Interview about the economics of Solar Energy – Entrevista sobre la economía de la energía solar

I was recently interviewed by the international newspaper “La república” for an article on the economics of solar energy. I have posted the full interview below in english and spanish. Feel free to comment and give your feedback! Full article Link: Diario La República – Energías renovables reducen 70% el costo de la electricidad

Interviewer: Yeimy Rozo, Interviewee: David Caicedo Sarralde.

¿Do you think that the entrance of renewable energies such as solar energy, may be able to counteract the profits obtained by fossil fuels in Colombia’s GDP?

In order to provide a conclusive comparative study, a rigorous analysis may be required so to evaluate solar energy from a holistic and critical perspective. This is, given that the response is not universal and can vary depending on the economy of each region, the climatic characteristics, among other factors.

For instance, the rate of profit obtained from the implementation of photovoltaic panels in regions where the climatic conditions are not appropriate, can be very low, hence it would not be able to compete with that generated by fossil fuels. Additionally, climatic phenomena such as the “niña” or “niño”, as well as prolonged rainy seasons, such as the one in which we currently find ourselves in, can make the installation of photovoltaic panels unviable because the amount of light that arrives is insufficient. Timmons (2014), explains it in the following section:

“While the total quantity of solar energy reaching Earth each day from the sun is enormous, available energy at any specific point is modest. The amount of energy derived from solar panels depends on the ambient solar level as well as collector energy conversion efficiency.” (Timmons, 2014, p.14)

Finally, the rate of profit must be compared with the rate of return on capital including an economic and environmental analysis, so to compare both indirect benefits and costs. In other words, the environmental cost of producing the materials that make up the structure and installation of the panels must be included in the profit rate, as they are sometimes made of plastic and other materials dervied from fossil fuels that could have generated measurable pollution in environmental and economic terms.

In conclusion, to give a fruitful answer, it is necessary to analyze the economics of solar energy in a deeper way, which includes aspects such as structural and temporal climatic conditions, environmental costs of materials and a technical baseline involving a sound quantitative and qualitative research that allows one to conclude from a suitable scientific and technical framework.

¿Could the investiment in solar energy sistems for the whole country bring a positive return for the productivity including more jobs and better training?

The answer may depend on many economic, social, political and cultural factors, both structural and circumstantial. First of all, Colombia’s economy is structured in such a way that the financial sector and infrastructure are the ones with the greatest share of GDP (DANE, 2018), which also accounts for the country’s current energy matrix, where Energy is generated mainly from hydroelectric and thermoelectric power sources. Given these structural characteristics, the change to an energy matrix with greater participation of solar energy, may not be compatible with the current economic productive structure. For this reason, a solid baseline is again needed to predict the viability of this transition and the way in which it could occur. By quoting the study of IRENA (International Agency for Renewable Energy), this argument can be supported in other words:

“Among other factors, the magnitude of the energy of renewable energy on GDP will depend on the economic structure of the country, the costs of alternative energy sources (eg fossil fuel prices, energy technology costs), and whether the equipment and required services are imported or sourced locally. Indeed, the literature available suggests that investment in renewable energy technologies (and any other technology) can have a more significant positive effect if the technology is produced locally under the right conditions (eg market, skills availability) (IRENA and CEM, 2014; Poyry and Cambridge Econometrics, 2014).” (Ferroukhi et al., 2016, p.15)

In terms of the socio-political factors, the levels of organization of the cities and the municipal seats of the municipalities can have dynamics that may facilitate or make it difficult to obtain a positive return to the investment in solar energy. Therefore, it is necessary to take into account the existing will of the political system at the national, regional and local levels. Additionally, aspects such as the level of civil culture and individual interests on sustainability ideas such as Proposition Zero, Good Living, among others, can also affect the possible levels of employment and training.

In conclusion, analyzing the increase in productivity and return on investment in solar energy should include an in-depth analysis of the structural characteristics of Colombia’s economy. This is, although some European countries can generate good levels of employment, for the Colombian case it may not be so. Moreover, speculative biases must be avoided before concluding with a concrete response. In addition, it should be mentioned that insofar as possible, solar energy has not been able to generate sufficient levels of return on investment to become the first source of productive income in any country. This is true even for the european countries and Costa Rica. Finally, it is worth mentioning that more progress is needed in the global political aspect, since agreements such as the one in Paris in 2016 are not yet binding, and the reduction of the environmental impact of schemes such as ETS (pollution permits) is questionable. For these reasons, the economy and economics science must respond from interdisciplinary approaches, such as political economy, ecological economics and Deep Ecology,  for example. This is beacuse, some of these approaches adopt a broad version of the economic system which includes all local and global ecosystems, (Martínez-Alier and Roca, 2001) and the sociopolitical and cultural system.

