Sveriges Riksbank

This week we had a lecture from some representatives from Sweden’s Central bank.

This was very informative and gave me a better insight into the objectives and rational of a central government bank. This peak at some of the workings behind the projects and models for the Swedish economy was useful.

They explained why they use models in economics even though by their own admission they are oversimplified. As there needs to be some process for measuring future trends and it can allow you to isolate certain variables to a certain extent. They explained the dominance of the DSGE (Dynamic, Stochastic, General Equilibrium) model in Marco-Economics and described how and why it is still used even after the financial crisis of 2008. They mention how it is often the case that economic articles are outside the norm if they do not include a DSGE model and therefore may not get published and it may be difficult for the author to find work.

They explained their reliance on the rate of inflation as a measure for the economy now and future stability, explaining that data updates on inflation are most regular and therefore one of the best indicators to go for. They also highlighted that it is not so significant as to what the percentage of inflation is but rather that they attempt to keep it stable for a long period of time as one of the key roles of the Swedish central bank is economic stability.

And it is here where there is an all too familiar warning sign for me as any industry that continues to try and maintain the status quo and stability for long periods by using the models that it is used to using in the past is walking a fine line. As the world is changing at an seemingly ever faster rate, globalisation takes more and more precedence which they state has a big impact on the Swedish economy. It seems rather scary to me that one of the main ways to counter act this change is to use a model which they themselves state is oversimplified.

Part of this course in global economy at CEMUS is set out to question established traditions in economics and it seems to me that many economists and to a larger extent banks and governments in general are stuck in a habit of using models that are no longer fit for purpose and are very reluctant to change. That to me seems highly problematic and I think the clear narrow mindedness to ignore some of the warning signs for the 2008 financial crisis highlights the dangers of such an approach.

But that is just me, what do I know about economics?

Thanks for reading,

Elliot

The Future of China.

This week, we had a guest lecturer from the Swedish Environmental Institute.  Although living away from China for several years he had a breadth of experience in the field he with scholars he called ‘China Watchers’.

These people are tasked mainly with observing the dramatic changes in China which have happened both culturally and socially but most importantly, especially in this context economically. He talked about the insane growth and development China has had over the last 30-40 years. China in that time has taken something in the range of 500-600 million citizens out of poverty. It has massively developed its infrastructure and the Chinese middle class has grown substantially.  An example he gave to illustrate the rapid rate of expansion in China was the city of Shenzhen opposite Hong Kong but on mainland China. This soon to be city was just a small fishing village in 1970. Today it has a population over 16 million.

He talked about ‘One Belt One Road’ (OBOR) and huge project designed to revive the historic trade route of ‘The Silk Road’ that once acted as the biggest trade road through Asia to the Middle East and beyond. He mentioned the massive investment China is having in Pakistan to do with this project but also the large-scale investment that it is having in many countries all across the global.

He then went on to talk about China’s sudden net fall in coal production and consumption as a result of the growing issue of climate change and things such as the smog clouds in Bejing.  This lead to the questions at the end of the session, with the main question being, can China adapt as rapidly to climate change as it has done to soo many economic issues it has faced in the last 50 years. As it is now the world’s largest emitter of fossil fuels. This question is difficult to answer but one thing is for sure, China will play a major role in Climate Change and every other significant issue on the world stage over the coming decades.

Thanks for reading,

Elliot.

 

The Global Economy Game.

Yesterday, in our Global Economy Course we had a seminar that was mandatory to attend. No one knew exactly what to expect, as it turns out we had a guest that used to be one of the course coordinators for the course we are currently studying. He came to run this session and he introduced us to a game or social experiment which turned out to be very interesting indeed.

The game was essential a global marketplace in small scale (in this case the planets from Star Wars). There were 6 tables all consisting of 5 or 6 members as well as the bank, an auction corner, the UN corner and the IMF corner. They asked for a couple of volunteers to observe the game without taking part to try and offer some extra insight into the things that developed throughout the exercise, I was one of these observers.

