Gal Rakover

@cemoyvat And what are your thoughts on the matter?

İmalat sanayinin büyümedeki rolünü gösteren çalışmalarıyla bilinen Dani Rodrik "İmalat Sanayi Konusunda Nasıl Şüpheci Oldum" başlıklı bir yazı yazmış. Dünya değiştikçe sürdürülebilir büyümeyi sadece sanayi üzerinden okumak anlamsızlaşıyor. Rodrik de pozisyonundaki değişimi Keynes'in şu sözleriyle savunuyor: "Gerçekler değiştiğinde, fikrimi değiştiririm; ya siz ne yaparsınız, beyefendi?" project-syndicate.org/commentary/ser…

Today we discussed a focus group on the Daily T and it concluded that voters are right-wing culturally, left-wing economically. As they have been since I can remember. Yet we head into another election with no one having the sense to offer just that. Such a strange country.

I cannot count the number of articles over the past 20 years (including from Nobel prize winners) that I read about how China cannot innovate b/c it is not a free market economy. But now I have to read the articles from the same people telling me how a state-directed economy innovates much more efficiently than a market economy & how we have to fight against that.

.@zarahsultana I assume this is a different Zarah Sultana MP to the one who was recently filmed clapping along to loudspeaker chants for intifada, on a street in Surrey. telegraph.co.uk/politics/2025/…

Very sorry to hear about Robert Skidelsky's death. Shortly after I finished reading the final volume of his brilliant three-volume biography of Keynes, perhaps 15 years ago, I met him at a conference in Brazil. We became friends after that and met several times, mostly in London (where he once took me to lunch at the House of Lords) but also whenever he was in Beijing. thetimes.com/uk/obituaries/…

Sad news: Robert Skidelsky, the biographer of Keynes and a very able economist and historian, has died. He will be missed. thetimes.com/uk/obituaries/…

Claiming the “state ideology of Zionism” had to bring about what happened in Gaza is no different then saying the Palestinian national movement had to end in October 7th. It would be a lazy man’s version of historical analysis if it weren’t specifically intended to indict the subject at hand, in this case Israel. One would never entertain the notion that what happened in Rwanda was predetermined or that 9/11 is an unavoidable result of Islam, but there is a specific need to damn Zionism as a distilment of the entire West’s colonialism and racism (and for some reason, capitalism), thus having Jews serve as the sacrificial offering through which Western progressives absolve themselves of civilizational guilt. This reeks of antizionism, bad faith and shoddy scholarship.

מה שאני הכי אוהב ב-AI זה שאני יכול לדבר איתו באנגלית שבורה והוא לא שופט אותי.

@amitbentzur Rau, E. G., & Stokes, S. (2025). Income inequality and the erosion of democracy in the twenty-first century. Proceedings of the National Academy of Sciences of the United States of America, 122(1), e2422543121. doi.org/10.1073/pnas.2…

@amitbentzur "In fact the two problems—inequality and democratic erosion—are linked. In a large cross-national statistical study of risk factors for democratic erosion, we establish that economic inequality is one of the strongest predictors of where and when democracy erodes."

המאבק על הדמוקרטיה לא נגמר בבית המשפט. סדרה חדשה מעלה שאלה מרכזית: האם דמוקרטיה יכולה להתקיים עם פערים כלכליים עמוקים? האם ללא ביטחון כלכלי, קורת גג ובריאות לכולם יכולה להיות דמוקרטיה יציבה? מומלץ וחשוב. youtu.be/ZSvhx7f3vaI?si…

דמוקרטיה ליברלית בקליפת אגוז (הגרף).

He decreased deficits and debt in pesos and massively increased them in dollars. Hint, the currency Argentina does not issue is the dollar. This is most likely not sustainable in the long run

התשובה שלי, היא שזה לא הכלי שאנחנו הכי זקוקים לו. אבל זה כלי שיכול להיות יעיל. הפודקסט הזה הוא בעצם פרומו לנייר מדיניות בנושא.

Brad Setser is pleased to see the IMF conceding that intervention by a country in its currency and external accounts “can systematically generate real exchange rate depreciation and raise current account balances”. He is being quite polite. We have known for decades that a country’s external imbalances must always be perfectly consistent with its internal imbalances, one implication of which is that if a country’s industrial policies result in the creation of persistent domestic imbalances, it can only maintain those policies to the extent that it controls its external account in ways that allow it to externalize these domestic imbalances. So, for example, if a country’s financial system is designed mainly to take household and business saving and direct this saving into approved investment at very low interest rates, it has to control its capital account to prevent domestic saving from flowing abroad. Or, as another example, if a country’s industrial policies require transfers from the household sector to subsidize manufacturing, this is likely to lead to persistent trade surpluses, in which case the country must intervene in the currency to prevent its appreciation from reversing those transfers. An appreciating currency reverses these transfers by effectively subsidizing households (households are net importers) and taxing producers of tradable goods. This is nothing new. Keynes showed many decades ago that with a few, fairly obvious exceptions (when trade partners – e.g. rapidly growing developing countries, Europe and Japan after WW2, etc. – need to import capital for domestic investment purposes), persistent manufacturing surpluses are prima facie evidence of domestic interventions whose domestic costs are being exported to trade partners. Without some form of intervention in the currency or the trade and capital accounts, in other words, policies that lead to domestic imbalances are much harder to maintain.

