Black political power and the decline of black land ownership

Conclusion The absence of a viable equity base has been costly to the black community both economically and politically. Black dependency on white economic support has served to rob the black community of its autonomous decision-making potential. Further, without the advantage of a steady income and personal property in which they can take pride, many povertystricken Blacks have been unable to develop a serious interest in political activity. At the same time, black organizational efforts—both political and economic—have been crippled by the lack of a sufficient equity base to keep them independently viable.     

Discussion of 'Financial innovation and European housing and mortgage markets', by David Miles and Vladimir Pillonca

Although their paper stresses the potential merits of a particularfinancial innovation—a form of shared-ownership indexedcontract—Miles and Pillonca surprisingly neglect the roleof differential surges of financial innovation in explainingcross-country differences in house-price inflation. The risk-reducingpotential of their favoured instrument deserves further analysis,not least because of the sizeable political risk involved: theexperience of several other countries that have used indexedmortgage contracts shows their limited robustness to macroeconomicshocks.     

Immigrant Struggles in New Orleans Post-Katrina

Race relations in New Orleans have often been narrowed to Black and white, especially pre-Katrina. According to the 2000 census, the city was about 67% African American, 27% white, 2% Asian, and 3% “Hispanic.” In a city with a deep history of racial tensions between Black and white, other people of color—and especially recent immigrants—often went unmentioned in discussions of city demographics. The city’s world famous culture—whether in the traditions of Mardi Gras Indians and secondline parades, or in music like jazz and bounce—is also famously rooted in specifically African cultures. Even in media coverage of the city post-Katrina, the story of immigrant experiences has remained mostly invisible. When these stories have been told, they have often fit into the old stereotypes of “model minorities” (as in the case of the Vietnamese recovery) or of low-wage workers stealing jobs (as in the case of news reports on the city’s new Latino population). However, the stories of these other New Orleanians offer an important lens through which to view the overall struggle over the city’s recovery. And the work of grassroots activists from these communities, who strived to not only work for justice for their friends and neighbors, but also to build broad multi-racial alliances, provides an inspiring example for people in other cities who are waging similar fights.     

U.S. Antidumping Enforcement and Macroeconomic Indicators Revisited: Do Petitioners Learn?

We contribute to the literature on the political economy of U.S. antidumping enforcement through an analysis of the pattern—and macroeconomic determinants—of country-specific antidumping petitions filed by U.S. firms against 15 countries between 1981 and 1998 (examining quarterly data). We reconcile some seemingly inconsistent results from the prior literature by suggesting that “learning” by petitioners about the administration—in practice—of the U.S. trade laws has led to changes in the roles of the macroeconomic determinants over time. JEL no. F13     

Capitalism,democracy and discrimination—The rise and decline of racism in cox’scaste,class and race

In his bookCaste, Class and Race, Oliver Cromwell Cox took positions on the link between capitalism and racism that appear contradictory; on the one hand he argues that racial exploitation emerged with the rise of capitalism, and on the other, that advancement of capitalism would reduce racial exploitation. This article analyzes this seeming contradiction from a Marxian perspective and argues that Cox failed to seriously consider the central organizing mechanism of capitalism—competition—to discuss the relation between capitalism and racism. To analyze race relations under any mode of production, the central organizing mechanism of that mode has to occupy a focal position. A failure to take account of that fact often results in political conclusions that, like Cox’s, are divorced from theoretical analysis and thus are weak and impractical.     

Impact of preferential procurement policies on minority-owned businesses

Financial data on minority firms that compete for business in government and corporate set-aside programs reveal that these firms lag behind their nonminority counterparts in important respects. They are, relative to nonminorities, (1) less profitable, (2) younger, and (3) much more highly leveraged. Large-scale minority enterprises are no longer the rarity that they were 20 years ago. These firms have not, however, achieved parity with their nonminority cohorts, and their unique traits—especially undercapitalization—continue to reflect the vestiges of discrimination.     

