Latest news with #JohnMaynardKeynes
Gulf Today
07-07-2025
- Business
- Gulf Today
America's broken politics affecting economy
The political realignment has come for economics. At least since the days of Friedrich Hayek and John Maynard Keynes in the last century, the divide in economic thinking roughly corresponded to the political split. In the mainstream, everyone was a capitalist and saw some role for government. The right/left divide was mostly over exactly how big that role should be. Now, in economics as in politics, it is no longer left versus right; it is moderates versus populists. The question isn't so much the optimal size of government in a global market-based economy, it is whether the economy is positive or zero-sum and how it entrenches power, according to Tribune News Service. The result is unlikely allies and enemies. The horseshoe theory of politics holds that extreme left and right partisans agree more with each other than they do with the centrists in their party. That theory now also applies to economics. A decade and a half ago, economists and policy wonks were divided on things that in retrospect seem quite small — the structure of the Affordable Care Act, for example. More and more lately, I struggle to find disagreement with center-left economics pundits who used to make me shake my head. It could be that we are all moderating with age. But I don't think so. It's that the conversation has changed. The debate is increasingly about questions we moderates have long seen as resolved, such as whether price controls work (no), globalization is a good thing (yes), or growth should be the primary objective (of course). These questions are being revisited because populists have become a much bigger and more influential force in US politics and policy — and as they do, centrists find that we have more in common with each other than the more extreme wings of our respective camps. It's not just me. Ezra Klein recently described a divide in the Democratic Party over the so-called abundance agenda, which argues that getting many regulations and special-interest groups out of the way can unlock more growth. So-called 'abundance liberals' argue that, with the right policies, the government can increase economic growth and make everyone better off. The more populist wing of the Democratic Party rejects this approach, because it sees the real problem as power. It has a more zero-sum view of the economy, in which the powerful (usually corporations and the rich) take most of the limited resources everyone should be entitled to. I am closer to abundance liberals (let's make a bigger economic pie) than I am to populist liberals (let's make sure the pie slices are exactly even). I also support getting rid of wasteful regulations and favors to special-interest groups. The difference is that I think these barriers need to be removed to empower the private sector, not the government, to drive growth. This is not a trivial difference, and someday it will probably tear our fragile alliance apart. But for now, compared to the alternative, it feels semantic. Conservatives are facing a divide similar to the one Klein describes among liberals. The populist strain of the right also sees the world as zero-sum and condemns the concentration of power — not of the rich, but among foreigners and institutions: universities, technology firms, government bureaucracies, international agencies, and so on. President Donald Trump's administration reflects this division. Its economic team includes representatives from the more traditional pro-growth wing of the Republican Party, with trained economists and people who worked in finance, as well as people from the more populist zero-sum wing, dominated by Yale Law graduates and their fellow travelers. This realignment will shape America's economic discourse and policies for the foreseeable future. Rather than a right/left divide on the role of government, the main debate going forward will be between centrists and populists.
Bloomberg
01-07-2025
- Business
- Bloomberg
America's Broken Politics Is Breaking Economics, Too
The political realignment has come for economics. At least since the days of Friedrich Hayek and John Maynard Keynes in the last century, the divide in economic thinking roughly corresponded political split. In the mainstream, everyone was a capitalist and saw some role for government. The right/left divide was mostly over exactly how big that role should be. Now, in economics as in politics, it is no longer left versus right; it is moderates versus populists. The question isn't so much the optimal size of government in a global market-based economy, it is whether it the economy is positive or zero-sum and how it entrenches power.
