Thailand’s military has declared martial law after six months of protests and the removal of the Prime Minister on corruption charges. The Thai military has often intervened in domestic politics, but this move came as a complete surprise. The army insists that the invocation of martial law was not a prelude to a coup d’etat, but the way forward is unclear. It was provoked by the refusal of the caretaker government in Thailand to step down in the face of widespread protests.
The Swiss bank, Credit Suisse, has pleaded guilty to helping US citizens evade taxes by facilitating disguising money in offshore accounts. The bank destroyed documents in order to hide the identity of the tax evaders, and many are certain that the practice is widespread. Legal action has long been overdue on this matter–the amount of money hidden from the Internal Revenue Service is likely in the tens of trillions of dollars. The action will likely send shivers through the international banking community.
Russia is close to signing a 10-year, $400 billion deal with China for natural gas. The move is in response to the likelihood that Europe, Russia’s current gas trade partner, will try to find alternative sources of energy because of Russia’s actions in Ukraine. There are many obstacles to implementing the deal, but both Russia and China have strong national interests to make it work. It will be interesting to see how closely the two sides will be able to cooperate.
China has evacuated more than 3,000 of its citizens from Vietnam after last week’s violent anti-China protests. The protests were triggered by China’s decision to place an oil rig in disputed territory in the South China Sea. The protests had initially been approved by the Vietnamese government (an unusual decision by the government), but they spiraled out of control and many factories were burned and several people were killed.
The scale of the BJP’s victory in the Indian elections has still not been precisely determined, but it appears to be a stunning defeat for the Congress Party. In the map below, the orange districts went for the BJP, and the blue districts went for Congress. Indian voters certainly made their wish for change apparent in a dramatic fashion.
Claire Jones, “Economics: Change of Course,” Financial Times, 16 May 2014
When Yuan Yang began her economics course in autumn 2008, she was shocked that within the cloisters of Balliol College, little attention was paid to the world outside. As Lehman Brothers’ bankruptcy left markets reeling, her lectures at Oxford university offered little to help her understand how the failure of a single US investment bank could cause global pandemonium.
Only when she voiced her disquiet to her tutor did she encounter theories that offered explanations for what was happening. “The crisis exposed how disconnected the teaching of economics is from helping students understand real-world events,” says Ms Yang, now a 23-year-old student at the University of Beijing. “When I discovered that, within economics, there was an alternative to what I was being taught, it was such a relief. I had felt like I was part of an intellectual enclave that had no consideration for what could be learnt from psychology, philosophy or anything else in the social sciences.”
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In 2012 Ms Yang helped found the Rethinking Economics network, aimed at changing what she describes as the subject’s isolation from public debate. The network has branches around the world, which are among the 42 student organisations that this month signed an open letter calling for the standard curriculum to be overthrown.
The students, who are scattered over 19 countries on four continents, are demanding professors scrap their focus on a single way of analysing the economy. The signatories, mostly in their twenties and early thirties, want more discussion of alternative theories and methods. Rather than just prepare them for a career in finance, they want their courses to grapple with the big problems of the economy.
“Most economics models we’re taught consider just one thing: profit. There’s little consideration of sustainability or equity,” says Nicolò Fraccaroli, the founder of one of the groups – Rethinking Economics Italia – and a student at Luiss Guido Carli in Rome. “Universities need to teach you how to do a job. But first we need to be sure that people who are going to move massive amounts of capital are conscious of what they’re doing.”
The open letter is part of a broader rebellion against mainstream economics teaching. It has gathered pace since the financial crisis dented the view among some in academia that economics had solved most of the world’s big economic conundrums.
Lena Kaiser said her interest in economics was piqued by wanting to understand inequality, the theme of Thomas Piketty’s bestseller, Capital in the 21st century. Her studies at the University of Mannheim left her disappointed. “The questions I wanted to discuss weren’t discussed at all. There was no critical thought whatsoever.”
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But over the past three decades, undergraduate courses have been increasingly dominated by the quantitative methods of the neoclassical school. Almost six years after the collapse of Lehman Brothers, the standard university course has barely changed. A study by Peps-Economie, a group of students who came together in 2009, found that just 1.7 per cent of modules in French universities covered economic history and there was just one course at a single university devoted to the epistemology of economics.
