Assessing tail risks to the euro area economy

In Chavleishvili, Kremer and Lund-Thomsen (2023), we develop a novel approach to gauge the potential short- to medium-term costs and benefits of alternative policy actions when monetary policy faces trade-offs between financial and macroeconomic stability. The structural quantile vector autoregressive (QVAR) model – introduced by Chavleishvili and Manganelli (2023) – provides a flexible way of estimating the dynamic interactions between our main variables of interest: real GDP growth, inflation, short-term interest rates and financial stability conditions.^[2] The “flexible” attribute refers to the fact that the estimated interactions can be weaker or stronger in the centre and in the tails of the “joint probability distributions” of the model variables. Financial stability conditions are captured by two summary indicators measuring financial imbalances and system-wide financial stress, respectively. Using quantile regression allows us to uncover non-linearities in the dynamics of the model variables like in the seminal “growth-at-risk” paper by Adrian et al. (2019), which documents a much stronger impact of financial distress on the left tail of the growth distribution. By considering the entire probability distribution of our variables of interest, we can evaluate policy options not just in terms of their most likely outcomes, but also in terms of the tail risks associated with particularly undesirable states such as systemic crises. The quantification of tail risks thus lends itself to a risk management perspective on financial stability considerations in monetary policy (see Kilian and Manganelli, 2008), a perspective that focuses on the balance of upside and downside risks to inflation and economic activity rather than on the mean forecasts of both variables.

To operationalise financial stability, our model includes two measures widely used in ECB analysis. The first one is the Systemic Risk Indicator (SRI), which measures the financial cycle and, by extension, system-wide financial imbalances (see Lang et al., 2019). The second is the Composite Indicator of Systemic Stress (CISS), which quantifies systemic stress in the financial system (see Holló et al., 2012, and Chavleishvili and Kremer, 2023). Conceptually, one may think of the former as systemic risk ex ante, i.e. the risk of a future financial crisis, and of the latter as systemic risk ex post, i.e. materialised systemic risk. A typical financial boom-bust cycle would then see an elevated level of the SRI followed by a steep rise in the CISS as the bubble bursts and the system deleverages, with the Great Financial Crisis being a prominent example. The risk of such a boom-bust pattern poses an intertemporal financial stability trade-off for monetary policy: it can try to curb the financial boom by keeping interest rates higher than they would otherwise be, at the cost of weaker economic growth over the short run and at the benefit of a financial crisis being less likely and less severe over the medium term. In this article, however, we focus on another: the intratemporal financial stability trade-off for monetary policy, in which monetary policy itself may trigger more immediate financial instability.

The intratemporal financial stability trade-off in 2022

The circumstances prevailing in 2022 in the euro area and in many other places in the world, marked a stark turning point in the monetary policy stance. At the time, surging inflation called for a sharp tightening of monetary policy, even though economic growth was slowing after the post-pandemic rebound and financial stress was increasing on the back of the Russian aggression in Ukraine. In addition, the financial system at the time was vulnerable to a policy reversal because after a decade of accommodative monetary policy, the yield curve was flat and risk premia were at historically low levels, implying elevated risks to the profitability of banks and other financial intermediaries from a sharp rise in short-term interest rates.

To quantify the intratemporal financial stability trade-off in the euro area, we forecast the full distribution of our model variables over a period of four years, starting with the fourth quarter of 2022 (Q4 2022). In the baseline scenario, we fix the path of interest rates to the expected short-term market rates from the September 2022 Survey of Monetary Analysts (SMA) conducted by the ECB. In the baseline, we also require the mean forecast of real GDP growth, HICP inflation and commodity prices between Q4 2022 and Q4 2024 to reflect the ECB’s publicly available macroeconomic projections. This approach allows us to replicate the context in which policymakers were deciding on the path forward at the time while still considering macro-financial tail risks.

In addition to the baseline scenario, we also consider two alternative policy scenarios with different paths of short-term interest rates. The first one is “front-loading”, whereby policy rates are hiked more quickly. This helps prevent inflation from becoming entrenched, but it can also hurt systemically relevant banks and other financial intermediaries that have become particularly vulnerable to interest rate risk. The March 2023 banking turmoil in the United States and elsewhere provides a clear example of how monetary tightening may induce, or expose, financial fragility (see, e.g., Jiang et al., 2023, and Acharya et al., 2023). The second scenario considers a gradual monetary tightening. This may alleviate strains on financial stability, but at the cost of making high inflation more persistent, thereby creating the risk of long-term inflation expectations becoming de-anchored from the ECB’s 2% target. All three interest rate paths are illustrated in Chart 1.

Chart 1

Counterfactual paths for short-term interest rates in the euro area

Chart 2 plots the projected paths of the mean as well as the 10^th and 90^th percentiles of the forecast density of real GDP growth and the CISS using the three interest rate paths above. As previously noted, in the case of real GDP growth, the dotted line is restricted to meet the ECB’s growth projections at the time. The 10^th and the 90^th conditional percentiles represent the downside and the upside tail risks around these mean projections, respectively.^[3] Looking at the chart, we see that downside risks to real GDP growth (blue lines, left chart), as well as upside risks to systemic stress (red lines, right chart) are amplified by the interest rate front-loading in the short term compared to the baseline, and that the effects are larger compared to the respective opposite tails. Tightening monetary policy above market expectations increases the probability of realising a high level of systemic stress, in turn feeding into downside risks to growth. In contrast, a more gradual tightening has the opposite effects.

