Iran’s Theocracy: An Uneasy Fusion of Religion and Political Economy

As mass protests erupted in Iran during the second week of January, 2026, Iran’s theocracy was on edge. That the protests stemmed from the dire economic conditions facing the people amid staggering inflation, including on basic food staples, rather than from foreign affairs, raises the question of whether religious clergy, including the “supreme leader,” Ayatollah Ali Khamenei, are competent in making economic policy. Without the ongoing political pressure that can come from constituents in a representative democracy, or republic, it is no surprise that the protests in Iran quickly became mass riots. In other words, bad economic policy by religious clerics in power in an autocracy can easily result in popular protests abruptly erupting into rioting. The overreaching of functionaries based in the domain of religion into politics (including economic policy), such that the distinctiveness of the two domains is ignored or obfuscated, can be distinguished from the problems that go with autocracy.

The full essay is at "Iran's Theocracy."

Negotiating from Weakness: The Plight of the European Union

To go to much effort to construct an economy on the scale of an empire only to refer instead to the economies within such a union, whether the E.U. or U.S. is to pay excessive homage to an ideology that can be termed Euroskeptic and anti-federalist, respectively. To refer to economies in one union and the economy in the other is just one means by which an ideology can distort a person’s reasoning and perception without the person being conscious of the underlying logical inconsistency. Such an inconsistency is incurred not only in “having it both ways” in the E.U. being a common market even as the states are referred to as economies even though many share a currency and thus a central bank, but also in referring to the federal system as if it were a mere “bloc,” or “network.”  In all of these cases of ideological word-games, the E.U. itself is minimized and thus implicitly marginalized from within. With Russia invading Ukraine and Israel eviscerating the Muslim residents of Gaza, self-marginalization for ideological purposes is indeed costly. Even referring to the federal official who is in charge of foreign policy as a “high representative” is implicitly denigrating and thus counter-productive to the E.U. being able to stand up to Putin and even Netanyahu in 2025.

The full essay is at "Negotiating from Weakness."

Poverty Impeding Development

In the 1980s, the advent of some newly-industrializing countries (NICs) in east Asia, such as Taiwan and South Korea, was generating excitement around the world that the gap between the least developed countries (LDCs) and the developed countries (DCs) then had a viable bridge through foreign direct-investment; that is, what had been a dichotomy was becoming a spectrum. The hope that globally-circulating capital might raise even the LDCs out of poverty. Of course, there was scarce any thought that the combined pollution of an economically developing world would raise global air and sea temperatures above 1.5C. Human beings are too near-sighted for that, and, of course, there is the allure of profits and higher salaries and wages. Also, the sheer inexorability, or stubborn persistence, of poverty in scaring off rather than being lifted up from foreign-direct investment may have been minimized by the hope. Roughly forty years later, Oriana Bandiera of the London School of Economics spoke on the theory that economic opportunities are impacted by how much wealth a person has at the outset—the alternative theory being that the opportunities are just as good for the poor as for the rich because differences are due to exogenous (i.e., outside) factors. The micro-level condition of a country’s poor impacts the attractiveness of a country to foreign direct-investment.

 

The full essay is at "Poverty Impeding Development."

On the Role of Agribusiness in Global Warming

Agriculture is a major source of carbon and methane emissions, which in turn are responsible for the general trend of the warming of the planet’s atmosphere and oceans. In fact, agriculture emits more than all of the cars on the roads. 10 percent of the emissions carbon dioxide and methane in the U.S. come from the agricultural sector. Livestock is the biggest source of methane. Cows, for example, emit methane. Methane from a number or sources, including the thawing permafrost, accounted for 30 percent of global warming in 2023. As global population has grown exponentially since the early 1900s, herds of livestock at farms have expanded, at least in the U.S., due to the increasing demand.[1] We are biological animals, and we too must eat. More people means that more food is needed, and the agricultural lobby in the U.S. is not about to let the governments require every resident to become a vegetarian. Indeed, the economic and political power of the large agribusinesses in the U.S. have effectively staved off federal and state regulations regarding emissions. It comes down to population, capitalism, and plutocracy warping democracy.

The full essay is at "On the Role of Agribusiness in Global Warming."

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1. Georgina Gustin, “Climate Change and Agriculture,” Yale University, February 22, 2024.

