tag:theconversation.com,2011:/institutions/skidmore-college-1358/articlesSkidmore College2024-02-29T13:40:51Ztag:theconversation.com,2011:article/2236322024-02-29T13:40:51Z2024-02-29T13:40:51ZHow Russia has managed to shake off the impact of sanctions – with a little help from its friends<p>Almost two years after the West <a href="https://www.politico.com/news/2024/02/24/russia-economy-west-sanctions-00142713">responded to the Russian invasion in Ukraine with a blistering array of sanctions</a>, a fresh round of <a href="https://home.treasury.gov/news/press-releases/jy2117#:%7E:text=State%20is%20designating%20three%20Government,abuses%2C%20and%20aggression%20against%20Ukraine.">financial measures was announced by the Biden administration</a> on Feb. 23, 2024. The new sanctions, imposed following the <a href="https://theconversation.com/navalny-dies-in-prison-but-his-blueprint-for-anti-putin-activism-will-live-on-223774">death of Russian opposition leader Alexei Navalny</a>, raised the number of individuals and entities now targeted by the U.S. to more than 2,000.</p>
<p>These measures <a href="https://www.state.gov/ukraine-and-russia-sanctions/">have run the gamut</a>, from targeted sanctions against President Vladimir Putin and other members of Moscow’s elites to broader restrictions on trade and investment.</p>
<p>Yet there are <a href="https://www.wsj.com/world/the-biggest-ever-sanctions-have-failed-to-halt-russias-war-machine-0986873f">few signs the sanctions have had a meaningful impact</a> on Putin’s ability to wage war.</p>
<p>As <a href="https://miamioh.edu/profiles/cas/keith-preble.html">experts on</a> <a href="https://www.skidmore.edu/political_science/faculty/willis.php">economic sanctions</a>, we believe the blunting of the sanctions’ impact can be attributed in large part to how Putin has been able to “sanction-proof” the Russian economy with help from friendly nations.</p>
<h2>Russian sanctions regime</h2>
<p>The sanctions regime put in place by the <a href="https://www.lawfaremedia.org/article/what-sanctions-has-world-put-russia">U.S. and its partners</a> in the European Union, along with Japan, Australia, New Zealand, South Korea and Switzerland, has been both targeted and broad.</p>
<p>Restrictions have been placed on individuals and firms on an ever-growing blacklist – the U.S. calls it the <a href="https://ofac.treasury.gov/specially-designated-nationals-and-blocked-persons-list-sdn-human-readable-lists">Specially Designation Nationals and Blocked Persons List</a>. The list includes entities both in Russia and within Russia’s procurement network and supply chains operating in other countries. </p>
<p>Inclusion on the list results in a proscribed entity’s assets being blocked. Meanwhile, U.S. nations and businesses are barred from conducting business with entities on the list.</p>
<p>Economic sanctions have also <a href="https://www.state.gov/additional-sanctions-on-russias-technology-companies-and-cyber-actors/">focused on specific sectors</a>, such as the financial services sector. Banks have been barred from clearing payments and facilitating the flow of money in Russia’s key revenue generating sectors, such as the oil and energy industries. Such <a href="https://www.state.gov/countering-the-wagner-group-and-degrading-russias-war-efforts-in-ukraine/">sectoral sanctions</a> target all firms in the given sector and, theoretically, can have a devastating effect on an economy. </p>
<p>In addition, the U.S. has been both surgical and cautious in its <a href="https://www.state.gov/issuance-of-a-new-executive-order-to-expand-russia-sanctions-authorities/">use of secondary economic sanctions</a>. Secondary economic sanctions, which penalize individuals and firms in third-party countries that maintain trade and financial transactions with proscribed entities, can be politically and diplomatically challenging given that targeted firms often aren’t doing anything illegal in their home countries.</p>
<p>The United States’ <a href="https://www.fincen.gov/sites/default/files/2022-06/FinCEN%20and%20Bis%20Joint%20Alert%20FINAL.pdf">Bureau of Industry and Security in the Department of Commerce</a> and <a href="https://www.consilium.europa.eu/en/policies/sanctions/restrictive-measures-against-russia-over-ukraine/history-restrictive-measures-against-russia-over-ukraine/">the EU</a> have also implemented export controls that restrict Russia’s military sector from accessing key technologies for the war effort. </p>
<h2>Dwindling effect</h2>
<p>These economic sanctions placed significant stress on the Russian economy in the first year of the war. Evidence of economic pain in 2022 can be seen in the jump in the rate of inflation <a href="https://www.imf.org/external/datamapper/PCPIPCH@WEO/RUS?year=2022">from 6.7%</a> to <a href="https://www.imf.org/external/datamapper/PCPIPCH@WEO/RUS?year=2023">13.8%</a>. Meanwhile, Russia’s gross domestic product fell <a href="https://carnegieendowment.org/politika/88664">3% to 4% in the first nine months of the war</a>, although analysts had initially forecast a GDP decline of up to 10%.</p>
<p>But since then, the Russian economy has withstood the impact of sanctions. According to data from the International Monetary Fund, the rate of inflation is anticipated <a href="https://www.imf.org/external/datamapper/PCPIPCH@WEO/RUS?year=2024">to drop to 6.3%</a> in 2024. Some analysts predict <a href="https://carnegieendowment.org/politika/88664">Russia’s economy to recover further in 2024</a>, with the <a href="https://www.imf.org/en/Publications/WEO/Issues/2024/01/30/world-economic-outlook-update-january-2024">IMF forecasting a 2.6% growth in GDP</a> – up from earlier estimates of <a href="https://qz.com/russian-ukraine-invasion-sanctions-war-international-mo-1851208999">just 1.1% growth</a>.</p>
<figure class="align-center ">
<img alt="A man in a suit stand sin front of a tank." src="https://images.theconversation.com/files/578804/original/file-20240229-30-f3hsoh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/578804/original/file-20240229-30-f3hsoh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=411&fit=crop&dpr=1 600w, https://images.theconversation.com/files/578804/original/file-20240229-30-f3hsoh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=411&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/578804/original/file-20240229-30-f3hsoh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=411&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/578804/original/file-20240229-30-f3hsoh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=516&fit=crop&dpr=1 754w, https://images.theconversation.com/files/578804/original/file-20240229-30-f3hsoh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=516&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/578804/original/file-20240229-30-f3hsoh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=516&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Vladimir Putin visits a tank factory on Feb. 15, 2024.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/in-this-pool-photograph-distributed-by-russian-state-agency-news-photo/2006245916?adppopup=true">Alexander Kazakov/AFP via Getty Images</a></span>
</figcaption>
</figure>
<p>This dwindling impact on the Russian economy points to a general truth: Sanctions are hard to maintain. They are only effective when they are consistently enforced, and <a href="https://www.aljazeera.com/opinions/2023/6/5/sanctions-on-russia-may-not-be-working-we-now-know-why">few countries apart from the United States have had the stamina to enforce export controls</a> over a prolonged period.</p>
<h2>‘Sanctions-proofing’ Fortress Russia</h2>
<p>Russia has also been able to adapt to the sanctions by adopting several strategies, some of which began long before the 2022 invasion. By then, Russia had been coping for years with <a href="https://2009-2017.state.gov/e/eb/tfs/spi/ukrainerussia/">sanctions put in place</a> after its illegal annexation of Crimea in 2014. The plan put in place by Moscow to fortify the economy has been named “<a href="https://www.npr.org/2022/03/01/1083804497/economic-warfare-vs-fortress-russia">Fortress Russia</a>” and consisted of building up <a href="https://www.npr.org/transcripts/1083804497">significant foreign exchange reserves</a> to maintain confidence in the Russia ruble. </p>
