Category: Economics (page 1 of 2)

Liberal World Order, Redux

Earlier this year, I wrote a piece for Duck regarding “declinist” arguments about liberal world order under Trump. I don’t think these arguments are going away, and in fact—just this week—they are in the news, and on our blog/twitter feeds (including a great piece posted just last week here on Duck).

I want to reiterate, and elaborate on some earlier points I have raised about these kinds of arguments. In the first place, they deserve reiterating and elaborating. In the second place, I just got back earlier this week from an illuminating conference at University College Dublin called “John Dewey and Critical Philosophy for Critical Political Times” which touched on many issues related to the problems for democracy around the world in a time of right wing populism.

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Trump and the Russian Money Trail

This is a guest post from Seva Gunitsky, an associate professor at the Department of Political Science at the University of Toronto. His book Aftershocks: Great Powers and Domestic Reforms in the Twentieth Century was recently published by Princeton University Press.

To understand the roots of the collusion, set aside Putin and follow the money.

In the endless pursuit of the Russia-Trump collusion story, we sometimes forget a key element: this whole mess began with money, not with election interference. The connections between Trump and Russia were forged years ago, well before he developed any serious political inspirations, and were focused on the shady schemes of Russian oligarchs and their dealings with Trump. Understanding the roots of the collusion means setting aside the usual narrative – Putin wants to destroy American democracy – and following the money first.

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Morality matters: What the United debacle, the Pepsi ad, and Bill O’Reilly have in common

Social media was abuzz last week with three big missteps by major corporations. Pepsi unveiled a failed television advertisement intended to render homage to the social protest movement in the U.S. but that instead trivialized the protests and appropriated their imagery for financial gain; the New York Times revealed allegations of sexual harassment against Fox host Bill O’Reilly and that the host and Fox paid out nearly $13 million to five women in exchange for their silence; and United airlines dragged a boarded passenger, David Dao, off a plane in order to allow its staff to catch a flight to Louisville. It is tempting to think that the moral outrage expressed on social media was a fleeting fit of slacktivism with little purpose. But, it is more than that. Continue reading

WPTPN: The Rise of Embedded Nationalism

This World Politics in a Time of Populist Nationalism (WPTPN) guest post is written by Moonhawk Kim, who was an assistant professor of political science at the University of Colorado Boulder from 2007 to 2016. His research focused on the politics of international trade institutions. This post first appeared on his blog To Be Analyzed.

Ruggie’s (1982) “embedded liberalism” provided the framework for understanding the nature of the domestic social contract underlying the post-World War II international economic arrangement for the last three-and-a-half decades. As a alternate to the “disembedded liberalism” (Polanyi 1944) model of the gold standard era, this model described and prescribed the importance of domestic political economic stability over maintenance of the liberal international economic order. In the decades since Ruggie’s article, the potential threat to the stability of embedded liberalism scholars anticipated was a return to disembbeded liberalism, the model of hyperglobalization at the cost of domestic political economic stability.

One way to interpret the triumph of Donald Trump is that the long-standing social bargain within the U.S. underlying Pax Americana—and thus the whole post-war international order—has unraveled. The bargain is moving toward hyper-priotization of domestic political economy over a liberal international economy. This interpretation is consistent with the broad observation about the characteristics of voters who voted for Trump (losers from globalization, broadly defined to include those that confront a high level of economic uncertainty if not low income) and Trump’s nationalistic economic policies, now taking the first step in the form of withdrawing from the Trans Pacific Partnership.

Two interrelated components are necessary for maintaining a stable domestic-international bargain. One, the international benefits of a liberal world economy—the gains from trade—has to be domestically distributed. Economists have always recognized that the gains are at the aggregate level. Those who gain from economic globalization (”winners“) need to compensate those who are hurt from it (”losers“) and mitigate the latters’ cost of adjusting to the new economic reality. Two, the domestic population needs to intuitively and/or rationally understand the nature of the domestic-international bargain and continually support to reinforce and sustain the international arrangement.

I have some ideas on why these two components unraveled over time:

  1. A Paradox of Stability: When an international order works—works really well, as it did in the post-war era—it becomes taken for granted. People and states simply come to think “this is how it is” and fail to realize the institutions and the effort underlying it. That’s actually the indication of the most institutionalized institutions, at least according to sociologists. However, when the taken-for-grantedness leads to desires for dismantling the institution in question, it becomes a problem. (This is akin to the vaccination issue—”Oh, I don’t have to vaccinate against pertussis, because pertussis is not a problem anymore!“

    A related aspect of this is that people/leaders also come to disregard the strategic interaction underlying the stability of the existing order. Other countries have been keeping their trade open because the U.S. has been. If the U.S. becomes more protectionist, other countries will not keep their trade open. The U.S. doesn’t just import; it also exports.

  2. Disjuncture from the Historical Moment: Much of the post-war international order was shaped by the experience states endured during the interwar years, in particular the Great Depression. As the length of time between the historical moment and the current period increases, the lessons fade—people/leaders who experienced it die and new ones never learn it. (What about the Great Recession? See #1 above.)
  3. Disembedded Liberalism: #1 and #2 led to an increasing emphasis on the liberal economic order over domestic political economic stability. The gap in real income growth in the U.S. over the last four decades is the best evidence of this. Certainly not all wealth resulted from a liberal international economy alone—technological progress played an important role—but the gains were not distributed in ways to ensure long-term domestic stability.
  4. Complexity of Globalization: I use the term “globalization” as a shorthand for lowering of costs of transportation and communication, thereby increasing the density of interaction among people. These changes are mainly facilitated by technological innovations that lower the costs. As a result of this, the global system becomes more complex in two ways.

    First, causal chains in large-scale outcomes become harder to trace. When causation has to be inferred rather than perceived, people reject both the process of inference (science) and the assertions of causality. This opens up the possibility of phenomena like “alternative facts” to arise.

    Second, differences across individuals, groups, and countries—which have always existed—become revealed and more likely to generate conflicts. Simultaneous with this increased exposure to diversity, the same technology that increases that exposure facilitates individuals and groups to communicate and organize with those that are likeminded (e.g., cable news channels). In short, globalization strengthens intra-group cohesion while increasing inter-group conflicts.

So what happens now? The next four years will be an interesting test of Keohane’s (1984) thesis that international institutions can in fact successfully persist and maintain order after hegemonic decline. Of course, with the current regime in the U.S., we are witnessing less of a decline and more of a willful rejection in alleged service of domestic political economic priorities. The absurdly misinformed protectionist policies by the administration will certainly end up causing a great deal of economic harm to the very groups it is claiming to be helping.

The Duck of Minerva’s WPTPN group is still seeking guest contributions. If you are interested in writing a post and have research expertise in international relations, international political economy, foreign policy, comparative politics, or cognate fields please see this post for more information.

WPTPN: What an “America First” Trade Strategy Gets Wrong

This World Politics in a Time of Populist Nationalism (WPTPN) guest post is written by Layna Mosley,  Professor of Political Science at the University of North Carolina, Chapel Hill. She researches the political economy of multinational production, labor rights, and sovereign debt and can be found on Twitter @thwillow

President Trump’s first days in office have been marked by a continuation of his pledges to fundamentally remake US trade policy. On January 23, the website of the United States Trade Representative, the executive branch agency charged with negotiating and implementing US trade policy, underwent a radical redesign. The site’s front page now touts the “America First Trade Policy,” in which the “landscape of trade policy” is revised “to work for all Americans.” Four days later, the administration announced – with subsequent qualification later — a 20 percent tax on all imports to the US (or, perhaps, on all imports from Mexico).

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WPTPN: The Collapse of Embedded Liberalism in a Time of Populist Nationalism?

This World Politics in a Time of Populist Nationalism (WPTPN) guest post is written by Sean D. Ehrlich, an Associate Professor of Political Science at Florida State University who researches international and comparative political economy, trade policy, and democratic institutions. His first book, Access Points, was published by Oxford University Press in 2011 and he is currently finishing his second book, The Politics of Fair Trade, which is under contract with Oxford University Press. He can be reached on Twitter @SeanDEhrlich.

Since the end of World War II the advanced industrial economies of the West have moved towards freer trade and increased economic integration at a fairly steady clip. While the Great Depression brought the previous era of globalization to a sudden halt, economic downturns after the War led only to temporary and isolated retreats from economic liberalism. The globalized world economy had even seemed to as, despite fears of rising protectionism and the collapse of the European Union, the world entered 2016 with global trade reaching an all-time high (albeit it with sluggish annual growth) and with the economic problems of the previous eight years seemingly mostly resolved. The twin political shocks of 2016—Brexit and Mr. Trump’s victory in the US Presidential election—call this all into question and suggest that the global liberal economic order might begin to retreat in the face of rising economic nationalism and populism.

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WPTPN: The Anti-Corruption Racket: How Demonetization Cements Modi’s Mantle

 

This World Politics in a Time of Populist Nationalism (WPTPN) guest post is written by Nikhil Kalyanpur, a PhD student in Government at Georgetown University. He researches business-government relations and the relationship between security and finance.

While Donald Trump has naturally dominated headlines across the world this past month, his chauvinistic brother-in-arms Narenda Modi has been just as active. The boss from Gujarat is taking a page from today’s global autocratic elite – exploiting international liberal norms to further illiberal ends. The BJP’s dramatic demonetization initiative leaves nearly 87% percent of Indian currency (the 500 and 1000 rupee notes) void, in a country where virtually the same percentage of the economy operates informally. The move is meant to curb the endemic corruption eating the Indian bureaucracy, and crack down on tax evasion and apparent (“Pakistani”) currency counterfeiting. The country is not quite following Modi’s modernization script. The country is stumbling toward recession while the burden is disproportionately placed on the poor, and, in particular, rural women for whom cash is the only way to escape abusive relationships. While the economy grinds to a halt, the legislature has been thrown into gridlock, US Congress-style, as the filibuster is now all the rage.

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WPTPN: The Loss of the American Narrative

This World Politics in a Time of Populist Nationalism (WPTPN) guest post is written by Aida A. Hozić is an Associate Professor of International Relations at the University of Florida. This blogpost draws on a chapter prepared for Hegemony and Leadership in the International Political Economy, edited by Alan Cafruny and Herman M. Schwartz (Lynne Rienner, forthcoming).

There is a moment at the end of every regime when the relationship between all hitherto accepted modes of representation and reality seems to collapse.  Regimes start running on fumes when well-established political rituals appear devoid of meaning, when institutionalized practices are revealed as arbitrary, when beloved symbols of power suddenly have no referent, pointing instead at power’s empty seat. In short, regimes collapse when narratives that have held them together are no longer believable.

America, I would argue, might be rapidly approaching that point.

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WPTPN: The Legitimacy of American Hegemony in the Age of Trump

This World Politics in a Time of Populist Nationalism (WPTPN) guest post is written by Daniel Braaten, Assistant Professor of Political Science at Texas Lutheran University.  His main research interests are in the areas of global governance, human rights, and U.S. foreign policy.  His research has been published in the Review of International Studies, Journal of Peace Research, Journal of Human Rights, and Human Rights Review.

What effect will a Donald Trump presidency have on American hegemonic legitimacy? My purpose here is not to wade into debates about whether U.S. hegemony is benign, here to stay, already gone, or more like an empire. My use of the term hegemony is only to acknowledge the role the U.S. has taken to build, maintain, and benefit from the post-World War II global order and how Trump’s foreign policy may impact America’s role in maintaining this system going forward. Already commentators are arguing that a Trump Presidency (coupled with the Brexit vote and a global surge in nationalism) spells the end of this system. So how might a Trump presidency undermine the legitimacy that underlies America’s hegemonic position and the post-World War II system of international institutions, embedded liberalism, and democracy?

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Open Thread on International Development Syllabi

In previous posts on the environment and health, I highlighted lacunae in the field, which I attributed in part to there being few courses in those substantive areas. By providing a few exemplar syllabi, I thought more of us might find it easier to offer courses on those topics. At the very least, some might find inspiration for courses and mine these syllabi for readings.

Another potentially under-studied area is international development. Here, there may be more course offerings and crossover with IPE, but I’m going to start an open thread with development syllabi because I can. Again, while I had graduate training in IPE,  my knowledge of international development comes from a second bachelor’s degree in England, my experience in the Peace Corps in Ecuador, and a subsequent internship at the Multilateral Investment Fund. Most of my development specific knowledge I picked up along the way.

I still think this is an understudied area in political science, though the politics of foreign aid and international organizations do get some coverage. My syllabus on the topic is gear towards MA students and helping them become better practitioners, particularly through manipulation of data and simple Excel graphical applications. 2016 syllabus here.

I’ll post additional exemplar syllabi in the comments thread.

Empathy, Envy and Justice: The Real Trouble for Algorithm Bias

Rousseau once remarked that “It is, therefore, very certain that compassion is a natural sentiment, which, by moderating the activity of self-esteem in each individual, contributes to the mutual preservation of the whole species” (Discourses on Inequality).  Indeed, it is compassion, and not “reason” that keeps this frail species progressing.   Yet, this ability to be compassionate, which is by its very nature an other-regarding ability, is (ironically) the different side to the same coin: comparison.  Comparison, or perhaps “reflection on certain relations” (e.g. small/big; hard/soft; fast/slow; scared/bold), also has the different and degenerative features of pride and envy.  These twin vices, for Rousseau, are the root of much of the evils in this world.  They are tempered by compassion, but they engender the greatest forms of inequality and injustice in this world.

Rousseau’s insights ought to ring true in our ears today, particularly as we attempt to create artificial intelligences to overtake or mediate many of our social relations.  Recent attention given to “algorithm bias,” where the algorithm for a given task draws from either biased assumptions or biased training data yielding discriminatory results, I would argue is working the problem of reducing bias from the wrong direction.  Many, the White House included, are presently paying much attention about how to eliminate algorithmic bias, or in some instance to solve the “value alignment problem,” thereby indirectly eliminating it.   Why does this matter?  Allow me a brief technological interlude on machine learning and AI to illustrate why eliminating this bias (a la Rousseau) is impossible.

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Is there a connection between the Northwest Passage and the South China Sea?

This is a guest post from Hannes Hansen-Magnusson, a Lecturer in International Relations at Cardiff University (contact by email: Hansen-Magnusson”at”Cardiff.ac.uk or via twitter: @HansenMagnusson)

For centuries the political struggle over the legal status of global oceans was presented as one of mare clausum vs. mare liberum. These concepts concerned the possibility of movement as well as rights and responsibilities of seafaring nations and coastal states which had sometimes been the subject of small-scale physical confrontations at sea, such as the so-called Cod or Turbot Wars, but also of judicial processes, such as the Corfu Channel or Fisheries cases, which followed earlier conflicts. Overcoming confrontations such as these, progress was achieved after nine long years of negotiating the United Nations Convention on the Law of the Sea (UNCLOS) between 1973-1982. Since entering into force in 1994 UNCLOS has provided a constitution-like framework with which to quell physical confrontations and opened an institutionalized path for settling disputes and open questions through one of its three organizations (the International Tribunal on the Law of the Sea, the International Seabed Authority, and the Committee on the Limits of the Continental Shelf) or through the Permanent Court of Arbitration. Given these developments during the last two decades, it may be possible to speak of mare iudicatum or administratum as the new development towards a peaceful use of global oceans.

The point of this contribution is to remind ourselves as academics and practitioners that as progressive as this development may appear, it should be clear that the new order does not assert itself through an invisible force that is inherent in the provisions of UNCLOS and the procedural rules of different organizations charged with its implementation. Much depends on what happens in the day-to-day instantiation of it through the activity of seafarers and their states. Although these activities may be small-scale and local events, there is a chance of global reverberations, which is what this contribution is arguing: because in a global framework there can be no extra-ordinary events and localities, they all matter for the overall architecture.

In order to demonstrate this, I will revert to two current examples: the passage of the Crystal Serenity through the Northwest Passage (NWP), on the one hand, and politics in the South China Sea (SCS), on the other. Remote as they may seem in geographical terms and as they are treated as such by area specialists, there is a wider issue at stake which connects them, centering on the peaceful use of global oceans. Continue reading

The Anglosphere, Dominance in Global Finance, and the Consequences of Brexit

 

This is a guest post by Jan Fichtner, Postdoctoral Researcher in the CORPNET project at the Department of Political Science of the University of Amsterdam.

So far, International Relations and International Political Economy have not dedicated much attention to analyzing the group of the Anglophone countries together (notable exceptions are Andrew Gamble, Jeremy Green, Kees van der Pijl, and Srdjan Vucetic). Instead, the vast majority of IR and IPE approaches treats the English-speaking countries and jurisdictions solely on the grounds where they are located geographically: the Unites States and Canada are grouped as ‘North America’, Australia and New Zealand are seen as part of ‘Asia-Pacific’, the British dependent territories of Bermuda, the Cayman Islands, and the British Virgin Islands (which all act as important offshore financial centers) are usually categorized under the heading ‘Caribbean’, and finally most analyses treat Ireland and the United Kingdom as part of ‘Europe’ or the European Union. The latter is going to change in the coming years as a slim majority of Britons has voted for ‘Brexit’. Therefore, the UK will eventually leave the EU, although the details of this historic divorce are far from clear. This comes after many years of widespread skepticism against the EU and continental ‘Europe’, which has been fueled constantly by many British politicians and certain Australian-American-owned media outlets.

In a recent article in the Review of International Studies (free access through August 2016), I have argued that the Anglophone countries generally have much more in common with the other English-speaking states than with neighboring countries – Peter Hall and David Soskice as well as Bruno Amable have found indications that the Anglophone economies form one distinct socio-economic model. Moreover, the English-speaking countries are deeply integrated by their extremely close cooperation in the highly sensitive field of signals intelligence (the so-called ‘Five-Eyes’), which is unparalleled in the world. Thus, it makes sense to analyze the Anglosphere countries together. This is especially pertinent in the pivotal field of global finance.

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Transforming Markets and Social Movements

Why do some transnational advocacy movements have more success transforming global markets than others? Can we look to look to differences in market structure for a preliminary account? Why were AIDS advocates able to achieve extended access to antiretroviral medications for millions of people while climate campaigners have struggled to achieve comparable gains?

This week, International Studies Quarterly published an early access and ungated version of my article with Ethan Kapstein where we examine how the structure of markets shaped the differential scope for climate and AIDS advocacy. (This is an extension of our 2013 book AIDS Drugs for All which had a broader focus on movement organization and agency.)

In brief, we argue that four factors of the industry opportunity structure facilitate market transformation: (1) the number of product markets, (2) the degree of global integration (3) market concentration and (4) the source of rents. In this post, I thought I’d walk through the logic we develop in the article and some of the issues that I think merit further research. (I developed some of these themes in my remarks at last fall’s APSA pre-conference workshop on markets and politics).  Continue reading

Discussion: Structural Power and the Study of Business

This is a guest post by Randall Germain, Professor of Political Science at Carleton University, as part of the Duck of Minerva’s Symposium on Structural Power and the Study of Business. Links to other posts in the symposium can be found here.

A scholar knows he has been around for a while when the problem of structural power re-emerges as a legitimate and worthy subject of research. My graduate education in IR and IPE was pre-occupied with debates over hegemonic stability theory and neo-realism, which were, in their own ways, very particular demands to take structure and the power of structures seriously in our research. But along the way this interest in structure became transmuted into a quest to make whatever data we had about existing institutions reveal how they functioned in a world of exogenous developments. Research shifted from a focus on what Benjamin Cohen has called ‘big picture’ thinking about the global economic and political order, to a much narrower set of concerns connected to how specific institutions operate and the parameters within which they move. In many ways the concerns that dominated scholarly debates in my academic ‘youth’ have gone south, replaced by concerns which, while not of course unimportant in a scholarly sense, are perhaps somewhat less driven by the ‘big picture’ problems of change and transformation that animated research in that earlier period.

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The Structural Power of Business: Taking Structure, Agency and Ideas Seriously

This is a guest post by David Marsh (Institute of Governance and Policy Analysis, University of Canberra, Australia), Sadiya Akram (Queen Mary College, University of London, UK) and Holly Birkett (Birmingham Business School, UK), as part of the Duck of Minerva’s Symposium on Structural Power and the Study of Business. This post draws on ideas developed at greater length in their article found here. Links to other posts in the symposium can be found here.