Eric Beinhocker, head of the Oxford Martin School’s wing of the Institute for New Economic Thinking, an organisation founded in 2009 by billionaire hedge fund manager George Soros, says: “The world has changed a lot. Economics has changed a lot, too. But the curriculum hasn’t.”
Reformers accept that policies with their roots in mainstream neoclassical economics helped contribute to the Great Moderation, the era of stability and prosperity in the decades running up to the crisis. Yet they view as myopic the focus on just one school of thought. Louison Cahen-Fourot, a member of Peps-Economie, says: “We’re not anti-neoclassical, or anti-maths. We just see it as one part of something much bigger.”
Those who studied before the crisis describe complacency among not only academics but also their fellow students. “When I started in 2004, I asked very critical questions in class. When I did, everybody said, ‘you’re wasting our time – we need answers for the exam’,” says Thomas Vass, the founder of Rethinking Economics’ New York branch. He is now a student at the city’s New School, which does offer more heterodox courses.
The turmoil since 2008 has provided a fresh catalyst for change. Camilla Cea, who was involved in student protests in Chile between 2011 and 2013, says: “The critics to today’s curriculum have long existed. [But] the financial crisis has acted as a trigger.”
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Critics of the students’ demands point to the work of economists they view as mainstream, whom they argue explain the crisis. They also contend that the methodologies used by other schools lack rigour.
Tony Yates, reader in economics at Bristol University, blogged in reply to the Manchester demands: “Students wanting to draw the analogy between the financial crash and organic processes had better stop chatting about Austrian economics and start crunching exotic non-linear ordinary differential equations [or rather, starting the slow and painful process of learning how to do it]. Even if heterodoxy is to be the new orthodoxy, students are going to need [to] suffer the trials of dynamic mathematics.”
Yet student frustration – fuelled and disseminated by social media – remains clear. Mr Cahen-Fourot, active in the Peps-Economie group since moving to Paris in 2011, says: “Without any co-ordination, students around the world had all had the same feelings about their economics education. We started to think it was a global problem.”
Last December he sent Facebook messages and emails, eventually arranging a Skype call in late January. Mr Fraccaroli says: “We speak around 10 different languages and a lot of us – like me – are not native English speakers. But we shared the same feelings. We had some arguments but we solved them and the way we have co-ordinated our campaign around the world is proof of it.”
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Partly inspired by the letter, a branch of Rethinking Economics has been founded in Beijing.
Some worry that renewed global growth could muffle calls for reform. “The crisis has been very important. Economic recovery helps people to pretend there is nothing wrong,” says Joe Earle, a member of the Post-Crash Economics Society. “Student life is very transient and curriculum change only happens with a lag so we need to keep the pressure up.”
Others are more positive. “The letter was very thoughtfully done. Now it’s up to faculties to listen and be as constructive,” Mr Beinhocker said. “I’m quite optimistic you will start to see change.”
Student protests have come and gone, and the question remains whether the mooted curriculum reforms would have mass appeal. Mr Vass is confident. He says his old classmates no longer view him as a time-waster. “Those people [who told me to be quiet] come up to me and say: ‘Now I understand why you were so critical’. There’s a completely different attitude.”
Narendra Modi and the Bharatiya Janata Party (BJP) have won a resounding victory in India, with the prospect of a ruling majority that will not require a coalition government. The election was the largest in human history and brought to an end the almost continuous rule of the Congress Party in India since its independence in 1947. Modi rode a huge wave of resentment against the deteriorating economic situation in India, and his platform promised significant changes in policies. Many in India worry, however, about the degree of Hindu nationalism a Modi government will endorse.
Mike Dorning of Bloomberg press has written a succinct article on hos the American public regards US engagement in world affairs. The evidence suggests that President Obama is being led by public sentiment in his foreign policy, and that the gradual disengagement is generally supported, even within the Republican Party even as some of its leaders argue for a more forceful position on a variety of issues. How the rest of the world responds to this disengagement remains to be seen.
At least ten people were killed in twin bomb blasts in Kenya. Suspicion immediately fell upon the group, al Shabab, that took responsibility for earlier violent attacks in Kenya. The group claims to be retaliating for Kenyan attacks on nearby Somalia. Foreign governments have warned their citizens to be on the higghest alert in Kenya, in anticipation of similar attacks.