Bibliography:

• Timmons, David & Others (2014). The Economics of Renewable energy. Global Development and Environment Institute. Tufts University, U.S.
• Ferroukhi et al. (2016). Renewable energy benefits: measuring the economics. IRENA (International Renewable Energy Agency).
• DANE (2018). National Accounts – statistics by topics. Consulted on the 22nd of April of 2018. Available at: https://www.dane.gov.co/index.php/estadisticas-por-tema/cuentas-nacionales
• Martínez-Alier, Joan y Roca, Jordi (2001). Ecologial economics and environmental policy. Economic Culture Fund. Mexico city, México.

 

SPANISH VERSION

¿Considera que la entrada en vigor de las energías renovables como las solar podrían contrarrestar las ganancias obtenidas por los combustibles fósiles en el PIB de Colombia?

Para llegar a un estudio comparado concluyente, se requiere de un análisis riguroso, en el cual se pueda evaluar la energía solar desde una perspectiva holística y crítica, pues la respuesta no es universal y puede variar dependiendo de la economía de cada región, de las características climáticas, entre otros factores.

Por ejemplo, la tasa de ganancia obtenida a partir de la implementación de paneles fotovoltaicos en regiones donde las condiciones climáticas no sean las adecuadas, puede ser muy baja, por lo que no podría competir con aquella generada por combustibles fósiles.  Adicionalmente, los fenómenos climáticos como el niño o la niña, así como temporadas de lluvia prolongadas, como en la que nos encontramos, puede hacer inviable la instalación de paneles fotovoltaicos, ya que la cantidad de luz que llega es insuficiente. Timmons (2014), lo explica en el siguiente apartado:

“While the total quantity of solar energy reaching Earth each day from the sun is enormous, available energy at any specific point is modest. The amount of energy derived from solar panels depends on the ambient solar level as well as collector energy conversion efficiency.” (Timmons, 2014, p.14)

Por último, la tasa de ganancia debe ser comparada con una tasa de retorno del capital, que incluya un análisis económico y ambiental, comparando tanto los beneficios indirectos como los costos indirectos. En otras palabras, se tiene que incluir en la tasa de ganancia, el costo ambiental de producción de los materiales que componen la estructura e instalación de los paneles, que pudo haber generado contaminación medible en términos ambientales y económicos, al provenir del plástico u otros derivados de combustibles fósiles.

 En conclusión, para dar una respuesta provechosa, se requiere analizar la economía de la energía solar de una manera más profunda, que incluya aspectos como las condiciones climáticas estructurales y temporales, los costos ambientales de los materiales y una línea de base técnica con una base cuantitativa y cualitativa sólida, que permita concluir desde un margen científico y técnico adecuado.

 ¿La inversión en sistemas de energía solar para todo el país podría traer un retorno positivo a la productividad generando más empleos y mayor capacitación?

 La respuesta puede depender de muchos factores económicos, sociales, políticos y culturales, tanto estructurales como coyunturales. En primer lugar, la economía de Colombia está estructurada de tal forma que el sector financiero e infraestructura, son las que más participación tienen en el PIB (DANE, 2018), lo que da cuenta también de la actual matriz energética del país, en donde la energía se genera principalmente a partir de fuentes de energía hidroeléctrica y termoeléctrica. Dadas estas características estructurales, el cambio a una matriz energética con mayor participación de energía solar, podría no ser compatible con la estructura productiva económica actual. Por esta razón, se necesita nuevamente una línea de base sólida, que permita evaluar de forma predictiva la viabilidad de dicha transición y la forma en la que se podría dar. Retomando el estudio de IRENA (Agencia Internacional de Energía renovable), se puede soportar este argumento en otras palabras:

“Among other factors, the magnitude of the impacts of renewable energy on GDP will depend on the economic structure of the country, the costs of alternative energy sources (e.g. fossil fuel prices, energy technology costs), and whether the equipment and required services are imported or sourced locally. Indeed, the literature available suggests that investment in renewable energy technologies (and any other technology) can have a more significant positive effect if the technology is produced locally under the right conditions (e.g. market, skills availability) (IRENA and CEM, 2014; Poyry and Cambridge Econometrics, 2014)” (Ferroukhi et al., 2016, p.15)

En términos de factores socio-políticos, los niveles de organización de las ciudades y las cabeceras municipales de los municipios pueden tener dinámicas que faciliten o dificulten la obtención de un retorno positivo a la inversión en energía solar. Es necesario tener en cuenta también la voluntad política existente, tanto del sistema político a nivel nacional, como a nivel regional y local. Adicionalmente, aspectos como el nivel de cultura ciudadana e individual en torno a ideas de sostenibilidad como la Propuesta Cero, el Buen Vivir, entre otros, puede también afectar los niveles de empleo y capacitación posibles a raíz de dicha inversión.

En conclusión, analizar el incremento de la productividad y retorno de la inversión en energía solar debe comprender un análisis profundo de las características estructurales de la economía de Colombia. Esto es, si bien en algunos países de Europa se pueden generar buenos niveles de empleo, para el caso Colombiano puede no ser así, por lo que se deben evitar sesgos especulativos antes de concluir con una respuesta concreta. Adicionalmente, cabe mencionar que en ningún país del mundo, la energía solar ha podido generado suficientes niveles de retorno a la inversión, para ser la primera fuente de ingresos productivos, ni si quiera en Europa o Costa Rica, por ejemplo. Finalmente, cabe mencionar que se necesitan más avances en el aspecto político global, ya que acuerdos como el de Paris en 2016, aún no son vinculantes, así como resulta cuestionable la reducción del impacto ambiental de esquemas como los ETS (permisos de contaminación). Por estas razones, la economía también debe dar respuesta desde enfoques interdisciplinarios, como la economía política, la economía ecológica, la Deep Ecology (Ecología profunda), en donde se entienda una versión amplia del sistema económico, incluyendo a todos los ecosistemas locales y globales (Martínez-Alier y Roca, 2001), sistema social, político y cultural.

Bibliografía:

• Timmons, David & Others (2014). The Economics of Renewable energy. Global Development and Environment Institute. Tufts University, U.S.
• Ferroukhi et al. (2016). Renewable energy benefits: measuring the economics. IRENA (International Renewable Energy Agency).
• DANE (2018). Cuentas Nacionales – estadísticas por temas. Consultado el 22 de Abril de 2018. Disponible en: https://www.dane.gov.co/index.php/estadisticas-por-tema/cuentas-nacionales
• Martínez-Alier, Joan y Roca, Jordi (2001). Economía Ecológica y política ambiental. Fondo de Cultura Económica. Ciudad de México, México.

 

Back to the basics: Political Economy is back, Capital is back

After two years of blog inactivity, the amount of fresh ideas and posts that are shared amidst blog networks and groups is considerably more than what I used to remember. It is a truly fulfilling sensation to see how some of the blogs have undergone a level of progress such that their voices are being shared by several people around the world.

Coming back to the WordPress world of connecting to other people who think alike, motivates me to uphold the basics in terms of the Political Economy of Inequality. I am talking about the Quarterly Journal of Economics paper of Piketty and Zucman that preceded the world-famous book “Capital in the twenty-first Century”.

In this paper the authors decompose the national-income ratios in 8 “developed” economies around the world in terms of several drivers and patterns such as the asset price recovery, savings rate, housing, capital gains, capital shares and private wealth pattern.These patterns try to account for the U-shaped curve that depicts a rather stable decrease of the Private Wealth – National income ratio after the WWII until the 1970’s when anti-capital policies started to be gradually lifted.