Chart 2

Forecast distributions of euro area real GDP (left) growth and the CISS (right) in the three policy scenarios

Overall, when comparing the short- to medium-term costs and benefits of the scenarios vis-à-vis the baseline forecast, the results generally do not support a more aggressive tightening path than what was expected by market participants in the autumn of 2022. The elevated downside risks to growth may outweigh the only modest gains in lower predicted inflation. That said, a policymaker who is particularly concerned about inflation expectations becoming de-anchored from target inflation may still be inclined to favour tighter policy. On the other hand, if policymakers were more concerned about the risk of causing severe financial distress by front-loading policy, the scenario could be modified to resemble, for example, the so-called “taper tantrum”, an episode of severe financial stress that occurred in 2013 when the Federal Reserve hinted at tapering its bond-buying programme.

Another consideration is that we have modelled monetary policy rather simplistically, with short-term rates being the only instrument. Today, monetary policymakers have several tools available, some of which can be used to separately target price and financial stability concerns, potentially mitigating the intratemporal financial stability trade-off. Still, a policymaker may prefer to avoid sparking financial stress to begin with, even if it can be contained with the right combination of tools.

Monetary policy from a risk manager’s perspective

In this article, we sketched a novel empirical approach to quantify the macroeconomic costs and benefits of monetary policies which take financial stability considerations explicitly into account. The approach has the distinct advantage that financial stability considerations are not introduced ad hoc or as pure “side effects” of monetary policy. In contrast, financial stability trade-offs enter the policy calculus through their direct effects on future inflation and economic activity. Our approach allows monetary policymakers to adopt a risk management perspective when confronted with elevated macroeconomic tails risks associated with certain risks to financial stability.

Source: ECB Europa

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A control area covering Airbnb-style lets in Edinburgh has been ruled “unlawful” for a second time.

Lord Braid said this aspect of City of Edinburgh Council’s attempt at regulating short-term lets (STL) was “unfair and illogical”.

Landlords took legal action against the local authority over retrospective permission required for accommodation.

City of Edinburgh Council said it would consider its next steps following the ruling.

The STL control area rules came into force on 5 September 2022, meaning property owners leasing their homes to visitors before that date would have apply for planning permission to change them to commercial premises.

However, landlords Iain Muirhead and Dickins Edinburgh Ltd argued that policy violated existing legislation.

During the judicial review at the Court of Session, they argued council guidance could only apply to lets which started operating after that date.

In a judgement published on Friday, Lord Braid agreed, stating the planning application “actively discourages” anyone from applying who does not have planning permission or an application in the pipeline, despite this not being required in every case.

‘Unfair and illogical’

He cited the hypothetical example of two STL operators – one of which had a certificate of lawful use before the cut off date and the other who did not.

He said that an operator who had permission to run a STL for several years before the deadline would have to reapply for their licence.

However, that could then be rejected under the new legislation, which Lord Braid said would “deprive thousands of landlords of compensation”.

Meanwhile, an STL operator leasing through a site such as Airbnb could apply after the cut-off – having never gained permission before – and have it approved.

Lord Braid branded that “not only unfair, but illogical”.

The council was given power to impose the control area – the first of its kind in Scotland – by the Scottish government.

The policy was introduced amid concern over the spread of Airbnb- style properties across the city and impact on available housing stock for permanent residents.

Neighbours had also linked the rise in STL’s to an increase in anti-social behaviour.

‘Onerous and oppressive’

A separate ruling from the Court of Session in June found the legislation to be “onerous and oppressive”.

The legislation was amended as a result.

The council’s planning convener, James Dalgleish, said the local authority would consider its next steps following the ruling.

He said: “It’s important to point out that, following today’s ruling, residential properties that began being used as STLs after the control area came into force on 5 September 2022 still require planning permission.

“Those that began before that date may still need it and will be considered on a case-by-case basis.”

Source : BBC

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PORTLAND, Ore. — Portland Public Schools (PPS) is altering its suspension policy, after agreeing to a new contract with its teachers on Sunday.

The district and teachers agreed to give more support to kids and cut back on suspensions. Portland Public also plans to divert more resources, like psychologists, therapists and school counselors to intervene before students’ problems escalate into fights.

“It was very difficult to get that rapid response on time,” said Francisca Alvarez, a bilingual instructional coach at Scott Elementary School.

Alvarez said after the past few years, she has noticed a change in students.

“Educators are seeing more students in crisis,” Alvarez said.

Since the pandemic, there’s been more mental health issues in Portland Public Schools, and sometimes, that’s led to fights in school, Alvarez said.

Previously, PPS could suspend middle and high school for at least five days for extreme cases of physical harm or threats of violence. Now, a new contract agreement with teachers changes that.

“Through this bargain, we have added or expanded a team of professionals,” said PPS Chief of Student Services Jey Buno.

Instead of minimum five-day suspensions, staff psychologists, counselors and social workers will take a more hands on role. Other staff will also help provide additional student support.

“Now when students are in crisis, we have a rapid response team that we made sure to increase,” Alvarez said.

Rapid response teams increased from four to 12. They will intervene earlier when teachers and principals realize a student may need help.

“We have to move to the prevention and not the reaction,” Alvarez said.

PPS said there will be instances where discipline and suspending students may be required.

“We’ll take the unique circumstances of the situation and the student into consideration,” Buno said.

Some students are also unsure how effective the policy will be.

“I guess my question would be ‘How do they know what to intervene with?'” asked Lincoln High School senior Casey Marotta.

Source : KGW8

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House GOP members and Federal Communications Commission (FCC) leaders attacked the Biden administration’s broadband policy at Thursday’s FCC oversight hearing.  

