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“ŠeŽÒ ‰GŸõ‚ÌŽÒ “úŽž 2016 ”N 3 ŒŽ 21 “ú 05:03:02: hk3SORw2nEVEw@iUef9YLMjtI
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(‰ñ“šæ: ƒXƒeƒBƒOƒŠƒbƒc‹³Žö’ñoŽ‘—¿iŽ––±‹Ç‚É‚æ‚é“ú–{Œê–ój ‘æ1‰ñ‘Û‹à—ZŒoÏ•ªÍ‰ï‡”z•tŽ‘—¿iŽñ‘ŠŠ¯“@j “ŠeŽÒ ‰GŸõ‚ÌŽÒ “úŽž 2016 ”N 3 ŒŽ 21 “ú 05:00:06)

ƒXƒeƒBƒOƒŠƒbƒc‹³Žö’ñoŽ‘—¿i‰pŒêj@
‘æ1‰ñ‘Û‹à—ZŒoÏ•ªÍ‰ï‡@2016”N3ŒŽ16“ú
”z•tŽ‘—¿@Ž‘—¿‚PiŽñ‘ŠŠ¯“@j
https://www.kantei.go.jp/jp/singi/kokusaikinyu/dai1/gijisidai.html
@
@
Beyond the Great Malaise and Financial Stability towards Robust and Sustainable Growth
@
@
Joseph E. Stiglitz
Tokyo
March, 2016
@
\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.2nI. Where we are
@
@
• Slow growth\Great Malaise, New Mediocre
@@ENot a crisis yet
@@EBut with persistent moderately high unemployment (in some cases disguised) in
@@@many of G-7, higher unemployment among youth and marginalized groups
@@EDisproportionate share of slow growth going to a few at the top\growing inequality, wage
@@@stagnation
@@@@EEven in countries with low "official" unemployment, raising questions of quality of job
@@@@@growth and disguised unemployment
@@EWorld economy was weak in 2007, before crisis
@@@@EOnly sustained by a bubble
@@@@ERestoring the world to 2007 simply restores us to the weak economy we had then

• Mixed prospects\small probably of returning to robust growth, large probability of recession
@or worse
@@EJustifiable concerns about asset price bubbles that might deflate
@@EEmerging markets facing massive capital outflows, with many countries and
@@@companies over-indebted

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.3nUnderperformance of US Economy
@
@
• GDP some 15% below what it would have been had the growth rates that prevailed between 1980
@and 1998 continued

• Percentage of the working]age population employed lower than it was in the early 1980s, when
@women were entering the workforce en masse

• Median real (household) income is less than 1% higher than it was in 1989

• Real wages at the bottom are lower than 60 years ago

• African-American youth unemployment rate is still 23.7%

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.4n

mgraphn United States GDP Trend Analysis mÈ—ªn

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.5nEurope is even worse
@
@
• With higher levels of unemployment

• Especially youth unemployment

• And lower levels of growth

• Euro crisis is not over \ only under short term "remission"
@@EHaven't created institutions that are necessary to make a single currency work, and not
@@@likely to do so at time soon

• Gap between where they are and where they would have been growing

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.6nDismal European performance since crisis

mgraphn Euro Area GDP Trend Analysis mÈ—ªn

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.7nChina
@
@
• Has been driver of global economic since GFC
@@EAdvanced countries affected directly and indirectly

• Likely to be significant slowdown

• Europe and US not likely to be able to make up for the slowdown of China's economy

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.8nMisdiagnosis of the Great Recession
@
@
More than a financial crisis

• Banks' balance sheets are largely restored

• Some regulatory reform (Dodd Frank)

• Yet economy is not back to health
@@EInsufficient attention paid to improving credit channel
@@EHelps explain why monetary easing didnft help as much as hoped

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.9nMisdiagnosis of the Great Recession
@
@
More than a balance sheet recession

• Balance sheet of large corporations largely restored

• It is not corporate balance sheets or their access to finance that are holding them back from
@investing
@@EIt is lack of demand.