The authors use several models to first explain the dynamics of savings and income growth rate that affect the wealth-income ratio, such as the Beta(wealth-income ratio)=Savings rate/income growth rate, or more complex ones such as the Two good model (Volume versus Relative price effect). In the end, the conclusions are pointing out how the wealth-income ratios increased from 200-300% in the beginning of 1970 to 400-600% in 2011. Most of the rise is due to the amount of savings rate rather than the capital gains, as well as the asset price recovery and housing investment compiled with the strong capital liberalization policies of the 1980’s (Piketty and Zucman, 2014, pp.1279-1287)

The U-Shaped curve and Private Wealth curve are as striking as the conclusions of the authors, in terms of the increasing role of private wealth in comparison to the national income and how the levels of 600% were only seen two centuries ago. The low-income growth rate adds up to the important savings rate to finally conclude that capital is back, which means that the issues of inequality and distinction between inherited and self-made wealth are of critical importance these days, as the authors suggest. 

In conclusion, these arguments are very useful to understand the increasing income share of the top 1% and the top 0.1% compared to the bottom 50%, as Piketty depicts in his book “Capital in the 21st century”. The correlation between housing bubbles, increasing private wealth-national income rates, consistent savings rates, low-income growth rates and capital liberalization are now easier to establish. As Capital is back and a new tax structure is needed, we need more community action towards protecting capital goods and a fair economic structure. In addition we also need be thankful for the problems, as controversial as it may sound, the problems are the ones that inspire us to keep the pace of change and service to the community. We all need to join the Pope’s struggle with hope and optimism as he once said: “Human rights are not only violated by terrorism, repression or assassination, but also by unfair economic structures that create huge inequalities” (Pope Francis, 2013).

Bibliography:

• Piketty & Zucman (2014), Capital is Back: Wealth-Income Ratios in Rich Countries, 1700-2010
• Pope Francis (2013). Speech on March of 2013. The Guardian’s report.

 

 

 

 

 

 

 

 

 

Evidence of Inequality at its peak!

As I was surfing the web I found out a very nice catchy image that I though was worth sharing.

http://becausefinanceisboring.com/post/113351248884/poor-getting-poorer-2008-2012-all-income-growth

In my opinion this image manges to accurately spell out the kind of society we live in today. Notwithstanding the reality that stands upon us, a lot may have chosen to ignore it.  However I think it is indeed our duty to constantly remind ourselves that for several decades our societies were able to build up a sense of community and claim collective goods by right! Those were the days of the Keynesian Consensus, the New Deal. Let us not forget that a social change is always possible, it has already been made! Of course the pathway is narrower today than before, but the system itself has left heaps of spaces for resistance. And we must tap into those spaces to come up with a local and global response by strengthening the solidity of our civil society with cooperation and class consciousness. Hope is upon us mates…!

A short review on “Ill fares the land” by David Caicedo S.

Written by: David Caicedo S.

The book named Ill fares the land (“Algo va mal” in spanish) was written by the british author Tony Judt (Judt, Tony (2010)). It was first released in 2010. The same year when the author died. Even though it’s been 4 years after the book was released, the issues discussed in his book have acquired again a high degree of importance in nowadays discussion between economists and academics, I strongly recommend this book given that all the values and arguments he exposed still apply now.

Now before starting to develop the author’s thesis, It is convenient and fair to mention a couple of facts about Judt’s life that might enable the readers to sketch an objective perspective towards the validity and importance of his opinion. Born in london, Judt was a graduate of the King’s College in Cambridge. He is still recognized for having taught in several prestigious Universities, such as Cambridge, Oxford, Berkelez and New York. In the last one he managed to found the Chair in European Studies in 1995. He also occupied the Director chair at the Remarque instute. In terms of awards, the most notorious ones he was awarded are the Hannah Arendt prize in 2007 and the Orwell prize for Lifetime Achievement in 2009. Before he passed away in 2010, he was still very committed to the task of providing his knowledge and experience to mankind, which can demonstred by the 3 books written by him in the mean time before his death. Among those books was Ill Fares the land. (Wheatcroft Geoffrey (2013))

Having highlighted the exceptional and committed writer that Judt is, It is possible to step forward on the book content analysis. As a central thesis the author wants to show that the society nowadays has taken a few steps back in terms of the constitution of the modern society. Several values and accomplishments gained by the generations between 1945 and 1970 have been not only forgotten but also radically overthrown and quicikly substituted by the neoliberal and conservative dogma of individualism and conformism with the status quo. . The inequality and inequity in the income distribution between the mayority of the world population and most countries is sharply rising, which also contributes to support the thesis that many economists such as Amartya Sen and Joseph Stiglitz (Stiglitz, Joseph and Sen, Amartya (2013)) have stated, in terms of the validity of conceiving development merely as economic growth measured by the country’s GDP.

