Interview With Peter Arno – Economics, Public Health, Aids And Covid-19

This is part of PERI’s economist interview series, hosted by C.J. Polychroniou.


C.J. Polychroniou: Why did you choose to become an economist, and focus on health policy?

Peter Arno: When I was in college in the 1970s I majored in economics because I felt it provided a useful perspective on how to view the world. I had always been interested in health issues and at that time I joined what was then called the Marxist Health Discussion Group, later renamed the East Coast Health Discussion Group. This group included a number of brilliant and inspirational thought leaders such as Vincente Navarro, Evan Stark, and David Kotelchuck, among others. Our irregular meetings over the course of a few years fueled my interest in health policy issues from a progressive, political economy perspective. I developed this perspective further while earning a doctorate in economics at the New School for Social Research, encouraged by my advisor David Gordon.

CJP: You have done an immense amount of research around the AIDS epidemic, which has resulted in hundreds of academic articles and a Pulitzer Prize-nominated book titled Against the Odds: The Story of Aids Drug Development, Politics @ Profit. How did you come to focus on this important issue?

PA:Upon completion of my doctorate, I received a postdoctoral fellowship at the Institute for Health Policy Studies at the University of California, San Francisco. At the time (1984-86), the AIDS epidemic was exploding in San Francisco, and I had the opportunity to study its economic impact with Dr. Phil Lee, the director of the Institute. I continued my AIDS-related focus when I returned to New York and found that the shortcomings in the local, state, and federal responses to the epidemic reflected many of the shortcomings in American healthcare. In particular, the AIDS crisis illustrated an Achilles heel of American healthcare—if you become ill and lose your job, you frequently lose your health insurance. Thus, at the point when you need it most, you lose access to health care.

I can trace the genesis of my book project directly to an academic paper on the economic impact of early HIV intervention in JAMA. In it, I wrote what seemed to me an innocuous sentence to the effect that the price of AZT (the first drug approved for AIDS treatment) did not reflect the production or development costs of the drug. This led to a letter from Burroughs Wellcome (the drug’s manufacturer) threatening legal action if I did not provide them with all the documentation on the production and development costs of the drug. With the help of my oldest friend, a partner at a major law firm in New York, and California Congressman Henry Waxman, I pointed out to the company that they were in a better position to provide the public with their own production and development costs. Additionally, I said that if they had a problem with my JAMA article, they should write a letter to the editor. The company backed off, but it was this alarming incident that led me to decide to write a book examining the historical development of AZT and the role of activists in the struggle to speed up the federal response to the AIDS epidemic.

CJP: In that book, you showed that the fight against AIDS encountered all sort of obstacles, including uncoordinated government policy and an ill-equipped health care system to respond to a national emergency. Firstly, where do things stand today with regard to AIDS? Secondly, why does the role of the U.S. government continue to be limited in health care in comparison to many other advanced countries?

PA: The treatment of HIV disease has progressed in quantum leaps over the past 40 years. It is now generally considered a chronic illness that can be held in check with appropriate medications. There are also effective preventive medications known as PrEP Therapy. However, tens of thousands of Americans are still infected each year and, like health care in general, the disease burden falls disproportionately on people of color and the poor. Moreover, the stigma and the high price of HIV drugs, particularly the PrEP therapy sold as Truvada (approximately $2,000 per month), discourage more widespread use.

Public funding for health care in the US is larger than most people think, comprising nearly 60 percent of all health care consumed. The main difference between the US and other developed countries is that our health care system is designed to extract private profits with few constraints on the pricing of health care services or products, rather than considering health care to be a public good.

CJP: Are there lessons you have learned in the fight against AIDS for what to do and what not to do in our current fight against Covid-19?

PA: The paramount struggle in the early days of the AIDS epidemic parallels what we have faced with the Covid-19 pandemic: the lack of a coordinated federal response. Our nation has failed this lesson twice, with devastating consequences. Hopefully, we can ensure it will not do so again.

