Getting Lectured

One of my favorite things about LSE is the number of public events that are hosted each week.

On Tuesday, I went to a lecture called "Crises and Revolutions: The Reshaping of International Development" by Sri Mulyani Indrawati, a managing director of the World Bank.  She made some interesting points about the relationship between politics and economics and how the World Bank, despite being a "non political" organization, has to recognize that money drives a lot of what goes on within governments, and vice versa.

She also talked about the importance of civic participation in the development process, and she referenced the role that protesters played in the ongoing political turmoil throughout the Middle East.  She said that a lot of people mistakenly believe that "government vs. people" is a transitional phenomenon, but that in reality, it's something that can crop up any time there is social unrest.  People are looking for "a new social contract with the government", which has been highlighted by the financial crisis. That, coupled with the Arab Spring, makes 2011 a history marker, and she thinks from now on, we will change the way we view development, with countries like China and India taking a much more prominent role.

The next lecture I attended was a Green Coffee Talk hosted by the LSE Environment Society and was, IMHO, the most interesting of the three (we limit attendance to around 15 people so we can have more of a discussion than a lecture, plus the subject matter is obviously very relevant).  Dr. Carmen Marchiori, one of my environmental economics lecturers and an expert on negotiation theory, talked about international environmental agreements, including predictions of what might happen in the future.  With environmental negotiations, countries have a strong incentive to free ride, and game theoretic models predict that only weak agreements can achieve broad consensus in an international arena.  Carmen's research explains why countries do end up agreeing to somewhat aggressive emissions abatement goals by looking at the complicated relationship between governments, lobbyists and civil society.

She has also done work on linkage strategies, i.e. attaching a stipulation for R&D funding to specific emission reduction targets.  Free-riding is always a problem, but when there is a credible and severe punishment attached to failure, countries are a lot more likely to respond (although it could have the perverse effect of turning countries away from the negotiations altogether).  

Her research predicts that, in the future, environmental negotiations will result in smaller coalitions with more aggressive abatement targets, and the focus will shift from mitigation to adaptation, which helps solve the non-excludabiliy problem that has encouraged actors to free-ride in the past.  Developing countries like China and India will be hit especially hard by climate change, and as quickly as they're emerging as major players on the international environmental scene, we can expect a lot of pressure from them to invest in adaptation projects. 

Finally, I went to a lecture called "OECD Labor Markets in the Great Recession" by Nobel Laureate (economic sciences) and LSE Professor Chris Pissarides.  I had heard he was boring, but his lecture was actually very interesting.  He specified a simple model of employment, then took the residuals from the model and explained why it was different for each country.  His conclusions were fascinating.  For example, he said that the US has really good employment laws (i.e. nonrestrictive) but that our lack of incentives to hire new people, coupled with an underfunded education that isn't preparing graduates (at either the high school or college level) for available jobs, has lead to a jobless recovery.  He also pointed to the change in labor mobility in the US, which he linked to home ownership (if people can't sell their homes, they can't afford to move and look for work), the extension of unemployment benefits with few stipulations attached, and a lack of training programs to help the unemployed find work as reasons for our jobless recovery.

This post is getting long, so I'll end it, abruptly, here.  You can dig through the LSE website to find podcasts of the two public lectures I mentioned above.  Unfortunately, the Green Coffee Talk wasn't recorded, but the interested reader can find some of Carmen's research here, although it's quite technical.