Monetary and Fiscal Policy and Structural Reform: Each Had a Role to Play after the Financial Crisis

With fiscal policy hamstrung by public debt in both the E.U. and U.S., monetary policy was a major beneficiary of the financial crisis of 2008 and the ensuing state-debt crisis that stammered on at least until 2013 in Europe. Lest it be concluded that central bank policy had reached an unassailable peak of salvation, the expanded role actually made its limitations transparent, at least in financial circles.

The full essay is at "Post Financial Crisis Coordinated Action."

An Empire's Economic Scale Demands a Market System: The Case of China

A trend of increased-scale economies can be observed through history as city-states have given way to the increased military power of centralized Medieval kingdoms. Many of those expanded into Early Modern kingdoms as advances in military technology make it possible for kings to extend the territory under their control. Even empires have gotten bigger. Modern-day Germany was once considered an empire, as were Switzerland and the Netherlands. Today these polities are states in a modern form of empire, the EU. Similarly, the emergent United Colonies of America was considered to be an empire within the British Empire, with the individual colonies being viewed on both sides of the Atlantic as Early Modern kingdom-level polities on par with the states of the E.U. in the twentieth century. Similarly in China, as kingdoms were added, an old form of empire took shape. Because these enlargements came about gradually over centuries, it has been difficult for the human mind to recalibrate how the modern large empire-scale economies should be designed to take into effect the distinct challenges of the scale. We can see such an adjustment in the case of China as economic centralization came to be replaced by regulated markets, albeit with a sizeable involvement still of the government in the economy. 

The Emperor Kangxi of the Qing Dynasty. He ruled for 60 years, greatly expanding the size of the empire. (Source: Chinahighlights.com)

The full essay is at "The Case of China."

Secession E.U.-Style: Beyond the Economic Implications

Financial markets place bets on political outcomes, such as how or even whether the E.U. state of Britain would secede from the Union. Leading up to the March, 29, 2019 secession date, the shifting odds moved stock, bond and foreign exchange markets, especially given the instability in the state government in general and more particularly on reaching a deal with the federal government in Brussels on just how the state would secede. Of course, the political magnitude of a state seceding from a Union such as the E.U. or U.S. is not captured by how markets anticipate the risks. To reduce secession to the end of a trade treaty does the secession and the Union itself a grave injustice. More generally, political changes do not reduce to their economic anticipations or effects. Nor is it wise to assess the political viability of future political events by the economic assessments in financial markets.

The full essay is at "Secession E.U.-Style."

Affluence and Democracy in China: A Complicated Relationship

The Financial Times reported in 2013 that there was “no great clamour in China for western democracy.”[1] The assumption in the West that prosperity in China will someday inevitably usher in democracy may unduly privilege Western political values in an exogenous context. The newspaper suggested that prosperity can be the source of rising pressure for political change rather than an antidote to it. In other words, the power shift between the state and individual that is unleashed by rising incomes does not necessary privilege the individual. Time and again, China’s leaders have refused to shift power to the individual at the expense of the state; social harmony, and power, are just too important. To be sure, cronyism and corruption, while endemic in China, are not esteemed cultural values, and the rising middle-class may demand that the state clamp down on the unfairness of government officials “wetting their beaks.” This would be particularly problematic if the growing upper-middle-class demand more transparency in government and more rule-of-law to instill fairness over the personal aggrandizement of government officials. However, President Xi, at least publically, would hardly object, as he set out to come down hard on corruption even in the state. At the very least, the matter of increasing wealth and democracy in China can only be complex, yet we can come to some conclusions based on Chinese history and the Chinese view of democracy being Western.

 

The full essay is at "New Wealth and Democracy: A Chinese Puzzle."

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1. Philip Stephens, “Political Cracks Imperil China’s Power,” The Financial Times, January 24, 2013.

The “Fiscal Cliff” in U.S.: Real or Hyped?

