25 de junho de 2008
24 de junho de 2008
Argumentar que é necessário deixar de fazer alguns projectos de investimento público para acudir a necessidades sociais é pura demagogia. Ferreira Leite poderia ter discutido a composição desse investimento, o sentido estratégico de alguns das suas componentes e a sua rendibilidade sócio-económica, mas nunca dar a entender (implicitamente) que está em causa o seu montante global medido em percentagem do PIB e que a sua redução deveria ser canalizada para a sustentação do consumo, ainda que dos mais desfavorecidos.
A situação do país - e, a do mundo - coloca efectivamente questões muito mais sérias ao modo como se efectiva o investimento público. Mais do que nunca deve ser criterioso e cuidadoso. O cuidado redobrado resulta das alterações em curso - que irão mudar radicalmente o modo como as nossas sociedades funcionam em termos, nomeadamente, do uso da energia - irão introduzir graus superiores de incerteza sobre a bondade de projectos de investimento dedicados, por exemplo, ao transporte rodoviário e aéreo (aeroportos). A incerteza aumenta porque não se sabe quando todas as consequências deste panorama novo se irão efectivar: se se não constrói aeroportos, perdem-se oportunidades de crescimenhto e criam-se estrangulamentos; constróiem-se os aeroportos e não sabemos se a evolução do preço dos combustíveis (ou a necessidade de conter o crescimento do CO2) faz colapsar, no entretanto, o transporte aéreo com o período de vida útil do projecto ainda a decorrer. É defensável, por isso e à cautela, haver desde já um enviesamento acrescido para os investimentos nos transportes públicos, no transporte ferroviário, na eficiência energética, etc.
Mais do que nunca o investimento público deve ser portador de um sentido estratégico assente numa devida reflexão e conhecimento de onde se está e para onde se vai.
Pode-se e deve-se discutir, ainda que num ambiente de grande incerteza, a composição do investimento público e nunca o seu nível - necessário como sustentáculo da procura agregada, numa altura que o investimento privado continua anémico. Assim, o TGV Lisboa-Porto é bastante discutível; o Lisboa Madrid já não o é, e assim sucessivamente.
Duas opiniões a reter sobre a entrada de Ferreira Leite: O primeiro dia - Editorial DiarioEconomico.com e A estratégia de silêncio - DiarioEconomico.com. Deste último, de Pedro Adão e Silva, a conclusão:
"O que o país manifestamente precisa é de mais política, assente em clivagens claras e organizada por princípios agregadores, de modo a contrariar a descrença na capacidade das alternativas político-partidárias em responder de modo diferente aos problemas económicos e sociais que a sociedade sente. O que Ferreira Leite tem para oferecer é menos política e mais indiferenciação ideológica. Entretanto, enquanto prossegue a estratégia de silêncio, o PSD de Ferreira Leite está a criar incentivos para que o sistema partidário português evite a clarificação ideológica: um contexto que tem servido instrumentalmente também ao PS mas que ajuda a aumentar o desinteresse face ao sistema e a desafectação dos cidadãos perante os partidos políticos."
A coluna é de António Correia de Campos, no Diário Económico, As rendas da indignação, e comenta o modo e o conteúdo que o PCP tem imprimido recentemente à sua oposição ao Governo do PS. Não estou de acordo com as conclusões - a política é a arte de fazer o possível e este é o possível ao alcance do PCP. O programa leninista da "análise concreta da situação concreta" deixou há muito de ser tentado - exige no mínimo que se perceba (se estude, se investigue) o mundo em que se vive - pelo que, na sua ausência, recicla-se tudo o que já foi dito e ritualiza-se a actuação política conforme o cânone de sempre: no entretanto, o mundo transforma-se, às vezes dando a impressão de lhes dar razão (prestam atenção a estes sinais); outras, de modo radical a caminho de novas manhãs muito diferentes e muito perigosas (aí não percebem). As diferenças de actuação, que se podem vislumbrar, num ou noutro momento, não são significativas.
"Segundo os jornais desta semana, dirigentes e militantes do PCP estiveram na vanguarda do “buzinão” da semana passada, de automobilistas e agricultores, contra o aumento dos combustíveis. Deputados à Assembleia da República e ao Parlamento Europeu, autarcas eleitos pela CDU, dirigentes regionais e concelhios do PCP, desta vez não se limitaram a concitar os militantes, ou a articular com a CGTP a movimentação dita “popular”. Assumiram a sua participação física e plena, ao contrário do que fizeram, em 2007, com as pequenas manifestações “ad hominem”, contra José Sócrates, ou contra a ministra da Educação, ou contra o ministro da Saúde: cartazes plastificados, enroláveis, que viajavam entre várias localidades do país....
...Sabemos bem que legítimas queixas dos serviços públicos continuam a rolar sem engrossarem manifestações. São essas que nos devem preocupar. O que há agora de novo, é o facto de andorinhas e cesteiros se situarem em escalão mais elevado na hierarquia dos manifestantes. Um novo patamar de luta.
Mas também é nova a postura de proposta de medidas. Vieram algumas na imprensa, reconhecemos o esforço de dar credibilidade à indignação. Mas quando olhamos as propostas, verificamos que algumas já foram anunciadas pelo Governo, como o congelamento dos passes sociais e dos títulos de transporte para além de Lisboa e Porto, ou o gasóleo profissional; outras estão a ser equacionadas ao nível europeu, como os impostos sobre os lucros das empresas petrolíferas.
As restantes são o que se esperava: mais despesa pública no caso do aumento intercalar de vencimentos da função pública e no aumento de 4% nas pensões mais baixas, tabelamentos artificiais de preços, condicionamento da Caixa Geral de Depósitos congelando-lhe e só a ela, o valor do ‘spread’ e um novo aumento do salário mínimo, após o último e o maior aumento realizado em muitos anos.
Dir-me-ão que estes políticos não sabem economia. Não acredito, sabem perfeitamente que o congelamento de preços de bens alimentares conduz ao açambarcamento e ao mercado negro, com pesadas penas para as classes baixas; que a fixação administrativa do ‘spread’ da CGD lhe retiraria competitividade no mercado bancário, que os aumentos de pensões e ordenados têm que ser pagos por alguém: ou por mais impostos ou pelo pequeno consumidor através de insidiosa inflação. Os manifestantes, pelo menos os dirigentes, conhecem bem estes efeitos e se necessitarem de reciclagem podem ler o claro artigo do dr. Silva Lopes, na semana que passou, em um jornal económico: quando a crise é importada, como a dos combustíveis, quase todas as medidas administrativas e de redução de impostos têm efeitos piores que a simples adaptação pela redução dos consumos energéticos, activos ou passivos.