Additionally the author is able to stablish a causal relationship between the rise of inequality and the rise of various social and political problems, such as crime, lack of any social mobility or interest of political participation of the citizens, and others. So with this, Judt wants to explain why the intervention of the State is not only favorable for the society development, but also necessary to reproduce certain values that might face the effects of an unequal society. The gain of the Welafare state was the Universalism for providing public goods to the society such as education, public health, dwellings, and most important the grant of equal rights and access to the market. Because specially after 1929 and now after 2008there is enough evidence in history to confirm that market is not an inclussive institution per se.

Given the benefits and accomplishments of the welfare state, the question mark about why they were crushed by the neoliberal view might come up. Judt explains, that in spite of improving the welfare of the society and allowing the three following decades after the II World War until the 1973 Oil crisis to be one of the hugest economic and development Booms in all mankind history, the welfare state approached an epoch of exhaustion. An exhaustion, mainly led by the new generations that were already born in the nest of the welfare state, meaning that they didn’t get to live what the past generations did, in order to build up the whole new idea of state and thus of socieal welfare after the WWII. Among these young generations, one could find both right and left-sided positions, for example the France protests on May of 1968.  Although the students were fighting for valid rights againts repression, their standard of fighting for freedom at all costs contribued to put aside important values such as Equality that in the future would leave a clear field for the ideas that Margaret Thatcher and Ronald Reagan would promulgate.

Nevertheless, the fight for liberty and individualism was not the only value that contribued to the deconstruction of the idea of the Welfare state. The author also mentions the role played by the excess of confidence coming from the instituional designers of the Welfare State, as a contributing factor. As well as the impact of the Fall of the Soviet Union to the ideals that supported the role of the state as an effective maximizer of the welfare and as a provider of public services.

Now, indeed the crisis of 1973 took a part in evidencing certain failures of the State as well as the lack of response from the Keynesian theory to new economic problems such as the stagflation. However it was not a structural cause of the Welfare State dismantle, as the rise of dogmatic neoliberal discurses that were taking place before the conservative revolution. Since then the common interests debate among citizens has been going down sharply. As a result, politicians that promised a solution to the “problem” such as Thatcher and Reagan, along with the support of an economic crisis, were elected to dismantle all the values that had so far contributed to the conformation of the modern society that we are now, specially those collective values in favour of the public and universal matters.

After 1980, the society moved on to a whole new worldview and economical system. A system in which the State would play a minimum role in the intervention of the economics and the most important rights in society would be declared officially as the freedom, measured in terms of the private property and the full trust in the market’s distibution of wealth and goods. Even knowing that the proof that the aggravation of selfish and individualist values could lead to a full crisis, was just at the end of the last corner, in 1929. Since then inequality and inequity in wealth distribution have increased progressively. As an example, Judt compares the wage of the CEO of a chain store like Wall Mart 40 years ago and now: The CEO earned 40 times the wage of one of his average employees; and now the same CEO earns 900 times the wage of one of his average employees. With this he illustrates the point that the will of economic growth of neoliberal dogma, has just created more inequality which is a sign of less development. Of cousre the problem is not in having more rich people, but in having more poor people. This happens even in highly developed countries such as the United States.

After 2008, some authors predicted that the Neoliberal ideas had reached a peak. However after those events, our society has not changed his path at all. Despite the need of a strong State to rescue the banks and thus the economy from the crisis, the main individualist and selfishment values still remain as a constant. Now, there is of course an exception to the equation which is the model adopted by Sweden, Finland and Denmark, where both ideas about the need of the State’s intervention and having a regulated market to help organize the economical activity are mixed up in order to form what Judt calls a social-democratic model. To him that is the ideal economic model because it is built upon a universal consensus about the intervention of the Welfare State and the market regulation is a mean to achieve the maximum social welfare without leaving the market economy whatsoever.

This also means that the dogma about the State’s inefficiency  must be eliminated from the debate, because as matter of fact, it was proven wrong. Not only by that, but also by the example displayed by Judt about the idea held in the building of Railroads and train stations during the Keynesian consensus, where the effectiveness of the State was very clear. But when it was hived off its efficiency to provide the public service decreaced so much that the privates even suggested to destroy a few train stations and Railroads. The results of losing the Railroads is not only losing the public good, but also a representative part of mankind history in terms of a civic life.