<p>Diversifying foreign exchange reserves, though, is just one part of the strategy.</p>
<p>The limited economic and financial sections imposed by the U.S. and others after the annexation of Crimea provided Russia with space and time to undertake a strategy of <a href="https://doi.org/10.1080/0163660X.2023.2188829">sanctions-proofing its wider economy</a>.</p>
<p>Sanctions experts such as <a href="https://caileighglenn.wixsite.com/home">Caileigh Glenn</a> have <a href="https://www.lawfaremedia.org/article/can-you-sanctions-proof-a-government#:%7E:text=A%20fourth%20sanctions%2Dproofing%20strategy,%2C%20Chinese%20renminbi%2C%20and%20euros.">identified four strategies</a> that countries employ to sanctions-proof their economy: <a href="https://www.bofbulletin.fi/en/blogs/2022/russia-is-struggling-to-find-new-sources-of-imports/#:%7E:text=During%20the%20past%20decade%20and,been%20modest%20in%20most%20sectors.">import substitution</a>, strengthening foreign partnerships, <a href="https://www.shearman.com/en/perspectives/2023/05/russian-countersanctions--new-measures-targeting-foreign-investors-in-russia">retaliation through countersanctions</a> and <a href="https://www.brookings.edu/articles/russias-external-position-does-financial-autarky-protect-against-sanctions/">reducing dependency on any single reserve currency</a>. </p>
<p>While Russia has employed a <a href="https://carnegieendowment.org/politika/88664">combination of these strategies</a>, cultivating partnerships with countries that are willing to ignore Western sanctions – or willing to look the other way – appears to have been a particularly successful strategy.</p>
<h2>China: A crucial partner</h2>
<p>Fortunately for Russia, China has been a somewhat willing partner.</p>
<p>Throughout the Ukraine conflict, China has played a balancing act: eager to maintain both its relationship with Russia as well as <a href="https://thediplomat.com/2023/11/understanding-chinas-policy-in-the-russia-ukraine-war-and-implications-for-china-us-relations/">economic ties with the U.S., the EU and Ukraine</a>. </p>
<p>In line with that policy, China has refrained from issuing its own economic sanctions against Moscow and has <a href="https://thediplomat.com/2022/08/china-moves-to-fill-the-void-left-by-russia-sanctions-on-its-own-terms/">filled, for Russia, the void</a> left by a reduction in trade with sanctioning countries.</p>
<p>In 2023, for example, Russian officials stated that around half of the country’s oil and petroleum exports <a href="https://www.reuters.com/markets/china-russia-2023-trade-value-hits-record-high-240-bln-chinese-customs-2024-01-12/#:%7E:text=Chinese%20shipments%20to%20Russia%20jumped,13%25%20last%20year%20from%202022.">were exported to China</a> – far higher than before the sanctions were imposed. Similarly, China’s exports to Russia, including smartphones, <a href="https://www.reuters.com/markets/china-russia-2023-trade-value-hits-record-high-240-bln-chinese-customs-2024-01-12/#:%7E:text=Chinese%20shipments%20to%20Russia%20jumped,13%25%20last%20year%20from%202022.">rose astronomically from its pre-Ukraine war levels</a>, largely due to the U.S.’s and EU’s sanctions against Russia. </p>
<p>The China-Russia partnership was on the rise even before the 2022 invasion. Presidents Xi Jinping and Putin have <a href="https://crsreports.congress.gov/product/pdf/IF/IF12100">met several times since 2013</a>, a year before Russia’s invasion of Crimea. And since then, the two countries have conducted a <a href="https://crsreports.congress.gov/product/pdf/IF/IF12120">variety of bilateral agreements</a> in areas such as trade, energy, diplomacy and military cooperation. </p>
<p>As such, the increase in trade between China and Russia since 2022 is part of a longer trajectory of Moscow relying less on Western powers.</p>
<p>And this has made the Russian economy less vulnerable to sanctions from Western countries. China’s share of Russian <a href="https://crsreports.congress.gov/product/pdf/IF/IF12120">trade increased</a> from around 10% in 2013 to 18% in 2021. Over the same period, the EU’s share dropped from 47% to 36%, and the U.S.’s remained relatively stable – at around 3% to 4%.</p>
<p>However, Russia’s ability to insulate itself from sanctions through increased trade with China may be facing a setback. The EU recently issued <a href="https://www.scmp.com/news/china/diplomacy/article/3252736/eu-agrees-blacklist-chinese-firms-first-time-latest-russian-sanctions-package">secondary sanctions on 193 firms and individuals</a> who are doing business with Russia, including three firms in mainland China and one in Hong Kong. The U.S. is <a href="https://www.cnbc.com/2024/02/19/china-has-a-lot-more-to-lose-us-considering-sanctioning-chinese-firms-aiding-russias-war.html">considering similar sanctions</a> against Chinese firms as well. </p>
<p>This may be particularly problematic for Russia, as China is much less dependent on Russia economically. Russia <a href="https://crsreports.congress.gov/product/pdf/IF/IF12120">comprised only 2% of China’s trade share in 2021</a>, and although trade between the two <a href="https://www.cnbc.com/2024/01/12/china-posts-higher-than-expected-exports-growth-in-december.html">increased in 2023</a>, <a href="https://oec.world/en/profile/country/chn">trade with the U.S., the EU and other countries within Asia</a> remains more integral to the Chinese economy.</p>
<h2>Other sanction busters</h2>
<p><a href="https://www.cfr.org/backgrounder/north-korea-sanctions-un-nuclear-weapons">North Korea</a> and <a href="https://www.sipri.org/publications/2021/policy-reports/mitigating-humanitarian-impact-complex-sanctions-environment-european-union-and-sanctions-regimes">Iran</a> – themselves targets of extensive sanctions – have also emerged as important partners in Russia’s strategy to sanctions-proof its wartime economy. Consistent with a trajectory of closer ties <a href="https://www.aljazeera.com/news/2023/9/13/the-highs-and-lows-of-russia-north-korea-relations">since Putin took office</a>, North Korea is now <a href="https://www.aljazeera.com/news/2024/1/12/us-imposes-sanctions-over-transfer-of-north-korean-missiles-to-russia">allegedly providing Russia with missiles and other arms</a>. Similarly, Iran <a href="https://www.reuters.com/world/europe/russia-has-received-hundreds-iranian-drones-attack-ukraine-white-house-2023-06-09/">has sold drones to Russia</a> for use in the Ukrainian conflict. </p>
<p>Western countries have been engaging in sanctions-busting, too. In December 2023, the U.S. Treasury <a href="https://home.treasury.gov/news/press-releases/jy1948?_gl=1*7sn7lq*_gcl_au*MTYyMjQ3ODI3OC4xNzA1MDgyMDky">unsealed indictments</a> relating to a Belgium-based network accused of coordinating the sale of electronics to Russian firms. Such networks undermine the export controls designed by the West to limit Russia’s acquisitions of critical technologies.</p>
<p>Also, spotty enforcement of sanctions has allowed Russia to circumvent restrictions. A report by Reuters on Russia’s wartime supply chain found that from February to October 2022, some US$2.6 billion in computer and electronic components <a href="https://www.reuters.com/investigates/special-report/ukraine-crisis-russia-tech-middlemen/">made its way into Russia</a>, with at least $777 million of the products originating from Western firms such as Intel and Texas Instruments.</p>
<p>These exports to Russia also included chips that could be used in the manufacturing of high-tech weaponry. Recent <a href="https://kse.ua/wp-content/uploads/2023/06/Russian-import-of-critical-components.pdf">analysis from the KSE Institute</a> found that Russian imports of “high-priority battlefield items” have largely recovered since sanctions were imposed in 2022.</p>
<h2>Next steps</h2>
<p>Key to improving the effectiveness of economic sanctions is the development of robust mechanisms of enforcement – both against firms and individuals. </p>