O que faz, então, o PCP assumir a passagem a nova e mais assumida forma de luta? Não é claro, mas não se deve excluir o empolgamento pela vertigem da indignação. Talvez todos devamos ler a história de Maio de 68: movimento espontâneo inicial, partidos a tentarem o seu controlo, rejeição da veleidade liderante dos partidos, ‘pagaille’ generalizada, acordos de Grenelle e, no final, eleições ganhas de forma retumbante pela direita.Claro que a história se não repete, mas deve sempre aprender-se com ela."
About this talk:
Adam Grosser talks about a project to build a refrigerator that works without electricity -- to bring the vital tool to villages and clinics worldwide. Tweaking some old technology, he's come up with a system that works.Why you should listen to him:
Adam Grosser is a venture capitalist, working with startups that are exploring new ideas in data communications, electronics and energy management. With a background in engineering and entertainment, he enjoys looking for opportunities that map over a few of his passions -- which also include greentech.
His passion for a sustainable solution to refrigeration -- for storing food and medicines -- led to the project he describes in his 2007 TEDTalk.- ver em Adam Grosser and his sustainable fridge Video on TED.com.
23 de junho de 2008
22 de junho de 2008
- Lisbon Treaty as Trojan horse vox - Research-based policy analysis and commentary from leading economists: "This column argues that the Lisbon Treaty is a Trojan horse where better rules of government (a good thing) are associated with fears of their misuse (excessive centralization). No wonder voters won’t open the gates. EU leaders need to dispense with schemes designed to bypass the will of the people and focus instead on fundamentally rethinking the goals and processes of political integration. Until this is clarified, European electorates will be confused, fear the “Eurocrats” and vote no."
- Lisbon Treaty: Good for democracy and efficiency vox - Research-based policy analysis and commentary from leading economists: "This column shows that the flow of EU decision-making has slowed. The Lisbon Treaty would bolster decision-making efficiency and democracy by reinforcing the three main elements of representative democracy, namely elected representatives that fight for their constituencies’ interests, compete with other such representatives, and are accountable to voters."
- Editorial: How to preserve the NHS, our national asset Comment is free The Observer "... Another challenge is managing expectations. Politicians must be honest about the limitations of publicly-funded healthcare. There will have to be a reorientation of priorities towards prevention of illness, supporting people to lead healthier lifestyles, to quit smoking, eat better, drink less. That in turn requires a debate about the different expectations that can be placed on individuals to take responsibility for their health, and on the state to provide a safety net. It will require political courage - from Labour in admitting where its reforms have failed to deliver value for money, and from the Tories in avoiding the temptation to denounce everything the government does for the sake of it when they do not seem to have radical alternatives in mind..."
"WHEN robots first appeared in factories in the 1960s, they could only do the simplest of tasks such as moving objects from one production line to another. Some 30 years later robots were adept at jobs more usually done by semi-skilled workers, such as cutting, welding and operating warehouses. Even better for factory-owners, since 1990 the average price of robots has plunged by as much as 75% in comparison with labour compensation."
- How to reform and still win elections vox - Research-based policy analysis and commentary from leading economists:
"Jean-Claude Juncker, Prime Minister of Luxembourg, President of the Eurogroup, and one of Europe’s leading policy makers, once famously complained that 'We all know what to do, but we don’t know how to get re-elected once we have done it' (The Economist, 2007). ..."
- Why Is Oil So High? Pick a View - NYTimes.com: "People who have spent their careers tracking the ups and downs of the global oil markets say their compasses are spinning. Oil prices rise for reasons they cannot quite fathom, and where prices will be a year from now has become, literally, anybody’s guess."
- Would Oil Prices Continue to Be So High If We Got Rid of All the Speculators? "Many have blamed the rapid rise in oil prices in 2007 and the first-half of 2008 on speculators. But if we somehow banned speculators from trading oil futures and options, would the price of oil drop back down to pre-2007 levels? It is not clear that it would. The link between high oil prices and speculators is understood to work as follows: Oil analysts and traders believe that oil prices will rise in the future due to a combination of increased demand from China and India and due to slowing or even reduced supplies from "peak oil". Seeing the writing on the wall, speculators start buying up oil futures and options today, believing they will be worth more in the future. This buying up of oil futures immediately raises their price, due to basic supply and demand. The price of oil should fall once these futures mature because speculators have no need for a physical delivery of oil - where would they store it? However prices, on average, do not fall - in fact they rise. It could be because someone is buying massive amounts of oil and physically storing it somewhere, but this is highly unlikely. What is more likely is that the price is maintained high because it is being "stored" in the ground rather than making it to market; that is some oil companies are cutting production. Step 4 in the chain is the crucial one. Unless the oil is being stored by the speculators (or somebody the speculators are selling their futures to), they cannot permanently drive the price up. All else being equal, oil prices must fall as the speculators sell their futures prior to maturity. But since the price of futures are not going down (on average), then all else must not be equal - it must be that production is being cut from what it would have been. We can think of the current situation as being akin to oil companies buying the futures from the speculators and delivering the oil to themselves.Due to this, it is not clear that getting rid of the speculators would drop oil prices one cent. The high prices appear to be largely supply-side issue. How much of the lower supply is due to oil companies cutting production and how much is due to "natural" factors is open to debate.