New Indian Express
26-06-2025
- Business
- New Indian Express
A jobless future? Rethinking work, worth, and what young graduates must do
In 1930, John Maynard Keynes prophesied that within a century, technology would advance so rapidly that we'd work just fifteen hours a week. The rest, he said, would be 'leisure filled with wisdom.' It is 2025 now. We have the technology; indeed, machines now write code, generate poetry, diagnose illnesses, and trade stocks. But Keynes' utopia has curdled into something else entirely; underemployment, precarity, and a deepening crisis of human worth in an age where artificial intelligence (AI) increasingly renders human labour redundant. The real crisis isn't just economic; it is existential. The collapse of work as we knew it We live in a world where there are more job seekers than jobs. This is not just a cyclical issue of economic downturns. It's structural. AI has magnified this structural imbalance. It can do more, for less, and often better. As Kai-Fu Lee, the former President of Google China and author of AI Superpowers, argues, 'AI will replace 40% of the world's jobs within 15 years.' What's more alarming is that it's not just factory workers or clerks, it's writers, lawyers, teachers, designers, and even software engineers. When one person with the help of AI can do the work of ten, what happens to the nine? A strange silence fills the space where policy should speak. Governments tinker with skilling programmes, universities revise syllabi, but none address the fundamental dislocation underway. And the young, especially fresh graduates, find themselves caught in a world they were not prepared for. Degrees without direction For decades, education has been sold as a passport to prosperity. Get a degree, any degree and you'll find a job. But this promise has frayed. In India, nearly 42% of graduates under 25 are unemployed (CMIE, 2024). The situation is not much better in many parts of the developed world. Even in the United States, the so-called land of innovation, graduates struggle with underemployment, debt, and gig-economy drudgery. It's not just about supply-demand mismatch. It's a value mismatch. Most formal education continues to reward repetition, compliance, and memory, all the things machines now do better. Creativity, synthesis, moral judgment, and emotional intelligence, the truly human capacities, remain undernourished. So, what should a young graduate do? Learning how to learn and unlearn The first and most urgent shift required is psychological. No job is for life anymore. The linear career path, education, job, promotion, retirement is dead. In its place is the zigzag of projects, reinventions, collaborations, failures, and perhaps, something deeper 'vocation'. Graduates must understand that 'learning to learn' is the only skill with lasting value. As Yuval Noah Harari, author of 21 Lessons for the 21st Century, points out, 'In a world flooded with irrelevant information, clarity is power.' This clarity comes not from memorizing facts, but from knowing how to think, critically, ethically, and contextually. The young must cultivate the courage to unlearn: to discard stale notions of prestige and 'safe' careers, and instead explore what problems are worth solving, not just what skills are worth selling. Build for the human future, not the machine's Technology isn't destiny. It reflects values. AI is not some cosmic force; it is built by people, trained on data, and shaped by incentives. The real question is: What kind of society are we building with AI? Tristan Harris, the former Google ethicist who now runs the Centre for Humane Technology, warns against 'technology that hacks human weaknesses.' He calls for a renaissance of humane design, technologies that augment human agency rather than automate human obsolescence. Graduates from every stream, whether arts, sciences, or commerce, must ask: What is the human role in a machine world? The answers won't come from textbooks but from interdisciplinary exploration. The philosopher Martha Nussbaum, for instance, argues that a liberal arts education is more essential than ever not to churn out 'job-ready' employees but citizens capable of compassion, curiosity, and democratic judgment. Think local, act planetary The AI boom has exposed another stark world is connected, but the gains are not. Most AI tools are built for urban, Western contexts. But the crises of hunger, health, education, and climate disproportionately affect the Global South. Young graduates, especially in India, must think of their work as service, not survival alone. The future is not in chasing scarce jobs, but in creating new forms of value rooted in local needs. This is where Gandhi becomes relevant again, not as a figure of nostalgia but as a thinker of radical modernity. His idea of Nai Talim (basic education) was to blend learning with livelihood, knowledge with character. Imagine a generation of graduates who build AI tools for farmers, who design educational games in regional languages, who run micro-health networks in remote villages. These are not 'jobs' in the conventional sense but works of purpose. Community, not just individual genius We are sold the myth of the solitary tech wizard who changes the world with a startup. But meaningful innovation rarely happens in isolation. It emerges in communities of trust, where different minds bring different strengths. Young graduates must therefore invest in relationships, collaborations, and networks of mutual aid. In an age of hyper-individualism, the future will belong to those who can build teams, share credit, and solve problems collectively. The corporate economy extracts; the living economy regenerates. The young must turn their gaze from extractive metrics, salaries, designations, packages, to regenerative are we restoring, healing, building? These questions matter more than ever in a time when work must serve not just profit, but purpose. The future will not be built by those who merely seek to compete with machines, but by those who can reimagine what it means to be human in a world remade by them. The work of being human Let us be clear. AI will continue to advance. It will outstrip us in efficiency, consistency, and speed. But it will never replace meaning, beauty, empathy, or love, the things that make life worth living. A young graduate, therefore, must not ask 'What job can I get?' but 'What human role can I inhabit that AI never can?' This is not the end of work. It is the beginning of a new imagination of work, not as a market commodity, but as an act of creation, care, and contribution. That, Keynes might agree, is the real future worth building. (The author is a Bangalore-based management professional, literary critic, translator, and curator)