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.10nFurther concerns
@
@
• Persistent Global imbalances
@@EEurozone has exacerbated problem
• Asymmetrical adjustment
@@ECountries (firms, households) facing a decline in income have to reduce consumption
@@EThose with increased income do not expand spending symmetrically
@@EResponse to changes in oil price illustrates
@@@@EMany had expected lower prices to increase demand, but adverse effects of "losers"
@@@@@more than offsetting these benefits

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.11nDiagnosis of the central problem
@
@
• Lack of global aggregate demand

• Combined with insufficient efforts in each country to support non-traded sectors

• Excessive reliance on debt, financialization

• More broadly, in large parts of advanced countries about a third of a century ago, there began
@a process of rewriting the rules of the market economy (redesigning tax structures, ill-thought
@out liberalization) that led to slower growth, more instability and more inequality\just the
@opposite of what was promised

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.12nGreat malaise hides deeper problems on which there is being made remarkable little
@@@@progress
@
@
• Climate change

• Inequality, large number of individuals in poverty
@@EWith many dimensions\inequality in wealth, health (in countries relying on private provision
@@@of health care), and access to justice
@@EHollowing out of the middle in advanced countries\and even in developing world
@@EProblems especially severe for marginalized groups and (often) youth

• Deep structural transformations needed to achieve sustainable growth

• Deeper problems in market economies leading to productivity slowdown
@@EShort termism in both private and public sector
@@EInsufficient investment in basic research, and in many countries, infrastructure
@@EExcessive financialization, part of process, part of cause
@@@@EOpening up major gaps between wealth and capital
@@@@ECapital output ratio in many countries going down even as wealth output ratio increases
@@EFailures to adapt education system

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.13nII. Responding to the situation
@
@
Conflicting views about obvious instruments: monetary policy

• Monetary policy has largely run its course

• Never very effective in deep downturns: the only effective instrument is fiscal policy

• Real problem not zero lower bound\slight lowering of interest rates (into negative territory)
@will not work
@@EExperiments with negative interest rates unlikely to stimulate much, may have adverse side
@@@effects
• QE increased inequality, did not lead to significant increase in investment (if any) and
@because of financial market imperfections/irrationalities may have led to mispricing of risk
@and other financial market distortions
@@EOne of main benefits was competitive devaluation\but that's a zero sum game
@@EIn absence of adequate fiscal policies, "only game in town"\matters would have been worse
@@@in its absence

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.14nConflicting views about obvious instruments: fiscal policy
@
@
• Worry that fiscal policy risks damaging build up of debts
@@EView that fiscal stimuli in 2008/2009 didn't work is absolutely wrong
@@EReduced unemployment from what it otherwise would have been, prevented deeper
@@@recession, depression
@@EIn crisis, didn't have time to optimize spending\but even imperfect expenditures were
@@@better than alternative of massive idle resources and depressions
@@EWorry about debts is fundamentally misplaced in balance sheet approach, where government
@@@spends money on productive investments

• Effectiveness of policies undermined by globalization\large spillovers to others, costs borne
@at home
@@EBut global coordination sufficiently weak to provide "superior" globally coordinated
@@@solutions

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.15nWhat will not work\or not be sufficient\to restore prosperity
@
@
1. Monetary Policy
@@EUnderlying problem is not Zero Lower Bound
@@ELow interest rates induce capital intensive technology, may lead to "jobless" recovery

2. Trade agreements
@@ETariffs already very low
@@EWith G]7 exporting capital intensive goods, importing labor intensive goods, a "balanced"
@@@increase in trade leads to lower employment

3. Misguided supply side measures
@@ECorporate income taxes

4. Another dose of austerity

Some of these measures would be counterproductive

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.16nRemedies: Immediate issue\restoring global aggregate demand
@
@
1. Setting a high price on carbon (following up on Paris) will induce investments to retrofit
@ the global economy for climate change

2. Recycle some of the surpluses, e.g. through recapitalization of development banks, or creating
@ new development banks: would help meet deep investment needs, including infrastructure
@@EPrivate sector has proven itself relatively ineffective in intermediation
@@EShort term financial markets sit between long term investors and long term investments