- "... Chancellors from 1980 to 2003 basked in the good fortune of declining food and energy prices, relative to the prices of other items, and this allowed them to enjoy prolonged periods of subdued inflation, low unemployment and healthy growth in gross domestic product. They were not notably slow to take the credit. But since 2003, the entire decline in the relative price of basic commodities has been reversed and, in recent months, the shock has intensified dramatically. So far, the food and energy price surge has been entirely responsible for the rise in UK inflation from 2.1% in December 2007 to 3.3% in May this year, and if oil prices remain around $135 per barrel, inflation is headed to about 4.4% in September. Extra energy bills will subtract roughly 3% from the real living standards of British families, which is more than occurred in the bigger of the two oil price calamities in the 1970s. Let's make no bones about it: if sustained, this will be the mother and father of an oil shock. The unavoidable consequence is that oil consumers will have to accept that they are much worse off. The chancellor can choose to redistribute these losses between rich and poor, or between current and future generations, but he cannot eliminate them in the long term. Calls to drop energy taxes or subsidise energy bills are based on a fallacy. Higher energy bills must inevitably be paid either by consumers or taxpayers now, or by government borrowing, in which case taxpayers tomorrow will be worse off. ... This means that he has accepted the direct impact of the commodity price increases as a fait accompli, but that he will not allow them to be built permanently into wage increases or inflation expectations. Some people may be surprised that the governor, a renowned hawk in policy terms, is willing to permit such a prolonged period of above-target inflation, but the monetary regime always assumed that this would be the correct response to a sudden supply shock of the type we are now witnessing. "
- "...There is an essential difference between the total volume of reserves and the proportion of them that can be recovered as a rate per day: i.e. it doesn't matter how big the reserves are if they can't be tapped-into fast enough to match rising demand. This is true also of potential "abiotic oil" as is believed to be produced in the earth, according mainly to Russian/Ukranian geologists, in contrast to the prevailing view in the West. Even if the latter theory is true, the world still needs to reduce its demand for oil. "Sir: Richard Pike [CEO of the Royal Society of Chemistry is quoted ("Oil Shortage a Myth", The Independent 9-6-08) as saying there is plenty of oil left, and he is right. We should indeed not underestimate proven oil reserves but this is not the problem; the issue is flow rather than the quantity of total reserves and the quality of the oil that will be recovered from them. There may be 1,200 billion barrels worth left, but if it cannot be recovered much faster than is being done now it will not help alleviate the pressing gap between rising demand and supply. Even if Saudi were to increase its output by one million barrels a day (and it is debatable that they could) the product would be a heavy oil for which there is presently insufficient refining capacity in the world. Producing most of that remaining trillion or so barrels will be far more difficult and expensive than for the sweet, light crude oil, production of which peaked at the end of 2005. It will also be harder to turn it into fuel, requiring new refineries to be built, given its higher sulphur content and higher molecule mass hydrocarbon composition. I agree, we will be producing oil for decades and it is not running out per se, it is the cheap oil that is, and we will never see cheap fuel or chemical feedstocks again, with adverse effects for world transportation, industry and financial markets.
As I have previously noted, the only ones who benefit from the gas tax [holiday] are the oil companies and the petroleum producers. Case in point, the biggest producer just said: Next month, the Saudis will be pumping an extra half-a-million barrels of oil a day compared to last month, bringing total Saudi production to 9.7 million barrels a day, their highest ever level. But the world’s biggest oil exporters are coupling the increase with an appeal to western Europe to cut fuel taxes to lower the price of petrol to consumers. Why do they want the West to lower fuel taxes? They want to be able to raise their own prices and/or they want higher demand for their primary product: As N. Gregory Mankiw, the former chair of President Bush’s Council of Economic Advisors, says, “What you learn in Economics 101 is that if producers can’t produce much more, when you cut the tax on that good, the tax is kept … by the suppliers and is not passed on to consumers.”
O conceito de ultraperiferia integrou sempre, como um dos seus vectores caracterizadores, a distância. Muitos tinham vindo a depreciar a importância da distância como elemento conformador da situação económica de territórios como os Açores, na base, nomeadamente, do argumento da Internet ter feito desaparecer essa condicionante - um afável Professor (não da UA e não sei de quê - espero que não de economia) dizia, há alguns anos, à RTP Açores, que a ultraperiferia só importaria ainda devido aos Fundos Estruturais; a tontice da "boca" só teria equivalente noutra, proferida aquando de uma polémica interna, que a ultraperiferia só contaria a nível político, ou era somente um conceito político (estou a citar de memória).
Em todo o caso, este aumento do combustível veio a recuperar, de modo inequívoco, a importância da distância como condicionante de primeiro plano da situação económica de alguns países e regiões. Este aspecto - como outros actuais, emergentes - deveria ser integrado na reflexão estratégica do que deve ser feito agora e no futuro, política e economicamente, nos Açores. Que essa reflexão anda pelas ruas da amargura, prova-o os recentes episódios duma história triste, a que se chama o processo de desagravamento fiscal açoriano (mais sobre isto, mais tarde).
Os artigos abaixo (do mais antigo para o mais recente) referem a questão (ver ainda aqui - referencia a primeira das notas abaixo, mais outras ligações):
- Death of distance very much exaggerated Free exchange Economist.com:
"If rising transportation costs increase the importance of regional market potential, then the world's remote nations will be the first to suffer."
- Long distance numbers Free exchange Economist.com:
"Yesterday, apropos of news that New Zealand's economy is on the brink of recession, I wrote: If rising transportation costs increase the importance of regional market potential, then the world's remote nations will be the first to suffer.Today, this paper crossed my desk (by which I mean email inbox):
There is widespread evidence that a better access to markets contributes to
raising income levels. However, no quantification of the impact of distance to
markets has been made on the basis of a sample restricted to advanced — and
therefore more homogeneous — countries. This paper applies the framework
developed by Redding and Venables (2004) on a panel data covering 21 OECD
countries over 1970-2004, and shows that, relative to the average OECD country, the cost of remoteness for countries such as Australia and New Zealand could be as high as 10% of GDP. Conversely, the benefit for centrally-located countries like Belgium and the Netherlands could be around 6-7%.
- The world gets bigger - Paul Krugman - Op-Ed Columnist - New York Times Blog
"...How big is this effect? We know that the volume of trade between any two countries falls a lot with distance; this indicates that trade is quite sensitive to transport costs. This study gives a number:
[D]oubling transport costs from their median
value … reduces trade volumes by 45%. Moving from the median value of
costs to the 75th percentile … cuts trade volumes by
Now, the fuel price increase doesn’t have that large an effect — at least not yet. But a very back-of-the envelope calculation using CIBC estimates of the fuel cost effect gives me a 17 percent contraction in trade if oil prices stay at current levels for a long time. ..."
Ver também emVertical specialization and the impact of oil prices on trade - Paul Krugman - Op-Ed Columnist - New York Times Blog: "If high oil prices persist, we could be seeing a large drop in world trade."
Barred Spiral Galaxy NGC 1300
Explanation: Big, beautiful, barred spiral galaxy NGC 1300 lies some 70 million light-years away on the banks of the constellation Eridanus. This Hubble Space Telescope composite view of the gorgeous island universe is one of the largest Hubble images ever made of a complete galaxy. NGC 1300 spans over 100,000 light-years and the Hubble image reveals striking details of the galaxy's dominant central bar and majestic spiral arms. In fact, on close inspection the nucleus of this classic barred spiral itself shows a remarkable region of spiral structure about 3,000 light-years across. Unlike other spiral galaxies, including our own Milky Way, NGC 1300 is not presently known to have a massive central black hole.