Each country or planet was given a different amount of resources, pens, paper, money, scissors, rulers etc. And told they could make different shapes and sell them to the bank for different sums of money. People quickly began looking at what resources they had, what they needed and what would be the best approach to their tables economy. Different planets took different approaches, some restricted trade because they already had many resources. Others specialised in making one specific shape and producing a lot of that shape.

It was all fascinating to watch!

Every so often there was an announcement that there had been a change to the global economy and a new rule entered. There was the introduction of a financial crisis and the opportunity to take action on this. There was global warming and the opportunity to act on this. and there was the UN in which a representative from each planet could discuss and form a new rule for the global market if every representative agreed. All of these negotiations failed

As all of these negotiations failed, this may have been down to the limited time they had for each negotiation but also I think gives some insight into the complexity of international negotiations and how all the different interests from different players make such negotiations a lot more complex than at first glance.

This game was incredibly interesting to observe, how people come up with strategies, how they attempt to trade and negotiate, how they communicate, how quickly they adopt a role which in the real world they would find questionable or even unethical/immoral.

This game was based on gaining an insight into the realities of different economic interests but they potential scoop is much larger, there is a lot of insights into communication, psychology, group dynamics, people’s lack of consideration for others and environmental issues when their own economies are at stack. People’s interest in negotiating only if they think their planet will directly benefit.

I could go on, the point being I think this mini global economy experiment was an incredible insight. Very interesting to observe and I think I will remember this game and try to play a variety of it in the future. Thanks for reading.

Elliot

Swedish Trade

This week on our Global Economy course we had a guest lecturer from the Swedish Board of Trade. He showed us this week how trade is often a lot more complex than it first appears. For instance, products that say made in Sweden often are not completely made in Sweden but rather, the last part of the production before the product gets shipped out for marketing, that part is done in Sweden. He used another example of electronics and that even though products say made in China, it is often the case that parts of the product are made for example in the Philippines, are shipped to China and are re-assembled as part of a computer and exported with a made in China symbol. 

This lead to the guest lecturer arguing that the actual figures of many countries economies are much more heavily reliant on service industries than it first appears. This, in turn, was mentioned that the actual manufacturing of goods is a small part of the whole process of trade and that, he argued, the creative invention of an idea or product and then the marketing and the selling of the product take a much bigger role in the process of trade.

The guest lecturer from the Swedish Board of Trade also talked about TTIP and stated that Sweden had been one of the leading forces in pushing for the TTIP trade deal to go ahead. He seemed to be largely in favour of the deal which is interesting because the previous week we had a lecture about how devistatingTTIP and other trade deals like CETA would be in terms of environmental knock-on effects from the lowering of regulations and restrictions to trade. Most controversially TTIP includes something called ISDS (Investor-State Dispute Settlement) which gives the power for companies to sue governments for loss of future profits that may occur through changes in policy. These dispute settlements are not subject to appeal and not subject to public knowledge and are incredibly undemocratic as well as potentially very damaging for any future green policies by governments. The most relevant example is the Swedish company Vattenfall who own power plants in Germany sued the German government for loss of profits because Germany decided it wanted to lower the amount of energy it was getting from nuclear power plants.

This is just one aspect where trade deals like TTIP and CETA could be incredibly damaging to democratic and environmental issues, there are many more!

But as organisations like the Swedish Board of Trade and other Swedish instituations are still largely in favour of such trade deals, it is very important to do your own research and I encourage you to do so.

Thanks for reading,

Elliot

Kevin Anderson, A Suprise Guest.

This week we had a slight change in schedule and had an alternative lecturer fill in. Kevin Anderson is the Visiting Zennström Professor in Climate Change Leadership at Uppsala University and a leading UK climate scientist.

This lecture was particularly good as Kevin points to a number of issues that other lecturers and members of the scientific community often overlook or underestimate. We discussed that Paris Agreement and the fact that whilst it is a massive achievement that all the world leaders came together to discuss climate change and reached some kind of agreement. The length the agreements reaches in terms of limiting factors that impact climate change is not nearly strong enough. For example, both the shipping and the aviation industries are not mentioned in the Paris Agreement. Also, the agreement is on self-regulation rather than any international law, this means that there is little ramification for countries not meeting their climate goals. The real ramification being that the less strict we are now with the way we pollute the planet, the harder it will be to resolve in the future, if it is not already past the point of no return for human kind.

