The flexibilization of college education

In the last few days, I have been talking with friends about the state of college education in Spain. In recent years setting the foot in the professorship ladder has become increasingly difficult as new low-paying and insecure contracts (like "profesor asociado") have become more popular. The crisis is likely to accelerate this trend and reduce the amount of young people that have stable, long term contracts that allow them to build their career as researchers. What is most surprising is that the situation is not so dissimilar in countries with more advanced university systems. The NYT, for example, reports today that "n 1960, 75 percent of college instructors were full-time tenured or tenure-track professors; today only 27 percent are. The rest are graduate students or adjunct and contingent faculty". The end result may be less research, worse employment conditions for academics and less stability in education outcomes.

Health care reform and the particularities of the US

The US just took one more step towards reforming its health care system. The reform incorporates a set of regulations, taxes and subsidies to control health prices and increase the number of uninsured. Yet it does not incorporate a "public option"--a government-run insurance to compete with private ones. A few reflections on the reform and its implications for policy debates in other parts of the world:

a. I agree with those that claim that the reform should pass. Yet the loss of the public option is much more significant than many recognize (and justifies why liberals are disappointed). A strong public option would have opened the door for a government-run system in the long run and would have intensified pressures on private insurance. This is now missing.

b. Economic and social reforms are path dependent--something to remember when one things about Latin America and other parts of the world. It is simply difficult to move from a private-dominated system to a public one... or the other way around. The reform is one more reminder that there are many paths towards economic development, even if some of them will be better for equity than others.

c. Will this reform shift the debate on social policy in other parts of the world? I am less optimistic than a few months ago. A system of subsidies and taxes that do not incorporate a public option is quite compatible with the current, weak post-Washington Consensus (or Neoliberalism plus). At the end, this is an important reform for the US but one that may have relatively few implications in other countries.

Divided right wing ARENA in El Salvador

Losing elections after more than ten years in power is never easy, something is now becoming evident in the case of El Salvador. As El Pais reports, President Sacca has been expelled from the party and his followers have founded a new one. This would be good news for the current government and for voters if it creates a moderate right-wing party that is able to negotiate with FNLM.

Back after a while

I am back after a while without writing posts and with much more commitment to write often... even if I am not sure how many students and others are reading this blog. Two links that may be of interest:

a. The Economic Commission of Latin America just published its annual survey of economic conditions in the region (Preliminary Overview of the Economies of Latin America and the Caribbean). ECLAC expects a growth of 4.1% in 2010 for the region as a whole, with Brazil (5.5%), Uruguay (5%) and Peru (5%) doing particularly well. I think these numbers are too optimistic because the US and Europe may actually suffer more than it is currently expected.

b. A recent documentary (The End of Poverty?) offers a much needed critical approach to the challenges of poverty in the world. I have not seen it yet, but it looks promising.

The mainstream reading of the 1980s

I just came across an interesting short documentary on Bolivia and shock therapy. It is very well done, but it is very surprising to hear once again the Neoliberal reading of the crisis and the reform. With hindsight, it really resulted in unconvincing policies and a quite incomplete economic counter-revolution.

A tax on capital inflows in Brazil

Brazil just announced a 2% tax on foreign investment in equity and fixed income. While some market "experts" may be talking about credibility once again, this is good news because it will help to increase Brazil's policy space. It is not clear, however, whether it will stop the appreciation of the real or not...

Carceles en la República Dominicana

Esta es la primera vez que escribo en español en este blog y lo hago para felicitar a algunos amigos dominicanos que, liderados por Fray Aristides Jimenez Richardson, tanto han trabajado por mejorar la situación carcelaria en la República Dominicana. Los avances son cada vez más clars, como queda reflejado en este artículo, con mejor habitabilidad, un mayor acento en educación y mayor respeto a los derechos humanos. Muchas veces nos cuesta reconocer los avances institucionales que tiene lugar en países como la República Dominicana, pero concentrarnos en los éxitos puede darnos muchas pistas para repensar el resto de la economía.

Why blogs can be useful in academia?

Chris Blattman, a successful blogger and development political economist, explains why blogging can be useful. I don't always agree with his ideas (in particular, he has an unjustified attraction for quantitative research in political economy), but have learnt a lot from his ideas. I just cannot succeed as much as he does in presenting my ideas in this blog and, especially, distributing around!

Private equity firms

The New York Times just published a great news documentary on private equity firms. It illustrates the asymetries in the US between companies in the financial sector (which make billions through deals) and a majority of workers who suffer from those deals. Many questions come out of this:

a. Are primary equity firms any better or worse than public companies?

b. How extended is equity firms among different varieties of capitalism?

c. What are the lessons for Latin America? Will a US-style financial sector be any better or worse than the current one dominated by family conglomerates?

d. Will the recent financial crisis change anything?

Progressives may be losing the battle

At the beginning, I thought that the financial crisis would open the door for new policy debates and a new "progressive consensus". More expansionary macro-policies and the debate on the health reform in the US would open the door for a return to a social-democratic understanding of distributional rules. It turns out that I could not be more wrong!!!! In the next few days, we have seen:

a. A return to bonuses in Wall Street ($700,000 per Goldman employee!) with no apologies for it.

b. An accent on stability and prudence after the crisis (somehow we can imagine who is paying for it).

On top of that, a column in today FT defends the need to let the consumer make decisions in the health sector.

Have we lost a historical opportunity to change things?