Remilitarization and the End of the Gold Bloc in 1936

We juxtapose two hypotheses as to what destroyed the gold bloc in September 1936: the external inconsistency hypothesis—internationally uncompetitive gold bloc price-levels; versus increasing concerns for France’s national security caused by a remilitarizing Germany—the internal (to-the-gold-bloc) inconsistency hypothesis based on a greater military threat against France than neutral Switzerland and Netherlands. The hypotheses are not mutually exclusive, but support is found for the internal inconsistency hypothesis as the trigger for the French devaluation.     

The impact of cognitive biases on capital investments Empirical evidence regarding the anchoring heuristic

A large body of research shows that cognitive biases—unconscious mental errors caused by simplified information processing strategies—distort decision making in a variety of situations. This article demonstrates that these biases are also highly relevant with regard to decisions in a capital investment context, an area that has not received scientific attention yet. Building on a short introduction of the underlying principles and on brief analogy-based theoretical considerations, the main part describes and analyzes three series of empirical experiments, which clearly show that anchoring-induced cognitive biases systematically distort judgments and decision making in the respective contexts. This is the case for artificially incorporated anchors (first series of experiments) as well as for situation-embedded anchors (second series). The third series of experiments finally shows that the observed bias also persists for professionally experienced people.     

State-Building in Resource-Rich Economies

One of the most significant differences between developing countries and today’s advanced states is the fact that many developing countries rely heavily on one or several natural resources. That such dependence shapes the state’s ability to tax—its fiscal capacity—is commonly argued in the political science and applied development literatures. This paper approaches the issue from an economic angle. Our analytical foundation builds upon a novel theoretical framework, and allows us to model fiscal capacity as an ex ante investment under uncertainty. For our panel of 30 hydrocarbon-rich economies, instrumental-variables results provide strong empirical support for our theoretical proposition: resource intensification weakens state-building by impeding the state’s fiscal capacity. This result provides an inaugural validation of the economic analytics of state-capacity determinants: understanding these determinants serves to build stronger states and support sustainable paths of development. Our result also suggests that one of the main tools of fiscal policy-analysis in resource-rich economies, namely optimal taxation, could gain in practical relevance by incorporating capacity-constraints into the analytical fiscal-framework.     

Race and social organization: An economic perspective

Conclusion Improvements in the economic, political, and social status of Blacks are joint effects. Improvement in one is unlikely without concommitant improvements in the others; this is a multiedge sword.Success in any of the areas is correlated with improvement in the others—synergism. On the other hand, failure to realize the interdependencies makes success or improvement in any of the areas unlikely.     

Insurance redlining and the process of discrimination

Insurance redlining and the racially discriminatory consequences of the sale of property insurance have been documented in several cities throughout the United States. In this study teams of “testers”—comparably qualified insurance consumers who differed only in the racial composition of the neighborhood of the homes they sought to insure—contacted three Milwaukee area insurance companies regarding the possibility of purchasing insurance for their homes. Though no blatantly discriminatory behavior was exhibited, agents representing these companies expressed a clear preference to pursue business in white communities and placed additional barriers in the way of testers from nonwhite neighborhoods. These findings parallel changes in other institutional sectors of the housing industry where blatantly discriminatory behavior has generally given way to more subtle forms of bias. Policy recommendations are offered to reduce existing racial disparities in the availability of insurance and to open up housing markets in general for minorities.     

Controversies on market failure in rewarding inventors

Conclusions A definite answer to the question of whether inventors are over-compensated cannot be attained within a model of an “ideal” market economy. Our analysis, however, yields informations about the conditions which determine an inventor's reward: When constant returns to scale are prevailing in the economy (models 2, 4), we can expect that compensations for inventions are effiecient or too small. Under decreasing returns (model 5), an inventor’s reward may be either too large or too small. But overcompensation — when it occurs — can never be larger than the sum of all producers’ surpulses (model 1). Thus, profits from inventions may be large, but not excessive.     