<p>Greater use of secondary sanctions along with stiffer penalties against sanctions violators should raise the costs of sanctions-busting and make such transactions less attractive. Research has shown that the longer economic sanctions persist, the <a href="https://www.sup.org/books/title/?id=24154">less effective they become</a> – and two years into the Ukraine conflict, Russia has shown itself to be quite adept at avoiding the full force of the West’s attempts to squeeze its economy and derail its war effort.</p><img src="https://counter.theconversation.com/content/223632/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The US has imposed another round of sanctions following the death of Russian dissident Alexei Navalny. But will it work?Keith A. Preble, Visiting Assistant Professor of Political Science, Miami UniversityCharmaine N. Willis, Visiting Assistant Professor of Political Science, Skidmore CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2212972024-02-01T17:04:20Z2024-02-01T17:04:20Z3 years on from coup, economic sanctions look unlikely to push Myanmar back to democracy<figure><img src="https://images.theconversation.com/files/572880/original/file-20240201-21-z6rg6j.jpg?ixlib=rb-1.1.0&rect=39%2C377%2C4427%2C2551&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Sanctions have failed to prevent Myanmar's military from obtaining hardware.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/military-hardware-is-displayed-during-a-parade-to-celebrate-news-photo/1249572841?adppopup=true">STR/AFP via Getty Images</a></span></figcaption></figure><p>When <a href="https://www.nytimes.com/article/myanmar-news-protests-coup.html">Myanmar’s military seized back control</a> of the country in February 2021 after a decade-long democratic interlude, the international community reached for a familiar tool: economic sanctions.</p>
<p>The coup led several countries, <a href="https://ofac.treasury.gov/sanctions-programs-and-country-information/burma">including the United States</a> and <a href="https://www.consilium.europa.eu/en/press/press-releases/2023/12/11/myanmar-burma-council-adds-4-persons-and-2-entities-to-eu-sanctions-list-in-eighth-round-of-sanctions/#:%7E:text=The%20Council%20has%20imposed%20restrictive,February%20and%2020%20July%202023.">European Union member states</a>, to impose or reinstate trade embargoes and other financial proscriptions against Myanmar’s military.</p>
<p>On Feb. 1, 2024 – coinciding with the third anniversary of the military coup – the U.S. <a href="https://www.voanews.com/a/us-marks-anniversary-of-myanmar-coup-with-new-sanctions/7465629.html">announced a fresh round of sanctions</a>. It comes as the Myanmar government continues to be embroiled in a <a href="https://theconversation.com/military-violence-in-myanmar-is-worsening-amid-fierce-resistance-and-international-ambivalence-203646">grinding civil war</a> with <a href="https://www.foreignaffairs.com/burma-myanmar/could-myanmar-come-apart">ethnic minority insurgent groups</a>. But to date, sanctions have not encouraged the ruling generals back toward a democratic path or tipped the war in favor of pro-democratic resistance groups.</p>
<p>Moreover, as experts on <a href="https://cnwillis.com/">East and Southeast Asia</a> and <a href="https://poliscikeith.com/">economic sanctions</a>, we know that the history of Myanmar – and our own research – suggests that economics sanctions are unlikely to have that impact any time soon.</p>
<h2>Current sanctions against Myanmar</h2>
<p>The current sanctions against Myanmar share much in common with those imposed prior to 2010, when the country began a <a href="https://www.eeas.europa.eu/eeas/battle-democracy-myanmar_en?s=110">process to restore democratic government</a>. The actions taken since 2021 by the U.S., EU and others – which include targeted and sector-specific sanctions – are aimed at undermining the military junta’s ability to <a href="https://www.state.gov/sanctions-against-the-myanma-oil-and-gas-enterprise-and-concerted-pressure-with-partners/">violently repress the country’s pro-democracy movement</a>.</p>
<p><iframe id="6JbEj" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/6JbEj/1/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>At the same time, those imposing sanctions appear to be more cognizant than in previous periods of the <a href="https://doi.org/10.1080/10357718.2013.764581">potential negative impacts on the Burmese people</a>.</p>
<p>The sanctions imposed after the 2021 coup are more targeted and designed to affect the military government and its enterprises. In earlier periods, the <a href="https://poliscikeith.com/">financial measures were broader</a> and affected the entire Myanmar economy.</p>
<p>This is by design. The legal basis for post-2021 U.S. economic sanctions on Myanmar, <a href="https://www.federalregister.gov/documents/2021/02/12/2021-03139/blocking-property-with-respect-to-the-situation-in-burma">Executive Order 14014</a>, serves as the foundation for a multitude of targeted measures, which include restrictions on individuals and businesses connected to supplying Myanmar’s air force with jet fuel. </p>
<p>Signed on Feb. 11, 2023, the new U.S. sanctions regime reflects changes in how the <a href="https://home.treasury.gov/system/files/136/Treasury-2021-sanctions-review.pdf">Biden Administration intends</a> to use financial penalties to target Myanmar’s generals, not its people. </p>
<p>The U.S. has also made it a priority to work collaboratively with international partners on imposing complementary rather than competing sanctions.</p>
<p>Evidence of this coordination emerged <a href="https://www.state.gov/the-united-states-promotes-accountability-for-human-rights-violations-and-abuses/">on Dec. 10, 2021</a>, coinciding with <a href="https://www.un.org/en/observances/human-rights-day">Human Rights Day</a>, with the U.S. rolling out a package of measures in conjunction with the United Kingdom, Canada and the European Union. For example, the EU’s “<a href="https://finance.ec.europa.eu/eu-and-world/sanctions-restrictive-measures_en">restrictive measures</a>” – the bloc’s parlance for economic sanctions – include many of the same sanctions imposed by the U.S., such as restrictions on the export of military and dual-use equipment, asset freezes, visa and travel restrictions, and restrictions on the export of telecommunications equipment.</p>
<p>The U.S. has also imposed targeted sanctions via the <a href="https://ofac.treasury.gov/faqs/topic/1631">Specially Designated Nationals list</a>, a blacklist of people with whom U.S. citizens and firms are banned from doing business. Listed entities in Myanmar include military leaders, business people and their families. The idea is to focus the economic pain on individuals and entities involved in the coup and subsequent repression of democracy campaigners, rather than on the country as a whole.</p>
<h2>Past sanctions against Myanmar</h2>
<p>Certainly, history suggests that the U.S. needed to update its sanctions policy. Myanmar observers have long debated the effectiveness of the old Myanmar sanctions regime, with <a href="https://www.newmandala.org/busting-myth-myanmar-sanctions-success-story/">many concluding</a> that it had little impact on the junta’s decision to return to democracy. Rather, Myanmar’s democratic elections <a href="https://doi.org/10.1080/10357718.2013.764581">were part of the military’s road map</a> and not the result of sanctions pressure.</p>
<p>One reason for this skepticism over earlier sanctions was that they targeted imports from key sectors of Myanmar’s economy, <a href="https://academic.oup.com/book/9797/chapter-abstract/157012800?redirectedFrom=fulltext">such as garments and textiles</a>, that were not connected to the junta. These economic sanctions harmed private enterprises in Myanmar.</p>
<p>The latest sanctions <a href="https://home.treasury.gov/news/press-releases/jy0078?_gl=1*1mmoid*_gcl_au*MTYyMjQ3ODI3OC4xNzA1MDgyMDky">target military-owned or -linked enterprises</a>, such as Myanma Economic Holdings Public Company, Myanmar Economic Corporation Limited, Myanma Gems Enterprise, Myanma Timber Enterprise and the Myanmar Pearl Enterprise. </p>
<p>The post-2021 sanctions, though, are still plagued by some of the same problems of their predecessors. </p>