CJP: The coronavirus pandemic has brought to surface once again the shortcomings of the U.S. health care system. In that context, you advocate Medicare For All as the only choice. Can you please outline the symptoms of the dysfunctional U.S. health care system, and briefly explain what an ideal universal health plan would look like?

PA:A single payer Medicare for All program is not the only choice, but it is the best choice. Our current system, the most expensive in the world, is riddled with administrative waste, high prices and, perhaps worst of all, denies access to care to tens of millions of Americans. Under a single payer framework the relentless increase in health expenditures can be brought under control and health care made available to all Americans.

CJP: In a study you co-authored with Jeanette Wicks-Lim, it is argued that certain anti-poverty measures, such as the Earned Income Tax Credit (EITC), can have a direct impact on health outcomes not simply on an individual level but across a geographic unit such as the neighborhood. How so, and, given that this study analyzed data only from New York City, would it be safe to conclude that anti-poverty policies such as the EITC can have more generalized effects on public health?

PA:The findings from our study—that increased income derived from the EITC improves certain health outcomes—has been underscored by dozens of other studies at the state and federal levels. Thus, it is highly likely that enhanced anti-poverty policies including the EITC have a positive impact on health outcomes.

Our ecological argument that a broad-based policy such as the EITC affects not only individuals but also the communities within which they live is based on the spillover affect of millions of dollars generated and then spent within these communities. As we stated, these spillover or multiplier effects occur “when EITC recipients spend their EITC dollars at neighborhood businesses. These EITC dollars then go into the paychecks of those businesses’ workers who, in turn, spend their earnings at other businesses (and thus, their dollars go into the paychecks of those businesses’ workers and so on), generating new rounds of increased spending. Thus, through the multiplier effect, EITC benefits can measurably improve the overall economic environment in low-income neighborhoods, not just the lives of EITC recipients.”

CJP: Are you optimistic about the prospects of the United States of America adopting eventually a system of universal health care? Do you think that our experiences with Covid-19 has affected the chances for the adoption of universal health care in the U.S.?

PA: I do believe that we will eventually join the rest of the developed world by adopting a universal health care system in the US. The timing however is unclear. Over the past few years there has been growing public support for transformational change of our health care delivery system. However, given the current political environment, this is more likely to happen first at the state level—e.g. New York or California. If one of these two big states were to implement a universal single payer plan, it would likely lead to a cascade of state efforts that should ultimately result in a national program. This is a process similar to what Canada went through to achieve its national universal health care system.

As millions of us get vaccinated against SARS-CoV-2, we will obtain a first-hand glimpse of what a single-payer, Medicare-for-All approach to health care might look like. This is because many of the features of a single-payer system are present in the vaccination program.

First, the vaccine’s development and the process of vaccination have characteristics that set it apart from the normal business of health care, which is based on costs and profits, consumer choice, and administration.

On the cost/profit side, vaccines have historically been the least profitable products for pharmaceutical companies. The development of this vaccine has been largely subsidized by the federal government. Several of the participating pharmaceutical companies have announced that they will not make profits from the vaccine during the pandemic. There are many benefits due to this single-payer feature including that none of us will have to pay at the point of care for the vaccine itself. Additionally, haggling with insurance companies should be greatly diminished.

When it comes to consumer choice, often heralded by defenders of our current health care structure, the only choice will be whether or not to get vaccinated and where to do so. And not can we afford to pay for it.

The driving force to vaccinate the American people en masse parallels that of Medicare for All: to provide universal, affordable healthcare to everyone. The primary goal of both the vaccination program and Medicare for All is the public good, not the extraction of private profit. One of the most significant outcomes of the pandemic may be increased political momentum for Medicare for All.