Economic Times
19-06-2025
- Business
- Economic Times
From vaults to verdicts: Central banks say it's still gold's time to shine
For years, the so-called financial wizards laughed at the Indian housewife's fetish for gold. Economist John Maynard Keynes was no exception calling the yellow metal a 'barbaric relic'. But the prudent Indian housewife showed the mirror to the financial veterans. Not only did the institutional investors have a new-found love for gold in recent years, the lords of the financial systems, those who print currencies that fill every wallet – the
New Indian Express
14-06-2025
- Business
- New Indian Express
Looking at the dollar as reserve currency when Trump is floating his "big and beautiful" agenda
These two new books by well-credentialled economists examine the role of the US dollar in international finance. The story has its origins in the July 1944 meeting at the Mount Washington Hotel in Bretton Woods, New Hampshire, which established the post-Second World War international financial order. The objective was to facilitate free trade based on convertible currencies and stable exchange rates. The troubled pre-war gold standard, where the standard unit of currency was a fixed weight of gold, was not considered feasible. There was insufficient supply of the precious metal to meet expected demands of international trade and investment in the post-war economy. The communist Soviet Union, emerging as a rival to the USA in the global order, also controlled a sizeable proportion of known gold reserves. The debate came down to differences between John Maynard Keynes, representing the UK, and a senior US Treasury department official Harry Dexter White, who allegedly was a Soviet spy. Keynes' bold solution was a world reserve currency (the Bancor) administered by a global central bank. White rejected the proposal: "We have been perfectly adamant on that point. We have taken the position of absolutely no." The meeting took place against the background of a still raging war, the rise of fascism, and the Great Depression. The US had emerged as the pre-eminent economic and military great power as well as the world's richest nation and the biggest creditor. The British and the French, devastated by two world wars, needed American money to rebuild their economies. White's view prevailed. Bretton Woods established a system where the US dollar effectively assumed the role that gold had played previously in the international financial system. Countries pegged their currencies to the dollar which as the principal reserve currency was to have a fixed relationship to gold ($35 an ounce). The Bretton Woods system was ultimately undermined by large US budget deficits to pay for the Vietnam War and President Johnson's Great Society programs, inflation and increased dollar outflows. The dollar's convertibility to gold was removed. There was a shift to predominately market set exchange rates. However, the dollar continued as a major trading and reserve currency. 96 percent of trade in the Americas, 74 percent in the Asia-Pacific region, and 79 percent in the rest of the world is denominated in the currency. Only in Europe where the euro is dominant with 66 percent share is its market share low. About 60 percent of international and foreign currency claims (primarily loans) and liabilities (primarily deposits) are in US dollars. Its share of foreign exchange transactions is around 90 percent. US dollars constitute around 60 percent of global official foreign reserves. These shares are disproportionate to the size of the US economy (around a quarter of global GDP or 15 percent adjusted for purchasing power). King Dollar and Our Dollar, Your Problem, as evidenced by the trite titles (the latter based on Treasury Secretary John Connally's much cited barb), offer conventional histories, rarely deviating much from the accepted narrative. Much of this ground was traversed by Barry Eichengreen in his 2010 book Exorbitant Privilege. Jeffrey Garten's 2021 book Three Days at Camp David- How a Secret Meeting in 1971 Transformed the Global Economy also provides a more nuanced perspective especially on the decoupling from gold. Garten was present during the discussions that led to the suspension and then closure of the gold window. Both books purport to address the question which has been asked intermittently for over half a century: can the dollar survive as the global reserve currency? There are broadly two camps. Those who believe that the announcement of the dollar's death, like Mark Twain's, is greatly exaggerated. Others believe that structural changes in the global economy mean the relegation of the American currency to a lesser, often unspecified, role, perhaps as one of a suite of reserve assets. Both authors reference the standard problems of a reserve currency. The first is the 'policy trilemma' or 'impossible trinity' proposition of economists Robert Mundell and Marcus Fleming. It argues that an economy cannot simultaneously maintain a fixed exchange rate, free capital movement, and an independent monetary policy. The second is the paradox named after economist Robert Triffin. This states that where its money functions as the global reserve currency, a country must run large trade deficits to meet the demand for reserves. Any aspirant to a new global reserve currency status must accept an unacceptable loss of economic control and must run large current account deficits. Blustein and Rogoff do not see these problems posing any immediate risk to dollar dominance. Arguably no other country, such as Japan, Europe or China, which potentially could fill America's role, would want their currency to function as a reserve currency because of the issues mentioned. That is, if they fulfill all the requirements, which they do not in any case. Paul Blustein argues that the dollar's dominance is underpinned by American military power, the US rule of law, and confidence in the dollar as a store of value. The latter is somewhat surprising in that the currency has