Internationale Combinatie in de Ijzer-Industrie

„Gold is for the mistress—silver for the maid! Copper for the craftsman cunning at his trade.” „Good!” said the Baron, sitting in his hall, „But Iron—Cold Iron—is master of them all!” (From „Cold Iron”, by Rudyard Kipling.) Vele gegevens en getallen, in dit stuk voorkomende, zijn onder meer ontleend aan: Ministry of Reconstruction, Report of Committee on Trusts, London 1919,—George R. Carter, The Tendency towards Industrial Combination, London 1913,—Dr. H. Levy, Monopoly and Competition, London 1911,—H. W. Macrosty, Trust Movement in British Industry, London 1907,—J. M. Keynes, The Economic Consequences of the Peace, London 1920,—Balansen U. S. Steel Corporation,—P. de Roussiers, Les Syndicats industriels de producteurs en France, Paris 1901,—de leener, Les syndicats industriels en Belgique, Bruxelles 1904,—Et. Martin Saint Léon, Cartells et Trusts, Paris 1909,—Dr. H. Mannstaedt, Konzentration in der Eisenindustrie, Jena 1906,—Prof. Dr. A. Binz, Kohle und Eisen, Leipzig 1919,—Dr. L. D. Pesl, Das Dumping, München 1921,—J. Singer, Das Land der Monopole, Berlin 1913,—Prof. Dr. R. Liefmann, Kartelle und Trusts, Stuttgart 1920,—Dr. J. Grünzel, Ueber Kartelle, Leipzig 1902,—Th. Vogelstein, Organisationsformen der Eisenindustrie, Leipzig 1910,—Dr. W. Morgenroth, Die Exportpolitik der Kartelle, Leipzig 1907,—Ir. Landsberg, Ijzer en staal, Amsterdam 1919.     

De noordse economische integratie

Summary The post-war attempts to achieve a Nordic regional economic integration have not yet been successful, partly as a result of the establishment of the European Free Trade Association. These attempts were apparently shelved when two of the four Nordic countries — Denmark and Norway — applied for a membership of the European Common Market. However pending the negotiations for entry to the EEC, a draft Treaty for the establishment of the Organization for Nordic Economic Co-operation (Nordec) was drawn up on the instruction of the governments of the Nordic countries. In this paper the possible effects of this regional Nordic Common Market, when established, are briefly analyzed. The author also investigates the increase in intra-Nordic trade since EFTA was created. In view of the interprenetation of Nordic trade flows resulting from EFTA, it is highly unlikely, that Sweden could remain outside a large, integrated European market, which Denmark and Norway had joined.      

Portfolio modelling and growth in open economies

The standard BRANSON model is modified in a way which allows one to focus on the short term dynamics of foreign bonds markets, the money market and the stock market—or alternatively the oil market. This allows us to explain the dynamics of the exchange rate and the oil price within a portfolio choice model; also we identify critical expectation dynamics in a more conventional pricing approach to the oil market—expectations determine whether or not the oil market equilibrium is compatible with a stationary price or with sustained oil price inflation. Moreover, a straightforward innovative way to combine a portfolio approach with a growth model is developed. New results are obtained—through multiplier analysis—about the long term effects of changes in the savings rate, the process innovation rate, the product innovation variable and the money supply on the exchange rate and the stock market price; this raises many empirical issues. Finally, the analysis presented sheds new light on the global asset price dynamics in the context of the banking crisis. To the memory of Edward Graham, Petersen Institute for International Economics, Washington D.C.     

William graham sumner: Monetary theorist

Conclusion Sumner was the product of an indigenous American hard-money tradition that embraced free markets, free trade, and sound banking—a tradition that has much in common with the Austrian School in its theoretical and political orientation. His understanding of economic theory came from his reading of classical economists and the works of American theorist Condy Raguet, and his political convictions from his study of the American monetary experience, particularly the errors of the Hamiltonians. With these influences and his own hard-money views, Sumner arrived at positions on money, banking, and business cycles, economic policy that can be described as proto-Austrian in many ways. In particular, he saw credit-fueled booms as inherently unsustainable because they give rise to “fictitious capital” as versus real wealth.     

Trade adjustment in the WTO system: are more safeguards the answer?