Peter S. Arno is a health economist, and a Distinguished Fellow at the City University of New York Institute for Health Equity. He is a member of the National Academy of Social Insurance and serves on the Board of Directors of the National Committee to Preserve Social Security & Medicare Foundation. He was the founding director of the Center for Long Term Care Research & Policy and the doctoral program in health policy at New York Medical College and director of the Division of Public Health and Policy Research in the Department of Epidemiology and Population Health at Albert Einstein College of Medicine and Montefiore Medical Center. He received his doctorate in economics at the New School for Social Research. His 1992 book, Against the Odds: The Story of AIDS Drug Development, Politics & Profits, was nominated for a Pulitzer Prize.

Dr. Arno’s recent work includes studies on the impact of Social Security and the Earned Income Tax Credit on population health, food insecurity and the elderly; economics of caregiving; social and geographic determinants of obesity; and regulation and pricing practices of the pharmaceutical industry.


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Carsten Dippel – Das vergessene Pogrom von Bagdad

Jüdische Gemeinde mit langen historischen Wurzeln: In Bagdad war rund ein Fünftel der Bewohner in den 1920er-Jahren jüdisch. (akg-images / Collection Dupondt) Source: Deutschlandfunk Kultur

Deutschlandfunk Kultur – Seit sechs Jahren gibt es einen internationalen Gedenktag an den Farhud. Doch nur wenige kennen das Pogrom von Bagdad, das die mehr als 2500-jährige Geschichte jüdischen Lebens im Irak beendete.

Salima Murads Stimme war in der arabischen Welt bekannt. Salima Murad war Jüdin, verheiratet mit einem Muslim. Im alten Irak war das möglich. Noch in den 1920er-Jahren machte die jüdische Bevölkerung Bagdads gut ein Fünftel der Bewohner aus. Tür an Tür lebten seit Jahrhunderten Juden und Muslime zusammen.

Doch dann brach im Kriegsjahr 1941 etwas über die jüdische Gemeinde herein, das niemand kommen sah: der Farhud. Am 1. und 2. Juni tobte binnen 30 Stunden ein Mob im jüdischen Viertel Bagdads. Muslime schlugen auf ihre jüdischen Nachbarn ein. Sie plünderten Geschäfte, vergewaltigten Frauen, töteten mindestens 130 Menschen, manche sprechen von mehreren Hundert.


Rabbi Sasson Kadouri war ein hoch angesehener Mann. Der langjährige Oberrabbiner von Bagdad blieb bis zu seinem Tod 1971 bei seiner Gemeinde, die er nicht im Stich lassen wollte. Sein Enkel, der Künstler Joseph Sassoon Semah, wuchs in Israel auf und hatte nie eine Chance, seinen Großvater kennenzulernen. Aber die Geschichte seiner Familie spiele für ihn als Künstler eine wichtige Rolle, sagt Semah.

Semahs Eltern haben über ihr Leben im Irak kaum gesprochen. Im zionistischen Staat habe ihr Narrativ lange Zeit keinen Platz gefunden, beklagt er. So sei es nicht erwünscht gewesen, ihr arabische Muttersprache zu hören. Eine Stimme, wie die der Sängerin Salima Murad, sucht man im israelischen Radio vergeblich.

„Es war in einem rechtlichen Sinne nicht verboten. Aber Schande über Dich, wenn Du Arabisch sprachst“, berichtet Semah. Dies zeichnet auch der Historiker Dan Diner in seinem jüngsten Buch „Der andere Krieg“ nach:
„Die babylonische, die Bagdader, die irakische Judenheit und die jüdische Heimstätte waren einander eigentlich fremd geblieben. Die zwischen ihnen liegende Syrische Wüste markierte ein sowohl faktisches wie mentales Hindernis.“

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Labor Unions Rally Behind California’s Zero-Emissions Climate Plan

Robert Pollin

Robert Pollin, distinguished professor of economics and co-director of the Political Economy Research Institute (PERI) at the University of Massachusetts at Amherst, has been spearheading national and international efforts to tackle the climate crisis for more than a decade. Over the past few years, he and a group of his colleagues at PERI have produced green economy transition programs for numerous states. The latest such program is for California, and it is being released today.