<p>They lack the weight of the United Nations, which has not called for sanctions against Myanmar. This stands in contrast to sanctions against other countries flouting international norms, like <a href="https://armscontrolcenter.org/fact-sheet-north-korea-sanctions/">North Korea</a> and <a href="https://www.cfr.org/backgrounder/international-sanctions-iran">Iran</a>. </p>
<p>The U.N. Security Council is <a href="https://theconversation.com/sanctions-against-myanmars-junta-have-been-tried-before-can-they-work-this-time-158054">unlikely to sanction Myanmar</a> as permanent members <a href="https://apnews.com/article/un-myanmar-military-killing-rights-suu-kyi-029f8503bf1eb6ec0e97e8521775184a">China and Russia refuse to condemn</a>, let alone sanction, Myanmar’s military rulers.</p>
<p>As a result, the international community has been split in its response to Myanmar’s democratic backsliding and <a href="https://www.hrw.org/world-report/2023/country-chapters/myanmar">human rights violations</a>. While Western countries have decided to isolate Myanmar through targeted trade and financial sanctions, countries in East and Southeast Asia have <a href="https://doi.org/10.1080/02185370600832497">maintained diplomatic and trade ties</a> with the military government. </p>
<p>And there is an incentive for countries in Southeast Asia to not take part in any sanction regime. As we show in our forthcoming book, “<a href="https://poliscikeith.com/">Trading with Pariahs</a>,” Myanmar’s trade ties tend to be strongest within its region. </p>
<p>During the first sanctions regime from 1988 to 2015, Southeast Asian economic ties with Myanmar became stronger as the country’s trade with sanctions-imposing Western states declined. </p>
<p>For countries in East and Southeast Asia, maintaining ties with Myanmar provided not only economic opportunities but also a strategy for monitoring and perhaps ameliorating Myanmar’s internal situation. For example, the Association of Southeast Asian Nations, or ASEAN, <a href="https://asean.org/asean-10-meeting-the-challenges-by-termsak-chalermpalanupap/">admitted Myanmar</a> in 1997 despite the refusal of the junta to allow democratic elections and address human rights abuses. The approach favored by Myanmar’s neighbors was to try and bring Myanmar’s generals in from the cold rather than ostracizing them internationally.</p>
<p>And despite Singapore’s recent declaration that it <a href="https://eastasiaforum.org/2023/06/22/whats-next-for-sanctions-on-myanmar/">will stop arms transfers to Myanmar</a>, ASEAN member countries and those in East Asia continue to refrain from sanctioning Myanmar, preferring engagement to isolation.</p>
<h2>Can sanctions work?</h2>
<p>While U.S. sanctions have the potential to hurt the military, there are reasons to believe that they won’t be able to bring the government to its knees. It is likely that the <a href="https://doi.org/10.1177/00223433221087080">uneven termination of the United States’ earlier sanctions</a> provided insufficient time for American firms to fully engage and invest in Myanmar’s market, limiting the potential for future leverage now.</p>
<figure class="align-center ">
<img alt="Men in uniform take part in a military parade." src="https://images.theconversation.com/files/572854/original/file-20240201-23-vx77gs.jpg?ixlib=rb-1.1.0&rect=23%2C276%2C5241%2C3228&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/572854/original/file-20240201-23-vx77gs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/572854/original/file-20240201-23-vx77gs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/572854/original/file-20240201-23-vx77gs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/572854/original/file-20240201-23-vx77gs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/572854/original/file-20240201-23-vx77gs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/572854/original/file-20240201-23-vx77gs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Myanmar’s military are bogged down in civil war, but not yielding to sanctions pressure.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/MyanmarUSSanctions/8798420feac44ad88a7359ff1e70a23f/photo?Query=myanmar%20sanctions&mediaType=photo&sortBy=creationdatetime:desc&dateRange=Anytime&totalCount=346&currentItemNo=1">AP Photo/Aung Shine Oo</a></span>
</figcaption>
</figure>
<p>Those countries that do have significant leverage are unlikely to sanction Myanmar. And this undermines efforts by the U.S. or the West to isolate the country. </p>
<p>The challenge for the West can be seen in its sanctions on jet fuel trade. Amnesty International’s “<a href="https://www.amnesty.org/en/latest/news/2023/03/myanmar-new-shipments-of-aviation-fuel-revealed-despite-the-militarys-war-crimes/">Deadly Cargo” report in 2023</a> highlighted how Myanmar’s military can still secure reliable shipments of jet fuel despite the U.S. sanctions on the product.</p>
<p>The reason is more than 95% of Myanmar’s refined petroleum oils – needed for jet fuel – come from regional trading partners. Since 2021, China, Thailand, Singapore and Russia have <a href="https://www.amnesty.org/en/latest/news/2022/11/myanmar-amnesty-aviation-fuel/">provided much of the Myanmar’s military’s jet fuel</a>, enabling it to continue bombing campaigns throughout the country.</p>
<p>Even though the U.S. Treasury <a href="https://home.treasury.gov/news/press-releases/jy1701?_gl=1*nc1bho*_gcl_au*MTYyMjQ3ODI3OC4xNzA1MDgyMDky">has expanded its sanctions on jet fuel</a> to include both military and commercial, the impact of these sector-wide sanctions remains unclear. </p>
<p>While the nature of the current U.S. sanctions is starkly different from prior efforts to pressure Myanmar’s generals, the effectiveness and potential for success appear quite similar. Given the dearth of economic ties between Myanmar and countries outside its region, the potential for change in Myanmar seems unlikely without significant efforts by those countries with an ability to weaponize their extensive economic interdependence: China, Japan and ASEAN member states. </p>
<p>ASEAN is not blind to the erosion of human rights, and it has signaled its awareness of the regime’s atrocities and support for civilians by <a href="https://www.cnbc.com/2023/09/06/myanmar-wont-be-allowed-to-lead-asean-in-2026-in-blow-to-generals.html">denying Myanmar its turn as ASEAN’s chair in 2026</a>. </p>
<p>However, the regional bloc is unlikely to impose economic sanctions on Myanmar in the foreseeable future, casting further doubt on the ability of Western sanctions to improve human rights and democracy meaningfully.</p><img src="https://counter.theconversation.com/content/221297/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Economic proscriptions by the US and EU are hampered by lack of support among Myanmar’s major trading partners in the region.Charmaine N. Willis, Visiting Assistant Professor of Political Science, Skidmore CollegeKeith A. Preble, Visiting Assistant Professor of Political Science, Miami UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2051802023-05-08T12:19:57Z2023-05-08T12:19:57ZWhat is insider trading? Two finance experts explain why it matters to everyone<figure><img src="https://images.theconversation.com/files/524789/original/file-20230507-15-rcy73r.jpg?ixlib=rb-1.1.0&rect=140%2C126%2C4548%2C2952&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Financier Ivan Boesky was the real-life inspiration for Gordon Gekko of 'Wall Street.'</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/le-financier-ivan-boesky-en-avion-au-dessus-de-new-york-le-news-photo/999012440">Yves Gellie/Gamma-Rapho via Getty Images</a></span></figcaption></figure><p><a href="https://www.investopedia.com/terms/i/insidertrading.asp">Insider trading</a> is the term used to describe the illegal act in which someone relies on market-moving, nonpublic information to decide whether to buy or sell a financial asset.</p>
<p>For example, say you work as an executive at a company that plans to make an acquisition. If it’s not public, that would count as inside information. It becomes a crime if you either tell a friend about it – and that person then buys or sells a financial asset using that information – or if you make a trade yourself. </p>
