Dear Friends and Colleagues,

I have written a paper discussing Milton Friedman’s baleful influence on economics. Part of escaping that influence is developing alternative ideas. But part of the process is understanding where and how economics went “off track”.

The abstract is below and on my website (HERE). Please feel free to share it with others who may be interested in this subject.

Best,
Tom Palley

Thomas Palley
Senior Economic Policy Adviser, AFL-CIO and
Research Associate, Economic Policy Institute
Tel: (202)-667-5518
e-mail: [email protected]
www.thomaspalley.com


Restoring Shared Prosperity: A Policy Agenda From Leading Keynesian Economists, December 2013, PDF available at www.thomaspalley.com, book available at Amazon.com

Dear Colleagues and friends,

In response to the suggestion from  the list manager  to  inform you of the UNCTAD special online essay on " Global and systemic implications of United States Supreme Court rulings in favour of hedge funds over Argentina on 2001 defaulted bonds", I would like to share with you the link to the piece:
http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=783&Sitemap_x0020_Taxonomy=UNCTAD%20Home

The piece highlights the global and systemic implications of the recent United States Supreme Court rulings in favour of hedge funds over Argentina on 2001 defaulted bonds. The rulings have removed financial incentives for creditors to participate in orderly debt workouts and will make future debt restructuring even more difficult. Moreover, obliging third-party financial institutions to provide information about assets of sovereign borrowers world wide and not to transfer payments to creditors participated in debt restructuring before holdout creditors getting paid will have a significant impact on the international financial system as the enforcement of debt contracts for the creditors would be becoming part of the service obligations of financial service providers involved in debt restructurings. Meanwhile, the erosion of sovereign immunity is also a concern.

Best regards.

Yuefen  LI 
Head Debt and Development Finance Branch
United Nations Conference on Trade and Development
UNCTAD, Switzerland 
[email protected]  

Dear Colleagues

The United Nations Human Rights Council (HRC) adopted, through a vote, a historic and significant resolution to start a process for an international legally instrument on transnational corporations.

Officially entitled “Elaboration of an international legally binding instrument on Transnational Corporations and other Business Enterprises with respect to Human Rights” (A/HRC/26/L.22) the resolution was adopted on 26 June at the 26th session of the HRC.

The resolution was co-sponsored by Ecuador and South Africa, and also supported by Bolivia, Cuba and Nevezuela. In the vote on the resolution, 20 Members of the HRC supported the resolution, while 13 Members abstained, and 14 Members voted against it. Countries that supported the resolution include: Algeria, Benin, Burkina Faso, China, Congo, Cote D’Ivoire, Cuba, Ethiopia, India, Indonesia, Kazakhstan, Kenya, Morocco, Namibia, Pakistan, Philippines, Russian Federation, South Africa, Venezuela, Vietnam.

Countries that abstained include: Argentina, Botswana, Brazil, Chile, Costa Rica, Gabon, Kuwait, Maldives, Mexico, Peru, Saudi Arabia, Sierra Leone, and United Arab Emirates.

Countries that voted against the resolution include: Austria, Czech Republic, Estonia, France, Germany, Ireland, Italy, Japan, Montenegro, Republic of Korea, Romania, the former Yugoslav Republic of Macedonia, United Kingdom, and United States of America.

The resolution provides for the establishment of an open-ended intergovernmental working group (IWG) that is mandated with elaborating an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises.

The resolution provides that the IWG shall hold its first session for five working days in 2015, before the 30th session of the HRC. The resolution also provides that the first two sessions of the working group shall be dedicated to conducting constructive deliberations on the content, scope, nature and form of the future international instrument.

The resolution mandates the Chairperson-Rapporteur of the IWG to prepare elements for the draft legally binding instrument for substantive negotiations at the commencement of the third session of the working group, taking into consideration the discussions held at its first two sessions. It recommends that the first meeting of the IWG serve to collect inputs, including written inputs, from States and relevant stakeholders on possible principles and elements of such an international legally binding instrument.

The resolution requests the IWG to submit a report on progress made to the HRC for consideration at its thirty-first session.The resolution explains in a footnote that the reference to ‘other business enterprises’ denotes all business enterprises that have a transnational character in their operational activities, while it does not apply to local businesses registered in terms of relevant domestic law.

The resolution also makes reference as well to the important role of civil society actors in promoting corporate social responsibility and in preventing, mitigating, and seeking remedy for adverse human rights impacts of transnational corporations (TNCs) and other business enterprises.

In presenting the resolution to the HRC, Ambassador Luis Gallegos Chiriboga of Ecuador stressed that the Council owes its existence to those who tirelessly fight to protect human rights and the victims of human rights violation, including those that are most needful for protection and support. He called upon the Council to correct injustices, including the lack of protection for victims of violations of human rights abuses carried out by TNCs. He noted that these corporations benefit from binding international protections. However, victims of harmful corporate activities lack access to legal protection, while only having available voluntary norms.