- ver em Astronomy Picture of the Day, NASA (Arquivo, 22 de Junho de 2008)
20 de junho de 2008
- FT.com / Columnists / Samuel Brittan - Why the Irish were right to say No
"If some European countries such as Germany and France and a few others want to develop the centralist and corporatist model further, I do not see the objection. Indeed we are likely to see not a two-speed but a multi-speed Europe, even though the British Foreign Office will worry that the UK might not be absolutely sure of a seat at an imaginary top table. Too bad."
Esta nota poderá ser a "mãe de todas as notas" - mas arruma, em princípio, o acervo (restante) de artigos sobre o referendo irlandês. São artigos de fontes, perspectivas e posições políticas diferentes, mas todos careiam ou tópicos de reflexão ou informações interessantes. Ficam aqui também como referência para notas futuras.
- Europe’s Unhappy Union by Theodore Dalrymple, City Journal 18 June 2008
"Is the European Union heading for a Yugoslavian-style denouement? It sometimes looks as if its political class, oblivious to the wishes or concerns of the EU’s various populations, is determined to bring one about. The French and the Dutch voted against the proposed European Constitution, but that did not deter the intrepid political class from pressing ahead with its plans for a superstate that no one else wants. ...
... What could explain the Irish obduracy? Several explanations came forth, among them Irish xenophobia and intellectual backwardness and the malign influence of the Murdoch-owned press. The narrowest economic self-interest was also said to have played a part. Having been huge beneficiaries of European largesse over the last 30 years, the Irish—who have the second-highest per capita GDP in Europe after Luxembourg—are now being asked to pay some of it back in the form of subsidies to the new union members from Eastern Europe. Ingrates that they are, they don’t want to pay up, especially now that their own economic growth rate has slowed dramatically in the wake of the financial crisis and the economic future looks uncertain. Another explanation for the Irish “no” vote was that Irish citizens had been frightened by the proposal of the French finance minister to equalize tax rates throughout Europe, thus destroying unfair competition (all competition is unfair, unless the French win).
... What the people of Europe want is completely irrelevant. For the moment, all is peaceful and quiet. The political class, which loves the unitary European state precisely because it so completely escapes democratic or any other oversight (let alone control), and for whom it acts as a giant pension fund, holds the upper hand for now. But tensions and frustrations in Europe have a history of expressing themselves in nasty ways."
- The Irish “no” and the rich-poor/urban-rural divide vox - Research-based policy analysis and commentary from leading economists
"At first sight the French no vote has little in common with the Irish rejection of the Lisbon treaty. In France the scaremongers said that further integration would lead to a fiscal race to the bottom, and place France's liberal abortion laws in jeopardy. In Ireland the scaremongers said that further integration would lead to a fiscal race to the top, and the imposition of liberal abortion laws on what remains a largely Catholic country.And yet there are striking socio-economic similarities between the two votes that Europe's politicians will disregard at their peril. A glance at the electoral map suffices to confirm what earlier opinion polls had indicated: the Irish vote divided along class lines in a stark and disturbing fashion. In the most affluent constituencies of Dublin, such as Dun Laoghaire, where even a modest home can cost upwards of €1 million (although that is changing), 60% or more voted for the treaty. In working class areas of the city, it was the no vote which scored in excess of 60%. Brouard and Tiberj (2006) show that precisely the same division between rich and poor, or the skilled and unskilled, can be discerned in the French 2005 vote.There are at least two ways of interpreting such patterns. The first would hold that well educated voters are more politically sophisticated and better able to understand the issues involved in a complex amendment to the institutional underpinnings of the European Union. The second interpretation is that, on the contrary, both rich and poor are capable of correctly discerning where their economic interests lie, and vote accordingly.The argument would be that globalisation generally, and European integration more narrowly, has overwhelmingly favoured skilled workers, at least in affluent countries such as France, Ireland and the Netherlands. Unskilled workers, by contrast, feel under threat from Romanian (or Asian) competition, or immigration from Eastern Europe and further afield. And while those of us who are more fortunate might regret it, it is hardly surprising that -- in accordance with Heckscher-Ohlin logic -- they vote accordingly.... . But I have to say that my bet is that the gap between middle-class and working-class voting patterns has a lot more to do with different interests, real or perceived, than with supposed differences in political sophistication. To a large extent this prior is based on the work of Anna Maria Mayda and Dani Rodrik, and Richard Sinnott and myself, on the determinants of attitudes towards globalisation across countries.That work has shown that while the unskilled are more hostile than the skilled to trade and immigration in rich countries, in poor countries it is the unskilled who are the most pro-globalisation -- which seems difficult to reconcile with the argument that the less well educated simply cannot be expected to understand the benefits of international economic integration.If this interpretation is correct, then the Irish referendum result, in one of the most pro-European members of the Union, should serve as a wake-up call to politicians that if they want to maintain the benefits of open international markets, as I do, they will simply have to take more notice of the concerns of those who are being left behind. Of course, I wouldn't want to claim that this referendum result was simply about the economic interests of different groups of voters.The greatest difficulty facing the pro-treaty side was in articulating a compelling reason to vote yes, when the European Union has clearly not collapsed in the wake of the 2005 and 2007 enlargements. Public mistrust of politicians, in Ireland as in France, meant that assurances that the treaty really was necessary, all appearances to the contrary, were always going to fall on a great many deaf ears. As in the Netherlands, there was surely a fear that as a small country Ireland stood to lose by more than France or Germany in giving up its veto -- and this impression is bound to grow in the weeks ahead, if as seems likely Europe's leaders attempt to ignore this Irish roadblock to their institutional ambitions on the grounds that Ireland is…small.Some voters dislike the way that the French and Dutch referendum results were essentially ignored by Europe’s leadership. And so on. My claim is simply that economic interests were one factor among many, and should not be ignored. If working-class and rural voters are systematically voting against further European integration, that is something which Europe's political leadership will need to listen to. ...
- "In the wake of Ireland's rejection of the Lisbon treaty, observers around the world are attempting to understand what, exactly, the "no" vote means (see Tyler Cowen for his, characteristically interesting, conclusions). Some European leaders have all but settled on the idea that a two-track European Union is unavoidable, whereby serious intergrationists press on with their project while sceptics sit on the edges of what would be a glorified free trade area.Writing at VoxEU, Daniel Gros argues that this possibility should have been made explicit in referenda on the reform package. In other words, the question put to Ireland shouldn't have been, "What do you think," but rather, "Will you join us or shall we kick you right out?" Incentives are extremely misaligned when a small-nation electorate can punish ‘Brussels’ and its own political class at little or no cost. Ireland represents 1% of the EU, so 99% of the cost of the ‘no’ falls on other members.
