China's third plenum is almost a declaration of economic war. Remembering the distinguished economist C.T. Kurien. Plus, Sausalito allows nonresidents to join economic committee and clashes arise over Louisiana's coastal restoration project.
Sources:
https://www.telegraph.co.uk/business/2024/07/24/chinas-third-plenum-is-almost-a-declaration-of-economic-war/
https://www.thehindu.com/news/national/ct-kurien-distinguished-economist-no-more/article68440057.ece
https://www.marinij.com/2024/07/23/sausalito-ordinance-lets-nonresidents-join-economic-committee/
https://www.hindustantimes.com/world-news/us-news/clashes-arise-over-the-economic-effects-of-louisiana-s-3-billion-dollar-coastal-restoration-project-101721780990765.html
Outline:
(00:00:00) Introduction
(00:00:41) China’s third plenum is almost a declaration of economic war
(00:03:28) C.T. Kurien, distinguished economist, no more
(00:06:13) Sausalito ordinance lets nonresidents join economic committee
(00:08:27) Clashes arise over the economic effects of Louisiana's $3 billion-dollar coastal restoration project
Simply Economics
China’s Economic Policies and the Legacy of C.T. Kurien
China's third plenum is almost a declaration of economic war. Remembering the distinguished economist C.T. Kurien. Plus, Sausalito allows nonresidents to join economic committee and clashes arise over Louisiana's coastal restoration project.Sources:https://www.telegraph.co.uk/business/2024/07/24/chinas-third-plenum-is-almost-a-declaration-of-economic-war/https://www.thehindu.com/news/national/ct-kurien-distinguished-economist-no-more/article68440057.ecehttps://www.marinij.com/2024/07/23/sausalito-ordinance-lets-nonresidents-join-economic-committee/https://www.hindustantimes.com/world-news/us-news/clashes-arise-over-the-economic-effects-of-louisiana-s-3-billion-dollar-coastal-restoration-project-101721780990765.htmlOutline:(00:00:00) Introduction(00:00:41) China’s third plenum is almost a declaration of economic war(00:03:28) C.T. Kurien, distinguished economist, no more(00:06:13) Sausalito ordinance lets nonresidents join economic committee(00:08:27) Clashes arise over the economic effects of Louisiana's $3 billion-dollar coastal restoration project
- Duration:
- 12m
- Broadcast on:
- 24 Jul 2024
- Audio Format:
- mp3
Good morning and welcome to Simply Economics. It's Wednesday, July 24th. On today's show, China's third plenum is almost a declaration of economic war, and we remember the distinguished economist C.T. Kurian. Plus, clashes arise over the economic effects of Louisiana's $3 billion coastal restoration project. This coverage and more, up next. I'm David, and you're listening to Simply Economics. We start off with a new report suggesting that the world may be on the cusp of a second China shock, even larger than the first one that reshaped the global economy in the 1990s and early 2000s. The first China shock saw a flood of cheap goods from China redrawing the contours of the global economy, allowing multinationals to exploit labor arbitrage between Chinese and Western wages. This contributed to rising inequality and weakened democracies in the West. Here to discuss the implications is our economics correspondent. So what exactly is different about this potential second China shock compared to the first? The scale is the key difference. China's economy today is twice as large on the global stage as it was in 2007 before the global financial crisis. According to Professor Michael Pettis from Peking University, we now have an untenable situation where China produces 31% of the world's manufactured goods, but only accounts for 13% of world consumption. This massive trade imbalance with China's trade surplus hitting a record $100 billion a month is something the rest of the world has to absorb. And it's not due to superior Chinese products, but rather the result of structural policies pursued by the Chinese Communist Party. Some had hoped that China might change course and address these imbalances. Were there any indications of that at the recent third plenum meeting of China's leadership? Unfortunately not. The third plenum, held every five years, has set China's economic strategy ever since the days of Deng Xiaoping and was seen as an opportunity for a shift. However, those hoping for change were disappointed. The structural issues and trade imbalances look set to continue which could have major repercussions for the global economy if this second China shock plays out as some fear. We've already seen how disruptive the first China shock was in terms of rising inequality and political instability in Western democracies. Are we potentially looking at more of the same with a second shock? Quite possibly and on a larger scale given the growth in China's economy since the early 2000s. The first China shock period saw the profit share of GDP and inequality in the West reach the highest levels since World War II. It rewarded capital while leaving behind the bottom half of earners in America and Europe. This compounded existing inequalities and weakened democracies. So a second larger shock could certainly exacerbate these trends. However, much will depend on how policymakers and businesses in the West respond and adapt to China's growing economic clout this time around. It seems clear that the world needs to brace for some potentially major economic shifts and disruptions in the years ahead as China's role in the global economy continues to evolve. Thank you for your insights on this important issue. On a somber note, the world of economics has lost a luminary. C.T. Kurian, distinguished economist and former professor at Madras Christian College, passed away on July 23 at the age of 93. Kurian was known for his lifelong focus on understanding and eradicating poverty through his economic research and writings. For more on Kurian's life and legacy, we turn now to our simply economics correspondent. What drove Kurian to dedicate his career to the study of poverty? David, from a young age, Kurian was acutely aware of the stark poverty that surrounded him, even as he himself lived a relatively comfortable life. This disparity troubled him deeply. He pursued the study of economics in college, hoping it would help him understand the root causes of poverty and how to eliminate it. However, he was disappointed to find that mainstream economics at the time did not seriously grapple with issues of poverty. Undeterred, Kurian went on to earn a PhD from Stanford University, focusing his research on the economics of underdeveloped countries like India. And this focus on poverty alleviation became the defining theme of his academic career. Correct? Absolutely. Over his long career as a professor at institutions like Madras Christian College and the Madras Institute of Development Studies, Kurian authored 15 books examining various aspects of economics, always through the lens