Kevin mentions that current trends in reduction indicate that we are moving towards a 3-4 degree global rise in temperature. He stresses the devastating effect this would have on communities all over the world. highlighting that even at a 2 degree in global temperature, people will die, we will have climate refugees and people’s homes will be lost through rising sea levels, drought, famine and increased natural disasters.

The lecture focused on the fact that we need dramatic reductions and alternatives to energy consumption as soon as possible. There was a focus not just on changing our energy systems to greener technology but also importantly, mitigation. A reduction in energy consumption by the wealthy in developed countries was referenced through several examples of the disproportionate levels of consumption globally.

I feel this lecture brings a very important message that is: If we are to deal with the climate issues facing mankind we must not only look to change our energy systems but also our lifestyles, behaviour and consumer habits. This requires not just that government stop using fossil fuels first but also that you, me and everyone else reading this change the way we use our surroundings.

Thanks for reading, Elliot.

Cemus Debate Night.

The last class we had on my Global Economy module we had a first round of debates. As a mandatory part of our Cemus course. This is one aspect in which Cemus courses differ from other courses and one in which I was pleased with, I like debating and this is an interesting and different way to learn and develop ideas around the issues we were discussing.

There were 3 debate motions held,

‘This house believes that communism functions better for social welfare and equality than capitalism.’

‘This house believes that capitalism can save the environment.’

And…

‘This house supports the provision of a universal basic income.’

All three of these debates were interesting, I took part in the third one so I will be focusing on that debate but first I will briefly tell you some of the things that came out of the other two debates. The first debate tried to lay out what is meant by communism and the defending side distance themselves from the failed communist systems of the U.S.S.R etc, they argued the countries like Sweden embody many of the traits put forward by Marx and Hegel in their original ideas. The opposing side highlighted that Sweden is still part of a capitalist system and such a system is more individualistic and offers more choice for members of society.

The second debate focused around the issue of whether is better/more effective and efficient to change from a capitalist system to save the environment or adapt and reform capitalism in order to save the environment. One team arguing that profit and relentless growth are not compatible with a sustainable lifestyle to help protect the environment. While the other side were arguing that innovation happens quickly and the problem will be solved through capitalism eventually because changing the whole economic system would take longer and be harder to accomplish in the time we need to stop a 2 percent rise in global temperature, for example.

My debate was on Universal Basic Income(UBI), I was put in a position against the introduction of UBI which was interesting as it was counter to my original thoughts on the subject. This debate focused on the practicality of implementing a system on such scale, the future of the job market which one team argued would mean less jobs, whilst the other argued it would more likely mean an evolution of the job market but not necessarily less jobs. We used the example of Switzerland which recently had a referendum on UBI and voted to reject the introduction of this by 77% to 23%. One reason being that they already felt that Switzerland had a good welfare system and that UBI would encourage people to stop working. I enjoyed the debate and that it went well but what is really interesting for me is that the few places that they have trailed UBI the results have been very positive and it did not affect people’s desire to work. If that is of interest to you then I suggest that you do some further research on the small scale UBI trails that have been done as they show some promising results.

Thanks for reading, Elliot

 

Brexit and The Wider EU Debt Crisis

This week we had a lecture from Joao Rodrigues, researcher and lecturer at the Faculty of Economics, University of Coimbra, Portugal. Before this lecture we prepared by watching a video on the European Union (EU) debt crisis. Punk Economics 1: The European Debt Crisis  https://www.youtube.com/watch?v=oAR0VRLRGHE

Rodrigues gave a number of insights into his perspective on Brexit and the European debt crisis during the lecture. Here are some of the thoughts raised by him in the lecture. He discussed the interesting development that in Britain the labour party were previously the anti- EU party in England and that it was the conservatives that were pro-EU, Noting the substantial shift in this in comparison to Portugal where the left party is still euro-sceptic and the right party is still the pro Europe party.