The massive study — nearly 200 pages long — shows how California can become a zero emissions economy by 2045 while expanding good job opportunities throughout the state. Nineteen unions have already endorsed the green transition plan, making clear that they reject frameworks that falsely pit labor priorities and the environment against each other, and more are expected to do so in the days and weeks ahead.

In this interview for Truthout, Pollin, co-author with Noam Chomsky of Climate Crisis and the Global Green New Deal: The Political Economy of Saving the Planet (Verso 2020), talks about the climate stabilization project for California and the national implications of union support for a green economy transition.

C.J. Polychroniou: California has been at the forefront of the climate fight for years now, but the truth of the matter is that its efforts have fallen short. Now, you and some colleagues of yours at PERI have just completed a commissioned climate stabilization project for California. How does the project envision the clean energy transition to take place in a manner consistent with the emission targets set out by the UN Intergovernmental Panel on Climate Change (IPCC) in 2018, and how will it be financed?

Robert Pollin: This study presents a recovery program for California that will also build a durable foundation for an economically robust and ecologically sustainable longer-term growth trajectory. California has long been a national and global leader in implementing robust climate stabilization policies. This includes the 2018 Executive Order B-55-18 by then Gov. Jerry Brown. This measure committed the state to cut CO2 emissions by 50 percent as of 2030, to become carbon neutral no later than 2045, and to produce net negative emissions thereafter. These goals are somewhat more ambitious than those set out by the IPCC in 2018. Our study outlines a program through which the state can achieve its own established goals.

Our study shows how these 2030 and 2045 emissions reduction targets can be accomplished in California through phasing out the consumption of oil, coal and natural gas to generate energy in the state, since burning fossil fuels to produce energy is, by far, the primary source of CO2 emissions, and thereby, the single greatest factor causing climate change. The project we propose is to build a clean energy infrastructure to replace the existing fossil fuel-dominant infrastructure. The clean energy infrastructure will require large-scale investments to, first, dramatically raise energy efficiency standards in the state and, second, to equally dramatically expand the supply of clean renewable energy supplies, including solar and wind primarily, with supplemental supplies from low-emissions bioenergy, geothermal and small-scale hydro power. We show how this climate stabilization program for California can also serve as a major new engine of job creation and economic well-being throughout the state, both in the short- and longer run.

We have scaled the clean energy investment project at about $76 billion per year on average between 2021 – 2030. This would equal roughly 2 percent of what we estimate will be the state’s average GDP between 2021 – 2030. In other words, California can hit its emissions reduction targets through maintaining clean energy investment spending levels at about 2 percent of overall economic activity in the state. That means that roughly 98 percent of the state’s annual economic activity can still be focused on anything other than clean energy investments. But the state must maintain this 2 percent of GDP investment level in clean energy for the program to work.

We estimate this level of investment will generate roughly 420,000 jobs throughout the state’s economy. New job opportunities will open for, among other occupations, carpenters, machinists, welders, electronic equipment assemblers, environmental scientists, administrative assistants, accountants, truck drivers, roofers and agricultural laborers. Investments in public transportation — a major component of the energy efficiency investment program — will produce public-sector jobs for drivers and managerial staff. The quality of these jobs — including wages, benefits and levels of unionization — vary by sector. In general, it will be critical to raise job quality standards as the number of jobs available expands. Raising unionization rates, as well as expanding job training programs will all be crucial for raising overall job quality levels. Local hire provisions and related measures will also need to be implemented to ensure equitable access by race and gender to the expanding job opportunities.

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Public Banking Can Improve The Lives Of US Workers While Helping Save The Planet

Gerald Epstein is Professor of Economics and a founding Co-Director of the Political Economy Research Institute (PERI) at the University of Massachusetts, Amherst.

The movement to create public banks is gaining ground in many parts of the U.S., particularly as part of an effort among activists and progressive lawmakers to extend banking access to low-income communities and communities of color in the post-COVID-19 economy. But how does public banking help protect the local community and assist with development? If public banks become part of the Federal Reserve — as a bill introduced by Representatives Rashida Tlaib and Alexandria Ocasio-Cortez aims to do — what would be the consequences? Leading progressive economist Gerald Epstein, professor of economics and co-director of the Political Economy Research Institute at the University of Massachusetts at Amherst, has studied the issue of public banking extensively and sheds ample light on these questions in this exclusive interview for Truthout.
– This interview was based on joint work with Esra Nur Ugurlu.

C.J. Polychroniou: After a series of ups and downs, the movement for public banking is gaining traction in states in the U.S. Why do we need public banks, and why are they a better alternative than private banks?

Gerald Epstein: First off, when I discuss a public bank or a public banking and finance institution, I generally mean a financial institution that has public support, has a social or public goal, and is not driven mainly by a profit motive.

Why do we need public banking institutions? Plenty of reasons. Private banks charge excessive fees for simple banking services. Asset management companies and financial advisers have major conflicts of interest. Banks engage in highly risky activities, expecting bailouts when they get into financial trouble. Private equity firms strip businesses and households of their assets by loading them up with debts, leaving them without the wherewithal to pay decent wages or compete with other companies.

The public provision of financial services is important not only because it can do what the current financial system does not do, but it can do better at many of the things that private finance purports to do. A public banking and financial institution could help restructure the financial system to better serve public needs, especially the short-term and long-term needs of the poor, the working class and the planet.

Here are some important functions that a public banking and financial institution could play in our economy:

1. Competition and regulation: Public options compete with existing financial institutions, thereby providing people with alternatives to private finance and possibly improving the products and services that private finance offers. The public option also provides a means of regulating private financial institutions through competition.
2. Public goods: Public goods, such as a highly educated population, efficient infrastructure, and long-term technological innovation with broad positive spillovers, can be supported by public finance institutions.
3. Collective goods and complementarities: Collective goods are those that require concerted and collective action to come to fruition and generate productive outcomes. For example, as Mehrsa Baradaran argues in developing her proposal for “A Homestead Act for the 21st Century,” providing affordable housing is not sustainable in and of itself because there are a number of complementary goods that must be available at the same time, such as jobs, financial institutions and grocery stores. Here, community development is a good that must involve collective planning and simultaneous financing in a number of different areas for any of the pieces to succeed. A public banking and financial institution can be a useful mechanism to coordinate and help finance these activities.
4. Financial inclusion — fighting poverty, exploitation and racial discrimination: Financial exclusion, exploitation and racial injustice are deeply ingrained social ills in the United States. Public banking and finance institutions can help finance affordable housing, cooperatives, small businesses, education initiatives and financial services, all in communities of color and for institutions owned or controlled by members of the community.
5. Financial resilience and stability: Public banking and finance institutions, by contributing to a diverse financial ecosystem, help to make the financial system more resilient and robust. For example, unlike for-profit banks, publicly oriented financial institutions tend to perform countercyclically, helping to stabilize the economy rather than exacerbating crises.
6. Economic transformation: For large-scale transformative issues, the social provision of finance must play a major role. These include projects that have long-term gestation periods, massive uncertainty, large economies of scale, and the need for complementary investments and planning. One example is the pressing need to make the transition to renewable and non-carbon-producing fuels, such as the Green New Deal. This requires investment in new technologies and infrastructure implementation. In such a multifaceted transformative endeavor, public provision of finance is crucial as a facilitating mechanism and a planning tool.
7. Promote full employment and good jobs: Credit allocation is key for job creation, including areas of structural unemployment, as well as patient capital for long-term gestation projects and infrastructure investments. Here, the quality of employment is as critical as the quantity (“high road” employment).
8. Instrument of public policy: In an economic transformation like the Green New Deal, public provision of credit is a powerful instrument of government policy. Countries that have made successful, rapid and transformative economic changes, including the United States, South Korea, Taiwan, China, and Western European countries, such as France, Germany and Italy in the first few decades after World War II, all used public provision of finance as a carrot or stick to elicit desired corporate behavior and allocate credit to priority sectors.
9. Reducing the power of financial elites and countering capital strike: Among the most important effects of a public banking and financial institution — and a key reason that capitalists often oppose it — is that having a public option reduces the market power of private capital and the political power of finance. As private banks and other financial activities in the United States have become bigger and more concentrated, social provision of finance will confront these oligopolies with more competition. Politically, public options reduce the power of the threat of a capital strike and of being “too big to fail.” With a large public banking and financial institution footprint, we can say to Wall Street, “Go ahead and fail. Our public financial institutions will provide the needed services without you.” Moreover, public banking and financial institutions provide a counterweight if private finance threatens capital flight in response to progressive policies they don’t like.