<p>Punishment, if <a href="https://www.investopedia.com/articles/investing/021815/how-sec-tracks-insider-trading.asp">you’re convicted for insider trading</a>, can range from a few months to over a decade behind bars.</p>
<p>Insider trading became illegal in the U.S. in 1934 after Congress passed the <a href="https://www.investopedia.com/terms/s/seact1934.asp">Securities Exchange Act</a> in the wake of the <a href="https://www.investopedia.com/terms/s/stock-market-crash-1929.asp">worst sustained decline in stocks in history</a>. </p>
<p>From Black Monday 1929 through the summer of 1932, the <a href="https://www.federalreservehistory.org/essays/stock-market-crash-of-1929">stock market lost 89% of its value</a>. The act was meant to prevent a whole litany of abuses from recurring, including <a href="https://www.investopedia.com/articles/stocks/09/insider-trading.asp">insider trading</a>. </p>
<p>While insider trading typically involves trading stocks of individual companies based on information about them, it can involve any kind of information <a href="https://www.cnbc.com/2023/05/05/jobs-report-april-2023-job-growth-totals-25300-in-april.html">about the economy</a>, a commodity or anything else that <a href="https://www.cnbc.com/2022/02/09/stock-market-futures-open-to-close-news.html">moves markets</a>.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/2WDBI4nLtXQ?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Insider trading was dramatized in Oliver Stone’s 1987 classic movie “Wall Street.” Here, ruthless financier Gordon Gekko explains why information is so valuable.</span></figcaption>
</figure>
<h2>Why insider trading matters</h2>
<p>Insider trading is not a victimless crime. People trading on inside information benefit at the expense of others.</p>
<p>A key characteristic of well-functioning financial markets is high liquidity, which means it is easy to make large trades at low transaction costs. But when traders fear losing money to counterparts with inside information, <a href="http://dx.doi.org/10.2139/ssrn.276179">they charge higher transaction costs</a>, which leads to less liquidity and lower investor returns. And since a lot of people have a stake in financial markets – <a href="https://www.federalreserve.gov/publications/files/scf20.pdf">about half of U.S. families own stocks</a> either directly or indirectly – this behavior hurts most Americans.</p>
<p>Insider trading also <a href="https://ssrn.com/abstract=249708">makes it more expensive</a> for companies to issue stocks and bonds. If investors think that insiders might be trading bonds of a company, they will demand a higher return on the bonds to compensate for their disadvantage – increasing the cost to the company. As a result, the company has less money to hire more workers or invest in a new factory.</p>
<p>There are also broader impacts of insider trading. It <a href="http://dx.doi.org/10.2139/ssrn.3645579">undermines public confidence</a> in financial markets and feeds the common view that the odds are stacked in favor of the elite and against everyone else. </p>
<p>Furthermore, since inside traders profit from privileged access to information rather than work, this makes people believe that <a href="https://ethics.org.au/wp-content/uploads/2019/02/The-Ethics-Centre_180410-on-trust-and-legitimacy.original.pdf">the system is rigged</a>. </p>
<figure class="align-center ">
<img alt="Martha Stewart, flanked by U.S. Marshals, leaves court" src="https://images.theconversation.com/files/447122/original/file-20220217-23-1xrykmz.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/447122/original/file-20220217-23-1xrykmz.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=533&fit=crop&dpr=1 600w, https://images.theconversation.com/files/447122/original/file-20220217-23-1xrykmz.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=533&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/447122/original/file-20220217-23-1xrykmz.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=533&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/447122/original/file-20220217-23-1xrykmz.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=669&fit=crop&dpr=1 754w, https://images.theconversation.com/files/447122/original/file-20220217-23-1xrykmz.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=669&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/447122/original/file-20220217-23-1xrykmz.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=669&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Martha Stewart was found guilty of insider trading in 2004.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/EnronMirageEconomy/3101174e18964ced96e4e87edc376790/photo?Query=Martha%20stewart%202004&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=7&currentItemNo=6">AP Photo/Bebeto Matthews</a></span>
</figcaption>
</figure>
<h2>Hard to prove</h2>
<p>Research shows that <a href="https://dealbook.nytimes.com/2014/06/16/study-asserts-startling-numbers-of-insider-trading-rogues/">insider trading is common and profitable</a> yet <a href="https://knowledge.wharton.upenn.edu/article/why-insider-trading-is-hard-to-define-prove-and-prevent/">notoriously hard to prove and prevent</a>. </p>
<p>A recent study estimated that <a href="https://dx.doi.org/10.2139/ssrn.3764192">overall only about 15% of insider trading</a> in the U.S. is detected and prosecuted but suggested more of it is coming to light in recent years because of increased enforcement.</p>
<p>One of the more famous – and few – examples of insider trading being prosecuted was the <a href="https://www.chicagotribune.com/sns-ap-martha-stewart-chronology-story.html">2004 conviction</a> of businesswoman and media personality Martha Stewart for <a href="https://www.sec.gov/news/press/2003-69.htm">selling shares based on an illegal tip</a> from a broker.</p>
<p>The sudden collapse of several banks in 2023 <a href="https://www.forbes.com/sites/nicholasreimann/2023/05/05/first-republic-bank-executives-reportedly-under-investigation-for-possible-insider-trading/">has also caught the attention of authorities</a>. The Securities and Exchange Commission is reportedly investigating executives at both Silicon Valley Bank and First Republic Bank, which was seized and sold on May 1, for potential insider trading. </p>
<p>And, so, the cat-and-mouse game between regulators and those who want to game the system continues.</p>
<p><em>This is an updated and shortened version of an <a href="https://theconversation.com/link-176940">article that was originally published</a> on Feb. 18, 2022.</em></p><img src="https://counter.theconversation.com/content/205180/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The SEC is investigating whether executives at First Republic Bank, which was seized by regulators and sold to JPMorgan Chase, improperly traded on inside information.Alexander Kurov, Professor of Finance and Fred T. Tattersall Research Chair in Finance, West Virginia UniversityMarketa Wolfe, Associate Professor of Economics, Skidmore CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2023072023-03-22T20:03:05Z2023-03-22T20:03:05ZFederal Reserve bows to bank-crisis fears with quarter-point rate hike, letting up a little in its fight against inflation<figure><img src="https://images.theconversation.com/files/517049/original/file-20230322-2102-14dfck.jpg?ixlib=rb-1.1.0&rect=35%2C78%2C5807%2C3810&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Fed chair Jerome Powell opted for a cautious approach on rates.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/federal-reserve-board-chairman-jerome-powell-holds-a-news-news-photo/1475351298?adppopup=true">Alex Wong/Getty Images</a></span></figcaption></figure><p><em>The Federal Reserve <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20230322a.htm">raised interest rates by a quarter-point</a> on March 22, 2023, bowing to market expectations that it would temper its aggressive program of rate hikes amid a still-brewing banking crisis.</em></p>