He mentioned the fact the Britain already had a less involved deal with the EU where they opted out of various agreements that other European countries have signed up to. He noted the irony in a country voting to leave the EU when they already had a substantially better deal than multiple other EU member nations.

However, other talking about the debt crisis of Greece, Spain, Portugal and Ireland he highlighted some benefit in Britain having an element of sovereignty in that they still have their own central bank whereas the EU nations have to bow to the pressures of the European Central Bank.

He said in relation to Brexit that the future consequences of the vote are yet to be seen and may depend largely on the government decisions on how the process is managed. He also downplayed the role racism played in the referendum decision pointing to class distinctions, those who have lost out because of globalisation and the city vs the country divide. “we cannot reduce the vote to racism alone”. Whilst I agree that the use of racism is not the only factor in the complicated sequence that lead to a vote for Brexit I do not agree with his glossing over of racism as a key factor in the debate for these three primary reasons as immigration was one of the biggest contested points (driven up by the United Kingdom Independence Party UKIP), UKIP used a poster that was directly comparable to Nazi propaganda about Jewish immigration and finally since the result of the referendum there has been a substantial rise is racially aggravated incidents.

The talked ended in questions about the future of Britain, the future of Europe, of the Euro and potentially the Break-up of the European Union and the return to national sovereign states.

The answers are still unknown, only time will provide the answer to such questions.

Thanks for reading,

Elliot

Trade Talk (TTIP, TPP, TISA, CETA)

I write to you this week in relation to something with more real world implications than the normal weekly update on what we are studying as part of the Environmental Communication and Management Masters programme.

There are a number of trade deals currently being negotiated on an international scale that could affect the development of countries around the world for generations to come as a switch in focus this week we had a lecture based on TTIP (Transatlantic Trade and Investment Partnership) which is a trade deal between The European Union and The United States. This week we were lucky enough to have a guest lecturer from a Brussels based organisation called Corporate Europe Observatory. An organisation with the tag line ‘Exposing the power of corporate lobbying in Europe’ a detail which is very relevant to these modern trade deals as I will further explain.

The lecturer gave us some information on TTIP and to a larger extent the other trade deals mentioned in the title. He explained how these deals which are marketed as good for trade and creating jobs are actually in essence a way of large corporations gaining even more power over laws and regulations. Even to the point of being able to block or override national governmental decisions. He repeated for clarification of the message that these trade deals are not so much about trade (as trading tariffs between the EU an US are already low) and more about the removal of regulations from the market. Under TTIP, regulations would be lowered to allow easier access to markets. The danger with this is best explained in two examples. One, the agricultural industry, currently there are a lot of substances in the food industry that are allowed in the American food market that are not legal in the EU such as GMO crops and certain hormones within the meat industry. This is seen as a ‘barrier to trade’ and would potentially be removed under TTIP. The same goes for certain drugs in the pharmaceutical industry that are currently illegal in the EU.

More than this Pascoe our lecturer mentioned, that in the run up to the TTIP negotiations some 92% of the 500 or so companies and organisations that were asked to comment on the trade agreement were representatives of large corporate investment. Indicating a huge bias of corporate interest over public interest.  Leading to one of the scariest and more damaging clauses of these new trade deals like TTIP.

Within this agreement there is something currently called ISDS this is in essence a private arbitration tribunal in which companies have the ability to sue governments for potential loss of profits from government decisions. This has massive environmental, political and anti-democratic implications. For example, under a similar system the Swedish company Vattenfall sued the German government for changing its policy to try and phase out nuclear power. Meaning the nation being sued either has to pay out large enormous sums of money or reverse the policy in which the suing company would loss profits (Further detail see article). https://www.theguardian.com/business/2015/jun/10/obscure-legal-system-lets-corportations-sue-states-ttip-icsid

Another point that Pascoe made was that as part of TTIP there is a clause that requires corporate interests to be consulted on future decisions that may affect business. Or “co-write all future regulations” which would translate to a massive increase in power for multinational corporations that are already hard to control in terms of paying the appropriate level of tax or enforcing working standards across the work force.