After two years without a fifth commissioner, FCC Democrats have started the process to reinstate Obama-era net neutrality rules. The 3-2 vote reinstated the policy that brings internet service providers under the jurisdiction of the FCC as telecommunications carriers. The FCC repealed net neutrality in 2017 under the Trump administration. 

“The Biden administration has chosen partisan ideology over smart policy,” Commissioner Brendan Carr (R) said. “Indeed, almost three years into this administration, a clear pattern has emerged. The Biden administration’s entire approach to the Internet — its broadband agenda, if you will — can be boiled down to one word: control.” 

House Republicans agreed, with Rep. Bob Latta (R-Ohio) saying, “Burdensome and expansive regulations like these will only discourage broadband buildout at a time when Americans need it most.” 

Carr continued to attack the Biden administration, saying the regulation is not about consumer safety or efficiency, but about reinstating government control. 

“In other words, utility-style regulation of the Internet was never about improving your online experience — that was just the sheep’s clothing,” Carr said. “It was always about government control.” 

Other lawmakers agreed and said media marketplace legislation should be handled by Congress, not the FCC.  

“Changes to laws that govern the media marketplace need to be made by Congress, not by the FCC,” Energy and Commerce Chair Rep. Cathy McMorris Rodgers (R-Wash.) said. 

Congress members clashed with the FCC’s Democratic chairwoman, Jessica Rosenworcel, throughout the hearing. When Latta asked how the reinstatement of net neutrality rules could impact national security, Rosenworcel responded, “I would be happy to have [a] discussion with you about national security issues. You and I spoke about this already.” 

Before beginning his questioning, Rep. Buddy Carter (R-Ga.) addressed Rosenworcel, saying, “One of the main functions of Congress is oversight. So, we’re here for oversight, not confrontation. I want to be educated; I don’t want to be confrontational.” 

Other commissioners and House members encouraged their colleagues to refocus their attention on important issues at hand, such as consumer safety, rather than partisan finger-pointing. 

“Device security is just one of many other policy priorities that the FCC should instead focus on in lieu of partisan goals that do not further the public interest,” Republican Commissioner Nathan Simington said. “I am hopeful that my colleagues will embrace more bipartisan, commonsense policies going forward.” 

Recently confirmed fifth Commissioner Anna Gomez (D) agreed, saying, “We must be vigilant about protecting consumers. From spam calls and scam texts, to protecting victims of domestic violence, to ensuring the internet remains open, consumers’ interests must lead our policymaking.”    

Source : The Hill

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Olly sold her tourism business in Botswana after Covid-19 struck and paid almost £8,000 for visas and flights to take a job as a carer in the UK. The work was stressful enough, involving long miles between clients around rural Somerset in an unfamiliar manual car.

But in August, just weeks after her family joined her, her employer folded. She swiftly found another job in a care home willing to sponsor her visa, but is only allowed to work part-time while the Home Office processes the paperwork — and risks deportation from next week if the delay continues. “It is very difficult financially, because the savings I had got finished,” Olly said. “Right now we don’t know . . . if the Home Office will tell us to pack our bags and go.” Olly is one of hundreds of migrant care workers who have sought help over the past year from Unison, the largest UK union, after the job they had pinned their hopes on left them in acute difficulties. 

This is the group of workers ministers have in their sights as they seek ways to cut record immigration. Home secretary James Cleverly, under pressure from the right wing of the Conservative party, is reviewing options to reduce work-related migration that include higher salary thresholds and limits on the number of dependants care workers can bring.  Immigration through all channels — study, work-related and humanitarian — has surged since the pandemic, partly reflecting international trends that affect many advanced economies, and partly because of the design of the UK’s post-Brexit visa system. 

Other inflows are now slowing, but visa applications for care workers are still rocketing; more than 100,000 were granted in the year to September, according to official data, almost half the total of all skilled worker visas.  Unions and employers, however, argue that a clampdown on migrants and their families will achieve nothing and that ministers need to boost funding so that the care sector can pay enough to recruit and retain UK workers.  “The care system would implode without migrant care staff,” said Christina McAnea, Unison’s general secretary. “The government needs to reform immigration rules, not make them more draconian.” In a report published on Tuesday, the union detailed the experience of many other migrant workers who had taken care jobs in the UK only to find themselves underpaid, overworked, charged thousands in dubious fees, or stranded with big debts as their employer went bust. 

“We didn’t expect this kind of work. It is far better in my country,” said Nimesha, who sold her house in Sri Lanka and spent £12,000 on agents’ fees, visas and flights to come to the UK, with a further £2,000 loan for the car needed to cover the long distances between clients. The reality of the job has been crushing: she leaves home at 7am and is often on the road until 11pm, stumbling around in the dark trying to find the homes of clients for late-night calls. UK staff at the same agency work on much more flexible terms, she noted, and rarely at night. 

But with rent of £1,000 a month for a house shared with another family, it will take her years to earn enough to repay her debts and return home. Like the other workers interviewed by the Financial Times, she spoke under an assumed name because she could not risk antagonising her employer. The government’s Migration Advisory Committee recommended opening up entry-level care jobs to migrants in 2022 only reluctantly. It worried that workers in effect tied to their employer by the terms of their visa would be vulnerable to this type of exploitation.  Last month, MAC chair Brian Bell told ministers he was “increasingly concerned about the serious exploitation issues being reported within the care sector”. But he said employers should retain the ability to hire overseas for now, because the government had not addressed the underfunding that made it impossible to recruit at home.  Sir Julian Hartley, chief executive of NHS Providers, which represents health organisations across England, said the latest migration data showed how urgent it was to fund a plan to resolve the workforce crisis. 

An understaffed care system could not “keep relying on international recruitment to plug these huge gaps”, he said — but at present, overseas staff were essential “to keep it going”.  If ministers pressed ahead with proposals designed to cut migrant numbers — in particular, restrictions on bringing family — they would make workers’ lives harder without solving the sector’s problems, Unison said.  The union said their priority should be to vet recruitment agencies more effectively and make it easier for care workers to move job if their employer is exploitative or goes out of business. Those made redundant have just 60 days to find a new visa sponsor, and can only work 20 hours a week while they are waiting for an application to go through. 

Many migrant workers recently made redundant by another provider are keeping afloat only because they came to the UK with a partner who can also work, according to Patricia. The senior care assistant from the Philippines, whose earnings help her father pay for the medication he needs at home, also lost her job when her employer went into liquidation this month. She said her work began smoothly in 2021 but worsened over time, with staff often underpaid and asked to travel farther.  “I love domiciliary care, having conversations with clients . . . but I am traumatised now,” she said, describing 12-hour days in which she often drove more than 100 miles. She hopes a new job, with clients closer to home, will work out, if the Home Office approves the visa.  “I am lucky I found this company, because they care also about the carers, Without carers, who is doing the care?”

Source : Financial Times

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The year in Northern Territory politics appears to be winding up in much the same way it began.

The Fyles Labor government announced it would be rolling out a suite of new measures to try and quell a rising tide of crime across the jurisdiction, including new laws and liquor restrictions.

At a press conference on Monday, it was quick to say the changes were coming as a result of listening to police, who are struggling with a seemingly unending workload of crime and drunkenness.

Among the changes, bottle shops across Darwin soon won’t be allowed to open until midday.

NT Police Commissioner Michael Murphy had indeed called for changes to bottle shop opening hours for some respite for his officers. In fact, he’d called for them to go even further than they have.

“Later opening hours will be beneficial for our operations, and ultimately, protect vulnerable people in our community,” Commissioner Murphy told the media.

“I wanted a 2pm extension to the opening hours, and obviously the government have to make a decision around that.”

The government is saying that it’s listening but, realistically, stakeholders such as the Darwin Lord Mayor have been calling for such restrictions to be installed in the Top End for months and months.

In this latest announcement, history also seems to be repeating itself; Earlier this year, with alcohol abuse spiralling out of control in Alice Springs, the Fyles government wouldn’t immediately act to install new restrictions until it was essentially forced to do so by a frustrated commonwealth.

Stakeholder fury after a failure to consult

But this latest announcement had more of an immediate backlash than the instance in Alice Springs.

It quickly became clear this week that the government had failed to consult with key stakeholders who will be impacted by the changes, including the NT Police Association (NTPA) and Hospitality NT.

The NTPA said it was told about planned law changes, including a controversial move to arm private security guards with capsicum spray, minutes before they were announced to the media.

NTPA president Nathan Finn accused the government of using police as “political pawns”.

“I don’t think that’s suitable as a consultation for the peak body of the NT Police Force and its members, to be consulted six minutes before they go out live to the public with this,” Mr Finn said.

Hospitality NT also said it was blindsided by the changes to liquor store opening hours, with the organisation’s head Alex Bruce furious about the lack of consultation.

He accused NT Labor of making populist moves to try to win support ahead of next year’s election.

“At the moment, these guys, they are governing for polls,” Mr Bruce said.

Mr Bruce also said Chief Minister Natasha Fyles had verbally promised to industry heads just days ago that there would be no further changes to liquor policy in this term in government.

“The biggest impact of the chief minister’s actions [on Monday] go to her honesty and integrity, and calls that to question in our industry now,” he said.

By the middle of the week, the government was on the back foot.

Ms Fyles conceded the government’s communication could’ve been handled better and Police Minister Brent Potter also acknowledged that “not everyone will be happy with this”.

“We have to be dynamic and agile, and I appreciate the position that hospitality have, and absolutely, we can always do consultation better,” Mr Potter said.

The government’s acknowledgements have allowed them to fall into the hands of critics like the Country Liberal Party (CLP) opposition, which has accused Labor of creating policy on the run.

Last sittings of 2023 filled with pot shots and theatre

The Fyles cabinet’s performance outside of parliament was a precursor to what was to come inside.

The final days of sittings for 2023 were riven with pot shots at the opposition, Dorothy Dixer questions and self-congratulating speeches, as the government’s new laws sailed through on urgency.

The parliamentary theatre was also in full swing.

On Wednesday, Treasurer Eva Lawler was booted from parliament for an hour, and her fellow ministers moved to turn on their own Speaker, Mark Monaghan, for having kicked her out.

And there was the moment Attorney-General Chansey Paech launched into a verbal attack on the CLP regarding policies about Aboriginal equality, saying the CLP would put Aboriginal people “on the menu” if it won the NT election next August.

The statement conveniently wipes aside the reality that there are Aboriginal leaders who hold deep concerns over how NT Labor’s new laws will treat their people.

Independent Arnhem Land MLA Yiŋiya Guyula voiced some of these concerns over the new laws, particularly regarding the government’s move to expand the Banned Drinker Register.

“I hoped that there would be a movement by government towards providing more support to address the underlying issues of excessive alcohol consumption and addiction,” Mr Guyula said.

“However, this bill is not about more support to help individuals or communities deal with the problems of addiction – this is a punitive bill that targets homeless and displaced people who are living on the streets and bush in Darwin.”

Some will agree with Labor’s and the NT Police Commissioner’s points that the laws are sensible in light of the dizzying rates of crime that the territory is facing, and that a circuit breaker is needed.