As the U.S. economy slogged through a recession following the credit crisis in 2008 and the E.U. was weighed down by the ballast of austerity in the most indebted states, developing economies, including those of China and India, kept the world economy afloat. As a group, those economies grew 7.4% in 2010, 6.2% in 2011, and 5.5% in 2012. In keeping with this trend, the Global Economic Outlook of the Conference Board predicted 4.7% for 2013. Fortunately, the Board also predicted a pick-up in consumer demand in the U.S. to pick up the slack. “The only really short-term positive impact that we can have is that we can see a faster return of demand, particularly in the U.S.,” the Board’s chief economist said. As of 2012, such a return was not necessarily “in the cards.” The pessimism can be seen in the projected world economic growth of 3 percent, which is lower than the 3.2% expected in 2012 and the 3.8% achieved in 2011. That the projected growth rate of only 1.8% for the U.S. in 2013 is less than the projected 2.1% for 2012 indicates that increased demand in the U.S. was not expected to fully pick up the slack for the slowing-down of the developing economies. Here I want to point to a major factor in the U.S.: the possibly impending “fiscal cliff” of cuts in the federal budget and the end of the Bush tax breaks  that were scheduled to begin on January 1, 2013 unless Congress and the White House could come to a legislative agreement beforehand on an alternative way of holding down the deficits. Presumably that way would have a less recessionary effect.

The full essay is at "The Fiscal Cliff in the U.S."

Questioning Universal Basic Income

The gist of basic income is that a government “distributes cash universally. As the logic runs, if everyone gets money—rich and poor, the employed and the jobless—it removes the stigma of traditional welfare schemes while ensuring sustenance for all.”[1] The “logic,” I submit, is flawed even if the basic idea is solid.

The full essay is at "Universal Basic Income."

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1. Peter S. Goodman, “Inequality? California City Is First in U.S. to Try,” The New York Times, May 30, 2018.

Social Harmony and Toxic Chemicals in China

According to the New York Times in 2012, the Chinese had become increasingly willing “to take to the streets despite the perils of openly challenging the country’s authoritarian government.” Even more surprising, government officials had actually acquiesced in some notable cases. Given the raw nature of power, particularly under authoritarian auspices, revolution rather than gradual reform may still be the most likely means by which democracy can bloom under the golden, albeit hazy, sun.

The full essay is at "Chemical Pollution in China."

Essays on the Financial Crisis

The financial crisis that peaked in the United States during the fall of 2008 is an excellent case study of what can go wrong with leadership and corporate governance in business, financial ethics, government regulation directed both to the firm level and that of the financial system itself, and legal accountability for the culprits. The collection of essays begins with a series of essays on Lehman Brothers, with particular attention on its last CEO, Richard Fuld. Given the fraud surrounding subprime-mortgage bonds at numerous banks, the second part of the book looks at why legal accountability was so elusive in the United States. Weaknesses in the financial regulation, with particular attention to whether agencies had been captured by their respective regulated firms, comprises the third part. The fourth part examines the culpability of the Federal Reserve Bank, which had perhaps been too close to its regulated banks to anticipate the crisis. The book concludes with essays on why business ethics had been so very weak. The careful reader will take from the book a sense that the financial system remained vulnerable even after government attempts to reduce the systemic risks of a big bank going under. 

The book: Essays on the Financial Crisis, is available in print and as an ebook at Amazon.com.

Is Undoing Financial Reform In Line with Free-Market Ideology?

Legislating on the basis of an aversion to government intervention in financial markets can paradoxically result in more massive intervention. The latter can come to pass even amid an anti-interventionist ideology on account of the emergency conditions that call for the extraordinary incursion of government into a market. Undoing the Orderly Liquidation Authority of the Dodd-Frank Act in the U.S. is a case in point.

The full essay is at "Financial Reform and Free-Market Ideology."

Wallonia Threatens to Veto the E.U.-Canada Trade Treaty: Complicating State Sovereignty in the E.U.

"The European Union and Canada signed a far-reaching trade agreement on [October 30, 2016] that commits them to opening their markets to greater competition, after overcoming a last-minute political obstacle that reflected the growing skepticism toward globalization in much of the developed world."[1] The obstacle may indeed have reflected increasing resistance at the time to globalization, but this veil can be pulled back to reveal the underlying political obstacle--that of states' rights in the E.U., taken to a crippling extreme.

The complete essay is at Essays on Two Federal Empires.

1. James Kanter, "Canada and E.U. Sign Trade Deal, Bucking Resistance to Globalization," The New York Times, October 30, 2016.

Going to Extremes for Economic Growth: Low Interest-Rates as Unfair and Unwise

Is moderate monetary policy better than going to the extremes? The same can be asked of fiscal policy. Moreover, is a hypertrophic urge to prompt economic growth as if it were an end in itself better than seeking an economic equilibrium? Generally speaking, systems in equilibrium are more stable than those that include a schizogenic, or limitlessly maximizing, variable. An example of the latter is the population growth of our species relative to the equilibria otherwise established by the ecosystems in which we live. A desire for economic growth is a maximizing variable in a political economy. So too is the related practice of taking monetary (and fiscal) policy to an extreme. If the desire is great enough and the related policies extreme enough, the equilibrium of a political economy can be punctured with systemic risk increasing as does the instability of the system. I contend, therefore, that moderate government and central bank policies are preferable to going to the extremes. Here, I address monetary policy.