Beina Xu has written a short, but very comprehensive, review of the issues in the disputes in the South China Sea. For those who wish a good, substantive primer on the diputes, and how they touch upon a variety of nations and a variety of other issues, I recommend the essay.
The political situation in Turkey has become even more unstable because of the government’s handling of a major tragedy in the nation’s coal mines. There has been significant discontent in Turkey over the growing authoritarianism of the Erdogan government, but photos of one of his aides assaulting a protester have amplified the concerns. The political instability is having a serious effect on the economic health of the country as well, as concerns over slow growth and inflation have reduced economic activity significantly.
Protests have erupted in several Brazilian cities as citizens vent their anger over the money being spent by the state on 12 World Cup tournament. The protests have actually been going on for quite some time, but as the date for the tournament nears, the anger against the government has bubbled closer to the surface. Instead of spotlighting the country’s development over the last few years, the tournament may actually create serious problems for Brazil.
Thousands of Vietnamese citizens attacked what they believed to be Chinese factories in Vietnam in protests over China’s decision to place an oil rig in disputed waters in the South China Sea. Some of the factories were owned by Taiwanese businesses, but the protesters mistook them for Chinese-owned facilities. The degree of anger over the territorial dispute is likely something precipitated by the government, but it also reflects a long-standing animosity between Vietnam and China. The oil rig is scheduled to stay in place until August so this protest may signal only the beginning of the unrest. In another area of the South China Sea, the Spratley Island group, the Philippines have accused China of building an airstrip on Johnson Reef. The map below gives an idea of the competing claims to the Spratley Islands.
Iran and Saudi Arabia have begun to explore the possibility of better relations. The hostility between the two states is deep and long-standing, but the current negotiations between Iran and the P5+1 have opened up different configurations of power in the Middle East. The two states are aware that their current postures are contributing to greater violence in the region, and have apparently decided that talking with each other offers the possibility of at least avoiding a larger confrontation.
The diplomatic language on the Israeli-Palestinian issue has taken a dramatic turn since the collapse of the most recent negotiations. After comments by Secretary of State Kerry and chief negotiator, Martin Indyk, there are more who are concerned about the future of Israel. It does appear as if the right-wing in Israel, actually a small percentage of the Israeli population, has decided that there should not be a Palestinian state. How the dispute can be resolved without a two-state solution is not at all clear.
The Pew Research Center has conducted one of its surveys in Europe, asking people in different countries their opinions about Muslims, Jews, and Roma. The results are quite striking with a high degree of variation among different countries. Italians hold the most unfavorable views toward Muslims, Greeks hold the most unfavorable views about Jews, and virtually every country holds negative views about Roma. The results testify to the growth of ethnic sensitivities in Europe, a development quite at odds to the European Union experiment.
On Wednesday Iran and the P5+1 will begin what is hoped to be the final stage of negotiations on the Iranian nuclear energy program. The 6-month interim agreement signed earlier is due to expire on 20 July, and that interim agreement left some vital issues unresolved. The fundamental obstacle is the desire on the part of some of the powers that Iran not have the “capability” to build a nuclear bomb. The problem is that Iran already has the capability to build a bomb, and satisfying the demand for no capability means that Iran would have to dismantle or destroy some of the facilities (mainly centrifuges) that it has already built. As the deadline nears, we should be prepared for a propaganda war by all sides.
The mediator appointed by the UN to negotiate a settlement in Syria, Lakhdar Brahimi, has announced that he will step down from the position on 31 May. The decision signals his deep frustration over the negotiations and likely signals his belief that a settlement is not possible. The decision by Syria to hold a presidential election in June, with current President Assad as the only viable candidate, appears to be the final blow to any serious negotiations. Assad has essentially announced that he will stay on on his own terms. There is no end in sight for the Syrian tragedy, and the entire world should be ashamed of its failure to save the innocents who have suffered so much in the civil war.
Ukrainian separatists claimed victory as a referendum in certain parts of Ukraine showed support for independence from Kiev. The vote itself was highly controversial: the question asked was ambiguous, many Ukrainians boycotted the election, and there are many accusations of fraud. Nonetheless, some of the separatists asked to join Russia, using the referendum as a valid sign of the legitimacy of their independence. Russia has slowly backed away from overt support for the referendum, and it appears as if the Russians do not know what their next step should be. The interim government in Kiev condemned the vote, but it risks open civil war if it moves too hard against the separatists. One can only hope that negotiations between the separatists and the Kiev government can be fostered before too many irreconcilable steps are taken.