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.17nMeasures that would work
@
@
3. Increasing government spending, financed partially by taxes, will stimulate economy
@@EPrinciple of balanced budget multiplier; with well designed taxes and expenditures,
@@@multiplier can be quite high
@@EAppropriate accounting framework looks at both sides of the national balance sheet, not
@@@just at liabilities
@@@@ESpending on education, health of young people are investments which improve asset side
@@@@@of balance sheet
@@@@ESo do investments in infrastructure and technology
@@EEnvironmental taxes and land taxes will help restructure the economy to create sustainable
@@@growth
@@ESo will government expenditures to promote structural transformation and promote equality

4. Other measures to increase equality will increase global aggregate demand
@@ERewriting the rules: improving equality of market income
@@EImproving on transfer and tax system
@@EMeasures that increases wages and worker security
@@@@EIn some countries, improving legal framework surrounding unions/bargaining

5. A global reserve system will reduce need for demand-reducing build up of reserves

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.18nBeyond global aggregate demand
@
@
• Especially as world moves to service sector economy, non-traded sector likely to be
@increasingly important

• Absence of domestic demand impairs supply

• Domestic demand is more than private consumption
@@EIncludes investment in environment, people, technology (closing the knowledge gap),
@@@infrastructure, making cities livable

• Much of this domestic demand will have to be publicly financed
@@EHealth and education are among key service sectors

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.19nA. Ending austerity
@
@
• Even the US has had a mild firm of austerity
@@E500,000 fewer public sector employees, normal expansion would have some 2 million more

• Notions of expansionary contractions and that there is a critical threshold, above which debt
@lowers growth have been discredited

• Even if that were the case, the balanced budget multiplier means that increasing taxes in
@tandem with investment spending increases GDP now and in the future

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.20nNeed balanced approach to finance\debt vs. tax
@
@
• Will vary from country to country, depending on levels of debt and taxes, growth paths
@@EAlways need to keep balance sheet perspective

• In all countries, raising environmental taxes ("charges", including congestion fees),
@including carbon tax, would generate substantial revenues and improve economic performance

• So too would a Financial Transaction Tax

• In virtually all countries, raising taxes on land and other natural resources ("inelastically
@supplied") would raise substantial revenues, increase growth (less diversion of savings to
@unproductive uses)

(Cont'd on next slide)
\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.21nNeed balanced approach to finance\debt vs. tax (Cont'd)
@
@
• Lowering taxes on corporations would not increase investment, since most investment is debt
@financed, and interest is tax deductible (lowering taxes raises net cost of capital, and thus
@discourages investment!)
@@EIncreasing taxes on companies that do not invest in the country and create jobs may
@@@incentivize investment

• Some taxes actually stimulate spending today (carbon tax, inheritance tax)

• Balanced budget multiplier implies that raising taxes and spending in tandem stimulates economy

Well designed taxes would also address key issues of inequality, instability, and environmental
degradation

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.22nBeyond austerity
@
@
Rethinking budgetary rules and frameworks

• Capital Budgeting
@@EBalance sheet perspective is especially important when cost of funds is low and returns
@@@to investments are high

• Using development banks to promote investment
@@EWith well designed taxes and expenditures, multiplier can be quite high

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.23nB. Spending money well: focusing on key long run problems\lack of productivity
@
@
There has been under-investment in technology and infrastructure which is complementary to
private investment
@@Ewith government support of basic research (as a percentage of GDP) lower than it was a half
@@@century ago
@@Ewellspring of ideas driving new innovations to increase productivity may be drying up

What is need is more Investment infrastructure and technology
@@Esince much of this public investment is complementary with private investment, private
@@@investment will be stimulated
@@Einvestment could be financed through an infrastructure bank

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.24nC. Spending money well: focusing on key long run problems\Structural Transformation
@
@
• Global manufacturing employment is in the decline

• With globalization, the advanced countries will be seizing a declining share of that employment

• Needs to be shift to service sector
@@EAnd in some countries, improving productivity of service sector

• Markets on their own do a poor job at managing the kind of large structural transformation that
@is needed
@@EEvidenced in earlier transition from agricultural to manufacturing

• Among the service sectors that should be taking up the slack are education and health
@@EGovernment rightly plays an important role in these sectors
@@EAusterity has constrained the ability of the government to play that role

