Blog - Views on the Economy and the World

Views on the Economy and the World

A blog by Jeffrey Frankel

For more information on this publication: Please contact the Belfer Communications Office
For Academic Citation:Views on the Economy and the World,” Views on the Economy and the World, http://www.belfercenter.org/publication/views-economy-and-world.

255 posts

Explaining Dodd-Frank

| Sep. 08, 2017

Nine years ago this month, the US sub-prime mortgage crisis morphed into a severe global financial crisis.  Many Americans across the political spectrum angrily demanded financial reform, by which they meant a tightening of financial regulation.  Indeed, important reforms were subsequently enacted, in particular the 2010 Dodd-Frank bill.

teaser image

teaser image

Americans have under-estimated the nuclear threat from North Korea and misunderstood what policies would reduce it.  At the same time they have over-estimated the importance of bilateral trade deficits with China and misunderstood what policies would reduce them.  Now these two different issues intersect.

My preceding post discussed the Chinese trade aspect of the problem.  Here I review the geo-politics and history of the North Korea nuclear problem.

teaser image

teaser image

Trump has threatened new trade barriers against China while simultaneously depending on Beijing’s help to rein in North Korea’s alarming nuclear weapons program. These two aspects of US policy toward China are at odds.

It feels inappropriate to write a column that treats the two issues on a par. To state the obvious, the stakes are vastly higher in a potential US-North Korean military conflict, especially when it comes to the real danger that nuclear weapons will be used, but even if they are not. But we need to consider the Chinese trade issues together with the Korean nuclear issues because the Trump White House does. (Chief strategist Steve Bannon, for example, had the priorities reversed. Just before he was fired he said that the Korea issue was a “side show” compared with the all-important “economic war with China.”)

Why do Republican politicians seem unable to come together on a bill to “repeal and replace” the 2010 Affordable Care Act, also known as Obamacare? After all, they have spent 7 years with that as their single-minded goal, they campaigned on it in the 2016 presidential election, and they now control all branches of government.It is tempting to blame lack of experience and competence on the part of the president. But that doesn’t explain why the Republican congress can’t do it without him.

The Sugar Swamp

| June 26, 2017

As the United States, Mexico, and Canada prepare to renegotiate the North American Free Trade Agreement, as US President Donald Trump’s administration has demanded, much attention is being devoted to one item in particular: sugar. The negotiations will probably produce a sweet deal for the US sugar industry, highlighting the emptiness of Trump’s promises to “drain the swamp” of special-interest influence over policymaking.
Sugar producers’ political clout is nothing new, in the US or other industrialized countries. They have often received trade protection, in the form of import tariffs and quotas, to ensure that domestic sugar prices far exceed those in supplier countries like Australia, Brazil, the Dominican Republic, the Philippines, and Mexico.

teaser image

teaser image

Economists hesitate to explain to people that they should borrow less. The advice sounds too “schoolmarmish.” It seems to lack sympathy for those whose incomes are not keeping up with the standard of living that they had expected based on historical trends. But for those concerned with the reach of the nanny state, the state is precisely what encourages citizens to borrow. And it does nobody any favors to get them overly indebted, as the millions of homeowners who went underwater in the housing crisis ten years ago discovered.

How to Re-Negotiate NAFTA

| Apr. 27, 2017

If NAFTA is to be renegotiated, improvements could include strengthening labor and environmental protections, improving dispute-settlement mechanisms, adding new issues areas, and including more countries.  Is that pie in the sky?  The negotiators already did it last year.  It was called TPP.  

US Treasury Secretary Steven Mnuchin  needs to explain to his boss that China is no longer manipulating its currency, preferably in time for Trump’s meeting with Chinese President Xi Jin Ping, scheduled for April 6-7.  Neither is Germany.

The quantity of financial regulation is not quite as important as the quality.  One must get the details right.  The case of the US “fiduciary rule” strongly suggests that President Trump will not get the details right.

Several countries are undergoing “demonetization” or currency reforms in which the government recalls bills of particular denomination that are circulation and replaces them with new notes. Some of these initiatives are going better than others.