But that’s beyond the point.

NT Labor ends 2023 by rushing out regulations that have been called for all year, from various corners including the CLP and the mayors of Darwin and Katherine, but won’t acknowledge this as a delay.

If it continues with this same approach into the new year, and if crime rates don’t subside in the meantime, NT Labor may find itself with plenty more time for consultation from its opposition benches in 2024.

Source : ABC News

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The weak economic momentum, along with the hope for the Federal Reserve’s rate freeze next month and moderating inflation, may prod South Korea’s central bank to keep its policy rate unchanged again this week.

But the Bank of Korea (BOK) is likely to say that it will keep its restrictive monetary policy stance amid still high inflation and soaring household debts.

On Thursday, the BOK is widely predicted to leave the rate, which currently stands at 3.5 percent, unchanged, which would be the seventh straight rate freeze in the face of a murky growth outlook, according to a survey of 13 economists by Yonhap Infomax, the financial data firm of Yonhap News Agency.

The series of rate freezes comes after the BOK delivered seven consecutive hikes in borrowing costs from April last year to January.

South Korea’s economy has been dogged by slumping exports and sluggish consumer spending. For the year, the central bank had expected Asia’s fourth-largest economy to expand 1.4 percent this year, but it is still unclear whether such a forecast would be achieved in the face of a still murky economic outlook.

Weak global demand, led by China’s slowing economy, and a delay in the recovery of the IT sector have been blamed for a slump in the country’s outbound shipments.

But recently, the country’s exports have shown signs of recovering. South Korea’s exports rebounded for the first time in 13 months in October, driven by robust auto shipments, along with signs of an improvement in the chip sector.

Outbound shipments moved up 5.1 percent on-year to US$55 billion last month and logged a trade surplus of $1.64 billion in October, the fifth straight gain.

This week, the central bank will announce its updated growth outlook for the year and next year as well.

The economy grew 0.3 percent, 0.3 percent and 0.6 percent, respectively, in the first, second and third quarters.

Policymakers have also pinned hopes on easing inflation, helping the central bank take a breather in its rate hike moves.

South Korea’s inflation grew at a faster pace of 3.8 percent in October, staying above 3 percent for the third consecutive month, due to higher prices of energy and farm goods.

It is the third month in a row that the annual price growth has picked up pace.

But oil prices have been stabilizing in the face of the Israel-Hamas war, possibly helping inflation ease down the road, a development that supports the central bank’s rate freeze.

The central bank is also paying keen attention to rising household debts.

Household loans extended by banks in South Korea rose for the seventh straight month in October, led by rising home-backed loans amid high borrowing costs.

Banks’ outstanding household loans reached a record high of 1,086.6 trillion won (US$833.6 billion) at end-October, up 6.8 trillion won from a month earlier, accelerating from a 4.8 trillion-won rise the previous month and marking an on-month increase for the seventh month in a row.

Early this month, the Fed held its benchmark lending rate steady at a 22-year high for the second consecutive time as it keeps striving to bring down inflation to its 2 percent target.

The Fed kept the rate between 5.25 and 5.50 percent. But it left open the possibility of a rate change later to achieve “maximum” employment and its inflation target.

Next month, the Fed is widely expected to stand pat again.

Source : Yonhap News Agency

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Maharashtra is set to be the first state to identify specific policy provisions and plan of action for five vulnerable categories of children as per the draft of the Maharashtra State Policy and Action Plan for Children, 2023, which recommends free primary health care services.

The categories are those belonging to backward and minority communities, urban poor, affected by migration and disabilities, and transgender and gender non-conforming (TGNC) children.

The draft policy has also considered the impact of climate change on children and suggested policies and action plans for a child-centric approach to disaster management and climate change adaptation. The policy and action plan is based on four thematic areas — health, nutrition and wellbeing; education and development; child protection and child participation.

The key recommendations of the policy are universal, free, and comprehensive primary health care services for all aspects of reproductive, maternal, child and adolescent health and universal and equitable access to quality education for all children.

For children from SC, ST, NT/DNT and minority communities, the draft has recommended steps to end discrimination based on gender, religion, caste, economic and social background; measures to prevent and protect children from all forms of violence; encourage interaction among children from diverse backgrounds to break stereotypes, ensure regular dialogue and sensitisation of diverse culture; provide strong social security system and basic amenities and programmatic services like housing, road connectivity, healthcare and water, etc.

The policy has suggested supporting rehabilitation till adult age to children with disabilities (CWDs), ensuring food security and fulfilment of special nutritional needs of children with disabilities, ensuring inclusive education by making school processes, activities and infrastructure CWD friendly, measures to eliminate stigma and discrimination by creating an inclusive socio-ecological environment.

For children of urban poor communities, it has suggested inclusion of children’s rights in all urban policies, build child-friendly cities, provision of child care services such creches, free and quality education, safety and protection of homeless children and formation of child protection committees at ward level.

The policy has recommended simplifying the process of identity documents for children with migrating families along with food security with access to public distribution system (PDS) at destination site, quality reproductive and regular health services for migrant girls and women and ensuring right to education.

The policy seeks to provide quality physical and mental health services, including counselling, to TGNC children, preventing violence against them by adequate response and redressal mechanism, sensitising families, neighbourhoods and communities so as to prevent desertion, abandonment and corrective violence against TGNC children and also to break stereotypes and address misconceptions. It has also recommended to adopt an integrated, multi-sectoral, community-focused and child-centric approach to disaster management and climate change adaptation, active measures to reduce all forms of pollution.