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.25nChallenges posed by this structural transformation
@
@
• New economy may be less capital-intensive
@@ESo that the investment needed to support a given growth in GDP may be smaller

• Older workers especially may be ill-prepared for the new economy
@@EWith the aging of the baby-boomers, a larger fraction of workers are older
@@EThe societal costs of not retooling\of simply accepting their obsolescence\are higher

• Existing arrangements creating large issues for old and young
@@EZero interest rate environment means that old who saved prudently through government
@@bonds have low income
@@EYoung can't afford to buy houses, often have to wait long time to get a job, when they get
@@@a job, it doesn't use their skills and talents, and in many countries, they are saddled
@@@with large debts

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.26nPolicies for promoting Structural Transformation
@
@
• In many countries government action was central in transition from agriculture to manufacturing

• The government needs to again take an active role, including through more active labor market
@policies.

• Such policies only work, however, if there are jobs for the retrained workers.
@@EThere needs to be a comprehensive framework for restoring full employment

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.27nD. Fighting Inequality
@
@
• More than redistribution

• Pre-distribution: Rewriting the Rules to ensure more equitable distribution of market income
@@EMarkets don't exist in a vacuum: the way they are structured affects how they function,
@@@efficiency, and distribution
@@EIncreases in rents explains the anomaly of an increase wealth/income ratio accompanied by
@@@a decrease in the ratio of productive capital to income

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.28nFighting Inequality
@
@
• These theories explain the marked disparity between the growth in labor productivity and real
@wages
@@EWedge can't be explained by standard theories\skilled bias technical change or differential
@@@savings rates

• Reduced inequality would improve economic performance, in the short term, and in the long term

See Stiglitz, J. E., N. Abernathy, A. Hersh, S. Holmberg, and M. Konczal (2015).
Rewriting the Rules of the American Economy, New York: W.W. Norton, 2015.

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.29nIII. Structural Reforms
@
@
Some basic principles

• In the absence of adequate demand, supply side reforms will increase unemployment, not
@promote growth
@@EMoving people from low productivity sector to zero productivity unemployment
@@ESupply does not create its own demand
@@EIndeed, supply side reforms can weaken demand and lead to lower GDP
@@EBut well designed demand policies can increase supply/productivity, can increase GDP today
@@@and potential growth rates

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.30nSupply side measures that would work
@
@
Often working in conjunction with "demand"

• Increased investment in technology

• Especially important as one creating an innovation economy and a learning society

• Increased investment in people\creating a healthier and more productive labor force

• Industrial policies which help restructure the economy, moving from old sectors to new
@@EMarkets don't make these transformation well on their own

• Competition policies\preventing the agglomeration of economic power
@@EMonopolies restrict output

• Financial market reform
@@ENot just prevent financial sector from imposing harms
@@EEncouraging it to do what it is supposed to do, intermediate, private finance, especially
@@@for small and medium sized enterprises
@@EEncouraging equity rather than debt

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.31nSupply side measures that would work
@
@
• Measures to facilitate participation in labor force
@@EGood public transportation systems
@@EParental and sick leave
@@EChild care

• Inclusion of groups that have been discriminated against and marginalized
@@EWomen
@@EMinorities
@@Eimmigrants

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.32nSupply side measures that would work
@
@
• There are many ineffective (or counterproductive) supply side measures
@@ELowering corporate income tax
@@@@EBut lowering taxes on corporations that invest and create jobs and increasing it on
@@@@@corporations that don't would incentivize investment and job creation
@@EFinancial market deregulation
@@@@ELeads to less investment, more speculation, instability
@@ETrade measures have not had hoped for supply side benefits
@@@@EBenefits always overestimated
@@@@@@ECurrent estimates of TPP for US around zero
@@@@EGrowing consensus TPP is a bad trade agreement, will not be ratified by US Congress
@@@@@@EInvestment provisions especially objectionable\introduce new source of
@@@@@@@discrimination, limits ability to regulate economy in ways that would lead
@@@@@@@to stronger growth, protect environment, etc.