This column proposes a radical solution – the other EU members should propose to leave the old EU and create a new one with the Lisbon Treaty as its founding document. The Irish would then have to decide whether they’re in or out. Ireland clearly felt that the treaty would involve costs for the nation, with which voters were uncomfortable. But Ireland inarguably enjoys huge benefits from EU membership, as well. By allowing Ireland the opportunity to veto the costs without risking the benefits, the EU essentially decided the outcome of the approval process before eurosceptical activists ever lifted a finger"
- Marginal Revolution: Irish thoughts
"Henry writes: In particular, German parliamentarian Axel Schäfer’s comment that “With all respect for the Irish vote, we cannot allow the huge majority of Europe to be duped by a minority of a minority of a minority,” would have a bit more credibility if, you know, the majority of the majority of the majority had been given a chance to vote on the Treaty themselves.
I can imagine a few other lessons:
1. Give people a referendum on a big question and they will use it as a chance to voice their general displeasure with many other matters. New Zealand made that mistake on electoral reform. The Irish vote was strongly divided among rich-poor lines.
2. According to polls, the Irish are not especially Euroskeptical. I guess that is "Eurosceptical". In any case multilateralism has limits.
3. The option under consideration *was* Plan B. There is no obvious Plan C.
4. It worked last time (2002) to ask them to vote again. Few people think that gambit can be played a second time.
5. One Irishman opined: ""We're told we can vote no, that the system requires unanimity. But when (a `no' vote) actually happens, every time, the EU tells us: You really only have a right to vote yes," said Dublin travel agent Paul Brady, who voted against the treaty.
6. Some deluded soul in the EU read a copy of John Calhoun instead of Buchanan and Tullock's Calculus of Consent. Hadn't they remembered the history of 17th and 18th century Poland and decided that a unanimity rule is a bad idea?
7. If European nations demand a unanimity rule (which I can well imagine), is that not a sign that they have a free trade area but nothing close to a real political union?"
- Ilana Bet-El: John Bolton's Irish adventure Comment is free guardian.co.uk
"Some time ago I asked who needs Fox News when you have John Bolton? Well, the Irish referendum slightly reformulated the question around the man: who needs sovereign democracy when you have John Bolton? There he was on June 8, declaring the Lisbon Treaty posed a threat to Nato and undermined democracy by handing more power to Brussels bureaucrats. It is worth noting that Ireland is not even a member of Nato – but only before asking what on earth he was doing, interfering in a process not relevant to him or his country? A large part of the answer must be that the Bolton opinion apparently knows no bounds. The world was his stage as US ambassador to the UN, then it was taken away from him by his own people in the US Congress, since he only got the job in a recess appointment, snuck in by his mate the president. So he is now reduced to hawking his mindless opinions around any stage available.
But another part of the answer may be related to a slightly more problematic question: was there a US interest in the outcome of the Irish referendum? Again, a large part of the answer must be a resounding "no". The US is absorbed in itself even more than usual, since this is an election year. However, and notwithstanding, there are some persistent murmurs of a rightwing desire in the US to undermine the Lisbon Treaty, in an attempt to weaken the EU as a strong economic partner and a potential rival for world power.
Such murmurs would be worthy of a giggle, were it not for some questions that now emerge, related to Declan Ganley, head of Libertas, whicht fronted the "no" campaign in Ireland. He was apparently shopping around for a PR company in Brussels to help him with his task. This was a year ago, and it should show his abysmal ignorance of the EU in that all PR shops in Brussels make their living out of helping companies and clients interface with the union, not close it down, so he found little joy. But here is the crucial fact: he was directed to Brussels by the Washington offices of various PR consultancies. In other words, he had gone to Washington first.
And that begs the question: why is an Irish entrepreneur seeking a lobbying company on an EU referendum in Washington? For someone who claims to have made his fortune by his own wits – and someone who also claims to have decided to fight the Lisbon Treaty after reading through it to seek business opportunities – it is implausible to assume he did not know his own way to Brussels, or found out lobbying possibilities through his own Irish connections. One can only assume therefore that he started his quest in Washington because that was where his connections lay.
Ganley remains an enigma in Ireland – though much has been made of his company's contracts with US defence forces in Iraq. (That in itself is ironic, since one of his central claims was that Ireland would be forced into a – non-existent – EU army and become militarised if the Lisbon Treaty was passed.) But then again, many international companies supply the US military. Indeed, one of them is owned by Ulick McEvaddy, another Irish entrepreneur who heads Omega Air, a Texas-based company that offers commercial airborne refuelling of military aircraft. He is one of the very few known contributors to Ganley's organisation, for on the whole it remains totally unclear how Libertas was funded or by whom.
It also remains unclear why John Bolton felt the need, or authority, to comment upon a purely Irish – and possibly European – affair. Even with his vast ego, he cannot be accused of being stupid. These are uncomfortable questions, which are in some ways on the sidelines of the Irish referendum – and in others right at its heart. For it was and remains about democracy and its workings.
And to may observers, the referendum seems anything but democratic. Much has been made about this being the third referendum to reject the treaty that was once the constitution – but it must also be said that it stands out as different, and not because of Ireland's size. For at base, in the previous two referenda, in France and the Netherlands, some of the major political parties expressed doubts and openly joined the "no" campaign. In Ireland this was adamantly not the case. All the elected political parties bar one – Sinn Fein – were in favour of the treaty.
Sinn Fein is also a legal and duly elected political party, but while Jonathan Powell has done a masterful job of portraying the positive traits of Gerry Adams, it has to be said that one definition of a nightmare was watching him last Friday preach to Europe about the merits of respecting legalities and democracy – closely followed by pictures of anti-abortionists spitting at the Irish Finance Minister when he was trying to speak on the Treaty.
... therefore, there is a big question to ask: why is it more democratic to have the result of a referendum run by a bizarre alliance of Libertas, anti-abortionists and Gerry Adams decide the fate of the EU than ratification of the treaty by duly-elected governments? To single-mindedly say: "Yes, it is so because the people have spoken," is to ignore that the people also spoke at the elections, in all EU member states. And those people empowered their governments to make decisions, including the ratification of treaties.