Maharashtra’s previous child policy was prepared in 2014. “Since then there have been legal and policy developments and commitments at national and international level, which created the need to have a new Child Policy,” the official from the Women and Child Welfare department said, adding that the new policy is presently in the discussion state and may be presented in the upcoming winter session of the state legislature.

Source : Indian Express

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If you want to understand how Joe Biden’s “build back better” domestic industrial policies will connect to a new foreign policy, talk to Jennifer Harris. She was, until recently, a special adviser to the President and senior director for international economics at the National Security Council, reporting to both its head, Jake Sullivan, and former head of the National Economic Council, Brian Deese.

A former Clinton State Department alumnus and former founding head of the William & Flora Hewlett Foundation’s economy and society initiative — where she funded many of the most influential policy thinkers in areas like antitrust and corporate governance — Harris’s job was to figure out how to best balance the interests of the President’s two favourite interest groups: American workers and diplomatic allies. She is behind much of the structure of the administration’s signature Inflation Reduction Act, and is currently overseeing BuildUS, a philanthropic fund to support the Act’s implementation across the United States.

Harris is also one of the key reasons that the White House has a new willingness to use economic tools of statecraft to forward its foreign policy aims, something she advocated in her 2016 book, War By Other Means, co-authored with Robert Blackwill. Here, she discusses the opportunities and the challenges of a post-neoliberal world.  Rana Foroohar: How did you first become interested in economics as a tool of statecraft?  Jennifer Harris: During my time at the State Department, I was thinking about economics really through the lens of the US’s relationship with China.

This was back in the early days after China’s WTO membership when the George W Bush administration was telling us that this was really a geopolitical necessity, that we would be changing China more than China would be changing the system. Obviously, I had scepticism at the time, but didn’t quite know how vindicated I would be some 20 years on. And it wasn’t until I left the State Department and wrote a book (War By Other Means) that I traced how we used to be pretty good at flexing economic muscle for geopolitical rather than economic ends, as a country. It’s what explains the success of the US in foreign policy from, really, the founding, on through to the middle of the cold war.  With the rise of the Chicago School, you saw a more neoliberal market order which said that the market should be placed above all national aims. And so began the logic of trade for trade’s sake and market liberalisation as an end unto itself. It took on normative weight, and that meant that there was a whole lot that became unseemly about using economics for a set of foreign policy ends. 

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We used to be pretty good at flexing economic muscle for geopolitical ends. It’s what explains the success of the US in foreign policy from its founding through to the middle of the cold war

And when you’re talking about questions of war and peace, I think that that’s just really dangerous, sloppy logic that really needed to be better interrogated. So, I came full circle when I went to the Hewlett Foundation after the 2016 election and started a programme there, really squarely focused on replacing the neoliberal economic ideas with something that worked a little better, that was better suited to our times. Something that took on the [neoliberal] orthodoxy across the political spectrum, and really understood how deeply those ideas were constraining all of our policy, domestic, foreign or otherwise. 

RF: You’re a lawyer by training, and I’ve always thought it was easier to see the flaws in the economic paradigm when you come from outside the profession. Was there a particularly telling “aha” moment for you on that score?

JH: Yes. It was right around 2012, the fever pitch of the Iran nuclear sanctions episodes, back when Benjamin Netanyahu had his nuclear risk charts that he was trotting out to whoever would listen to him. And it was clear that the West’s sanctions had created a bit of a currency crisis in Iran.  Shipping insurance was needed to underwrite the buyers who, under the US-led sanctions regime, were legally allowed to buy some threshold of oil from Iran. It was clear that it would not be hard for a set of countries to do some dance moves in the currency markets to make that kind of shipping insurance four times more expensive overnight. And that was exactly the kind of force multiplication of pressure that we could capitalise on, the underlying currency crisis, to really put the squeeze on Iran. And that was somehow seen as a third rail. The idea that we would make some calls to see whether countries were interested in really pushing on this point of leverage through some well-executed moves in the currency markets was just perceived as totally unseemly.  And I was like, am I wrong to think that we are within spitting distance of nuclear war? Is this really the equivalence that we’re going to have? And that was really the moment for me where the whole thing just felt, if it weren’t so dangerous, laughably silly. 

RF: For years now, you’ve been more hawkish on China than many others in policy circles. Was there a point where your views on the risks crystallised?

JH: I was looking at their economic model and just appreciating how it seemed incredibly adept at disentangling the liberalisation-cum-democracy story that we were all sold. That, in fact, there was a lot of twisting of market mechanisms as points of leverage that, in geopolitical terms, could make it seem as though China would meaningfully integrate themselves into the liberal order, when in fact that wasn’t going to happen.   That’s when there was a debate about whether China’s Treasury holdings were more of a point of leverage for them or for us. And my point there, going back to the Iran example, was, the reason often given why it would be unthinkable for China to dump their holdings in a way that would cause the US a lot of pain and instability was that it would be really costly for China to do this. To which I said, yes, everything costs something in foreign policy terms. There are no free lunches here either. Certainly, war costs something, by my count. Sending a signal of this sort to the Americans over something that was really valuable — like Taiwan or Hong Kong — would have been pretty cheap, as geopolitical signals go. 

RF: When you were at the Hewlett Foundation, before you entered the White House under Biden, how were you thinking about grant-making and philanthropy as a way to push your post-neoliberal world narrative forward?