According to a Republican political science is not a science at all

Senator Colborn does not think that research on political science (and one would think on other sciences as well) should be funded. This includes research on citizenship and democracy in developing countries and electoral participation. What can I say?

Is Krugman changing his position towards Economics?

In my last post, I criticize Krugman for failing to mention heterodox economics in his recent NYT article. In many ways, I thought the article was good but the same old, mainstream Krugman. However, the last entry in his blog (see here) is more surprising and reveals some changes. After insisting for years in the importance of presenting all arguments in mathematical language, he now recognizes that there is some good work in economics with no math. If only this view could expand a little...

Paul Krugman on the mistakes of macroeconomics

Paul Krugman has succeeded once again in explaining the basic conflicts in economics in a simple way. In Saturday´s article on the crisis in the NYT, he explains the conflict between New Classical Economists and New Keynesian Economists and he even recognize the mistakes of the latter. He also makes sensible proposals for the evolution of mainstream macro... AND YET what is most surprising is his total unwillingness to recognize the extensive work of heterodox economists (post-Keynesian in particular), who have done extensive work on the problems of financial markets and the instability of the capitalist economies. It is still surprising how mainstream economists forget the work at the fringes... and very sad for the future development of the discipline.

Leaving Guatemala (initial reactions)

Just two weeks do not allow you to understand a contradictory and fascinating country like Guatemala. They are a good start, however, to try to understand the reasons behind the violent past and the difficult present of Central America in general, and Guatemala in particular. After talking with people, reading a little and observing as much as I could, it is clear that: (a) A stronger and more effective state is a necessary but not sufficient condition for development; (b) We need to think harder about the links between multiculturalism, development and state policy; (c) It is important to complement our understanding of macro-processes of development with a solid analysis of all the micro-initiatives to promote "progressive change". This and much more is something that we all need to reflect, using as much as possible a comparative perspective.

More on Guatemala

This is a great country with a lot going on. Nevertheless, I am still amazed with the behaviour of the business class and the ideological content of public debate. Today an influential talk show quoted the Heritage Foundation and criticized a small expansion of public debt... in the midst of the crisis!

From Guatemala

My wife and I travelled yesterday to Guatemala where I will visit friends, give a three day workshop and do some interviews. It is an exciting opportunity to learn more about Central America?s current (difficult) situation. I was strike by how conservative business leaders are in this country! A couple of them were yesterday on TV claiming that the government had already distributed enough land because it had given 240 plots in the last ten years! Amazing!

"Tele-Golpe" in Honduras

The Costa Rican newspaper La Nacion has an interest article on the way in which anti-coup groups are disseminating the information. They have a link to a video that is worth seeing--check here.

Honduras

My colleague and friend Salvador Marti and I just published an Op-Ed on the coup in Honduras We believe that we need to pay less attention to Chavez and more attention to the quality of democracy and development in Central America!

Coup in Honduras

It is sad to see the army acting illegally and breaking the Constitutiona order in Latin America again. Yet the reaction of Costa Rica, the OEA and other countries has been impressive and hopefully will reverse this historical regression...

Public programs do not make as lazy at the end...

Conservative ideologues observers, keep insisting that unemployment insurance and a generous welfare state reduce people´s incentives to work hard and succeed. Yet new evidence shows that this may not be the case as Scandinavians are more committed to their jobs than British or Americans. Will certain myths ever be overcome?

More and more signs of the crisis

There are more and more signs of the unprecedented extent of the crisis and the impact that it can have on trade and investment (and thus on the external shock for developing countries). Air freight decreased in 2008 by 22.6, more than after September 11. Is this all bad? Will it result in a shift in trade towards services? Will it shift US imports from far places (US) to closer suppliers (Central America)?

Regional Integration in Central America

Central America has been very active in promoting preferential trade agreements in the last few years, including CAFTA with the United States and the Association Agreement currently negotiated with the EU. In a recently published policy paper, Fernando Rueda and I notice some of the negative features of these agreements and insist on the opportunity that the EU has to promote a really development-friendly association. It should include structural funds and more policy freedom and flexibility.

In any case, this type of agreements can be one of the casualities of the current crisis... something that would not be bad news according to recent work on the subject (see the book coedited with Ken Shadlen).

Paying attention to Chile

Given the importance of Chile as Latin America's "success" story, recent events are very important:

a. The reduction in copper prices have resulted in a surprisingly quick move from trade surplus to trade deficit.  According to data from Oxford Analytica, the trade sbalance has gone from +US$23.7b (more than 14% of GDP) in 2007 to an estimated +$10.2b in 2008 and -2.4b in 2009.  This just shows that much of Chile's recent success was dependent on commodities--an old story in Latin America.

b. This month Chile announced a relatively generous stimulus plan financed with the stabilization fund.  This fund increased rapidly in the last few years thanks to high copper prices.   Chile may thus become a successful example of anti-cyclical policies supported by an intelligent use of commodity revenues.   Yet it may also be that these policies fail to maintain a relatively healty rate of growth or that Chile becomes unwilling to spend more of this money. 

In any case, it is clear that Chile is mounting a more intelligent response than Mexico's passive option... and that it has become the country to follow if we want to learn more abou the characteristics and likelihood of anti-cyclical policies in commodity-rich, Latin American countries.

Slim and globalization

The Mexican Carlos Slim could soon become the second major investor in the New York Times.  Is this a sign of globalization?  Will the Latin American rich invest more and more in the United States?  Will this reduce their interest in their own country?