Why is their will, and their system of government, less democratic? To argue now that the people in other member states are being denied a right given to the Irish people is also daft: if one thing is clear, it is that no one voted on the substance of the treaty since no-one – from the prime minister of Ireland down to the youngest of voters – appeared to have read it.
Indeed, its very complexity was one of the reasons given for the "no" vote. One of the most basic issues behind discontent with the EU is the democratic deficit. Unfortunately the Irish referendum only increased concerns on this matter rather than clearly showing how EU decision making could be more democratic. For at the end of the day, respecting the will of the people must be an act encompassing the whole and not the part, and the part must show that they have voted for a clear issue rather than a mixed bag of single issue concerns melded into an unholy alliance ..."
- Timothy Garton Ash: Instead of bullying the Irish, Europe should be working on plan D - and E Comment is free The Guardian
"...I write as someone who thinks the EU needs the institutional reforms in the Lisbon treaty and regrets that a majority of Irish voters rejected it - from a gallimaufry of motives, it seems, some having little to do with the real content of the treaty. But I was shocked by initial reactions from the German foreign and interior ministers, the tone and implication of which was: silly little Irish voters, go away and come back with the right answer, otherwise we'll have to kick you out into the cold.
... That would be right if the EU were a direct democracy; but it isn't a direct democracy, or only in that lesser part of its legitimation that flows through direct elections to the European parliament. The EU - this EU, the only real, existing EU, the best EU we've got - is still mainly an indirect democracy: meaning that each democratic member-state has to reach its own decision in its own way.
That's time-consuming. As in a convoy, or an extended family, everything takes longer. Slower ships and curmudgeonly cousins must be attended to. But that's exactly what it means to be a European Union, not a hegemon-dominated alliance or a United States of Europe. It's true that, even under the existing treaties, smaller groups of states who want to work more closely together in particular policy areas can do so.
... But on the EU's central institutional arrangements and its external relations - the two big things the Lisbon treaty tries to address - this is, as soon as you stop to examine it, a complete non-starter. Worried about the EU being weak and divided, you would end up making it weaker and more divided. Tactically, in any case, this was the worst possible way to respond. Nothing could be better calculated to ensure that the Irish say "no" a second time - assuming their government dares to ask them again, which it's far from certain it will. The contrast with German reactions to the French "no" in 2005 is striking. When the French say "no", Europe has a problem. When Ireland says "no", Ireland has a problem.
... and then for the Irish government to come to the European Council in October with suggestions for a package they might take back to change their voters' minds. For example, there might be "explanatory protocols" giving assurances on abortion, Irish neutrality, corporation tax and anything else held to have fed Irish fears.
... So we should be thinking of plan E as well. Plan E has three parts. The first is to continue working under the existing treaties. The plain fact is that the enlarged EU of 27 is still functioning "under Nice". It has not ground to a halt, as some predicted. The second part is to see how many of the institutional changes that we really do need - to make an enlarged EU work better, and be more effective in the world - could be implemented without a new grand treaty. I've been asking this question of experts on the legal-institutional workings of the EU over the past few days, and the answer is: a surprisingly large number. I won't bore you with the details, which would make a Jesuit blush, but it turns out that, given ingenuity and political will, things like a more consolidated foreign policy apparatus with a single head could probably be made to happen anyway. Where there's a will there's a way. So this would be what the Swedish foreign minister Carl Bildt has called "Nice plus". The third part of plan E is the most important of all. While resolving this decade-long institutional tangle as best we can, we would go on actually doing things that matter to Europeans and to the world. When the new US president is elected this autumn, he should find in his in-tray a memo from Europe spelling out what we see as the biggest challenges in the world and what we propose to do about them.
- FT.com / Comment & analysis / Comment - What dream will Europe dream now?
"... Some readily conclude that it is far too easy to confuse citizens about complicated issues. To them, this is a proof that referendums are intrinsically bad and that treaty approval by stealth is justified. This is a deep misunderstanding of democracy. Our citizens are not confused; they are cynical, and this is a rational response to our leaders’ cynicism.
They vote No to Europe because they do not have any other means to express their displeasure with the way the EU is being run. The only votes that they can cast are for the European parliament, but these elections are really national affairs. We vote for national parties and the campaigns are almost everywhere dominated by domestic issues.
Citizens do not know much about Europe, simply because there is no public debate about European affairs. They do not care about a treaty that will keep them on the sidelines. The treaty matters greatly for the elites, because it sets the rules by which they play. It is not just complicated; it is not understandable because it does not address the everyday concerns of ordinary citizens. The EU is unique in the world in that some significant chunks of sovereignty have been abandoned by member states for the common good. But this authority has been transferred to unelected officials, notwithstanding the required nod of approval of the European parliament.
What kind of a democracy is this, when citizens have no say in the choice of their leaders? Neither the Commission nor its president, who is treated in terms of protocol like a head of state, is chosen as a result of elections in which they ran. The new president of the European Council (the body on which government leaders sit) envisaged in the Lisbon treaty would not be directly elected, either. These figures are selected by heads of governments who were themselves elected for other reasons. No one knows whether the Commission is a legislative or an executive body; strangely, it is both.
European citizens would not be so cynical if they were regularly invited to choose the people who run European affairs. We need real campaigns, dealing with European issues, just as in national elections. We ought to decide whether we want a presidential regime, in which case citizens should elect the president directly, or whether we prefer a parliamentary regime, in which case we would have an election where pan-European parties competed in order to put forward their designated leaders to run the Commission.
This would be a normal executive body with whatever powers the member states chose to give it. This is what the European Convention, which produced the infamous constitutional treaty, should have debated. It did not venture in this direction because it well knew that it would have been vetoed by heads of government fearful that a democratically elected European leadership would eat into their powers.
The convention’s progeny was doomed from the start. Of course, real European elections would take us uncomfortably close to a federal arrangement. The founding fathers sought to avoid this debate, which they knew would divide nations and people within each nation. This “great ambiguity” has worked wonderfully well for half a century, almost like a free lunch. Its costs are now becoming all too visible.
It may still be too early to resolve this ambiguity. In the meantime, whether the Lisbon treaty is ratified or not, Europe is likely to gravitate toward the mostly economic and monetary arrangement that the anti-federalists always wanted. This may turn out to be the only realistic solution. My generation shared a European dream. It has become a reality, beyond what we had dreamt. The next generations, who take the EU as a fact of life, will have to decide whether they want to dream up something else. One thing is sure: as far as integration is concerned, we are now entering a long period of freeze."