<p><em>The U.S. central bank lifted rates to a range of 4.75% to 5%, <a href="https://www.federalreserve.gov/monetarypolicy/openmarket.htm">its ninth-straight increase</a> since March 2022. As late as early March 2023, it appeared that the Fed was planning to resume last year’s full-throttle rate-hiking campaign after slowing down in February. But the <a href="https://theconversation.com/silicon-valley-bank-biggest-us-lender-to-fail-since-2008-financial-crisis-a-finance-expert-explains-the-impact-201626">collapse of Silicon Valley Bank</a> on March 10 forced the central bank to take a step back.</em></p>
<p><em>So what does the Fed’s announcement tell us about where monetary policymakers think the economy – and inflation – are heading? A team of economists and finance scholars have weighed in to help make sense of it all.</em></p>
<h2>Rate hike shows Fed confident in banking sector</h2>
<p><strong>Jeffery S. Bredthauer, University of Nebraska Omaha</strong></p>
<p>This muted rate hike signals that the Fed is being cautious in order to steady the financial sector, which has been struggling since the collapse of <a href="https://www.cnbc.com/2023/03/21/svb-collapse-was-lehman-moment-for-technology-goldman-sachs.html">Silicon Valley Bank</a> on March 10, 2023. But the fact that the Fed raised rates at all acknowledges that the fight against inflation will need to continue.</p>
<p>While still an increase, it’s more of a pause, in my view, because until the recent banking turmoil, the central bank <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html">was expected to lift rates by a half-point</a>. Inflation has <a href="https://www.bls.gov/news.release/cpi.nr0.htm">remained stubbornly elevated</a> even though the Fed had jacked up rates 4.5 percentage points before the latest hike, and Chair Jerome Powell <a href="https://www.wsj.com/articles/jerome-powell-to-testify-to-congress-on-outlook-for-rates-inflation-e4e7f1e3">made it clear in congressional testimony</a> that he was intent on subduing the rise in prices.</p>
<p>But the aggressive rate rises <a href="https://theconversation.com/why-svb-and-signature-bank-failed-so-fast-and-the-us-banking-crisis-isnt-over-yet-201737">left some regional banks like Silicon Valley Bank</a> vulnerable because they <a href="https://www.fdic.gov/news/speeches/2023/spmar0623.html">drove down the value</a> of tens of billions in assets they held. Silicon Valley failed because it didn’t have enough assets to meet withdrawals. </p>
<figure class="align-center ">
<img alt="Bikes locked to a bike rack in front of a building with SVB on the front" src="https://images.theconversation.com/files/517053/original/file-20230322-14-ds17vb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/517053/original/file-20230322-14-ds17vb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/517053/original/file-20230322-14-ds17vb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/517053/original/file-20230322-14-ds17vb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/517053/original/file-20230322-14-ds17vb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/517053/original/file-20230322-14-ds17vb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/517053/original/file-20230322-14-ds17vb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">SVB, the proverbial stick in the spokes to Fed plans.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/the-svb-private-logo-is-displayed-on-an-atm-outside-of-a-news-photo/1248916426?adppopup=true">Patrick T. Fallon/AFP via Getty Images</a></span>
</figcaption>
</figure>
<p>While the Fed and other regulators <a href="https://www.washingtonpost.com/business/2023/03/13/what-the-us-is-doing-to-avert-a-bank-crisis-and-why-quicktake/0d5f9752-c16c-11ed-82a7-6a87555c1878_story.html">have acted to shore up</a> the system by backstopping depositors and smaller financial institutions, the concern now is that there may be more banks in a similar predicament. The smaller rate hike should help ease some of these concerns.</p>
<p>Yet, the inflation battle must go on, and the Fed recognizes that <a href="https://www.reuters.com/markets/us/us-consumer-spending-surges-january-inflation-accelerates-2023-02-24/">strong demand continues to prop up</a> consumer prices, particularly in the service sector. As such, I believe the Fed news shows that it has confidence in the banking system by continuing its interest rate hikes, albeit at a slower pace than had previously been expected.</p>
<p>And this is important. The greatest fear would be that spooked customers might irrationally start withdrawing money from banks because they fear a financial collapse – the classic bank run. That will not happen as long as there is faith in the banking system.</p>
<h2>Drop in inflation gave Fed breathing room to ‘pause’</h2>
<p><strong>Joerg Bibow and Marketa Wolfe, Skidmore College</strong></p>
<p>The Fed had two courses of action available when it came to setting rates. The first would have seen it continue aggressively raising rates, ignoring financial stability concerns – perhaps even seeing the hiking campaign as a sort of bloodletting that would squeeze inflation out of the economy. The second way forward would be to take a beat and see how the <a href="https://apnews.com/article/silicon-valley-bank-bailout-yellen-deposits-failure-94f2185742981daf337c4691bbb9ec1e">ongoing fragility in the banking sector</a> plays out first. </p>
<p>Fortunately – in our view – the Fed did not choose the former.</p>
<p>While falling short of a total pause in raising interest rates – <a href="https://www.wsj.com/articles/u-n-calls-on-fed-other-central-banks-to-halt-interest-rate-increases-11664809202">an option some market watchers had been calling for</a> – the latest hike represents a substantial slowdown from the Fed’s previous plans, and therefore demonstrates the Fed’s caution in the face of a nascent banking situation. </p>
<p>It was able to do this in large part because there are clear signs inflation has come down.</p>
<p>As measured by the <a href="https://www.bea.gov/data/personal-consumption-expenditures-price-index">Personal Consumption Expenditure Price Index</a> – the <a href="https://www.stlouisfed.org/publications/regional-economist/july-2013/cpi-vs-pce-inflation--choosing-a-standard-measure">Fed’s preferred measure</a> – inflation has declined from a <a href="https://fred.stlouisfed.org/series/PCEPI">40-year high of 7%</a> in June 2022 to 5.4% in January 2023. </p>
<p>And the <a href="https://www.frbsf.org/economic-research/publications/economic-letter/2022/june/how-much-do-supply-and-demand-drive-inflation/">main cause of the recent surge in inflation</a> - COVID-19 supply chain disruptions – has eased. In addition, an upward wage-price spiral has not developed.</p>
<p>Furthermore, the banking turmoil might have already delivered an <a href="https://www.nytimes.com/2023/03/22/business/banking-crisis-interest-rates-lending.html">equivalent of another interest rate hike</a> in terms of its impact on the economy.</p>
<p>Although inflation remains high by historical standards, the risk it will reaccelerate seems low. Altogether, this allowed the Fed to take a breath and deal with what’s going on in the banking sector.</p>
<p>Put another way, the Fed decided, with so much uncertainty about the impact the recent turmoil will have on the economy, the risk of causing more damage was greater than the risk of inflation. </p>
<h2>Interest rates may peak soon</h2>
<p><strong>Arabinda Basistha, West Virginia University</strong></p>
<p>A big question on Fed watchers’ minds has been <a href="https://www.bankrate.com/banking/federal-reserve/when-will-the-fed-stop-raising-rates/">when will the central bank</a> stop raising rates or when will it settle on a “terminal” rate – that is, the level that monetary policymakers believe will ensure prices are stable.</p>
<p>That point may be just around the corner.</p>
<p>In September 2022, <a href="https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20220921.pdf">Powell said the Fed</a> was trying to get to “a place where real rates are positive across the yield curve.” </p>
