1. Patrick Jenkins calls out corporate double standards,
When Bill Winters blogged last week about the “scourge of racism and discrimination” laid bare by the police killing of George Floyd, the Standard Chartered boss joined a line of corporate leaders expressing admirable support for America’s black community amid widespread revulsion at the way Floyd died. But it was striking that, in the same week, StanChart struck a very different tone when commenting on Beijing’s widely criticised imposition of a potentially repressive legislation in Hong Kong. “We believe the national security law can help maintain the long-term economic and social stability of Hong Kong,” the bank said in a generally supportive statement. It was not alone. HSBC, another British bank with an Asia focus, made a similar declaration. So did a number of other big companies with operations in the territory.
See also this on HSBC.
2. Atif Mian, Amir Sufi, and Ludwig Straub have a paper which points to another consequence of widening inequality, the "savings glut of the rich" (the after-tax income of the top 1% of the income distribution minus personal consumption of the top 1% of the income distribution, scaled by national income),
Rising income inequality since the 1980s in the United States has generated a substantial increase in saving by the top of the income distribution, which we call the saving glut of the rich. The saving glut of the rich has been as large as the global saving glut, and it has not been associated with an increase in investment. Instead, the saving glut of the rich has been linked to the substantial dissaving and large accumulation of debt by the non-rich.
Analysis using variation across states shows that the rise in top income shares can explain almost all of the accumulation of household debt held as a financial asset by the household sector. Since the Great Recession, the saving glut of the rich has been financing government deficits to a greater degree.
3. More examples of corporate social responsibility in times of Covid 19, this time from US hospitals, for-profit and non-profit - furloughing lowly-paid frontline staff despite sitting on large cash surpluses, making them work without adequate protection gear, continuing to pay executives fat salaries and bonuses even as they receive large federal government stimulus. More here.
4. Debashis Basu writes about the implementation challenges to the recent agriculture market reforms. His suggestion,
The solution is for the NITI Aayog to select some of these states for a pilot project and get on board a few large business groups (Reliance, ITC, Mahindra, and others have enormous knowledge and can scale up quickly). Make them compete with each other to get the most modern technology at Indian costs, all with the ultimate vision of connecting the Indian farmer to the global market. This experiment must have positive feedback loops, embedded in the design, allowing sensible course corrections.
As I blogged here, the implementation challenges with these agriculture reforms are immense. Besides Bihar's experience, having abolished APMC Act in 2006, is not encouraging. Replacing a tightly regulated system with a completely deregulated system is not the answer.
5. This from Jean Dreze is worth bearing in mind about India pursues its economic growth,
India’s poorest states are extraordinarily poor, with large sections of the population on the margins of subsistence. It is doubtful, for instance, that any country in the world has a higher concentration of extreme poverty and hunger than Bihar.
6. Rajamohan sums up India's China problem,
One is that China has long-standing claims, right or wrong, on the territories of its neighbours. The other is the dramatic shift in the regional power balance in favour of China. Unlike in the past, China now has the military power to make good its claims and alter the territorial status quo, if only in bits and pieces. This is what China is doing in the South China Sea. And the situation may not be any different in Ladakh.
A big bully flexing muscles!
7. Minxin Pei reads the tea leaves and concludes that Xi Jinping stumbled badly at the beginning of the Covid 19 outbreak, and what's more internal criticisms have been rising. His conclusion,
It is reasonable to conclude that for now Xi may have weathered the coronavirus crisis with limited damage to his grip on power, but the longer-term effects of the coronavirus pandemic will most likely weaken, rather than strengthen, his rule.
9. It does say something about the silence of liberals in the west when FT writes an editorial urging EU for a diplomatic tsunami against Israel to deter the country from annexing the Jordan Valley (which forms 30% of the West Bank) and Jewish settlements in the occupied territory. FT writes,
Yet while the EU was quick to condemn Russia’s 2014 annexation of Crimea and impose sanctions against Moscow, its response to Israel’s creeping colonisation has been meek.