Ambassador Chiriboga focused on the importance of protecting victims, noting that victims of disasters, such as that by Union Carbide in Bhopal (India), Shell in the Niger Delta (Nigeria), and Chevron in Ecuador, among others, are still waiting for remedy and fair compensation. He underlined the support of more than 500 civil society organizations from around the world, European Parliamentarians, and the Vatican to the initiative towards elaborating a legally binding instrument on TNCs and other business enterprises with respect to human rights. Ambassador Chiriboga also stressed Ecuador’s support for implementation of the United Nations Guiding Principles on Business and Human Rights. [On 16 June 2011, the UN HRC endorsed by consensus the "Guiding Principles on Business and Human Rights: Implementing the United Nations 'Protect, Respect and Remedy' Framework" proposed by UN Special Representative John Ruggie (Resolution 17/4). More information available at: http://www.business-humanrights.org/SpecialRepPortal/Home/Protect-Respect-Remedy-Framework/GuidingPrinciples. At its 17th session, in resolution A/HRC/17/4, the HRC decided to establish a Working Group on the issue of human rights and TNCs and other business enterprises, consisting of five independent experts, with the mandate to promote the dissemination and implementation of the Guiding Principles. More information available at: http://www.ohchr.org/EN/Issues/Business/Pages/WGHRandtransnationalcorporationsandotherbusiness.aspx.

In a statement at the 17th session of the HRC in June 2011, the delegation of Ecuador noted its conviction that the United Nations should continue to work on the issue of establishing binding international standards on the activities of TNCs. Ecuador’s statement underlined that the Guiding Principles are “not binding standards”, “are just a guide”, and thus “are not mandatory”. At the September 2013 session of the HRC, the delegation of Ecuador delivered a statement on behalf of more than 85 countries stressing the need for a legally binding framework to regulate the work of TNCs. More on this statement is provided below.]

Speaking on behalf of South Africa, Ambassador Abdul Samad Minty noted that the government of South Africa accords special priority in regard to issues of TNCs, business, and human rights. He highlighted that the South African government holds a strong view that these entities, which are the primary drivers of globalization, cannot operate in a void. He added that TNCs and other business enterprises often operate in an environment where appropriate national legislation to effectively regulate their operations, or mitigate the propensity for their violation of human rights, is either absent or very weak. Experience shows that in countries of the North, where there are strong binding laws and regulations promulgated by national parliaments, the violations of human rights by corporations are significantly minimized, according to Ambassador Minty. He stressed that a universal regulatory framework in the form of a binding instrument to provide legal protections, effective remedies, as well as a range of other measures in quest for protections of victims, is desirable and imperative. He also recalled that global mass mobilizations by over 500 civil society organizations calling for such an instrument.

Read more: http://www.twnside.org.sg/title2/unsd/2014/unsd140605.htm

Best regards,

Kinda Mohamadieh 
Researcher, Trade for Development Programme
The South Centre 

Dear friends

You may be interested in our publication " The Debt Crisis: From Europe to Where?" downloadable in CADTM website:
http://cadtm.org/The-Debt-Crisis-From-Europe-to

In our newsletter you will find a series of articles on the topic, for example, following up the Argentinian case against the international vulture funds NML Capital and Aurelius Capital Management, the latest being a call for regulation of vulture funds by debt justice campaigners (here), or on the movements against debt in Spain and for a new social deal that can transform  Europe (here).
http://cadtm.org/Newsletter

See also on the International Citizen debt Audit Network (ICAN), born under the slogan “We don’t owe ! We won’t pay!”, bringing together movements and networks in different European and North African countries, fighting austerity measures and the debt system through the implementation of citizen audits.
http://cadtm.org/ICAN?lang=en

Best regards

Eric Toussaint
Président
Comité pour l'Annulation de la Dette du Tiers Monde(CADTM)
Avenue de l'Observatoire 345, 4000 Liège, Belgium

SALUDOS.. THIS IS REALLY A MAJOR CONCERN FOR ALL OF US IN LATIN AMERICA AND CARIBBEAN = LAC REGION, THIS IS SETTING A PRECEDENT NOT FOR ONE NATION, OR CONTINENT, BUT TO THE WHOLE WORLD.. THE FOREIGN MINISTERS OF LAC REGION - THE OAS WILL BE MEETING ON THIS ISSUE.. HOPE MORE PEOPLE SEE THE IMPORTANCE OF THIS AND WORK ON IT.
BEST, MARTA BENAVIDES -- EL SALVADOR

Reverend Marta Benavides
Co-Chair GCAP Global Council
GCAP is the world`s LARGEST CIVIL SOCIETY MOVEMENT calling for an END to POVERTY & INEQUALITY
http://www.whiteband.org/en

Dear all,

The US Supreme Court's refusal to hear a case about Argentina's debt is a big deal for international finance.

See: http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/who-shot-argentina

Best regards

Mark Weisbrot
Co-Director Center for Economic and Policy Research
1611 Connecticut Ave NW, Suite 400
Washington, DC 20009
Phone (202) 293-5380
Fax (202) 588-1356
E-mail: [email protected]
http://www.cepr.net/

Dear all,

Please find below the summary and here the link http://www.eurodad.org/files/pdf/537475054c4d5.pdf  to the report of the conference "Alternative solutions to the debt crisis", which took place in

Brussels ahead of the recent European Parliament elections. I look forward to continuing the debate on this crucial topic.

