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Economic Governance in a Post-Covid World

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Augusto Lopez-Claros The COVID-19 crisis is the largest shock to the global economy since the Great Depression of the early 1930s. The impact has been highly destabilising and global in scope and perhaps no statistic captures more eloquently its welfare costs than that for the first time in 3 decades in 2020 we saw a sharp increase in the number of people classified by the World Bank as “extremely poor;” about 120 million people joined the ranks of the very poor, a reversal likely to continue in 2021, the incipient economic recovery notwithstanding. Not surprisingly the crisis has raised multiple questions about our economic system, its resilience to shocks and, more generally, whether it is on a sustainable path. What are some of the lessons that can be drawn from this past year? Restoring public spending priorities COVID-19 has found the majority of countries totally unprepared to deal effectively with its devastating consequences. Even high-income countries have seen their hospitals

Equality of Opportunity as a Driver of Prosperity: The Case of Iran

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Augusto Lopez-Claros 1 The economic marginalization of women and ethnic, religious, and other minorities is a pervasive problem in virtually every country in the world. There is compelling economic evidence that shows that excluding minorities from the labor force not only undermines the legitimacy of the governments practicing various forms of discrimination but also ends up eroding the competitive potential of the country in an increasingly global and integrated marketplace. Much of the evidence has focused on how unequal treatment before the law and the associated violation of people’s human rights has adversely affected various metrics of human welfare and development. Perhaps the area that has delivered thus far the greatest insights is in respect of gender discrimination. At the World Bank over the past decade we built up a huge database comprehensively listing such discriminations embedded in the legislation of 190 countries and discovered that they are associated

Let’s have an honest debate about universal basic income

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This debate about UBI has recently come alive as governments have moved to deal with the asymmetric effects of COVID-19, with vulnerable groups being particularly affected.  Certainly, many countries are already providing temporary cash relief to the poorest, to limit the consequences of the lockdown, but in many countries the question of what happens afterwards has acquired renewed urgency because of the disproportionate effects on low-skilled workers, and the expectation that the world will remain vulnerable to other viruses in the future and the additional impact of climate change.  The opposition to UBI has several dimensions. For many UBI is seen as unaffordable and thus fiscally irresponsible, particularly against the background of the massive worsening of the public finances which will be a legacy of COVID-19. A second set of factors pertain to the role of incentives: delinking income from work and paying people to “stay at home” is seen as potentially destruc

A World Parliamentary Assembly as a Catalyst for Enhanced International Cooperation

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Andreas Bummel and Augusto Lopez-Claros 1 More than half a century ago UN Secretary General Dag Hammarskjöld said that “the United Nations was not created to bring us to heaven, but in order to save us from hell.” This past year has seen considerable soul-searching about the future of the United Nations, against the background of the 75th anniversary of the adoption of the UN Charter in 1945. Not surprisingly, the debates have not had the intensity that surrounded the creation of the UN during World War II. At the time, President Roosevelt and Prime Minister Churchill brought together the allied nations in the war effort against the Axis powers and there was a tangible sense of urgency; humanity needed to avoid in the future at all costs the calamity of global war, the utter hell associated in the end with some 60 million casualties and the destruction of entire cities and countries. The UN steered the world through the process of decoloni

Why a carbon tax is the best way to mitigate climate change

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The problem In a recent article in the journal Foreign Affairs Nobel-laurate William Nordhaus argues that although there is broad recognition that climate change is the most important environmental challenge facing the world today, governments have continued to tackle the problem with a deeply flawed architecture that relies on uncoordinated, voluntary arrangements which encourage free-riding in international climate change agreements such as the Kyoto Protocol and the 2015 Paris accord. With a perverse incentive structure embedded in such treaties “the global effort to curb climate change is sure to fail.” Since the national targets agreed in the Paris accord are inconsistent with a two-degree temperature target and because studies have shown that annual global emissions would need to drop by about 3 percent between now and 2030 to limit warming to the two-degree limit, there is growing recognition that without major mitigation of greenhouse gas (GHG) emissions global temperat