For countries to engage successfully in the international tradingsystem, their industries, firms, and workers must respond continuallyto new conditions of competition. The continuing need to adjustarises both from policy changes approved in multilateral negotiations—e.g.implementation of trade liberalization commitments, preferenceerosion, or adverse terms-of-trade consequences of export subsidyelimination—and from ongoing changes in competitive pressuresinherent in a liberal trading system—e.g. effects on comparativeadvantage of changes in technology or factor supplies. But thepolitical response to a situation calling for adjustment isoften a call for ‘safeguards’—whether as anex ante provision in negotiated agreements or as an ex postmeasure once the agreement has been signed and the reality ofnew conditions takes shape. This paper examines the range ofadjustment problems confronting the current and future internationaltrading system, the economic arguments for intervention to dealwith these problems, the adjustment environment as set out inthe current World Trade Organization (WTO) Agreements, and proposalsfor reform. While the adjustment problems we discuss apply toboth rich and poor WTO member countries, we highlight the issuesof adjustment especially relevant for developing countries.     

Transatlantic banking crisis: analysis,rating, policy issues

The key dynamics of the transatlantic banking crisis are analyzed and the five key requirements for restoring stability and efficiency in the EU/OECD banking sector are highlighted. Most important is the introduction of a new tax regime designed to encourage bankers to take a more long-term time horizon in decision-making and to reduce excessive risk-taking. Banks and funds should be taxed not only on the basis of profits but also on the basis of the variability—read variance—of the rate of return on equity: the higher the variability over time, the higher the tax to be paid. The quality and comprehensiveness of banks’ balance sheets must be radically improved and hedge funds should be regulated. The tax formula proposed here is an important institutional innovation designed to encourage “sustainable banking”. Moreover, new approaches to macroeconomic modeling are emphasized—including integration of rating into a macro model. Finally, the hybrid macro model presented sheds new light on the effects of the banking crisis, as it allows for a better understanding of the interaction of fiscal policy, monetary policy and innovation variables.     

Economic,Political, and Institutional Prerequisites for Monetary Union Among the Members of the Gulf Cooperation Council

The paper reviews the arguments for and against monetary union among the six members of the Gulf Cooperation Council—the United Arab Emirates, the State of Bahrain, the Kingdom of Saudi Arabia, the Sultanate of Oman, the State of Qatar and the State of Kuwait. Both technical economic arguments and political economy considerations are discussed. I conclude that there is an economic case for GCC monetary union, but that it is not overwhelming. The lack of economic integration among the GCC members is striking. Without anything approaching the free movement of goods, services, capital and persons among the six GCC member countries, the case for monetary union is mainly based on the small size of all GCC members other than Saudi Arabia, and their high degree of openness. Indeed, even without the creation of a monetary union, there could be significant advantages to all GCC members, from both an economic and a security perspective, from greater economic integration, through the creation of a true common market for goods, services, capital and labour, and from deeper political integration. The political arguments against monetary union at this juncture appear overwhelming, however. The absence of effective supranational political institutions encompassing the six GCC members means that there could be no effective political accountability of the GCC central bank. The surrender of political sovereignty inherent in joining a monetary union would therefore not be perceived as legitimate by an increasingly politically sophisticated citizenry. I believe that monetary union among the GCC members will occur only as part of a broad and broadly based movement towards far-reaching political integration. And there is little evidence of that as yet.

Destructive Trade and Its Effects on the Global Economy

This lecture was offered in honor of Professor Robert Mundell; a most fitting coincidence since the speaker was his classmate at MIT in 1955, exactly 55 years ago, and the topic emanated from our joint study with Professors Kindleberger and Samuelson at that time. The essence of the presentation can be summarized in its significant conclusions. The theory of comparative advantage as applied to real-world phenomena—and its practical free-trade recommendations—must be rejected or at least questioned, especially when it comes to trade between the advanced and the developing economies. The more realistic, even if less elegant mathematically, theory of Destructive Trade—explained in the lecture—should be a better guide in defining world trade solutions and leading us in the long run out of the present global crisis.