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.33nOther counterproductive supply side measures
@
@
• Backward looking supply side reforms also will not work
@@EReducing excess housing capacity in the US (empty homes in Nevada desert) would not have
@@@helped US recovery
@@EDestroying excess chip capacity in Korean crisis (1998) would have impeded its recovery
@@@@EIgnored option value
@@EArguments often made by those wishing a reduction in competition
@@@@E"national champions" = oligopolies

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.34nFailure of Supply side measures
@
@
• Supply side measures in US (and other countries) in early 1980s failed
@@EDidn't live up to promise of increasing tax revenues\actually fell
@@EDidn't live up to promise of increasing growth\actually fell
@@@@ESavings rate fell
@@@@@@ESame effect seen in more recent tax cuts in beginning of 2000s
@@@@ELabor force participation fell
@@EWorries about impact on inequality more than justified\have reached new heights

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.35nIV. Financial sector and financial turmoil
@
@
• Some of turmoil is reflection of lack of transparency in financial markets

• Some of turmoil is reflection of short-sighted nature of financial markets\they have always
@been very fickle

• Some of turmoil is reflection of deep uncertainty about the direction of the global economy

• Some of turmoil related to failure of countries to coordinate monetary policy, resulting
@uncertainty in exchange rates, large movements in destabilizing capital flows
@@EFacilitated by capital and financial market liberalization

• Much of the turmoil reflects failure to address fundamental problems in the financial sector

• Problem is that the turmoil is likely to have consequences for the real sector

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.36nReforming the financial sector
@
@
• More than preventing the sector from imposing harm
@@EThrough excessive risk taking
@@EMarket manipulation, predatory lending, etc.
@@EAbuse of market power

• Ensuring that it plays societal role at low transactions costs
@@Eproviding SME and housing finance
@@Emanaging retirement accounts and running the payments system at low transactions cost

So far, we have failed in both tasks

There is the need for broader and deeper reforms and broadening public instruments for providing
access to credit
• Student loans
• Public option in mortgages
• Public option in retirement accounts

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.37nV. Global Reforms
@
@
• Need new global reserve system
@@ECurrent system is a historical anachronism
@@ELeads to biases towards surpluses
@@EWeaknesses in reserve currency countries
@@EA global reserve system, as suggested by Keynes and recent UN Commission would lead to
@@@greater global stability

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.38nGlobal reforms
@
@
• Need global coordination to reduce global imbalances
@@EChina's surpluses are in process of being reduced
@@EBut those in the Eurozone are increasing
@@@@EWill need deep reforms in Eurozone

• Need global macro]economic (monetary and fiscal) coordination
@@EWas hope that this would happen after Global Financial Crisis
@@EHasn't materialized\even greater asynchronous movements

• Need better ways of recycling surpluses
@@ENew development banks move in the right direction
@@EBut there is a need for governance reforms and recapitalization of Multilateral development
@@@banks

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.39nFinance for development
@
@
Could simultaneously recycle surpluses, adding to global demand, and promote development, but
there are three impediments

• Debt markets: no international framework for debt restructuring
@@EImportant initiative at the UN, supported by vast majority of countries
@@EBut US and some European countries arguing against a "rule of law"

• FDI: investment agreements undermine the ability of countries to regulate

• Taxation of multinationals: international tax regime makes raising revenues difficult
@@ERace to the bottom
@@EBEPS agreement at G-20 left key issues unaddressed
@@EDeeper reform of global tax regime needed

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.40nAction on climate change
@
@
• Investments to retrofit the economy for climate change would provide needed stimulus to global
@economy

• Environment and economic growth are complementary
@@EEspecially if we measure growth correctly

• Providing a price on carbon would provide incentives for investment

• Paris meeting was important in creating momentum, so business community realizes that in one
@form or another there will eventually be a price for carbon
@@EKey investments (infrastructure, housing, buildings, power plants) are long term

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.41nVI. Reforms in the global decision making process
@
@
• Global economic integration has outpaced than of global political integration