@assafzim נכון. הבעיה בסחר בפליטות אינה מוסרית אלא שזו מדיניות לא מספיק אפקטיבית. או שהמס נמוך מדי מבחינת השפעה על פליטות או שהוא גבוה מדי מבחינת הנזק לכלכלה. לכן צריך לצרף אליו צעדי מדיניות נוספים שמגבירים את היכולת להסתמך על אנרגיה ירוקה יותר- השקעות בתשתית ומופ, סובסידיות וכד'

1. כל הנושא מזכיר לי ויכוח ישן בשאלה ״האם זה מוסרי לאפשר לאנשים לסחור בזכויות לפליטת פחמן״? הפילוסוף מייקל סנדל טען שזה לאֿ. יש דברים שלא עושים, גם לא אם מוכנים לשלם עבורם. אנחנו לא מאפשרים לאנשים לחנות בחניית נכים, גם לא בתמורה לתשלום. ענה לו חתן פרס נובל בכלכלה אריק מסקין->

That was precisely the point Keynes made at Bretton Woods. The world is only better off, he argued, if the surplus countries resolve the trade imbalances by expanding domestic demand. If, instead, the deficit countries resolve the trade imbalances by contracting domestic demand, global GDP growth slows and unemployment rises. Rather than demanding more aggressively that trade-surplus countries expand domestic demand, the IMF seems to find it easier to ask trade-deficit countries to reduce domestic debt, even when one of the purposes of the debt is to counter the demand impact of the trade deficit.

1/7 Martin Wolf, in an important piece on unsustainable current account imbalances, makes a point that most American economists miss: "the counterpart of external deficits tends to be unsustainable domestic borrowing." ft.com/content/49e38e… via @ft

🎯🎯🎯 "חלופה אמיתית למשטר הכלכלי הנוכחי תבוא ממי שיוביל להרחבה משמעותית של ההוצאה האזרחית, ולא ממי שידע רק לקצץ בכספים הקואליציוניים שהם 1% מתקציב המדינה. זו לא תוכנית עבודה, זה מקסימום קמפיין בחירות מעייף" @davarnews #google_vignette" target="_blank" rel="nofollow noopener">davar1.co.il/667341/#google…

1/9 Reuters: "China said that Mexico's trade measures against it, including tariff increases, ​constitute trade and investment barriers and that it had ‌the right to take countermeasures." rld/china/china-says-it-has-right-retaliate-against-mexicos-tariff-hikes-2026-03-25/

Thanks, Michael, you're exactly right. In many of my discussions the assumption they make, often without realizing it, is that trade is always balanced, probably because almost all the most important trade models implicitly (and often explicitly) assume balanced trade. And because they understand how the system works only under conditions of balanced trade, they see no point in discussing the effects of persistent trade imbalances. But for me the meaningful question is not about whether foreigners use dollars to invoice the two sides of their balanced trade. That is an interesting question for a completely different set of reasons (for example, how US capital controls created the eurodollar market of the 1960s, 1970s and early 1980s). But in that case it is also obvious, as Gopinath argues, that whichever currency foreigners use can have no impact on the US trade balance. The question here is a completely different one: which assets do foreigners use to balance their structural excesses of exports over imports? The answer to that question has everything to do with who runs the corresponding imbalances. If capital-rich foreigners prefer to invest their excess saving in capital-poor developing economies, as the economic textbooks prescribe, it will be developing economies (like the US during much of the 19th Century) that will run the corresponding deficits, and in many cases these will be healthy deficits because they will be driven by higher investment. But if, as is actually the case, capital-rich and capital-poor foreigners run structural trade surpluses, and invest their excess saving mainly in a trio of capital-rich countries (the US, the UK and Canada), then clearly it is that trio that will run the bulk of the deficits. Does it matter? Economists say it doesn't, but of course it does. When capital flows into developing economies in which investment is constrained by scarce domestic saving, it can lead to higher overall investment, which is good for global growth. But if it flows into advanced economies in which investment is constrained by scarce domestic demand, it won't lead to higher investment, in which case it must reduce saving, either by suppressing domestic demand (as Keynes and Joan Robinson warned) or by boosting domestic debt. But the main point is much simpler. Economies like Japan, Germany, China, South Korea, Sweden, Taiwan, etc. that have run structural trade surpluses for decades did not do so because they were forced by domestic imbalances in the US. These were all the result of conscious industrial policy decisions. Belive it or not, they have agency. But economies that run structural trade surpluses have also had no choice but to balance those surpluses by acquiring foreign assets. The claim by Gopinath (and many others) that how and where they decide to invest those surpluses has no impact on the external imbalances, and thus the internal imbalances, of the destination economies makes no sense to me. A decision by a surplus country to run a $100 surplus with the world and to balance it by acquiring $100 of US assets means that unless the US itself intervenes, it must run the corresponding deficit. Some might argue that "all the US has to do" is reduce its fiscal deficit by $100 and it will no longer run the a $100 trade deficit. This is wrong for at least two reasons. First, US fiscal policy should be determined by the needs of the US economy, and not the needs of foreign surplus economies. Secondly, and more importantly, the idea that a $100 reduction in the US fiscal deficit will reverse the $100 investment by the surplus country into the US assumes that foreign surpluses are caused by US saving shortfalls. But Gopinath seems to agree that countries like China have agency, and that China's surpluses are the result of Chinese domestic policies, in which case why should they disappear if the US fiscal deficit declines? And if they don't disappear, why should foreigners stop balancing surpluses by acquiring US assets if the US fiscal deficit declines? isn't it possible that this would make the US an even safer destination, in which case net inflows into the US might actually rise? It cannot be simply a coincidence that nearly three quarters of net capital flows end up in the three advanced economies (the US, the UK and Canada) with the most open capital markets, the most sophisticated and developed financial markets, and the least restrictions on foreign ownership. And because nearly three quarters of these capital flows end up in these three economies, it is also not a coincidence that these three economies account for nearly three quarters of global trade deficits.