<p>Real interest rates are a measure of the real, inflation-adjusted cost of borrowing, which is calculated by subtracting expected inflation rates from nominal interest rates. A yield curve shows yields for bonds of different maturities.</p>
<p>Back in September, part of the yield curve was negative, meaning annual inflation was higher than the interest rates. Today, <a href="https://www.nytimes.com/2023/02/10/business/interest-rates-inflation-economy.html">more of the curve</a> has turned positive, which means the Fed is closer to Powell’s goal.</p>
<p>Moreover, Powell <a href="https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20230201.pdf">switched from declaring</a> that “ongoing” rate rate hikes “will” be needed to the softer <a href="https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20230322.pdf">“some additional” increases “may be appropriate</a>,” which suggests it sees the light at the end of the interest rate tunnel. Powell also acknowledged that the banking sector stress can work in a way similar to an interest rate hike by reducing inflationary pressures via lower business activity.</p>
<p>Overall, it seems that the Fed is much closer to its policy destination with one or two moderate interest rates increases left in this year, if inflation risks evolve according to expectations. I see a pause in interest rates as early as fall when they settle at a terminal rate <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20230322a.htm">of around 5.5%</a>.</p><img src="https://counter.theconversation.com/content/202307/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Fed raised rates by a quarter-point – less aggressive than had been expected before the current banking crisis, but signaling inflation is still its focus.Jeffery S. Bredthauer, Associate Professor Of Finance, Banking and Real Estate, University of Nebraska OmahaArabinda Basistha, Associate Professor of Economics, West Virginia UniversityJoerg Bibow, Professor of Economics, Skidmore CollegeMarketa Wolfe, Associate Professor of Economics, Skidmore CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1769402022-02-18T13:07:37Z2022-02-18T13:07:37ZWhat’s insider trading and why it’s a big problem<figure><img src="https://images.theconversation.com/files/447130/original/file-20220217-6550-cyk6ud.jpeg?ixlib=rb-1.1.0&rect=17%2C28%2C1180%2C777&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Gordon Gekko of ‘Wall Street’ may be the fictional face of insider trading. </span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/gaynoir/5305214442/in/photolist-95NBqw-8eZzB4-2gaXVpL-s2fCsr-nFPuiD-ePa76m-sjMYy-e6jgdi-MRVMs6-5RK9Tv-XKREac-5RK9Mc-81RGna-auj3wz-5RK9H2-68vXMh-cYpQN7-Mz8LB4-97yw6Q-5p1xpr-7AHWLs-tzMsB-8hihSo-eH7ZqQ-eH1Vdz-5MUVGL-326JuL-5mEuYn-5a7HTp-4oursp-2jPZoFt-7KYrHv-2jP3Ezy-RNTZR-4ourhz-5J3hnY-2jMURif-2j1a7Sy-9zDy2t-2ge2gmQ-3ntYAr-darCBc-7BCEAG-nF4U7c-2jsS2ty-2jF4jgE-aDCTxL-byMpbz-Rc4DsU-5BZth">Ilona Gaynor/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span></figcaption></figure><p>There’s a <a href="https://www.vox.com/2022/2/12/22930385/congress-bipartisan-stock-trading-ban-lawmakers-pelosi-schumer">growing bipartisan push to prohibit</a> members of Congress from buying or selling stocks. The shift follows news reports that <a href="https://www.nytimes.com/2020/05/26/us/politics/senators-stock-trades-investigation.html">several senators sold stocks</a> shortly after receiving coronavirus briefings in early 2020 and that at least 57 lawmakers <a href="https://www.businessinsider.com/congress-stock-act-violations-senate-house-trading-2021-9">have failed to disclose financial transactions</a> since 2012 as required by law.</p>
<p>Congress passed that law – the <a href="https://www.congress.gov/112/plaws/publ105/PLAW-112publ105.htm">Stop Trading on Congressional Knowledge Act</a>, also known as the STOCK Act – in 2012 to fight insider trading among lawmakers with increased transparency. But a <a href="https://www.businessinsider.com/congress-stock-act-violations-penalties-consequences-2021-12">chorus of legislators</a> and <a href="https://www.cnbc.com/2021/10/28/sec-probes-possible-insider-stock-trades-by-sen-richard-burr-relative.html">governance watchdogs</a> argue that it didn’t go far enough and isn’t working. </p>
<p>All this raises two important questions: What exactly is insider trading and what’s the big deal?</p>
<p>We are a <a href="https://scholar.google.com/citations?user=JfUEmSUAAAAJ&hl=en&oi=ao">finance professor</a> and <a href="https://scholar.google.com/citations?user=dnCoKIUAAAAJ&hl=en&oi=ao">an economics professor</a> who have been studying financial markets and how investors try to take advantage of access to information for their personal gain. Our research shows it’s very common but difficult to stop.</p>
<h2>What is insider trading?</h2>
<p><a href="https://www.investopedia.com/terms/i/insidertrading.asp">Insider trading</a> is whenever someone uses market-moving nonpublic information in the act of buying or selling a financial asset.</p>
<p>For example, say you work as an executive at a company that plans to make an acquisition. If it’s not public, that would count as inside information. It becomes a crime if you either tell a friend about it – and that person then buys or sells a financial asset using that information – or if you make a trade yourself. </p>
<p>Punishment, if you’re convicted for insider trading, can range from a few months to over a decade behind bars.</p>
<p>Insider trading became illegal in the U.S. in 1934 after Congress passed the <a href="https://www.investopedia.com/terms/s/seact1934.asp">Securities Exchange Act</a> in the wake of the <a href="https://www.investopedia.com/terms/s/stock-market-crash-1929.asp">worst sustained decline in stocks in history</a>. From Black Monday 1929 through the summer of 1932, the <a href="https://www.federalreservehistory.org/essays/stock-market-crash-of-1929">stock market lost 89% of its value</a>. The act was meant to prevent a whole litany of abuses from recurring, including <a href="https://www.investopedia.com/articles/stocks/09/insider-trading.asp">insider trading</a>. </p>
<p>The issue <a href="https://slate.com/culture/2007/09/how-wall-street-s-gordon-gekko-inspired-a-generation-of-imitators.html">was dramatized</a> in Oliver Stone’s 1987 classic movie “Wall Street,” in which ruthless financier Gordon Gekko makes millions of dollars by trading on inside information on several companies obtained from his protege, Bud Fox.</p>
<p>“The most valuable commodity I know of is information,” <a href="https://www.youtube.com/watch?v=2WDBI4nLtXQ">declares Gekko</a>, who by the end of the film is convicted of insider trading and sent to jail.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/2WDBI4nLtXQ?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Gordon Gekko explains why information is so valuable.</span></figcaption>
</figure>
<h2>‘Informed trading’</h2>
<p>While insider trading typically involves trading stocks of individual companies based on information about them, it can involve any kind of information about the economy, a commodity or anything else that <a href="https://www.cnbc.com/2022/02/09/stock-market-futures-open-to-close-news.html">moves markets</a>. </p>
<p>For instance, the monthly consumer price index figures <a href="https://www.cnbc.com/2022/02/04/fresh-inflation-data-could-fuel-further-market-volatility-in-the-week-ahead.html">have a huge impact on financial markets</a> at the moment because of concerns about inflation and how it will affect the pace of Federal Reserve interest rate hikes. That data is collected and then closely guarded, but a small number of people have access to it before it’s officially released, making the information extremely valuable if any of them wanted to profit off it. </p>
<p>Our own research on financial trading ahead of the release of U.S. economic data <a href="http://dx.doi.org/10.2139/ssrn.2637528">shows that financial markets tend to move</a> in the “correct” direction in the minutes before it’s released. That is, if the new data would be a positive for stocks, we saw patterns of stocks rising before that information becomes publicly available – something known as “<a href="http://www.labex-refi.com/wp-content/uploads/2017/04/Informed-Trading-and-Its-Regulation-mbf-2-24-17CLR.pdf">informed trading</a>.” We also found this to be the case on data released <a href="http://dx.doi.org/10.2139/ssrn.2339825">in China</a> and <a href="http://dx.doi.org/10.2139/ssrn.3502748">the U.K.</a>. This suggests that some traders may have advance knowledge of information in economic announcements.</p>
