Tuesday, 23 June 2015

Liberté, égalité, fraternité


This is a short(ish) review of the INET Paris Conference (8-11 April 2015 at the OECD).  INET announced that Clive Cowdrey, of the Resolution Foundation, has joined their Governing Board. To get an idea what this means for INET, watch his speech about inequality at the Opening Plenary here (32:45 to 41:50).

My personal opinion is that INET are sucessfully challenging the orthodoxy. At times, however, this can be slow and inward-looking, especially when the grounds of the debate themselves are unchallenged. My conference notes include examples of speakers referring to 'negative equilibrium real rates', the 'Bernanke-Summers debate', 'QE being better than nothing' and 'the transition to markets (as) the challenge ahead' - as if the agenda were only set by the world's media.

However, I didn't go to hear familiar debates, but to hear new ones. Andrew Sheng joked about adding 'tragédie' to the conference title 'liberté, égalité, fraternité'... to spell 'LEFT'. In that vein, he spoke about central banks 'not knowing how to reduce their balance sheets' and the spillover costs of QE to developing economies. He concluded by arguing that central banks have minimal control of 'final settlement' in the markets. Given there is so much media rhethoric about returning to normal, the illusion of central bank control needed to be challenged.

On that same, LEFTish theme, Lord Turner discussed fiscal policy, suggesting we should not accept slow growth but consider 'debt write offs, defaults or monetizations' with explicit and permanent government deficits financed by the central bank. On Greece, Lord Turner thought that 'exit or restructuring are inevitable'. Given almost everyone in the UK talks about balancing the government's books, this puts Lord Turner somewhere alongside the Greens, SNP and Plaid Cymru.

Gerald Epstein's research strikes me as a little odd, given the general public are in little doubt that central banks have been captured by financial interests. However, the ensuing discussion led me to this post by Rob Parentheau, where he describes Eurozone QE as 'a mutual assisted suicide pact with finanzkapital in the eurozone'. Presumably, there is no Hippocratic Oath to prevent the doctor/economist/finance minister administering long bouts of intolerable pain.

INET finally had a panel on Africa and capital flight. The problem was defined by Vera Mshana: 'Africa loses more from capital flight than it receives in aid'. The chief beneficiaries of these flows are European banks, who are often closely entangled with corrupt regimes according to Léonce Ndikumana. Surprisingly, data on who might, or might not be, considered corrupt is co-ordinated by Reuters via World Check. The panel were passionate about making the system better and, as the discussion reminded us, much of the capital flight from Africa is a consequence of profit-seeking and transfers to an offshore parent company.

In summary, this was a good conference, provided you avoided familiar names and re-hashed debates. With the Resolution Foundation on board, the direction of future research looks promising.

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