The Yekaterinburg BRICs and a closer look at their global reach

Today, Russia is hosting a summit of the BRICs, the emerging markets that seem to have only one thing in common, namely to have been lumped together by Goldman Sachs in 2001. The countries will discuss the global financial architecture and  their role in it. There’s lots of talk about them in the media. Let me pick up on two articles published in  Business New Europe today (subscription required), of which some abstracts below.

A first article reports on a map that was just developed of the actual global integration (investment, trade and migration) of the BRICs with the rest of the world:

“Consulting company Maplecroft has just produced the Emerging Powers Integration Index (EPII), which tries to go beyond the usual comparisons of GDP growth or trade and assesses just how dependant the rest of the world already is on the BRICs.

Stinking euro-inertia

Not a very original idea for a post, to highlight an FT column everyone has probably read. But I am sure many people sitting here in Brussels and those expecting something from our good ole European Union in these days of trouble, sympathise with it – at least I do. Munchau’s column today says: “Like a fish, Europe is rotting from the head”. He said it. And yes, and the process really stinks.

Little complement to yesterday’s post

Please see previous blog post. I am adding this one to complement the discussion. Someone drew my attention to this very interesting article in the NY Times on a European welfare system ( a case study of the Dutch system) as seen by a US expatriate. “Going Ducth”, by Russell Shorto.

US and Western European social systems revisited

There is much talk about the US becoming “French“, “Swedish“, “socialist”….  because of its ongoing healthcare reform, stepped-up government intervention and high levels of public spending. This while the EU is having centre-right governments struggling to push through unpopular market-oriented reforms to boost economies that are lagging behind the US in dynamism. These are less prone to big hikes in public spending to sustain their economies in the ongoing crisis (not least because of a legacy of high levels of public debt and bigger welfare states).

The Wall Street journal today had an interesting feature comparing the fate of a laid-off industry worker in the US and in Germany and how the social systems in both countries affect their current well-being. Predictably: health care is the great dividing line. The US American also feels the crunch financially now, whereas the German has about one year to substantially start feeling the pain. Yet when reading the article with care one cannot avoid the impression that it looks overall rather equally tough on both sides, when it comes to uncertainty over the future. Which econonomy will ultimately be able to create jobs more quickly? seems therefore to be the fundamental question.

But are social systems between the US and EU so much different than is generally assumed?

Onslaught on the “financial oligarchy” from an unexpected corner

Who said IMF economists were bad guys serving the interests of financial globalization?

Simon Johnson, former IMF Chief Economist, is coming out in May’s edition of The Atlantic with a fascinating, highly provocative piece, on the collusion between the US’ “financial oligarchy” and the US government and how its persistence will contribute to prolonging the economic crisis. A long, but highly recommendable read. A few morceaux choisis:

Looking at another root issue behind the current economic crisis: housing policies

Somehow my modest insignificant little self can’t help thinking that the London G20 Summit (final communique here) and many national policies adopted to tackle the current economic downturn somehow haven’t been addressing a few core issues related directly to the current crisis. It’s been a useful feel-good and confidence-building event. But if one is to take an stringently rational approach to the crisis one would ask two simple questions: what has immediately caused the crisis? And what needs to be done in the future to avoid a repeat? This the G20 hasn’t done. Come to mind, for example: housing and mortgage policies, global macroeconomic imbalances and related monetary and financial policies.

Easter reading list

Whoever is wondering what good book to take home for Easter, a book with substance but that is not a dry academic treatise, maybe a few of the following recommendations might be of interest. I am not a person who is very good at keeping up with new book publications all the time, and who finds it important to catch up with old classics and books that are a few years old. The recommendations below reflect this.

Looking back at the G20

Two recommendations for those who want to take stock of the G20:

For French speakers, an excellent radio-show on France Culture with a few eminent French economists (if only that talent was allowed to have a greater say in the country…). One can listen to it until Friday.

And for other English-speakers who have read the newspapers, don’t miss the excellent warning and comment by the FT’s Alan Beattie today on G20, poverty, aid, etc: G20 pledges must amount to more than just hot air.

“Groupings that produce grandiloquent promises of international action are only worthwhile when they materially affect the domestic policy debates in their member countries. Breaking the G8 aid pledges has inflicted no significant political damage on anyone. (Italy is the worst laggard, and yet Silvio Berlusconi, one of the Gleneagles signatories, is back in power again in 2009.) In that regard, there is scant evidence yet that the G20 can perform any better than its widely discredited older cousin.”

G 20 week

Dear readers. I am pleased to announce that I will not feel obliged to comment on the G20 meeting.  Politically a very symbolic moment, because it aims to boost cooperation in the current global crisis, and because it enlarges the group of top decision-makers in the world economy from 7 (the G7 was created during the last big crisis in the 1970s) to 20 (roughly the economies that are responsible for most of the world’s production and trade), there is much doubt on what it can actually achieve. Anyway, my colleagues at ECIPE are doing a terrific job there at commenting on the crisis and the G20 from a trade policy perspective. A new paper is due out (see here: pb09011); there’s loads in the press as you will see on our website, where you can also subscribe to our newsletter and above all find a link to the quite provocative blog we have launched recently.

Critique of Thatcherism turned on its head?

Bumped into a funny article yesterday in The Guardian, Middle class centre-left UK newspaper. By commentator Simon Jenkins. In a time when everybody blames capitalism, deregulation, etc for all of today’s ills, a refreshing point of view on the legacy of Margaret Thatcher, the icon of the 1980s economic liberalization revolution that swept the UK and the rest of the world. Thatcher is even portrayed as a “centralizer” of sorts…. Let me quote: