Jomo Kwame Sundaram’s Blog

Goodbye 2020, but unfortunately, not good riddance, as we all have to live with its legacy. It has been a disastrous year for much of the world for various reasons, Elizabeth II’s annus horribilis. The crisis has exposed previously unacknowledged realities, including frailties and vulnerabilities. For many countries, the tragedy is all the greater as some leaders had set national aspirations for 2020, suggested by the number’s association with perfect vision. But their failures are no reason to reject national projects. As Helen Keller, the deaf and blind author activist, noted a century ago, “The only thing worse than being blind…

Just before the World Health Assembly (WHA), an 18 May open letter by world leaders and experts urged governments to ensure that all COVID-19 vaccines, treatments and tests are patent-free, fairly distributed and available to all, free of charge. Pious promises Leaders of Italy, France, Germany, Norway and the European Commission called for the vaccine to be “produced by the world, for the whole world” as a “global public good of the 21st century”, while China’s President Xi promised a vaccine developed by China would be a “global public good”. The United Nations Secretary-General also insisted on access to all when available. The WHA unanimously agreed that vaccines, treatments and…

Fiscal and monetary measures needed to fight the economic downturn, largely due to COVID-19 policy responses, require more government accountability and discipline to minimise abuse. Such measures should ensure relief for the vulnerable, prevent recessions from becoming depressions, and restore progress. They should help the most helpless, especially in the informal sector and casual employment. Efforts should also seek to accelerate structural transformation towards the Sustainable Development Goals (SDGs). Progress was already falling behind before the pandemic, e.g., on mitigating global warming. Unconventional measures The pandemic and policy responses have created a most unusual situation, demanding extraordinary policy responses to mitigate…

COVID-19 recessions have hit most countries, requiring massive fiscal responses. While most developing countries struggled with mounting debt even before the pandemic, many developed countries also face unprecedented macroeconomic pressures despite earlier spending cuts due to ‘fiscal consolidation’ policies. Tax, not aid? Before the third United Nations’ Financing for Development conference (FfD3) in Addis Ababa in mid-2015, Organization for Economic Cooperation and Development (OECD) head Angel Gurria acknowledged, “Much of [the tax not collected] is lost abroad in illicit flows. Developing countries also lose tax revenue from aggressive tax planning by multinational corporations. This cannot go on.” Earlier, then OECD Development Assistance…

The World Bank has been leading other multilateral development banks (MDBs) and international financial institutions to press developing country governments to ‘de-risk’ infrastructure and other private, especially foreign investments. They promote public-private partnerships (PPPs) supposedly to mobilize more private finance to achieve the Sustainable Development Goals. PPP advocacy has been stepped up after developing countries’ pleas for better international tax cooperation were blocked at the third United Nations’ Financing for Development conference (FfD3) in Addis Ababa in mid-2015. Official support for infrastructure PPPs seems stronger than ever. The Bank’s Global Infrastructure Facility (GIF) was set up to coordinate MDBs, private investors and…

The United Nations’ renamed World Social Report 2020 (WSR 2020) argued that income inequality is rising in most developed countries, and some middle-income countries, including China, the world’s fastest growing economy in recent decades. Inequality dimensions While overall inter-country inequalities may have declined owing to the rapid growth of economies like China, India and East Asia, national inequalities have been growing for much of the world’s population, generating resentment. In 2005, when the focus was on halving poverty, thus ignoring inequality, the UN drew attention to The Inequality Predicament. Secretary-General Kofi Annan warned that growing inequality within and between countries was jeopardizing achievement…

The World Bank has finally given up defending its controversial, but influential Doing Business Report (DBR). In August, the Bank “paused” publication of the DBR due to a “number of irregularities” after its much criticized ranking system was exposed as fraudulent. Apparently, data from four countries – China, Azerbaijan, the UAE and Saudi Arabia – was “inappropriately altered”, according to the Wall Street Journal. Exposure of these irregularities was the final straw: now, it is uncertain whether the DBR will return after its suspension. Exposing the lie After Chief Economist Paul Romer told the Wall Street Journal two years ago that he had lost faith in…

US third quarter GDP numbers released two weeks ago delighted stock markets and President Trump. Output had picked up by 7.4%, annualised as 33.1%, the largest quarterly economic growth on record, almost double the old record of 3.9% (annualised as 16.7%) in the first quarter of 1950, seven decades ago. Spinning numbers This news could not have come at a better time for Trump, who is struggling for re-election, as his Council of Economic Advisers (CEA) declared that this affirmed Trump’s claim, “we’re coming back, and we’re coming back strong”. The CEA spun the White House press release headline accordingly, “The Great…

In July, the UN Secretary-General warned that a “series of countries in insolvency might trigger a global depression”. Earlier, the United Nations Conference on Trade and Development (UNCTAD) and the International Monetary Fund (IMF) had called for a US$2.5 trillion coronavirus crisis package for developing countries. Debt distraction In the face of the world’s worst economic contraction since the Great Depression, a sense of urgency has now spread to most national capitals and the Washington-based Bretton Woods institutions. Unless urgently addressed, the massive economic contractions due to the COVID-19 pandemic and policy responses to contain contagion threaten to become depressions. Nevertheless, many long preoccupied with…

Limited liability protection for shareholders in joint stock companies was introduced to encourage investments in them. However, it has encouraged irresponsibility, causing much harm while generating profits without responsibility. Limited liability limits responsibility Columbia Law School’s Professor Katarina Pistor has extended her critique of the legal system to emphasize the implications of such limited liability. Limited liability encourages shareholders not to pay attention to the harm corporations they invest in may do. Instead, as emphasized by Milton Friedman, shareholders should focus on returns to investment, and not be distracted by other considerations, especially the notions of corporate social responsibility and stakeholderism. Chicago University’s Professor Luigi Zingales has…