lost some 99 percent of its purchasing power due to inflation since the early 1970s. King Dollar argues that its long-standing role in trade and capital flows creates a network effect which makes it hard to displace. Rogoff takes a similar position. Our Dollar, Your Problem examines the reasons behind the failure of the Soviet Union (to the surprise of this reader), the Yen, the Euro and Renminbi to reduce the role of the dollar. Rogoff, best known for his controversial This Time It's Different, does express concern that US debt levels, high interest rates, inflation and geopolitical instability could undermine the dollar's position. Unfortunately published before the new US administration took office, both titles look prematurely dated. The world has changed. The Trump administration sees major problems with the dollar's role as a reserve currency. One concern is that it led to overvaluation which has destroyed America's industrial and manufacturing base. A related issue is persistent trade deficits which have driven the US to become the world's largest debtor (foreign liabilities exceed foreign assets by $26 trillion). The arguments, whether correct or not, were raised before in the 1970s and 1980s. A new issue is the President's obsession around US military expenditure which provides allies with security cover. He argues, not without cause, that it has allowed beneficiaries to enjoy free-rider benefits diverting spending to other productive areas without compensating America for its high cost. President Trump and his advisors have plans to tackle the problem. Tariffs are one part of the program. The reason that these target allies is that some hold dollars and, in the poorly founded opinion of the administration, all can be coerced into helping the US implement its agenda. Another involves further weaponising the dollar through sanctions, asset seizures and control of payment systems, a process that has been underway for the last two decades. Both Blustein and Rogoff mention these measures although their impact was better covered in British historian Mark Galeotti's 2022 book The Weaponization of Everything: A Field Guide to the New Way of War. The most far-reaching step (proposed by Stephen Miran, now chair of the US Council of Economic Advisers) would entail user fees for holding US Treasuries (effectively a withholding tax), forcibly exchanging US treasuries for low- or zero- coupon century (100-year) or perpetual bonds (arguably a default) or placing the bonds in escrow (a seizure). Other options include capital controls and denying access to US capital markets. In essence, Trump's "big and beautiful" agenda is for other states to accept tariffs on their exports to the US without retaliation, invest in America by relocating production facilities, purchase US exports and pay tribute to the US (preferably all while prostrating and abasing themselves to access the biggest market in the world!). It is difficult to see how large sovereign countries or groupings like China, Japan, India, Brazil and Europe will find this acceptable. For a start, it would be political suicide domestically. Instead, these actions undermine the dollar's value as well as foreigners' willingness to hold the currency and US assets. The new US administration's cavalier disregard for legal process and the courts are also unlikely to build confidence in the integrity of the US or its financial system. The 'sell America' movement already underway may accelerate quickly as allies shift away from the US, seeing it as an unreliable and rogue actor. Nothing focuses the mind better than the threat of evisceration of your savings and wealth. What King Dollar and Our Dollar, Your Problem skirt is the unsustainable trade and capital imbalances in the global economy that have been building for a long time. These fundamentally underlie the need for a reserve currency. Where India imports more than it exports to China, if denominated in rupees, would leave the Chinese with surplus Indian currency. Alternatively, if denominated in Chinese renminbi, India would have to finance the deficit. This requires unfettered access to investments or funding in the respective currencies. The US tariffs and increased focus on sovereignty and security mean that trade is likely to become more bilaterally balanced. This would reduce surpluses to invest or deficits to finance decreasing the need for a reserve currency. The structure can be extended to encompass trading blocs where imbalances net out between members when aggregated and multi-lateral arrangements such as currency swaps to manage surpluses and shortfalls as needed. High saving rates and mercantilist policies, exporting more than you import and amassing surpluses to finance control of resources and assets, are not sustainable in the long term. As East Asia and the petrostates are discovering, the security of foreign investments is never guaranteed. These states are tentatively moving to increase currently modest domestic consumption, improve low credit availability and expand limited state social infrastructure for education, the aged and healthcare. This would reduce their reliance on trade and exports. Alongside improving domestic capital markets and the range of available investments, this would reduce surpluses requiring investment movement away from free trade and capital flows has implications for prosperity, especially for smaller and emerging nations. But it is difficult to see how this can be avoided. The drift to autarky underway with reductions in trade and saving imbalances may diminish the need for reserve currencies. It implies a world of multiple trading and reserve currencies which has existed at various times in history. King Dollar and Our Dollar, Your Problem are overly US-centric and overoptimistic in their core belief that the dollar's reserve currency status is secure. Given America's economic, political and social problems, this confidence will be tested over the coming years. Satyajit Das is a former banker and author of numerous technical works on derivatives and several general titles: Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives (2006 and 2010), Extreme Money: The Masters of the Universe and the Cult of Risk (2011) and A Banquet of Consequence – Reloaded (2021). His latest book is on ecotourism – Wild Quests: Journeys into Ecotourism and the Future for Animals (2024).