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Neoliberalism In Their Hearts, Proto-Fascism In Their Heads: The Political Identity Of Today’s GOP

Republicans have consistently adopted a reactionary orientation on race, ethnicity, and gender issues, and are fervid opponents of majority rule.

With becoming the party of Trump, analysts have sought to come to terms with the political identity of today’s GOP. The general consensus among mainstream pundits seems to be that the Republican Party is no longer a conservative party, but has instead become something of an authoritarian outlier. Many from the progressive and radical community, on the other hand, go even further and claim that the GOP is now a fascist party.

There is a problem with both approaches to the political identity of today’s GOP. Let’s examine first the claim that Trump’s GOP is no longer a conservative party but, rather, an authoritarian outlier.

Even if we assume that the Republican party was a pure conservative party before Trump, which I take to be a highly dubious proposition for reasons to be explained further below, it should be pointed out then that, conservative parties, to a greater or lesser extent, have always been authoritarian. As such, to say that today’s GOP has become an authoritarian outlier says very little, but also fails to capture the magnitude of the change that the Republican party has undergone since Trump’s emergence on the political scene.

Indeed, lest we forget, the Republican party has been the “party of law and order” at least from the days of Barry Goldwater. And as any astute student of history will tell you, the politics of law and order (submission to authority and opposition to other groups) have always been a gateway to authoritarianism no matter the political or cultural setting. Authoritarianism and reactionism are in fact built into the fabric of conservatism.

For that matter, the Republican party has been in actuality very much a reactionary political force virtually from the early twentieth century onwards. It’s history is replete with attempts to turn back the hands of time with respect to progress made on the political, social, and cultural front. Republicans have consistently adopted a reactionary orientation on race, ethnicity, and gender issues, and are fervid opponents of majority rule.

More than a decade ago, in an interview that appeared in the British political and cultural magazine The New Statesman, the brilliant and outspoken author of the “Narratives of Empire” captured rather powerfully the state of American politics at the time by saying that what you have with the Republican party is a “quasi-fascist batch” of people, “small-town enemies of everybody” who “believe in authority…in their own mind, and no-one else’s.”

Gore Vidal was using the above terms to refer to the reaction of Republicans to the governing of the United States—a “racist country,” as he put it, that compared favorably to South Africa under apartheid—by a black president.

What has changed in the Republican Party over the last 10 or so years is the emergence of Trump with his uncanny ability to expand dramatically the base of this “quasi-fascist batch” of people and to make them feel so much empowered that they believed they had the right to overturn an election just because their own guy lost.

But that still begs the question of whether Trump’s GOP is a fascist or neo-fascist party.

Fascism is a form of government in which the ruling party not only embarks on censorship and bans political opposition, but uses the state to gain indirect control of the economy, sets all prices and wages, and controls the monetary system.