JH: The deeply pragmatic starting point is, essentially, to note that society is always living in these intellectual boxes, from, really, going back to the beginning of modernity and the advent of classical liberal laissez-faire ideas and, in some ways, mercantilism before that.  Those philosophies were in service of a set of national prerogatives. Mercantilism was the reigning orthodoxy because it worked pretty well for a lot of the empires of note, like the British empire. And actually, once you had hegemony comfortably established, and this is in the Anti-Corn Law League, mid-1800s, you see this brief moment of flirting with more liberal economic ideas because there was no competition. That lasts for about five years or something before Germany seems like it’s catching up in ways that feel a little uncomfortable, and then you see a slip back closer to mercantilism. 

The idea that we would make some calls to see whether countries were interested in really pushing on this point of leverage [against Iran] through some well-executed moves in the currency markets was just perceived as totally unseemly

In the US context, at the beginning of the country, there’s a push back against mercantilism, married with an interesting Hamiltonian set of ideas about industrial policy as a national security imperative. As you get closer to the industrial revolution, and I think that gets you to another set of issues that then need dealing with, and you align that with the Great Depression, there’s a sense that perhaps our economic ideas were falling down on the job.  So, along comes Keynesianism.

These ideas seem to work better with the blocking and tackling of the problems of the day. And when they don’t, it creates room for Milton Friedman and his team to come along. So, it is really just about respecting the evolution of history and the ways in which there’s always a need for the next turn of the intellectual screw, based on the problems of the day. I think that’s the first point.  The second point is that I really looked around for concrete domains of policy that had been colonised, really overtaken, by neoliberal ideas. So, areas like antitrust, corporate governance, and industrial policy were three big bets that Hewlett put down. I think two of them paid off really, really well — antitrust and industrial policy. 

RF: So, who brought you into the White House? 

JH: I’ve been fortunate to have a close intellectual collaboration and professional relationship with Jake Sullivan for probably 15 years, going back to our time together at the State Department. When I was saying all these heretical things, he was one person that would at least hear me out more times than not. And he’s somebody who was a close student of all that went wrong in 2016 and all that wasn’t seen in Donald Trump’s rise. He was asking a lot of critical questions about the failings of the Democratic party and the bankruptcy of a lot of those [neoliberal] ideas. And I had been on the Clinton Campaign, really pushing, often alone, against things like Trans-Pacific Partnership and for harder lines on China earlier. So, we came up with a portfolio that would involve running offence on all of these ideas, including the narrative component of really telling a different story about what US foreign policy should be trying to do, and the important stitching together with our domestic economic agenda. That was probably the piece of the job that sold it for me. I would be reporting to both Brian Deese at NEC, as well as to Jake, and I’d be the person responsible for that stitching across our domestic economic and our foreign policy agendas. 

RF: Let’s talk about the Inflation Reduction Act. It represents a very powerful turning away from the ‘market knows best’ approach and towards the idea that climate is a national emergency, a war that we need to wage. Talk a little bit about that evolution and what the conversation was around the way the IRA would be structured. 

JH: Climate change was a problem that did not lend itself well to the neoliberal policymaking recipe. And I think the largest indictment there is the attempt and failure and reattempt to put a price on carbon, running at that brick wall again and again and again and having it just get more and more politically toxic.  We needed to create a different story about the relationship between state and market and the responsibility of government to really shape markets and pivot them towards a set of national or, in this case, global needs that are, I think, much larger than the outcomes that markets left to their own devices would provide. People also tend to be a fan of good jobs, and if this is the vehicle to get there, I think that it’s load-bearing as a multilateral idea. 

RF: You’ve written about the need for multilateral purchasing agreements to underwrite the supply of rare earth minerals needed for the green transition. What are some of the other ways in which you think the rubber is meeting the road in a post-neoliberal world right now? What do we need to be paying attention to?

JH: What’s the balance of foreign and domestic needs? How can we square Biden’s two favourite things — made in America and allies — and why does the moment demand it? This is really the project, I think, of the next decade of US foreign policy. What might this look like practically? It’s a threefold agenda. One is to open up that fiscal space for the rest of the world, mindful that that’s where the meaningful differences are between America and everybody else. That looks like a global minimum corporate tax deal that would be generating a lot more revenue. It looks like emerging market debt forgiveness. It looks like a really sleeves-up agenda on multilateral development bank reform. It looks like getting serious about global infrastructure finance machinery that works a whole lot better than it does now. RF: What are the challenges to getting all this done? JH: I think there’s a double standard between the way the US foreign policy establishment tends to expend political capital on what I like to call kinetic issues of the day, Ukraine, and Iran before that.  These kinds of questions have always sat on the high table of US foreign policy, and that’s really where the senior time and attention is. We need to be willing to expend a lot more political capital on things like a global minimum corporate tax deal, which involves getting Europe to do what’s needed with some unhelpful actors like Poland, like Hungary, to get them back in the box so that they could do the political implementation that people like Senator Joe Manchin would have needed to see for the US to have implemented the agreement on our part. 

Climate change was a problem that did not lend itself well to the neoliberal policymaking recipe . . . We needed to create a different story about the relationship between the state and the market

We needed to create a different story about the relationship between state and market and the responsibility of government to really shape markets And it’s the same deal on emerging market debt forgiveness. That might involve lending into official arrears for a country like Sri Lanka, or any country experiencing high debt distress, really created by irresponsible lending on the part of the Chinese. And there are ways to push through IMF packages that would allow those countries to default just on the predatory Chinese stuff and get the package of support from the rest of the IMF creditor nations in the face of that non-payment.

