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Abstract
The global financial crisis that began in 2008 has resulted in the widespread destruction of jobs and livelihoods. Among the factors that precipitated the crisis, growing inequality both within and between countries contributed to low levels of aggregate demand and the reliance of low-income households on unsustainable borrowing to maintain living standards. The crisis provides the opportunity to rethink macroeconomic policy, and for feminist economists to advance proposals that promote jobs, economic security, and equality by class, gender, and ethnicity. Reviving the global economy will require policies that focus heavily on job creation, putting money into the hands of low- and middle-income households.
Acknowledgements
The author wishes to express her appreciation to several colleagues for very thoughtful comments on earlier drafts: Lourdes Benería, Diane Elson, Gerald Epstein, Nancy Folbre, Caren Grown, Manuel Montes, and Bernard Walters.
Notes
1. Sub-prime lending is the extension of consumer loans to risky categories of borrowers who may possess any or all of the following characteristics: low credit scores, high ratio of debt to income, or high ratio of loan to collateral. Typically the interest charged on subprime loans is significantly higher than the average loan rate to compensate lenders for the increased risk of default.
2. It is notable that a disproportionate share of sub-prime loans went to groups that have faced discrimination and other barriers to livelihood generation, suggesting their low income and vulnerability make them targets of predatory lending practices. See, for example, Squires et al. (2009).
3. By implication, I also include here policies that lead to expansion of livelihoods in economies where labour markets are not the primary vehicle for income generation. Such policies could include credit expansion to small businesses and farmers.
4. The Overseas Development Institute (Citation2009) has produced a synthesis report of ten country studies on the impact of the crisis, and cites evidence of a decline in remittances to a number of developing countries. See also Ratha et al. (Citation2008).
5. Author's calculations from the World Values Survey, Wave 5, www.worldvaluesurvey.org. (last accessed 22 February 2009).
6. A recent Pew survey in the USA found that among Hispanic immigrants who sent remittances in the last two years, 71 per cent say they sent less in the past year than in the prior year. For more details, see Lopez et al (Citation2008). Thus far, however, the global evidence is of a slowdown on the rate of growth of remittances rather than absolute decline.
7. Author's calculations from World Values Survey data. See Note 5.
8. ‘Vulnerable employment’ is a newly defined measure of persons who are employed in jobs that are not waged or salaried, and thus work under precarious circumstances. This category captures work in jobs without benefits or social protection programmes. This group of workers is more ‘at risk’ than others during economic downturns.
9. India's National Rural Employment Guarantee Act was passed in 2005, and guarantees employment to every rural household for at least 100 days in every financial year. This is a type of employer-of-last-resort programme.
10. International reserve holdings as a percentage of gross national income have risen dramatically from the 1960s to the 1990s owing to financial liberalisation (Baker and Walentin Citation2001). That ratio rose from 4.7 per cent in 1976 to 27.1 per cent in 2007 (World Bank Citation2008). Baker and Walentin (Citation2001) estimate that the increase in reserve holdings has imposed an annual cost of 1 per cent of GDP on developing countries. This is because reserve holdings are invested in low interest bearing instruments such as US Treasury bonds, rather than in social and physical infrastructure investment or other higher yielding financial instruments.
11. For more details on this body of research, see Blackden and Bhanu (Citation1999).
12. Commodity price stabilisation funds are akin to ‘rainy day’ funds. These funds are used to stabilise the prices of internationally traded commodities whose prices exhibit a high degree of instability. The funds are used to smooth the income in the face of commodity price variability. The goal is to achieve more stable income for producers and more stable production.
13. It should be noted that the Korean Confederation of Trade Unions has been critical of this approach, arguing that the crisis is a pretext for cutting wages of regular full-time employees.
14. The CTT is now widely discussed as an option for stabilising international financial flows. The UK's then Prime Minister, Gordon Brown, publicly announced his support of a financial transactions tax at the G-20 meeting in November 2009. More recently, a campaign for a Robin Hood tax on banks has gained traction. For more information on CTT campaigns, see www.cttcampaigns.info/
15. Some have argued, however, that a very low tax is unlikely to substantially reduce currency speculation and other measures, such as capital management techniques, would be required to achieve this goal. See, for example, Grabel (Citation2003).
16. Laissez-faire is an economic doctrine founded on a view that free markets and free trade are optimal, and that government regulation of economic activity should be limited because it leads to inefficiencies and thus waste.
17. For more on this topic, see Epstein (Citation2003).
18. See Pollin et al. (Citation2006) for an application of this approach to the case of South Africa.
19. Some countries such as China, however, appear to hold high levels of reserves to prevent an appreciation of their currency. This reflects their strategy of relying on exports as a vent for surplus. There are other options to export reliance. One would be to permit the currency to appreciate, and then allow domestic wages and public sector spending to increase, thereby generating the domestic demand to replace lost export sales from the currency appreciation. Women would benefit substantially from this strategy. They had been very negatively affected by the government retrenchments in previous years, absorbing a large share of the lay-offs.