of uplifting the poor. He rejected the assumption that economic growth alone would automatically eradicate poverty. Instead, his writings emphasised the need for intentional policies and social transformation. To close the gulf between rich and poor, a divide he saw as only growing wider after India's economic reforms in the 1990s. Kurian seems to have been respected not just for his scholarship, but for his character and values as well. Very much so. Kerala's Chief Minister praised Kurian as an erudite scholar and consistent supporter of policies benefiting the majority. Enram, Director of the Hindu Publishing Group, paid tribute to Kurian as an outstanding scholar, beloved teacher and progressive public intellectual, who dedicated his life to studying how to eradicate poverty and improve the lives of millions. Kurian's passing is a great loss, but his legacy as an economist and institution builder, who brought a strong moral conscience to his work, will undoubtedly live on. A legacy that will continue to inspire economists and anti-poverty advocates for generations to come. Thank you to our correspondent for that look at the life and impact of the late C.T. Kurian. Turning now to local government news, the city of Sausalito, California has approved a new ordinance allowing non-residents to serve on the city's Economic Development Advisory Committee. The move resolves a conflict between the city's previous practice of appointing non-residents and its municipal code, while also giving business owners more of a voice. For more on this, we turn to our correspondent. What was the key motivation behind this change? The main driver was acknowledging the critical role Sausalito's business community plays. Not only in generating around half of the city's general fund revenue, but also in ongoing governance and policy discussions. Council member Melissa Blaustin emphasized this point, arguing it was important to give business owners a seat at the table, even if they reside outside city limits. The ordinance passed in a close three to two vote. What were the main objections raised by those who voted against it? Council member Jill Hoffman argued there are plenty of business owners who do reside in Sausalito and suggested non-residents could participate via a task force instead of changing the city code. Her colleague Janelle Kellman expressed concern that the change could be applied to other key advisory bodies like the Planning Commission, diluting the voice of city residents. Interestingly, the appointments made to the Economic Development Advisory Committee back in February technically violated the city's code at the time because some members were not Sausalito residents. How is the city handling that discrepancy? The city attorney acknowledged there was indeed a conflict between the municipal code and the resolutions that had created the Economic Committee. However, he noted the committee only serves an advisory role, so any recommendations it made that ran afoul of the residency requirement likely don't have any meaningful legal impact. Ultimately, it falls to the city council to weigh the committee's input. So in summary, non-residents can now serve on Sausalito's Economic Development Advisory Committee for up to two three-year terms. While the residency requirement remains in place for all other city boards and commissions, aiming to balance giving businesses a voice and maintaining local control. On the topic of balancing economic development and environmental concerns, Louisiana is moving forward with a nearly three billion dollar project to restore part of the state's rapidly vanishing coastline. However, the project is facing pushback and litigation from some communities who fear it will negatively impact the environment and their livelihoods. Joining us now with more details is our simply economics correspondent. So tell us, what are the main points of contention around this coastal restoration project? The primary concern seems to be the potential economic impact on certain communities. While proponents of the project have released a study highlighting the expected economic benefits of its construction, such as job creation and increased economic activity, there are fears that it could also lead to job losses in industries like fishing and oil and gas. Some communities worry that the environmental changes brought about by the restoration efforts could disrupt the ecosystems they depend on for their livelihoods. Can you give us a sense of the scale of this project and why it's considered necessary despite these concerns? Louisiana's coastline has been rapidly eroding for decades due to a combination of factors including sea level rise, subsidence and the loss of wetlands. This three billion dollar project aims to restore a significant portion of that vanishing coastline in southeast Louisiana. It's considered a critical step in protecting coastal communities from increasingly severe hurricanes and flooding. However, any large-scale environmental intervention like this is bound to have some unintended consequences and trade-offs. What are the specific restoration methods being proposed and how might they affect the environment and local economies? The project likely involves a combination of methods such as rebuilding barrier islands, reverting sediment from the Mississippi River to rebuild wetlands and possibly even constructing levees or sea walls. Each of these interventions could alter the flow of water, sediment and nutrients in the coastal ecosystem. This could impact the habitats of commercially important fish and shellfish species or affect the operations of coastal industries. The economic study probably tries to quantify and balance these potential losses against the projected benefits, but there's always uncertainty in predicting the outcomes of such complex interventions. Lastly, what's the status of the pushback and litigation against the project? Could they potentially delay or halt its progress? That remains to be seen. Environmental litigation can often be lengthy and complex. Even if the lawsuits don't ultimately stop the project, they could potentially delay its implementation as the courts consider the merits of the arguments. There may also be opportunities for compromise and modification of the project plans to address some of the community's concerns. Regardless, this conflict highlights the challenges of balancing environmental restoration, economic development and the needs of local communities in the face of a rapidly changing coastal landscape. Thanks for that insightful analysis of this complex issue. We'll continue to follow the developments around Louisiana's coastal restoration project and its economic implications. And with that, we wrap up our stories for today. Thanks for listening to Simply Economics. We'll see you back here tomorrow. [MUSIC] [BLANK_AUDIO]