Fascism’s political economy does not revolve around the “free-market” system. Fascists not only nationalize certain industries, but compel the owners of those that remain in private hands to operate in accordance with the economic aims and goals of their government.

Fascism’s political economy stands in sharp contrast with the prevailing economic doctrine in the United States, which is neoliberalism. To be sure, there is no evidence whatsoever that the Republican party has abandoned its belief in the “free-market” system and, in turn, plans to embrace a vision of an “organized state-capitalist economy.” Neither has it become supportive of trade unions, which was very much the case with both Italian fascism and German National Socialism.

Neoliberalism, with its emphasis on privatization, deregulation, tax cuts for the rich, and massive attacks on workers’ rights, has been the economic philosophy of the GOP before and during Trump’s reign in power, and will surely continue to be so after Trump. Therefore, labelling the Republican party, with its pathological aversion to the idea of a strong central government steering the economy to help with development, as a fascist party is politically and ideologically fundamentally way off the mark. Republicans (like most Democrats since Clinton) carry neoliberalism in their hearts.

However, when it comes to politics, social and cultural issues, the orientation of the Republican party has been “proto-fascist” for quite a long time. By “proto-fascism,” I mean an ideological orientation, a state of mind, and potentially a movement whereby the political attitudes and predispositions of its members are driven by hate, social frustration and racist tendencies, attraction for the strongman and contempt for the weak, idolization of violence and rejection of reason and the values of the Enlightenment. Fear of difference is also a trait of the “proto-fascist” frame of mind, as well as obsession with a plot and conspiracy theories in general.

America’s obsession with guns, god and the flag (a uniquely American menage a trois) is in general a classic display of “proto-fascist” mentality, which is another way of saying that “proto-fascism” has been an ever present phenomenon in the nation’s political culture.

Indeed, when we consider this nation’s saga of imperialism and long-stemming traditions of militarism, misogyny, racism, gun culture, aversion to sex education, and police brutality, it is beyond dispute that the United States has had a long history of “proto-fascism.” The difference now is that it finally has managed to put all the elements together and bring about the formation of an organized “proto-fascist” political force, but one whose economic principles remain unwaveringly committed to the dogma of neoliberal capitalism and is bent on using the government to make the rich richer while weakening further workers’ bargaining power and destroying nature on the altar of profit.

In sum, the best term to use in order to capture the political identity of today’s GOP is Neoliberal Proto-Fascism. And only time, and the way the powerful socio-economic and political contradictions resolve themselves in “the land of the free and the home of the brave,” will tell whether the GOP in particular and the country in general will make the ultimate move by embracing fully the vision, the politics, and the economics of fascism.


C.J. Polychroniou is a political economist/political scientist who has taught and worked in numerous universities and research centers in Europe and the United States.  He has published scores of  books and his articles have appeared in a variety of journals, magazines, newspapers, and popular news websites. His latest books are Optimism Over Despair: Noam Chomsky On Capitalism, Empire, and Social Change, an anthology of interviews with Chomsky originally published at Truthout and collected by Haymarket Books;  Climate Crisis and the Global Green New Deal: The Political Economy of Saving the Planet (with Noam Chomsky and Robert Pollin as primary authors);  and The Precipice: Neoliberalism, the Pandemic, and the Urgent Need for Radical Change, an  anthology of interviews with Chomsky originally published at Truthout and collected by Haymarket Books (scheduled for publication in June 2021).

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Carel C.A. van den Berg – The Making Of The Statute Of The European System Of Central Banks

You can download the complete book (PDF-file) here: CCAvdBerg – MakingofStatute

Dutch University Press, Amsterdam, 2004, 2005 ISBN 90 3169 292 7 – This book is the commercial edition of the dissertation defended and approved at the Faculty of Economics and Business Administration of the Vrije Universiteit of Amsterdam on 29 October 2004 . Thesis printed by Thela Thesis – ISBN 90 5170 997 8 (2004).