Finally Judt says that with the involution of the last 30 years our society has gained a discursive failure. We do not know how to talk and debate commong interest issues any more. There is an injustified collective fear for words like “socialism” which contributes to the lack of participation and involment of the citizens with politics. This must change, our youth has now the role of overcoming this discursive failure and resume the fight for public and collective values. Only with this break, a change of path can be materialized. In conclusion, Tony Judt gives a wing of hope about the change of path that the society must take. We must face the neoliberal values and break the dogma of individualism. Start fighting for democratic ideals such as equality, equity of the wealth distribution, social justice and univeralism.

All of these accomplished by a rethinking of the whole idea of the State, by bringing up social issues into the politcal and public debate and by not forgetting our history and the things achieved by the Welfare post WWII generations. Having said this, there is an obvious need of change in our global society which relies on us youth, for which we have to fight and think of it as our contribution to rescue the values that mostly define us as human beings.

Bibliography:

Judt, Tony (2010). “Algo va mal”. Ed. Taurus. Spain.

Wheatcroft Geoffrey (2013). “Professor Judt changes Train”. The Times Literary Supplement. UK. Available online: http://www.the-tls.co.uk/tls/public/article1239882.ece Stiglitz,

Joseph and Sen, Amartya (2013). “Mismeasuring Our Lives: Why GDP Doesn’t Add Up”. The News Press. U.S

By David Caicedo S.

A short review on “Why nations fail” of Daron Acemoglu and James Robinson

Written By: David Caicedo Sarralde

It’s been a while since the blog had been without activity. But now the vacation time has come to an end.

Time to go back to the routine and the creativity time.

The book written by Acemoglu and Robinson is indeed a book of a kind. It is referred by many authors including economics Nobel Prize recipients as a revolutionary book that provides a wide and accurate perspective for the debate surrounding the differences between the countries rate of development in the world. Why are some countries more developed than others, what is it that makes them rich and how did the world lead to such inequity in terms of development and income distribution around the world.

The main thesis of the book states that the reason why certain nations have reached a high development and are rich meanwhile others are not is because of the institutions that have been created in these countries. Following the author’s opinion, nations fail not because of the ignorance of their rulers, nor because they are not good enough advised and neither because it is a matter of geography and culture. Throughout the book the authors provide many arguments, examples and counterexamples to explain why these hypothesis do not explain the situations of inequity in the world or the differences in the economic and social development of the nations. For the authors the nature, interaction and history of the institutions built in the countries manage to explain some have turn in to the failure whilst some have reached the so called ideal development.

As far as this point, it is quite easy to notice that the perspective and approach of the book is the new institutionalism. Nevertheless the contributions made to the debate of development go beyond the analysis of the institutions, since many historical, social and political elements are analyzed to detect the critical conjunctures in the societies that allow for example a creative destruction moment to take place or clear the path for innovators to build the technology and tools that would reach a new development stage.

Another contribution of the book is to the development of both economic and political science. The authors first let the reader know their critical view towards how the economic science should see itself as well as the other science. They hardly encourage the need of an interdisciplinary perspective on the science in order to be able to give an accurate explanation to the economic problems of the societies which are not entirely economic.

They even joke that sometimes it is evident that the field of study of economics is that in which the political and social issues have already been solved, given that the most common approach on economics tries to leave all the non-economic variables outside of the equation to mistakenly explain a society problem. It turns out that the explanation on why a problem has developed somehow lies most of the times on political problems or even social problems. The economic science should understand this and hereby reach an interdisciplinary approach where the contributions of the political science, sociology, history and psychology should also play an important role alongside the economic problem itself.

Many situations and countries are analyzed in the book, for example the difference between the Nogales city between U.S and Mexican border, the two Koreas, African countries like Sudan, Somalia, Ethiopia, Botswana, South Africa, Congo, also countries like England, France, Russia, United States, Australia, China, Japan and even historical moments like the epipaleolithical natufian culture, the black death conjuncture, the Roman empire, and a few more others.