- Fintan O'Toole: The fear factory devastated Ireland's flaccid political class Comment is free The Guardian
"... What can be said with some confidence is that the Irish vote was shaped by the confluence of two factors. One was the miserable nature of the yes campaign. Every major political party except Sinn Féin (which has just 7% of the vote in the Republic) urged a yes vote, as did the Irish Congress of Trade Unions, the Irish Business and Employers Confederation and, in effect, the Catholic church.
The assumption seems to have been that Irish voters would simply follow their leaders. The main party campaigns consisted largely of putting up posters with the earnest faces of local or national politicians and bland slogans like "Good for Ireland, Good for Europe". The implicit message was: "This document is complicated and virtually unreadable but, trust us, there's nothing bad in it."
This strategy betrayed an astonishing ignorance of the way the Irish, in common with most Europeans, currently regard their political class. Trust isn't the most obvious feature of the relationship between governments and the governed.
... the sense of disillusionment and betrayal grew. In those circumstances, appealing to trust was a misjudgment that bordered on self-delusion. The benefit of the doubt no longer goes to the establishment. The other decisive factor was, paradoxically, the very incoherence of the no side. It was made up of people who actually can't stand each other.
There were rightwing Catholics who warned (against the judgment of the Catholic bishops) ... and leftwing liberals who have fought bitterly against those same people ... There were leftwing anti-militarists who warned that the treaty compromised Irish neutrality... And, in the form of Libertas - a mysterious group that emerged from nowhere with a great deal of money to spend - there were people with strong ties to US military contractors. There were campaigners who warned that the European Union would take away the Republic's low corporate tax rates, and activists who portrayed the union as a giant corporate conspiracy. Imported British Euroscepticism from the Irish editions of the Sunday Times and the Daily Mail sat alongside resentment of "foreign" influence from the EU. Logic would seem to suggest that a campaign so riddled with self-contradiction, and so lacking in an agreed alternative vision, ought to be highly ineffective against the big machines of the main political parties.
In fact the no campaign turned, more by accident than design, into a very efficient factory of fears. It was able to present voters with an extensive menu of anxieties. ...
... The turnout for Lisbon was much higher, so repeating the exercise would simply feed the perception that voters are being bullied. In any event, a second vote would have to be on an altered proposition. But to remove most of the things people objected to in the treaty, they would have to have been there in the first place. The treaty's doom, in other words, is probably sealed by the fact that it's not actually as bad as many Irish voters think it is."
- Jackie Ashley: Now that Ireland has rejected the treaty, what will Gordon Brown do? Comment is free guardian.co.uk:
"But one thing is certain: if he does to decide to push ahead with our European partners, he and they will have to make a much better case for Europe than has been done so far. A complacent campaign by the 'yes' supporters in Ireland lost the vote: it is time for those who want Britain to stay at the heart of Europe to stand up and make their voices heard."
- Richard Delevan: Why Ireland said no Comment is free guardian.co.uk
"...Campaigners for a yes vote jostled to assign blame. ... Martin said the no vote trend demonstrated a "disconnect between Europe and its people", and that many voters felt "a lack of information". ..."We up here in the elites have the idea that everyone is listening. But it didn't register." The head of Ireland's largest business organisation, Ibec, blamed a no campaign which he said lacked "integrity". Rural areas and working class urban areas turned in strong no votes.
...The campaign for a yes vote was up against a tough public mood, but the campaign itself was always on the defensive. ..."
- Editorial: The Irish vote must not thwart a better Europe Comment is free The Observer
"It is catch-22. Without reforming the way it makes decisions, freeing itself to act on global issues that really matter, the European Union will continue to look like a self-serving, arcane bureaucracy. But the EU can't negotiate the devilishly detailed process of reforming itself without resembling the conspiratorial caricature portrayed by its detractors.
... But the overarching theme - suspicion of a process that appears to serve elites more than ordinary people - resonates across the Continent. ... European leaders will be desperate to salvage the structural reforms common to both documents aimed at streamlining decision-making and giving the EU a more coherent voice in foreign affairs. Something of that nature, they argue quite rightly, is essential if the Union is to defend its member states' interests in the face of global challenges: climate change, energy dependency on Russia, economic competition from East Asia and international terrorism.
... As with any form of public administration, it is probably expecting too much that people will learn to love the EU. But what is extraordinary is how bad national governments have been at explaining why it is necessary - how it has been an overwhelmingly positive force on a continent that spent the centuries before its inception engaged in near-constant, bloody, religious, imperial and ethnic war.
The peace dividend still pays out. The prospect of EU membership has entrenched and advanced democracy in the strife-strewn Balkans. Croatia, for example, is set to join in 2010. British governments in particular have fostered scepticism by presenting their negotiations in Brussels as heroic defence of the national interest against the forces of pan-Europeanism. British Prime Ministers, including Tony Blair and Gordon Brown, have colluded in the fiction that EU power is something exercised over Britain by Brussels, to be constrained with 'red lines'.
In fact, EU power is wielded by Britain through Brussels. Decisions made there may adversely affect some sectional interest in British society or help another, farmers, for example, or bankers. But that is what government does.
If there is a compromise on 'sovereignty' when elected Prime Ministers agree a common position, it is minor compared with the limits on national power imposed by forces of globalisation, as is clear from the current surge in oil prices and the credit crunch. The EU can carry on for a while using existing practice for making decisions. The urgency felt in Brussels to get some version of the Lisbon reforms ratified is understandable - national governments are as fed up as voters with endless technocratic tinkering - but that urgency all too often comes across as arrogance and disrespect for public opinion.
The reality is that the pro-Europeans have to build their arguments, and possibly their treaty, from scratch. They must point out the ways in which the sceptics have already been proved wrong: on the mighty single currency that doomsayers said would collapse; on enlargement which has brought prosperity to millions of people despite gloomy predictions of nationalist backlash and institutional meltdown; on sovereignty which still resides in national parliaments; and on identity which is undiluted. Ireland is no less Irish for being in the EU, nor Germany less German, nor Britain less British. In Joseph Heller's novel Catch-22, the hero solves his predicament by going Awol. EU leaders do not have that option. They must fight for the project they believe in. They must win the argument for Europe. "
- Will Hutton: Europe must not be derailed by lies and disinformation Comment is free The Observer:
"Battle is going to be joined in earnest because it must. Pro-Europeans everywhere must engage. We need this Europe - to fight climate change, to ensure security of energy and food, to underwrite our prosperity and to fight for our common interests. The world needs it too. The EU is the citizens' friend. If it did not exist, Europe would have to invent something similar. Over the next few months, Europe's leaders are going to have to develop concrete initiatives to support these points and to present what they are doing as European and only possible because of the EU."