Zur Thematik
The creation of the Economic and Monetary Union (EMU) is one of the most profound steps in the monetary history of Europe, which has significance not only for professionals, politicians and academics, but also for everyday life. Among the accomplishments that stand out are the establishment of a federally structured European System of Central Banks (ESCB)[i]and the introduction of a single currency. The opinions and decisions of the European Central Bank (ECB)[ii] are almost daily topics for the national newspapers, discussions on its accountability (or perceived lack thereof) are recurrent topics in the European Parliament and political and academic circles. In short, the ECB has become a reality for almost everyone within a couple of years since its establishment. Technically it has been successful: the transition from national currencies to a single currency, the euro, has been a remarkably smooth process despite the gigantic scale of the operation. Though it is too early to evaluate how effective the ECB is in implementing its mandate, for the Monetary Union as a whole inflation rates are lower than they were during a large part of the nineties.

The legal underpinnings of the System and its independence have been extensively studied, see e.g. Stadler (1996), Smits (1997) and also Endler (1998). Also, from a political angle, the degree in which the negotiations leading up to the signing of the so-called Treaty of Maastricht in February 1992 could be characterized as a success for the German or for the French negotiators has been analyzed, e.g. by Viebig (1999) and Dyson/Featherstone (1999). In many respects these authors have concluded that it was a German success. However, the ESCB is not a copy of an existing central bank, not even the Bundesbank. It has been established on the basis of a unique Statute.[iii] This Statute will guide the ECB, also in the future. But like many texts, the Statute is sometimes ambiguous. For a right interpretation of the texts it is important to know their genesis. Sometimes wording was copied from existing other texts, sometimes texts are a delicate compromise, sometimes texts have a difficult technical history.

What distinguishes this study from these other studies is that these studies analyzed the ESCB from only one perspective, i.e. either from a legal, political or economic point of view. This study aims to show how political, economic and institutional considerations were combined and have found their way into the (legal) wording of the ESCB Statute. To this end I focus on each article, describing the economic rationale behind it as well as its genesis, systematically using historical sources which until now have not been used for these purposes. The perspective I take in order to interpret, analyse and assess the Statute of the ESCB is that of checks and balances. We will identify and study the ‘checks and balances’ which have been introduced in the Statute of the ESCB. ‘Checks and balances’ are an important characteristic of any federally designed system. They are part of the ‘rules of the game’, which have to be taken into account by the components of the system, which rules should ensure the system’s stability and effectiveness. For instance, ‘checks and balances’ prevent the possibility of ‘winner takes all’, because this would mean the end of the federal character. A clear normative framework for checks and balances for federal central bank systems is not available, though there are general notions which any workable system of checks and balances has to accord with. Therefore, we will develop a framework to describe the checks and balances in central bank systems.

The concept of checks and counterchecks also played a role when the American central bank system (the Federal Reserve System, FRS) was designed. A nice description can be found in P.M. Warburg in his book ‘The Federal Reserve System, Its Origins and Growth’ (1930), p. 166: ‘The position of the Reserve Board, as designed in the Act [of 1913], was bound to prove exasperatingly difficult and trying. The office was burdened with the handicap, commonly imposed upon so many branches of administration in a democracy, of a system of checks and counter-checks – a paralyzing system which gives powers with one hand and takes them away with the other. […] Success or failure in such cases generally depends on the wisdom with which the balancing of the checks and counter-checks in a legislative act is handled, and on the intelligence with which, later on, the act is administered.’ And ibidem p. 170: ‘[….] many attempts were made to find a satisfactory answer to the tantalizing puzzle of how to safeguard the autonomy of the reserve banks while giving, at the same time, adequate coordinating and directing powers to the Reserve Board.’ From our study it appears that these considerations were still relevant for the conception of the European central bank.

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