The full essay is at "Going to Extremes."

Brazil’s Rousseff Impeached and Removed from Office: A Case of Partisan Politics?

Dilma Rousseff was impeached and removed from office at the end of August, 2016. The state’s senate voted 61-20 to convict her on charges that she used illegal bookkeeping maneuvers to hid a growing budget deficit.[1] Her defense that she did not enrich herself through public office—that she did not steal public money for her own account—can be regarded as an attempt to deflect the legislators from the existing charges.[2] Only 56 legislators were necessary for a two-thirds majority. Given the problems of hyperinflation and fiscal mismanagement, including a growing public debt, her offenses were “deemed an impeachable crime.”[3] Although Brazil was hardly the only country where the chief executive has sought under political pressure to make a budget deficit look smaller than it actually was, enforcing deterring consequences even just in this case is laudable—while other, partisan motives, detracted from the vote’s legitimacy.

The complete essay is at "Partisan Impeachment in Brazil?"

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1. Paulo Trevisani and Reed Johnson, “Brazilian President Rousseff Ousted,” The Wall Street Journal, September 1, 2016.

2. Ibid.

3. Ibid.

Political Contributions in the U.S.: Political Bribery Beyond Access

What exactly does a large political contribution do for a contributor? The standard line is that access is “bought.” Being far removed from the Washington “belt-way,” the American people have swallowed the line, admittedly naively. As of 2015, we can look at the proverbial “man behind the curtain” for a much more realistic grasp of the extent to which the American political system is corrupt.

The full essay is at "Political Bribery"

Property Rights in China: On the Separation of Ownership and Control in the Stock Market

It is too simplistic to say that economies around the world converged as capitalistic after the collapse of the Soviet command-and-control economy. Even the notion that China’s communist party has embraced capitalism does not do justice to the ways in which China’s capitalist system is unique. This became particularly apparent in early July 2015, when the bubble burst in the Chinese stock market.

The full essay is at “Property Rights in China.”

On the Southwest American Drought: Looking to China

Lake Mead, a reservoir outside Las Vegas serving 40 million people in Nevada, Arizona, Southern California, and Northern Mexico, was at its lowest level (i.e., below 1,080 feet) in April 2015 since it was formed with the Hoover Dam.[1] Particularly for California, whose snow-melt would again be minimal, the continued draught was quickly turning dire. With a surplus of rain-water coming down on western Washington and Oregon, the U.S. Government could have dusted off FDR’s Civilian Conservation Corps (CCC) to activate the long-term unemployed (and the imprisoned) to assist the Army’s Corps of Engineers in constructing aqueducts and digging canals that would hook up with the extant canals running from the delta area north of Sacramento to southern California. It is not as though the Oregonians and Washingtonians would miss the water, and the Californian farmers could see to it that their best produce finds itself up north. Yet as easy as such a large-scale governmental project seems, the devil is in the details, which can actually be rather huge in themselves. China provides a useful case study that the Americans could, conceivably at least, benefit from—should they endeavor on a truly large-scale governmental project.

The full essay is at “The Southwest Drought and China.”

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[1] Reuters, “Lake Mead on Track for Record Low Water Level Amid Drought,” The Huffington Post, April 24, 2015.

Anti-trust Enforcement in the E.U. and U.S.: Business, Government and Society

In 2014, the E.U. depended on Gazprom, a state-controlled Russian gas company, for one-third of the natural gas used in Europe. Meanwhile, Russia depended on the company for export-earnings. Moreover, both the E.U. and Russia view Gazprom from not only commercial vantage-points, but geopolitical ones as well. Both dimensions were in the mix as the European Commission weighed bringing anti-trust charges against the company in April 2015. At the time, the E.U.’s executive branch was already formally pursuing Google on anti-trust grounds. Relative to anti-trust enforcement in the U.S., the E.U.’s own represents a formidable attempt to open up competitive markets. We can generalize, in fact, to posit a more balanced “check and balance” between business and government in Europe.

The full essay is at “Anti-trust Enforcement in the E.U. and U.S.”