There has been a revived interest in the last few years in the power of business. This is hardly surprising given the way in which Governments made significant concessions to the banks in the context of the Global Financial Crisis (GFC). Indeed, most, but not all, empirical studies of the power of business have concentrated on the relationships between Governments and the financial sector particularly in the UK and the US. Is it true, as some have claimed that the power of business has increased substantially, thus undermining the operation of contemporary democracy? Of course, this is, in large part, an empirical problem. However, assessing the power of any group within society is not easy and we need a more sophisticated conceptual framework to address this empirical problem.

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The Multinational Firm and Geopolitics: Europe, Russian Energy, and Power

This is a guest post by Rawi Abdelal, Joseph C. Wilson Professor of Business Administration at Harvard Business School, as part of the Duck of Minerva’s Symposium on Structural Power and the Study of Business. This post draws on ideas developed at greater length in Abdelal’s article found here. Links to other posts in the symposium can be found here.

Multinational firms produce many of the geopolitical outcomes in which political scientists are interested. It is such a pity, then, that political scientists know so little about multinational firms. In this paper I put forward a theoretical framework for understanding the role of multinational firms in both markets and the international system.

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Why Is the U.S. Still So Important in the Post-Crisis Global Financial System?

This is a post by William Kindred Winecoff, Assistant Professor of Political Science at Indiana University Bloomington, as part of the Duck of Minerva’s Symposium on Structural Power and the Study of Business. This post draws on ideas developed at greater length in Winecoff’s article found here. Links to other posts in the symposium can be found here.

A curious thing has happened since the global financial crisis: all of the rising powers that were ostensibly going to challenge the postwar American hegemonic project have taken significant steps backwards, while the U.S. has recovered much more smoothly than many predicted. Indeed, the political economy problems within unified Europe and the formerly-booming BRICs (Brazil, Russia, India, and China) appear to be deepening further, while others who had resisted the U.S. project, or been ambivalent towards it, are facing new problems of their own: this is especially true of “Pink Tide” left-populists in Latin America – who are suffering from the unraveling of the same commodities supercycle from which they previously had benefited – while the “Fragile Five” middle income economies (Turkey, Brazil, India, South Africa, and Indonesia) face slower economic growth, pressures on their external economic accounts, and serious domestic political challenges.

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Behind Structural Power Lies Structuring Power

This is a guest post by Henry Farrell, Associate Professor of Political Science and International Affairs at George Washington University, and Abraham Newman, Associate Professor in the Edmund A. Walsh School of Foreign Service and the Government Department at Georgetown University, as part of the Duck of Minerva’s Symposium on Structural Power and the Study of Business. This post draws on ideas developed at greater length in Farrell and Newman’s article found here. Links to other posts in the symposium can be found here.

Political scientists haven’t paid nearly enough attention to structural power over the last two decades. As Charles Lindblom argued, it is clear that firms have political power and influence that goes beyond their direct ability e.g. to put money behind ideas and politicians that they like. In a capitalist system, by definition, businesses make the final decisions about how capital is allocated. This means that politicians have to pay attention to their decisions, allowing businesses collectively and sometimes individually to shape the political agenda. Pepper Culpepper and his colleagues, both by drawing renewed attention to structural power, and by showing that it can vary across state, industry and context, are doing a lot to explain political outcomes that would otherwise remain mystifying.

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Structural Power in Latin America

This is a guest post by Tasha Fairfield, Assistant Professor in the Department of International Development at the London School of Economics and Political Science, as part of the Duck of Minerva’s Symposium on Structural Power and the Study of Business. This post draws on ideas developed at greater length in Fairfield’s article found here. Links to other posts in the symposium can be found here.

Taxation is a policy area rife with examples from around the world of the substantial influence that business can wield. Consider Latin America, a region known for phenomenal inequality and light taxation of income and wealth (much like the United States in recent years). Business has been particularly successful at securing favorable tax legislation in Chile­­––business owners who comprise the top 1% receive upwards of 22% of national income but paid average effective tax rates of roughly 15% (compare to 24% in the US in 2004).

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