Archive for July 13th, 2012

Reinventing Affordable Housing in NY…

July 13, 2012

NY Mayor Bloomberg announced¬†a housing program to build micro-apartments in NY City. These apartments would be of 275 sq. ft (hopefully all carpet feet area ūüôā and mainly for households having 1-2 persons (in Mumbai whole families live in this kind of area).

Howard Husock of Manhattan Institute writes this terrific article on this policy move:

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Reforms are basically about mindset…

July 13, 2012

Sanjeev Aga has this terrific article in ET. It came on 9-Jul-12 but just forgot to link it. Those who missed it this one is a must.

He ponders on one of the most important reform in 1990s. However, this reform just skipped most of the issues hurting us today:

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Future of International Cooperation — Global Government or Mixed Coalitions

July 13, 2012

A nice paper by William Savedoff of CGDEV.

He says mixed coalitions or multipolarity is how the world has always been. The period 1945-90 was an abherration:

 

This essay addresses the question of what these changes mean for the future of international cooperation from a broad historical perspective.

  • In particular, I argue that multipolarity is¬†actually the norm in international relations. The growing power of countries like China and¬†India represents a return to the global distribution of power preceding the acceleration of¬†economic and military expansion in the United States, Europe, and Japan.¬†
  • Second, the rise of¬†mixed forms of international cooperation, of opportunistic alliances, is not new; rather, such¬†mechanisms for addressing international issues preceded the rise of global governance¬†institutions in the post-WWII period. In other words, the world we are living in today is¬†normal; the world of 1945‚Äď1990 was the aberration.¬†
  • Finally, while global governance¬†institutions will continue to be important, mixed coalitions of state and nonstate actors are¬†likely to play a growing role in solving international problems. These models for¬†international cooperation are both promising and problematic: promising because they have¬†demonstrated agility and success; problematic because they may address the wrong issues¬†and because they cannot compel cooperation for key public goods.
What does he mean by global gov and mixed coalitions?
International cooperation that follows a global-government paradigm models its organizations, procedures, and actions on the typical form of a modern nation-state. The logic of such an approach is to use the authority and legitimacy of government to establish rules and actions that are binding on member states. The United Nations system is the most  obvious creation under this paradigm, along with international organizations such as the IMF, the World Bank, the World Health Organization, and the World Trade Organization. The European Union (EU) also fits clearly within this paradigm. A kind of unanimity or at least consensus was required to establish the constitutional structure for the EU, conferring a degree of legitimacy and authority on its supranational institutions. Thereafter, to a greater or lesser extent, these institutions have had some authority to compel member states to adhere to common rules and procedures.
The global-government paradigm generally seeks fixed membership of nation-states for a wide range of activities that can be carried out by international institutions. The resulting laws and institutions are usually established on the basis of unanimity which allows them to be binding on all members.
While some issues genuinely require unanimity, it¬†could be useful to distinguish those issues that do not require unanimity. For these kinds of¬†issues, a different voluntary and non-unanimous approach might be preferable.1¬†Such a voluntary and non-unanimous approach to international cooperation might be¬†described as following a mixed-coalition paradigm. Such an approach is more fluid than the¬†notion of global government institutions. It assembles interested parties‚ÄĒwhich may include¬†some nation-states but also NGOs, private foundations, for-profit firms, and civil society¬†groups‚ÄĒaround specific initiatives that may or may not result in the establishment of formal¬†organizations. Such an approach works opportunistically, finding members who can take¬†action in a way that ultimately, it is hoped, will demonstrate success and gain broader¬†international adherence
He gives examples from health, finance and environment to suggest the change from global gov to mixed coalitions. The change is more evident in health and environment than in finance. However, this does not mean that global gov. role is no more there. It is just that share of mixed coalitions has risen.
The author says rise of global gov. is unlikely:
First, the process of establishing nation-states with the associated legitimacy of governing institutions has required some level of homogeneity among subjects, regions, and power
Second, establishing effective governance institutions also requires that powerful elites curb their appetites, that they see more gain in caring for the goose that lays the golden eggs than in killing it
Finally, establishing effective governance institutions requires a model of bureaucratic¬†responsiveness that we do not seem to have invented yet. The main approach to global¬†governance continues to be based on nation-states as constituent members, and this creates¬†at least two thick layers of protection against responding to real feedback‚ÄĒthe layer of¬†accountability from international organizations to nation-states and the accountability of¬†nation-states to their citizens.
Though there are limitations with mixed coalitions as well.
Nice paper. Pretty different. Helps build some thinking on global governance structure…

Math or Society: Did Economists Forget Who They‚Äôre Supposed to Serve?

July 13, 2012

A nice post on the topic by Robert Johnson of INET.

Johnson in turn lists  several posts of Tim Johnson of Heriot-Watt University in Edinburgh.

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How Libor is calculated? A primer..

July 13, 2012

Here is an amazing primer by Donald Mackenzie on how Libor is fixed in London markets (HT: superb post in JRV blog) .

He explains all the mechanics of money markets in London and how this Libor process is done. It is like those Michael Lewis type articles. He wrote this article in 2008 and is quite prophetic as well. He does point to issues with Libor fixing as well way back in 2008. So the Libor scam was pretty much in making. This is what led Dr. Reddy to say in this lecture:

…In the discharge of semi-fiduciary functions that are critical to the integrity of financial markets, such as fixation of Libor and credit rating, the major global players in financial markets discredited themselves by resorting to questionable practices.”

Asked how he knew such market-sensitive information about the Libor scandal several days before the FSA announced its decision, Reddy says: “The moment investigation started, I knew that the well-known secret about manipulation of Libor will be out.” Note the phrasing about the “well-known secret” and the reference to the “major global players” in plural.

 First why Libor is fixed in London when NY has been the centre of finance?

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