30 September 2009
25 September 2009
21 September 2009
The idea of this mail is to show how production systems can behave in erratic ways when something like oil gets erratic. Keep in mind that production systems have lags - meaning they take time to adjust to new levels of prices. When oil prices are oscillating as wildly as $147 in July 2008, $ 34 in Feb 2009 to $70 today - other systems too will behave weird.
Japan and Belgium are a continent removed; but, do not underestimate the disruptive power of such swings in oil prices. Climate change also chips in. Reduced European milk products/derivatives demand due to the recession will also be chipping in.
An economy cannot be immune to the constraints imposed by the ecosystem that it dwells within. As long as there was slack within the various sub-systems of the ecosystem, disruptions did not manifest; as we are
reaching a point of almost no slack, the disruptions will manifest more frequently.
We live in interesting times for sure :)
The first link below is a video on Belgium in 2009 and the second on Japan in 2008
Three million litres of milk sprayed on the field
Belgian milk producers pour about 3 million litres (793,000 gallons) of milk on a field near Ciney, September 16, 2009, in protest over a growing industrial dispute over low prices. Low milk prices they say are bankrupting farmers. Source: REUTERS
Japan's Butter Meltdown
By COCO MASTERS/TOKYO Saturday, May. 03, 2008
The world's second largest economy is now crying over spilled milk — and its delicious by-product, butter. Japan, insulated from rice shortages that plague other parts of Asia, is experiencing an unprecedented shortage of the household staple — and discovering that it is not as immune from the growing global food crisis as it wants to be.
The butter shortage results from a chain of events. When the country suffered an overproduction of milk in 2006, the government ordered about 1,000 tons of raw milk poured down the drain and dairy cows slaughtered to prop up prices and defend local milk farmers. Dairy prices were then managed to retain their advantage to imported milk and butter, whose prices were inflated by tariffs. (To protect domestic butter, the tax on imported butter went up twice last year. There is a nearly 30% tariff on butter imports.)Butter has a strange status in Japan. Historically, butter is a reminder of Japan's first contacts with the West — the islanders complained that the foreigners were bata-kusai , that is, "butter-stinkers." But since the 1960s, local butter making and consumption has been seen as a symbol of Japanese self-sufficiency in and mastery of an originally Western product. The shortage is a blow to that independent self-image.
But now grain-feed prices have risen as a result of a drought in Australia as well as the accompanying use of corn for ethanol, which has reduced the amount available for feed for Japan's cows. The drought has also cut back on milk that would have been imported to supplement the Japanese market. Combined with competing demand for milk and milk products from emerging markets in China and Russia, the result is a collapse of the local butter production in Japan.
18 September 2009
14 September 2009
Axel Leijonhufvud Out of the corridor: Keynes and the crisis
Tony Lawson The current economic crisis: its nature and the course of academic economics
P.S. Thanks to Marek for flagging this.
12 September 2009
09 September 2009
we scoff at “exaggerated” future costs from warming. For years mocked as dismal killjoys by everyone else, we have picked on solemn, doom-prophesying climate scientists like the second geekiest kid at school sneers at the geekiest. A profession central to which is working out the cost of the opportunity foregone has a massive failure of imagination when it comes to climate change costs.
There are other examples of a deeply-ingrained fanaticism getting the better of common sense. Take the furore surrounding the Stern Report, a big cost-benefit analysis that argued acting now on climate change was economically wise.
08 September 2009
In this essay we aim to show, first, how the classical development economics, that of Ragnar Nurkse's (1907-1957) generation, epitomized the best development practices of the past 500 years and crafted them into what Krugman rightly calls high development theory. It is not a coincidence that the post-World-War-II era, when Nurkse and others ruled the development mainstream, is one of exceptionally good performance for many poor countries. Second, we argue that the alleged death of the classical development economics and subsequent rise of the Washington Consensus has to do not so much with increasing modeling in economics, a way of research purposely discarded by many classical development thinkers, but much more with misunderstanding the reasons for East Asia's success and Latin America's demise; we show that the root cause of this misunderstanding - that goes in fact back to 'misreading' key passages in Adam Smith - is the role of technology, or of increasing returns activities, and of finance, in development. Third, we aim to indicate key areas of further research that the current development mainstream should pursue in order to re-learn how to create middle-income economies and middle-class jobs.
There is also a new Facebook group you can join: 'Ragnar Nurkse' which will have more info and discussions starting soon.
Read more about Nurkse at these Wikipedia and New School pages.
04 September 2009
So what should be the objective of drinking water supply management in India? Not just increasing access to ‘improved’ sources of drinking water, but increasing access to a service that is reliable, affordable and sustainable both financially and environmentally. Such an objective will raise considerable debate over the right way forward. However, one golden principle stands out here—water is an increasingly scarce resource, so it has to be used most efficiently and equitably. Reporting appropriate data would go a long way in raising sensibility towards achieving the MDG of increasing sustainable access to safe drinking water.
For more details read, World Bank-Indicus Analytics report ‘India Water Supply and Sanitation’
03 September 2009
Different social contexts lead some people to believe in juju and others to believe that the alchemy of securitisation can turn subprime mortgages into triple A obligations. The test of the rationality of these beliefs is not their internal consistency, but whether they guide us to wise decisions. By that criterion, neither scores well.
02 September 2009
01 September 2009
The disjoint model is built on assumptions of independence. It assumes that individuals have opportunities, make choices to influence their environment and that their choices are a reflection of their goals and preferences. This is the model that dominates mainstream American discourse and culture, and the model of agency held by many of the people who did leave.
The conjoint model, on the other hand, is built on assumptions of interdependence. Here, human agency is primarily about adapting one's self to the world (rather than trying to change the environment), often through faith and spirituality, and decisions are more community-oriented. Though the conjoint model might seem more familiar to many middle-class observers as an East Asian philosophy, the authors argue that these attitudes are also prevalent in working-class Americans.
That's because many working-class folks lack the resources to engage in individualistic, independent behaviors. And this particular lived experience leads them to adapt by developing a sense of personal agency in which they make the most of their lives, given the challenges they face in exerting meaningful control over their environment. This is something that is often very difficult for outsiders to get.
This is the part I liked best:
"Despite the whole thing about putting yourself in someone else's shoes, you won't necessarily get it," Hamedani said. "Even to walk a mile in someone else's shoes. You have to walk through their world and how that informs who they are."
All of the social sciences are using one and the same model of the person," Markus said. "And that's a particular model that comes out of the middle-class American context in particular. It's the rational actor of economics, the reasonable person of the law.
"But as far as it goes," Markus added, "it's really right for about 5 percent of the world's population. When it comes down to it, when we say 'people,' we're talking only about North American, middle-class people with a reasonably high level of education and resources. ... This model is an historical and philosophical product, but it's not the way people naturally are. There are other ways to be an agent that deserve study."