We could be coupling that with a most favoured creditor clause that makes sure that once the country gets the benefit of an IMF package, and they get back to a little better fiscal health, they’re not going to go start repaying the Chinese as a first order of business. Coupling that twofold policy solution, I think, would have the US really earning support from a lot of the emerging markets, not condemning them to another generation of austerity.  RF: One of the advantages of the neoliberal system was its simplicity. It may have been false in its not taking into account negative externalities, but it was simple. As long as the share price is up and consumer price is down, you’re all good.

That simplicity is hard now, in this new world. How do you think about communicating around a post-neoliberal world?  JH: I’m clearly biased here, but I feel like we’re not far off from a fairly simple story, which is that we’re going to get back to the business of actually building things again and do a lot of the things that are necessary to that task. And I think that gives you a framework for thinking about stuff like permitting reform. It gives you a framework for thinking about why we need to come up with a new global critical minerals arrangement, rather than go back and bear hug TPP, so as to make the world safe for more multilateral pharmaceutical companies. 

RF: You talked about historical paradigm shifts earlier, and historical paradigm shifts play out over generations, often encompassing more than one leader, more than one administration in the case of the US. Let’s say, we were to get Trump, or let’s say, something were to happen to Biden, even, and you have a different Democratic president. How much of this paradigm shift is going to just stick because that’s what the moment requires?

JH: There are some promising green shoots to suggest this shift will stick. Look at the historic and increasingly bipartisan support for labour unions in the US, and a lot of the new asks that the United Auto Workers leadership is making at the bargaining table. Most striking about those asks is how they are not simply just trying to carve out a private security net for UAW workers, but reaching to the core of the Big Three’s business models, going after things like corporate buybacks (by requiring additional worker pay tethered to buybacks). Antitrust is a thing again. And not only is industrial policy back — it seems like the US’s public investment might deserve credit for the immaculate cooling we’re seeing on inflation. It adds up to a reckoning with how political power moves through the economy; how economic power can warp our political system; and the necessary — not exclusive but necessary — role of both government and public investment in solving the big problems of the day, starting with a clean energy buildout that doesn’t simply trade energy dependence on the Middle East for supply chain dependence on China.  

RF: Yes, the US economy right now feels like a repudiation of the economics of trickle down and tax cuts. The stimulus effect has just been so much more powerful and so much longer lasting. Now, maybe there will be some reckoning in the future.

JH: Right, and some people are saying, well, it’s really just supply chains healing themselves. Well, yes, but they are, I think, correcting, in part, on some of the early fruits of the investments we’re making. Certainly, at least, there’s the confidence that these investments are giving those portions of the markets, and this looks a lot like what we always described as the necessary solution for secular stagnation, which never really went away. 

I feel like we’re not far off from a fairly simple story, which is that we’re going to get back to the business of actually building things again and do a lot of the things that are necessary to that task

There are two problems that keep economists up at night. There’s those of us who worried about secular stagnation in ways that predated the pandemic, and then those of us who worry about supply chain kinks. The right answer for both of those is to push the productive muscle of the economy rightward, and that’s exactly what these investments are doing. 

RF: So now that you’ve left government, what are you up to, and what’s next?

JH: I’m keeping busy really with two projects right now. I’ve just launched a philanthropic fund called BuildUS. I’ve been incubating it since I left the administration. That is a purely domestically focused effort, on green implementation, and we’re getting quite deep into some states, like South Carolina, Louisiana, Tennessee, where the private investment’s going, where the jobs are going. And we need to make sure that they’re good jobs and that we get things like direct pay right. I think direct pay is a great example of a tool that will allow for public ownership, community wealth building. But people have to know about it. They have to know how to use it, so that’s what this fund is really focused on doing. And then thinking a lot about this basic question of how you take the logic of the IRA global and create more IRAs in more places, from Brazil to Europe to east Asia and right now, these are just informal conversations I’m having with some old friends in philanthropy.

Source : Financial Times

The post Jennifer Harris: ‘Everything Costs Something in Foreign Policy Terms. There Are No Free Lunches Here Either’ appeared first on Policy Print.

Thousands of protesters gathered in Washington on Saturday to demand a ceasefire in Gaza where thousands have been killed in an Israeli offensive since an attack by Hamas, and to denounce President Joe Biden’s policy towards the war.

Protesters carried placards with slogans such as “Palestinian Lives Matter,” “Let Gaza Live” and “Their blood is in on your hands,” as the US government continued to reject demands to add its voice to calls for a blanket ceasefire.

Activists called the planned protest a “National March on Washington: Free Palestine” and organized buses to the US capital from across the country for demonstrators to attend, said coalition group ANSWER, an acronym for “Act Now to Stop War and End Racism.”
“What we want and what we demand is a ceasefire now,” said Mahdi Bray, national director of the American Muslim Alliance.

The demonstration was among the largest pro-Palestinian gatherings in the United States and among the biggest for any cause in Washington in recent years, Reuters reported.
Crowds began gathering at Freedom Plaza near the White House in the afternoon before the protest started with a moment of silence as demonstrators held up a large poster with names of Palestinians killed since Israel’s massive retaliation began.

The deep-rooted Israeli-Palestinian conflict reignited on Oct. 7 when scores of fighters from Hamas, which controls the Gaza Strip, crossed into Israel, killing at least 1,400 people.
Israel has since struck Gaza from the air, imposed a siege and launched a ground assault, stirring global alarm at humanitarian conditions in the enclave. Gaza health officials said at least 9,488 Palestinians had been killed as of Saturday.

The growing number of civilian deaths has intensified international calls for a ceasefire, but Washington, like Israel, has so far dismissed them, saying a halt will give Hamas chance to regroup.

Source : Aawsat

The post Protesters Oppose Biden War Policy in Large Pro-Palestine Rally appeared first on Policy Print.