A video of about 100 of the 270 Nigerian schoolgirls kidnapped by Boko Haram was broadcast today. The girls had apparently been “converted” to Islam as they recited parts of the Koran and were dressed as Boko Haram believes Muslim girls should be dressed. The leader of the group, Abubakar Shekau, was seen in the broadcast and he delivered a speech in which he insisted that the girls would only be released as part of a prisoner exchange. There is a large-scale intelligence effort by many countries who are assisting the Nigerian government in locating the kidnapped girls, but there is no real likelihood of a rescue attempt any time soon.
NASA has released a study that shows that the ice sheet in Western Antarctica has already melted past “the point of no return” due to climate change. The US Public Broadcasting System has broadcast an interview with Thomas Wagner of NASA, one of the study’s lead scientists. According to Wagner, the rate of melt exceeds what had been expected and the main effect of the melt will be to raise sea levels far beyond what the IPCC had earlier predicted: “The next century, we’re looking at maybe three-feet-plus. When we include these kinds of factors, we might have to revise that estimate upwards, maybe four, maybe five, maybe more, and that’s kind of the cutting edge of the research right now.” Such levels would be catastrophic to all cities close to the seashore right now.
Iran has claimed that it successfully reverse-engineered a US RQ-170 Sentinel, a top-of-the-line drone. Iran claims that it captured the drone in December 2011 by disrupting the drone’s GPS system, a relatively low-tech attack. If true, the Iranians have secured some of the most sensitive secrets of the US. It remains to be seen, however, if the copy is robust. It is likely that the Iranians could fetch a very high price for some of the technology in the drone.
Afghanistan held a national election last month that failed to produce a clear-cut winner. The run-off between the two top vote-getters is scheduled for next month: Abdullah Abdullah, a former foreign minister, and Ashraf Ghani, a former finance minister. Abdullah recently received an endorsement from the third-place finisher, and it looks likely that he will win the election. Although a Pashtun, Abdullah is closely allied with the Tajiks in Afghanistan; Ghani was likely to receive strong support from the Pashtuns. The ethnic cleavage is an important division in Afghanistan, but it appears as if Abdullah has been able to defuse the intensity of that split.
There have been eight rounds of voting in the Indian national election, and the final round of voting is to be held on Monday. It appears that Narendra Modi’s Bharatiya Janata Party (BJP) will win a majority of seats in the Parliament. Modi has been emphasizing economic issues in the election as the Indian economy has sputtered in recent months. For some Indians, however, Modi represents a brand of Hindu nationalism that is worrisome in the diverse Indian polity.
China has secured an oil drilling rig in waters in the South China Sea that is disputed territory. The rig is 17 miles from an island also claimed by the Vietnamese, and the action has precipitated 4 days of naval confrontation between the two states. The decision to place an oil rig is a step above simply claiming the territory–it signals an intention to extract resources that could be potentially very valuable. It is unlikely that the Vietnamese, who have a long history of tension with China, will back down from its claim.
In the face of Western sanctions (which will likely increase if the planned referendum in eastern Ukraine goes on as scheduled), Russia is turning to China as an investment partner. The shift makes sense for both countries: Russia exports raw materials, and China needs raw materials. The Chinese must be worried about the rule of law in Russia and how their investments may be handled by the Russian government. The Western sanctions have clearly affected the Russian financial sector, but not its exports of raw materials: “The world’s largest energy producer shipped 2 percent more gas to Europe in the first three months of 2014 than a year earlier, government data show. Diesel production for export increased, while cargoes of grains, palladium and nickel either climbed or were at similar levels.”
President Salva Kiir and former vice-president Riek Machar have signed a cease-fire in South Sudan. The violence in South Sudan is a struggle over political power between Kiir’s ethnic Dinkas and Machar’s ethnic Nuers, and millions of people have been displaced in the violence and thousands have been killed. The cease-fire gives an opportunity for humanitarian aid to be delivered to the country, but the UN has evidence that points to gross violations of human rights which makes the aid difficult to deliver fairly. There are 8,500 peacekeepers in South Sudan, but they have been impotent in the face of the savage violence.
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