Lastly, a large percentage of what we know of these deals comes from leaked documents as even with the people responsible for voting on TTIP for example the European Commission, could only view the trade document two at a time, in a room where they are not allowed to take notes or pictures of the document and not allowed to quote sections of the text in the public domain.

The list of problematic and undemocratic aspects related to TTIP, TPP, TISA and CETA are long and troublesome and the view of the lecturer as well as many environmental organisations is that they are very dangerous for climate change issues and democratic sovereignty.

In the last question it was asked what would the lecturer suggest as an alternative trade deal that worked for not only big corporate interests. He mentioned the ‘Alternative Trade Mandate’ a trade arrangement that aims to put public interest, transparency and social progress ahead of profits.

Please do your own research and/or watch this lecture on TTIP

https://www.youtube.com/watch?v=6fDCbf4O-0s

Thanks for stopping by and feel free to share the information provided.

Elliot

 

 

 

Systems Thinking and The Inside Job.

This week we had the introduction to the second section of our Global Economy course at CEMUS.

We were introduced to systems thinking, a concept that I have come across briefly before but never in any depth. The lecture went from introducing us to the concept of different systems interconnectivity and a game with the class to demonstrate this. To a word of advice from some of the authors who are linked to the creation of systems thinking. You can never fully understand the true complexity of a system.

This was explained with the example of ‘The Inside Job’ a film that we were asked to watch before class this week. The film is available on YouTube and I recommend anyone who is remotely interested in why we had the biggest economic crash in recent years to watch it. Anyway, the example was that although we know some of the factors involved in the financial crash we can never fully understand the interconnectedness of the different systems and what potential changes might occur.

However, as system thinking argues, you can find what systems theory describes as leverage points. Points in a given system that if you change the input the system will still continue but you may be able to change the flow of the system. In the example of the 2008 financial crash, this could be a leverage point of regulation on how much banks are allowed to borrow in regards to how much assets they have on their account. There could also be a leverage point if future governments broke from giving the same financial services positions in government following the crash.

The discussion that followed the class talked about the film ‘The Inside Job’, the link between government, lobbyists and big financial interests. We also talked about the likelihood of another financial crash and sadly the general consensus was that this is very possible as many of the factors that were involved in causing the crash in the first place have not changed. Profit is still more important than regulation or environmental degradation, CEO salaries continue to go up. Governments have not done enough to curb the risky investments that the finance industry encourage and therefore the culture and the habits of Wall street and others has largely gone unaltered. Sorry to leave you on this sad note but that was my summary of the class discussion following the film. This is also why different approaches to the study of economics are important.

Tack,

Elliot

 

The Reflection Paper

This week the last thing we had to do for in order to pass The Context and Process of Research 1: Theories and Methods is to write a reflection paper in order to pass the course. This I think shows another reason why Sweden is a valuable place to study as reflection papers are not very common as a practice in England. Yet they can be quite useful as a tool for developing your own learning and understanding which is the exact context they are utilised here.

In this reflection paper we were required to look over the past weeks of study and discussed how we found the texts we read. Whether we understood the theoretical framework they were based in and how easy or difficult we found the process.

Some texts within this course I found easy to digest, others I found more difficult. I talked about the difficulties in interpreting some texts over others and the wise bit of advice from our lecturer that:

“In order to theorise well, you must first be well read”

This was very short but effective as for me it summed up the whole module, the theoretical perspectives that I found easiest to identify were the ones that I had come across several times before. The more experience I had which a school of thought the easier I saw that theory as present in a relevant text and therefore the natural conclusion is that the easier such a theory would be to use in my own research.

This message helped with the aim of the course, which I felt was to encourage students to think about the theories and methods behind texts. The driving forces, if you will, and thus also help students develop their own ideas about theories and methods they like or enjoy in order that they can work with developing their ideas about their own thesis research.

In that regard the reflection paper and the course were very useful.

Elliot