10. Urbanisation facts from The Economist,
By 2016 more than a fifth of humankind was living in cities of 1m people or more. The largest 300 metropolitan areas now generate half the world’s gdp and two-thirds of that gdp’s growth. And New York remains at the tip of the top tier. At almost $1.8trn its gdp is the largest of any city in the world. It is home to as dense a cluster of globally important firms as you can find anywhere... Edward Glaeser, an economist at Harvard University, has shown that urban density increases workers’ productivity and minimises their carbon footprints. Americans who live in big metropolitan areas are, on average, more than 50% more productive than those who live in smaller metros. This holds true even for workers with the same education, experience, working in the same industry and boasting the same IQ. Much the same is true in other rich countries. In poorer ones the advantages of city life are even greater... According to Enrico Moretti, an economist at the University of California, Berkeley, each of the “knowledge jobs” that make cities like San Francisco or New York so successful supports five service jobs, some high paying—lawyers—some much less so—baristas.
And this about the impact of reduced mass transit use,
“A 1% decline in transit use into Manhattan would translate into a 12% increase in car traffic,” says Nicole Gelinas of the Manhattan Institute, a think-tank.
11. Interesting story in the same magazine about industrialisation in Africa. Sample this about the dominance of Chinese,
Consultants at McKinsey estimate that Chinese firms handled 12% of Africa’s industrial production in 2017, employing several million people. Only a few were eyeing exports to the West. Instead, 93% of their revenues came from local and regional sales.
In light of premature de-industrialisation and protectionism, value addition in the primary sectors may be a good opportunity for African countries,
“The scope for classic labour-intensive, export-oriented industrialisation is narrower now,” says Yaw Ansu, who advises the minister of finance in Ghana. “But countries like us can compensate by basing our model on adding value to our agriculture and natural resources.” One example is Blue Skies, a company near Accra. Its workers dice fruit sold in European shops. Another example is horticulture. In normal times, more than 400 tonnes of cut flowers are flown out of Nairobi every day, on average. In Ziway, an Ethiopian town, kilometre-long greenhouses sprawl like aircraft hangars beside the dust and donkey carts. Roses grow for transport to the Netherlands. Covid-19 has thrown many of these firms into crisis. But when travel and trade bounce back, so will opportunities. This is not classic manufacturing, but it is not subsistence farming either. Economists at unu-wider, a research institute, talk of these as “industries without smokestacks”. They include tourism and call centres. Africa’s diversity means there will be many routes to success.
12. Finally, a good account of how the Chinese Communist Party managed the Covid 19 lockdown,
Lockdown in the neighbourhoods, now all but lifted in most cities, was not a matter simply of telling residents to stay at home. It involved deploying armies of people to act as guards, health monitors, helpers for the infirm and procurers of supplies. Central to these efforts were two organisations: residents’ committees and neighbourhood party committees (their memberships are often the same). The “two committees”, as they are often called, had their heyday in the Mao era as enforcers of the party’s will. Since then they have become less visible, focusing mainly on registering new residents, administering local clubs, distributing welfare payments and providing proof-of-address and other useful documents.
But during the height of the lockdown, between late January and mid-March, these committees played a prominent role. Their staff stood guard at entrances to housing compounds in China’s more than 100,000 neighbourhoods, policing who could leave or enter. They supervised self-isolators, sometimes using webcams and alarms. They organised deliveries of food and other essentials for residents and transmitted the government’s latest instructions via WeChat. But with each neighbourhood having only a handful of permanent staff to monitor and help hundreds of people, manpower was far from adequate. So the party called in reinforcements, including party members, local officials and volunteers. In many neighbourhoods “temporary party committees” were created to oversee these efforts, headed by officials from higher levels of the urban bureaucracy. The new committees established numerous other bodies: temporary party branches for each neighbourhood “grid” (an area often comprising a single residential compound) and party cells for each building.
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