All the best,
Bodo

Bodo Ellmers
Policy and Advocacy Manager - Debt and Responsible Finance Unit
EURODAD - European Network on Debt and Development
Rue d'Edimbourg, 18-26. Brussels 1050. Belgium
http://www.eurodad.org/ Email: [email protected]

ALTERNATIVE SOLUTIONS TO THE DEBT CRISIS

After the financial crisis, debt burdens are weighing heavily on countries in Europe, the MENA region and elsewhere. Citizens are concerned about the high costs of debt service that eat up their tax payments. Each Euro of public income that our governments pay for debt service is a Euro not paid on public services or social protection to the people. Moreover, the citizens whose money is used to pay off debts find that much public debt that burdens our nations is illegitimate. They also find that the loans have been taken out against their will and without their due authorisation, and that the money has not been used for their benefits. Citizens feel that this debt is not our debt, and that we should not pay what we do not owe.

The experts and activists brought together at the "Alternative solutions to the debt crisis" conference proposed a number of policy options about how to deal with current debt problems. A key measure is certainly to bring the costs of debt service down.

THE PROPOSALS CAN BE GROUPED INTO TWO DIFFERENT CATEGORIES:

The first is to reduce the debt stock, the total amount or volume of debt in crisis countries, through debt restructuring, cancellation or repudiation. There are different ways to get there. One proposal that stood out because it featured in many presentations is to deal with the European "peripheries" debt problem in a similar way as Germany's post-war debt in 1953 was dealt with. Convene a major conference of creditors and debtors that deals comprehensively with the debt burden, and takes developmental criteria into account when deciding on the size of debt reduction and the

revised terms of debt repayments. For instance, by limiting their volume as share of GDP, or making them dependent on current account surpluses, in the same way as the London Debt Accord did in 1953.

The second is to reduce the cost of debt service. Several experts argued that it is not the size of the debt stock that matters but the costs of it, which is primarily determined by the interest rate a debtor nation has to pay. Therefore, the aim is to get the interest rates down and/or to reschedule repayment to a point of time when the economic and financial situation of debtor countries has improved. One  prominent example would involve the European Central Bank: the ECB could purchase government bonds of debt-distressed nations and convert them into zero-interest bonds with long or even infinite maturities.

However, there was a strong sense, especially among the activists at the conference, that not all debt can be considered alike. A distinction needs to be made between legitimate and illegitimate debts. A key instrument is the debt audit, an investigation into the origins of public debt that can be conducted by citizens or governments, and assess either a nation's debt stock (which historically happened in Ecuador) or outstanding loans (as Norway did as a creditor nation). Illegitimate debt should be repudiated by debtors, and ultimately creditors have to accept that they have to cancel illegitimate claims.

There was a strong consensus that solving the current debt crisis is not enough. Unless major reforms take place, we will soon end up in the next crisis. The reasons for debt crises are manifold and differ from country to country, and so did the proposals. Just a few examples contain better citizen participation in and oversight over budget making, public borrowing and spending, in order to reduce waste, corruption, and the embezzlement of funds. A large set of proposals addressed the tax policies. In particular low and decreasing tax rates for capital and corporations have been identified as key reasons for the fiscal deficits that ultimately led to the debt crisis. Higher or new taxes, for instance on wealth or financial transactions, featured strongly in the debate on how to finance public affairs while reducing the need to borrow from financial markets. Importantly, experts also mentioned the need to strengthen the domestic economy and its industrial and productive capacities, as trade deficits cause a balance of payment crisis. Several mentioned that the character of conditionalities that creditors such as the IMF impose do more harm than good in this regard.

In Europe in particular, bank bail-outs and macroeconomic imbalances have been triggers for the sovereign debt crisis. The view on solutions here differed, with some proposing deeper integration and better coordinated EU policies in more sectors as the best way, while others advocated for more national sovereignty, including even an exit from the European Monetary Union in order to increase national policy space.

There was a strong consensus that we do not have the right institutions to prevent and manage debt crises, and that the institutions we have (in particular the Troika) are illegitimate and fell victim to elite capture, which explains why they managed the crisis for the benefit of the rich. The debate about "alternative institutions" is certainly one that should follow on from the discussion about "alternative solutions" that took place at the conference.

There are at least two prerequisites for reforms to happen. Firstly, a change in attitude is needed. There is still a predominant view in mainstream thinking that the "guilt" for a debt crisis is to be found on the debtor's side, and consequently the debtor has to be punished and change their behavior. The debtor has to adjust. In practice, however, there is no lack of evidence of misconduct on the creditors' side, which contributed decisively to the debt crises. It should be obvious that the debt relation necessarily involves two parties. Both share the co-responsibility for preventing debt crises and for overcoming debt when prevention failed. Debtors (nations and individuals) must develop the courage to default when creditors refuse to act responsibly. Secondly, political change on a local, national and international level is needed in order to shift the power balance from creditors to debtors. More precisely, from political forces that are captured by creditors and are dancing to

their tune, to those who want to solve the debt crisis in the public interest, based on principles of justice and solidarity.