I've Been Busy

Does anybody still read this? If so, you are getting a double-dose of some things I've been working on recently.

The Formalities of Non-formal Economies

From the trading of snacks in an elementary school playground to the trafficking of people all around the world, non-formal economies are everywhere. Yet, their embedded workings remain largely invisible to formal economic analysis. These workings are neither small ($3 trillion is estimated to be laundered worldwide) nor peripheral to society (Société Générale); the non-formal overlaps and interacts with our daily formal lives. Some experts have even found that over 50 percent of the economic activity in certain countries – both developed and underdeveloped – occurs, formally uncounted, outside of formal markets. But open up any introductory economics textbook and you will find little to no mention of the deadly trade in illegal arms or the similarly deadly trade in counterfeit pharmaceuticals – each amounting to hundreds of billions of dollars every year. Our blindness towards non-formal economies is a direct result of our formal education through an “old-world” point-of-view; a lack of global perspective, privileging the quantitative over qualitative, the legal/illegal dichotomy, and other conceptual afflictions form this outdated ideology. To remedy this, not only do the basic assumptions of our formal economic theories need to be revisited, but a complete reframing of our traditional worldview must be affected. Paramount in this reframing is a new conception of economics – one not disposed to narrow conceptualizations and passé ideologies. The discipline of economics prescribes itself to a formal fetish – a detrimental yet dominant conviction, masking the sea of non-formal activities lying just under the surface of our everyday economic experience. Economics isn’t just supply and demand, but, above all, represents the nexus of wealth, power, and ideology in our world. With this broader understanding, real policy, real development, and real conclusions can be met. Informed of the profit, politics, and power that drive both the economies we see and the economies we don’t, we can begin to formulate real economic theories for the contemporary world.

Another Unpopular Post

Yes, I really am about to criticize Jeffrey Sachs...

The End of Poverty, or the Beginning of Hegemony?

In his 2005, New York Times bestseller, Jeffrey Sachs, with inspiring rhetoric and practical simplicity, lays out the grand vision of a world without poverty – a goal which, approached through the right (modernist) steps, can be achieved in our lifetime. Sachs imagines the development process as a progressive climb up the “development ladder.” The problem for the poorest countries, he says, is that they are so indebted or impoverished that simply reaching that first wrung is a near impossibility without “our” help. But, fortunately, after grasping that first wrung and taking that first step, these countries will be able to follow us up the ladder towards a freer democratic system and a capitalist market economy; thus marks the end of poverty.

Or, the beginning of hegemony? Even in his casual rhetoric, Sachs reveals his modernist approach. His use of “clinical economics,” which employs the more amicable language of modern medicine, does not fully mask his very particular and very Western set of goals. Again and again, we are fed images of the “others” – poor, helpless, violent, or irrational. Sachs, not lacking a real compassion for humanity, sells his modernist agenda as the only solution to the ailing Third World “others.” It is their corrupt governance and outdated economic knowledge, he says, or their culturally based prejudices and lack of (modern) infrastructure that blocks growth and prosperity. The prescription: a full dose of markets, a round of “shock therapy,” and some liberal-democratic institutions. A few years and a few financial crises later, and they should be just fine…

By grasping that first rung on the development ladder (with a little boost from foreign aid), Sachs believes that the third world countries can begin the “historical” and inevitable climb toward a liberal democracy and capitalist economy. Their future is viewed in the West’s reflection, with modernity as both the means and the end of his prescription. Our theories, based on a particular understanding of “development,” forcefully create an underdeveloped “third world.” This straightforward juxtaposition hides the subtle domination of the developed over the developing. Help – in the form of foreign aid, World Bank loans, or structural adjustment – can all be seen as instruments of cultural hegemony; it is the projection and affirmation of our selves as the pinnacle of progress, while framing the other as opposite. They are backwards, according to Sachs, and their only hope for a turnaround is to follow the lead of the developed countries.

Jeffrey Sachs’s vision is not just of a world without poverty, but of a world of total cultural homogenization and complete market integration. The “other” he creates is not our equal, but opposite and inferior. To save “them,” they must be helped to become “us.” If his modernist agenda is carried out, Sachs believes we will see the end of poverty. Perhaps, though, what we would see is really the final triumph of Western hegemony.

Philosophical Meanderings

We don't interact through objectivities. Words, thoughts, and actions are all open to interpretation and representation. Economics - of the mainstream, formal type - presents itself as the "real" story of human material interactions. But I think that there is more to the story. Existing on the margins are numerous economic conversations, with each person voicing and different interpretation of economy. These different conversation don't mask a universal motive nor do they reveal a universal method. The world is messy. To begin to understand everything under the umbrella of "economic," we should being to listen to what people are saying, instead of putting rational, self-interested words in their mouths...

Krugman and Corn

There is a food crisis on the horizon, says Paul Krugman, and unfortunately there are no simple answers. Most problematic is that food prices have been rising across the board, and when the prices of "basics" rise, this hurts poor consumers the most. Krugman works through the two obvious (and related) reasons: growing consumption rates in developing countries and rising oil prices. He also blames global warming for the "bad weather" problems in Australia and certain African countries (a bit of a stretch, but I'll let it go).

After a series of finger pointing, Krugman gives us the biggest culprit: biofuels. After giving the basic criticisms of biofuel efficiency and production, comes to the conclusion that we need to push back on biofuels. Really? This rash thinking seems to confuse short-term problems with possible (probable?) long-term benefits. Sure, biofuels may not be incredibly efficient now, but they are nearly on par with petroleum-based fuels in terms of cost. Given time and research, the prospects of biofuels may be well worth the food price destabilization that it might have caused (tough, I know, when people are starving...). Krugman too hastily blames biofuels then calls for the outright abandonment of their use as the solution. That just doesn't make any sense to me. I think there are other ways to buffer the poor from increasing food prices without crushing one of our best hopes for oil independence in the future.

Economists are lame

The Economist's idea of a joke.
I didn't get it for a long time. I thought it was a real graph with some interesting observation behind it. When I figured it out, I felt foolish. I did learn that the British also celebrate (? acknowledge? confuse others on?) April Fool's day.

Extra funny is reading the responses, thankfully I was not the only one who didn't realize it was a joke

4000 Year-Old Bling

Archaeologists have just found the oldest piece of "status" jewelry known in North America, dating back to about 2000 B.C. The necklace, found in the Andes, exhibits that societies far less complex than had previously thought used jewelry and precious stones as wealth and status symbols.

A problem with this: The writers point out that gold is almost universally considered a luxury item, yet their evidence only dates back to the emergence of more complex societies. To apply this same reasoning to these older societies (which, until now, they didn't even know produced/used ornamental jewelry!) seems a bit hasty. No matter how universal gold may seem as a status symbol, even in our society we can see that its exact meaning and interpretations have changes (for example, we no longer think of the "gold standard", or gold as a common form of currency, as it was long used as). The real meaning of the object also transcends its mere physical composition (as gold), and embodies unknown cultural value. I think more research should be done on this piece and others similar to it that may be found before any rash conclusions are made.

FDR on Economic Freedom

Perhaps the only thing more extraordinary than this speech's resonance and relevance to contemporary times is that the person who gave it actually was President. It is incredible both how much and how little 70 years can change things...