Forum. “Today,” Xi continued, “we also live in a world of contradictions.” On one hand, “growing material wealth and advances in science and technology” have enabled unprecedented rates of development. On the other hand, “frequent regional conflicts, global

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