• Whenever there are spillovers, externalities need for collective action

• But we have no good framework for doing so at the global level

• Global economic policy too often reflects power and special interests
@@ENot necessarily focusing on areas where global cooperation and harmonization are necessary
@@@@EExcessive harmonization of IPR rules
@@@@EHarmonization on rules that reflect special interests, with insufficient democratic
@@@@@accountability\different from what might emerge from a more global democratic process
@@@@EEspecial concern that new trade agreements will impair ability of governments to
@@@@@perform essential regulatory functions in a democratic way
@@EFocus is on harmonizing down, to lowest common denominator

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.42nReforms in global decision making process
@
@
• How to increase representativeness
@@EUnder-representation of small and poor countries
@@EImportant, even if they have little weight in global economy

• How to increase legitimacy
@@EUN is the international body with global legitimacy
@@EIMF has similarly more legitimacy within its remit

• Danger of "club" getting together to make decisions for all
@@EUndermines credibility of other organizations

• Alternative: Global Economic Coordinating Council
@@EOperating under the UN, IMF

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.43nRethinking global decision making
@
@
• Variable geometry
@@ERecognizing that it will be difficult to get close to unanimity on many issues

• "Coalition of willing"\for instance on climate change
@@EWith cross-border taxes to induce others to cooperate

• May not be able to get all to agree to new global reserve system
@@EAgain coalition of willing\advantages will induce others eventually to join

• Thinking carefully about where externalities are most important
@@EAbsence of collective risk bearing induces high level of savings, reduces global aggregate
@@@demand
@@EGlobal rules favoring capital increase inequality, with adverse effects on global aggregate
@@@demand
@@EGlobal instability creates inequality, leads to high savings, both of which contribute to
@@@deficiency in global aggregate demand

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.44nVII. The World Today in Perspective
@
@
• Many of the advanced countries began an experiment a third of a century ago\lowering taxes,
@deregulation

• There was a need to adjust economic framework to changing economic circumstances
@@EBut they made wrong adjustments

• Consequence has been slower growth and increasing inequality

• Full effects are just now being felt\but they have been on their way

• If current course continues things will get worse
@@EWith untold political consequences\some of which we are beginning to see

• This experiment can and should now be declared a major failure

• There is a need for a new course
@@EMinor changes, tweaking of current arrangements will not do

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.45nMany pieces to this failed experiment
@
@
• New approaches to monetary policy
@@EFocus on inflation, rather than balanced perspective\growth, employment and stability

• New approaches to fiscal policy
@@EIn Europe, stringent constraints on deficits

• New emphasis on privatization
@@EExtending even to social security in some countries

These too have not brought promised benefits

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.46nExperiment in new global architecture is also a failure
@
@
• Forty years ago would began experiment with unfettered capital flows
@@EWas supposed to bring a new era of stability

• Markets would do a better job than governments

• Instead it ushered in new era of global instability
@@EEspecially associated with short term capital flows

• Now even the IMF says that there should be capital controls (capital account management)

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.47nThere is a way forward
@
@
• Restoring the balance between the government and the market

• Recognizing the importance of the "third sector" and new institutional arrangements

• Ending austerity

• Global efforts to address global needs, global public goods, global externalities
@@EBeyond climate change to include a global science foundation
@@EGlobal efforts to increase productivity\instead of a race to bottom

• Commitment to measures to increase living standards for all

• Global reassessment of how we measure progress
@@EWhat we measure affects what we do
@@EMain message of the Commission on the Measurement of Economic Performance and Social
@@@Progress
@@EWork continuing at the OECD

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
mp.48nThe World Economy: The Way Forward
@
@
• The New Mediocre, the Great Malaise, Secular Stagnation are not inevitable
@@EThey are the result of failed policies

• In an increasingly integrated world, the best way forward would entail global cooperation in
restoring balance and increasing aggregate demand
@@ECombined with cooperation, for instance, in the provision of global public goods
@@@\research, global warming
@@EAchieving that cooperation has proven difficult
@@EJapanfs leadership in G-7 may be part of way forward

• But even lacking that cooperation, there is much that each country can do to strengthen demand
@and improve productivity within its own borders
@@EWith significant spill-overs to others

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
@

@@”Žè‚Í‚¹‚¸A”Žèˆê——‚ðŒ©‚é

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