Since the beginning, the mean time and the ending part of the analysis of these countries and situations the authors are able to support their main hypothesis. In addition as a result of putting all the information and data together, they authors are able to theorize and generalize some concepts such as the distinction between the institutions that grant real development and equity that are the inclusive ones, and those which create poverty and “underdevelopment” named extractive.

Another generality that the authors find out is that there is a wide grid of interactions between political and economic institutions, always evidencing that there is a subordination relationship between the economic institutions to the political ones. By this generalization the authors state that always inclusive political institutions lead to inclusive economic institutions, same happens with the extractive ones. This is exemplified in the case of England and France where the inclusive political institutions, product of the fight of emerging classes seeking for new rights along with a few critical conjunctures, were needed first before all the inclusive economic institutions were created and thus a path to poverty alleviation, plurality, political centralization, private property rights, creative destruction, innovation, new technology and development was drawn.

Having explained this main concepts, the book keeps on with more concepts deducted from this first theoretical chart. The two classes of institutions can create a virtuous cycle for the inclusive ones to be maintained or a vicious one for the extractive ones. This explains a long and continuous path of many countries in Europe, Africa and America that have had a history of inclusive and extractive institutions for periods even up to 450 years as happens in America. Also explains why it happens that even some countries that have reached their own independence and come through the submission to another country still have the same institutions and no changes have been made for a long period of time.

On the other hand, the book only emphasizes in supporting and exemplifying the main thesis and does not step into many debates and issues around the concept of “development” and the relationship between the income distribution and the economic game rules that have been set by the international system. Even though this matter is not addressed by the book it does not mean it is less important. Because in order to lay out a path to development it is necessary to define what it is and be inclusive in its definition. That means being able to recognize that the western way of development is not the only one nor the only accurate one.

As Joseph Stiglitz, Sygmunt Bauman, Amartya Sen and a few other economists and political scientists have argued, the conception of development involving the mandatory growth of the GDP does not grant sustainability, an environmentally friendly model, or a better income distribution or even an actual human or social development in the countries. Therefore it is important that the sciences open up to the various worldviews around the concept of development to try to understand and comprehend that the debate does not contain a single truth but instead it is a consensus (following Habermas this time).

In conclusion, the book is a very good example to understand the approach of the new institutionalism. Also it is a huge contribution to the economic and political science in terms of overturning the approach of this sciences to things that had been forgotten for a long time such as an explanation to the differences in the income distribution in the countries and the way of development among them. The economic Growth of GDP guarantees actual development no longer, which is why the economic science should start digging through the lines of interdisciplinarity to adapt to the changing problems of the society that have proven to be a mix of political, social and economic issue. If a problem is isolated in one perspective such as the economic one, the explanation will be guaranteed to be as far to the reality as a fairy tale and therefore a narrowed and mistaken worldview can be build. That is the reason why the debate around the concept of development should also acquire a primary role in this certain issues. An inclusive and open view of the cultures is also needed. From my point of view only if all these factors converge, the complex of the society and countries problems and issues can be understood and hereby faced.

by: David Caicedo Sarralde

Modelo de un nuevo “Consenso” coherente y efectivo para el desarrollo real de América Latina en la época actual.

Por: David Caicedo Sarralde

De acuerdo al texto de David Llistar y al aporte proporcionado por autores críticos respecto al proceso de globalización del capitalismo neoliberal, como Joseph Stiglitz y Amartya Sen; el consenso de Washington no garantiza ni facilita el desarrollo económico, social y político de América Latina en general. Esto, debido a que se basa en intereses ajenos a las realidades de estos países y desconoce las verdaderas necesidades económicas y sociales de la región. (Llistar. (2002))

El contraste de los indicadores de PIB y de crecimiento económico, con las cifras de IDH de muchos países de América Latina. Junto con los indicadores de GINI e indicadores de desigualdad económica y social, y otras cifras que tratan de abordar el desarrollo desde un enfoque distinto, como el índice de Felicidad; demuestran una correlación inversa (Sen, (2004).) y evidencian el fracaso del consenso de Washington en promover un desarrollo real democrático y útil para mitigar el problema de la pobreza y la desigualdad.