- Peter Preston: We forget at our peril Comment is free The Guardian:
"The people who want to rescue Serbia from its past know the perils of narrow nationalism. They - and many like them - need our help because they are striving for something better, sometimes at huge risk. But do we even pause to perceive it? No: European union has become a gravy train of Fleet Street imagining and distant manipulation by men who don't start from where we start or remember what we ought to remember. Don't make them more than a bit of the problem. But don't brush aside how serious their deep unseriousness has become; or underestimate how direly we'll all suffer as this project unravels. Choppy waters on Wall Street? Mountainous seas in the Channel? Let's hope so. Because those who would sink this Europe would have to learn to swim."
"Satellite images show Lake Chad one-tenth the size it was in 1972, not even 40 years ago. Lake Chad used to be the world’s sixth-largest lake, but its resources have been diverted for human use or affected by rainfall such that its been almost entirely depleted in a very short amount of time."
- visto em Climate Progress » Blog Archive » Lake Chad now more like Pond Chad.
19 de junho de 2008
“We should act on climate mitigation and adaptation not because we are able to
predict the future, but because we cannot.”
"So wrote Roger A. Pielke Jr. in an op-ed in the Financial Post, a Canadian newspaper with a doubting stance on dangerous human-caused climate change. Dr. Pielke, a political scientist at the University of Colorado, has long complained that climate scientists have been overstating the reliability of computer simulations projecting how the Earth will respond to rising levels of greenhouse gases. But he has also long advocated for policies that would lead to curbs in emissions."
Até estes já dizem isto! Estou de acordo, como é óbvio - face à incerteza mas com evidência suficiente para substantivar a preocupação, devemos guiar-nos pelo princípio da precaução, e por as "barbas de molho"!
- ver en Acting in an Uncertain Climate - Dot Earth - Climate Change and Sustainability - New York Times Blog
The Star Streams of NGC 5907
Explanation:Grand tidal streams of stars seem to surround galaxy NGC 5907. The arcing structures form tenuous loops extending more than 150,000 light-years from the narrow, edge-on spiral, also known as the Splinter or Knife Edge Galaxy. Recorded only in very deep exposures, the streams likely represent the ghostly trail of a dwarf galaxy -- debris left along the orbit of a smaller satellite galaxy that was gradually torn apart and merged with NGC 5907 over four billion years ago. Ultimately this remarkable discovery image, from a small robotic observatory in New Mexico, supports the cosmological scenario in which large spiral galaxies, including our own Milky Way, were formed by the accretion of smaller ones. NGC 5907 lies about 40 million light-years distant in the northern constellation Draco. - ver em APOD: 2008 June 19 - The Star Streams of NGC 5907, NASA (Arquivo, 19 de Junho de 2008)
- FT.com / Columnists / Wolfgang Munchau - Trichet justified in diverging from the Fed
We have been talking about decoupling for a long time. Now it is happening. No, I do not mean that the European or Asian economies are decoupling from the US. The world economy is too interlinked for real economic decoupling to take place. But there is a form of decoupling we are seeing now that we did not see before: monetary policy decoupling.
In the past, European central bankers tended to follow the US Federal Reserve, often with delay, never perfectly, but generally in the same direction. ... The policy response to our most recent financial crisis has been different. While the Fed cut by an accumulated 325 basis points, the Europeans first refused to follow, and they are now moving in the opposite direction. ... The reason is not a rise in oil or food prices, about which monetary policy can do nothing, but an increase in various measures of inflation expectations. ... By moving in the opposite direction from the Fed, the ECB is providing a much more appropriate domestic policy response than what would have been possible under a national currency regime. The ability to do this constitutes quite possibly one of the biggest economic benefits of the euro. It has not only domestic but global implications. In particular, it limits the Fed’s own room for manoeuvre, something that would have been unthinkable only a few years ago.
If the Europeans had followed the Americans again, the Fed would probably have been in a position to cut interest rates further. The dollar would not have fallen as much and Ben Bernanke, Fed chairman, would not have needed to revert to verbal intervention to prop up the dollar as he did last week. This suggests that in terms of global monetary policy, we are in the middle of a shift from a unipolar to a bipolar world.
In the past, the Fed’s policy alone used to determine the global monetary policy stance – via the dollar, the global anchor currency. Through long periods of loose monetary policies, including lengthy episodes of negative real interest rates, the Fed contributed directly to the rise in global inflation. I am not referring to the recent commodity price increases but to the trend rise in inflation we have been observing for some time.
European inflation has also risen as part of this global trend. If the ECB follows the course Mr Trichet appears to have set out, there is now a real possibility that the eurozone, and perhaps some other regions in the world as well, could decouple from this US-led trend. This is what I mean by policy decoupling.
In theory, an independent central bank, under a floating currency regime, can achieve whatever inflation target it wants, no matter what happens elsewhere. In practice, central banks, even tough-talking ones such as the ECB, make compromises. The ECB would not have raised interest rates if the euro’s exchange rate to the dollar had been at $1.70, or if the economy looked as though it were to fall into a black hole. ... On its own, it will not get eurozone inflation back towards target over the next couple of years. For my taste, the ECB has moved too hesitantly and a little late. But at least it has been moving in the right direction.
The policy goal of the Fed, meanwhile, appears to be avoidance of recession and minimising distress in the financial system. Price stability, which also ranks as one official goal in the Fed’s mandate, seems to be pursued by means of sanctimonious speeches, rather than policy action. As monetary policy of the world’s two largest economies moves in starkly opposite directions, interesting possibilities are opening up.
One is whether the dollar will decline prematurely as a global currency – an issue on which economists are divided. Differential inflation rates could plausibly trigger such a shift. As US inflation rises, more and more countries may unpeg from the dollar to avoid imported inflation. If this trend persisted, the US would risk losing its exorbitant privilege – the ability to live beyond its means thanks to a globally domineering currency. This is not a forecast. It is a scenario conditional on policy choices. The central bank of Turkey last week responded to the rise in inflation by raising the inflation target. That is one way of dealing with the problem but not a credible one. Alternatively, you can stick to your target under adverse circumstances. The ECB is trying to do the latter. I suspect it will subsequently be seen as the better response.