Debido a esto, no sólo es necesario un replanteamiento del consenso en un post-consenso de Washington, sino una reforma estructural completa de la forma como los países de América Latina conciben desarrollo y la forma como se debería actuar desde el estado, las políticas y la población para alcanzar dicha meta de desarrollo económico, social y política real. De tal forma que se analice críticamente la viabilidad de continuar en una relación de dependencia con las entidades de banca multilateral, como el FMI, el BM o el BID (Stiglitz, (2007)).

En esta medida, a continuación se plantea un nuevo consenso en donde se tenga en cuenta un diagnóstico real de la situación general de América Latina y se propongan nuevos elementos que busquen un beneficio social general, en donde el objetivo no es la maximización de beneficio de las empresas transnacionales o las élites, sino la maximización de bienestar de toda la población, articulada mediante una nueva meta y reconfiguración epistemológica del concepto de desarrollo.

El consenso Latino Americano para el desarrollo

 

1. 1.       El plan de desarrollo de cada país, deberá incluir un diagnóstico efectivo de las necesidades de la población, así como la aceptación del fracaso de las políticas estipuladas en el consenso de Washington
2. 2.       En la constitución de cada país, se deberá incluir una concepción de desarrollo incluyente, en donde se define la búsqueda de un verdadero desarrollo social, político y económico de la población; que a su vez reconozca la diversidad de concepciones, como por ejemplo la indígena.
3. 3.       Por esto mismo, se deberá aceptar que el sistema político y económico, han llegado a un punto de inflexión e inestabilidad, en donde las reformas que se hagan a continuación serán todas de carácter estructural, e implicarán un reformateo completo del modelo y del sistema actual. Lo cual incluso podrá ser llamado, a la luz de autores como Huntington, como una “revolución total”.  (Huntington (1992). Pp.238)
4. 4.       Cada país, deberá procurar incurrir en un déficit fiscal cuando su economía demuestre la necesidad de incrementar la Demanda Agregada desde el estado (lo que en el caso Latinoamericano es “sine qua non”). Sin embargo, deberá tener cuidado con una futura crisis de deuda. El país podrá mantener déficit, siempre y cuando lo financie y su economía no decaiga demasiado.
5. 5.       El estado deberá incrementar el gasto público, desde la esfera social y de la educación. Se podrán otorgar subsidios para mejorar el bienestar de la población.
6. 6.       El estado deberá reformar estructuralmente su modelo de presupuesto y de desarrollo, para incrementar considerablemente su capacidad de intervención económica, incrementar su productividad, diversificar su producción, mejorar su competitividad, reducir su dependencia de la inversión externa, y dar un vuelco hacia la demanda interna.
7. 7.       Adicionalmente, se deberá efectuar una reforma tributaria, para garantizar como mínimo que toda la población pague un porcentaje similar, y que no ocurra que las clases más altas paguen un porcentaje menor o casi insignificante en comparación con las otras clases.
8. 8.       También se necesita una reforma en el ámbito del comercio, para promover y proteger la industria nacional frente a la extranjera.
9. 9.       Una vez las reformas se hayan efectuado, el estado pasará a administrar la salud la educación y el transporte en algunos casos. Esto debido a que se demuestra que si bien las empresas privadas con eficientes, tienen como objetivo la maximización de sus ganancias, y no la maximización del bienestar de la población, lo cual es un impedimento económico, social y ético.
10. 10.   La propiedad privada es permitida y protegida. Sin embargo se fomentará la ampliación y mejoramiento de los espacios públicos.
11. 11.   El mejoramiento del sistema político en vías a mejorar la democracia, debe ser también una prioridad en cada país, por lo cual se buscará una ampliación de los canales de participación.

Bibliografía:

Huntington, Samuel P. (1992). El Rol político en las sociedades en cambio. Editorial PAIDOS. Buenos Aires, Argentina.

Sen, Amartya. (2000). Desarrollo y libertad. Editorial planeta. Bogotá, Colombia.

Llistar, David. (2002). El qué, el quién, el cómo y el por qué del Consenso de Washington. Observatori del Deute en la Globalització. Cátedra UNESCO de la UPC. Artículo en línea.

Sen, Amartya. (2004). Nuevo examen de la desigualdad. Alianza Editorial S.A. España.

Stiglitz, Joseph. (2007) El malestar en la globalización. Editor punto de lectura. Barcelona, España.

Sen, Amartya. (2009). El valor de la democracia. Editorial el viejo topo. Madrid, España.