<p>Of course, alternative explanations could be that some traders are simply more skilled at collecting and analyzing available data that correctly predicts the economic announcements. For example, <a href="https://www.statestreet.com/content/dam/statestreet/documents/pricestats/PriceStats_productprofile_4PAGE.pdf">online prices</a> collected in real time can be used to predict inflation levels. Also, <a href="https://ssrn.com/abstract=3446701">satellite imagery</a> and <a href="https://ssrn.com/abstract=2826684">analyst forecasts</a> can be used to predict crude oil and natural gas inventory levels.</p>
<figure class="align-center ">
<img alt="Martha Stewart, flanked by U.S. Marshals, leaves court" src="https://images.theconversation.com/files/447122/original/file-20220217-23-1xrykmz.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/447122/original/file-20220217-23-1xrykmz.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=533&fit=crop&dpr=1 600w, https://images.theconversation.com/files/447122/original/file-20220217-23-1xrykmz.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=533&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/447122/original/file-20220217-23-1xrykmz.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=533&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/447122/original/file-20220217-23-1xrykmz.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=669&fit=crop&dpr=1 754w, https://images.theconversation.com/files/447122/original/file-20220217-23-1xrykmz.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=669&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/447122/original/file-20220217-23-1xrykmz.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=669&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Martha Stewart was found guilty of insider trading in 2004.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/EnronMirageEconomy/3101174e18964ced96e4e87edc376790/photo?Query=Martha%20stewart%202004&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=7&currentItemNo=6">AP Photo/Bebeto Matthews</a></span>
</figcaption>
</figure>
<h2>Common, profitable and hard to prove</h2>
<p>Research shows that <a href="https://dealbook.nytimes.com/2014/06/16/study-asserts-startling-numbers-of-insider-trading-rogues/">insider trading is common and profitable</a>, yet <a href="https://knowledge.wharton.upenn.edu/article/why-insider-trading-is-hard-to-define-prove-and-prevent/">notoriously hard to prove and prevent</a>. A 2020 study estimated that <a href="https://dx.doi.org/10.2139/ssrn.3764192">only about 15% of insider trading</a> in the U.S. is detected and prosecuted. </p>
<p>One of the more famous – and few – examples of insider trading being prosecuted was the <a href="https://www.chicagotribune.com/sns-ap-martha-stewart-chronology-story.html">2004 conviction</a> of businesswoman and media personality Martha Stewart for <a href="https://www.sec.gov/news/press/2003-69.htm">selling shares based on an illegal tip</a> from a broker. Another came in 2016, when billionaire Steven Cohen and his now-defunct SAC Capital Advisors hedge fund <a href="https://www.reuters.com/article/us-usa-insidertrading-sac-capital/cohens-sac-capital-in-135-million-settlement-with-elan-investors-idUSKBN13P2X0">entered into a US$135 million settlement</a> over <a href="https://www.newyorker.com/magazine/2017/01/16/when-the-feds-went-after-the-hedge-fund-legend-steven-a-cohen">insider-trading allegations</a>. The hedge fund also <a href="https://money.cnn.com/2014/04/10/investing/cohen-sac-capital-point72/">paid a fine of $1.8 billion</a> in 2014 over similar charges. </p>
<p>And in 2020, former U.S. Rep. Chris Collins <a href="https://www.washingtonpost.com/business/2020/01/17/former-rep-chris-collins-be-sentenced-insider-trading-case/">was sentenced to 26 months in prison</a> for passing on a confidential tip to his son and then lying about it to the FBI.</p>
<p>More recently, <a href="https://www.npr.org/2021/09/27/1041059924/2-top-federal-reserve-officials-retire-after-trading-disclosures">two Fed officials stepped down</a> in September 2021 after disclosures showed they were trading extensively in 2020 at the same time the U.S. central bank was spending trillions saving the economy from the effects of the pandemic. And Sen. Richard Burr and his brother <a href="https://www.cnn.com/2021/10/28/politics/burr-sec-investigation-stock-trades/index.html">remain under investigation</a> by the Securities and Exchange Commission over stock trades they made in February 2020 shortly after the North Carolina Republican received closed-door briefings on the pandemic. </p>
<h2>Why it matters</h2>
<p>Insider trading is not a victimless crime. By throwing sand in the gears of financial markets, people trading on inside information benefit at the expense of others.</p>
<p>A key characteristic of well-functioning financial markets is high liquidity, which means it is easy to make large trades at low transaction costs. Insider trading <a href="http://dx.doi.org/10.2139/ssrn.276179">adversely affects market liquidity</a> and makes transaction costs higher, reducing investor returns. And since a lot of people have a stake in financial markets – <a href="https://www.federalreserve.gov/publications/files/scf20.pdf">about half of U.S. families own stocks</a> either directly or indirectly – this behavior hurts most Americans.</p>
<p>Insider trading also <a href="https://ssrn.com/abstract=249708">makes it more expensive</a> for companies to issue stocks and bonds. If investors think that insiders might be trading bonds of a company, they will demand a higher return on the bonds to compensate for their disadvantage – increasing the cost to the company. As a result, the company has less money to hire more workers or invest in a new factory.</p>
<p>There are also broader impacts of insider trading. It <a href="http://dx.doi.org/10.2139/ssrn.3645579">undermines public confidence</a> in financial markets and feeds the common view that they odds are stacked in favor of the elite and against everyone else. </p>
<p>Furthermore, since inside traders profit from privileged access to information rather than work, this makes people believe that <a href="https://ethics.org.au/wp-content/uploads/2019/02/The-Ethics-Centre_180410-on-trust-and-legitimacy.original.pdf">the system is rigged</a>. </p>
<figure class="align-center ">
<img alt="Chris Collins arrives at a federal court as cameras record him" src="https://images.theconversation.com/files/447121/original/file-20220217-13070-azm93l.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/447121/original/file-20220217-13070-azm93l.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/447121/original/file-20220217-13070-azm93l.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/447121/original/file-20220217-13070-azm93l.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/447121/original/file-20220217-13070-azm93l.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/447121/original/file-20220217-13070-azm93l.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/447121/original/file-20220217-13070-azm93l.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Former U.S. Rep. Chris Collins pleaded guilty to insider trading and lying to the FBI. He was sentenced to 26 months in jail in 2020.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/CongressmanStockIndictment/d1a8f9fa60ff4b858db505d5daf1d3de/photo?Query=Insider%20trading&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=796&currentItemNo=6">AP Photo/Seth Wenig</a></span>
</figcaption>
</figure>
<h2>Curbing insider trading</h2>
<p>The odds of Congress prohibiting lawmakers from trading stocks got a boost when House Speaker Nancy Pelosi <a href="https://www.npr.org/2022/01/20/1074387320/pelosi-opens-the-door-to-stock-trading-ban">recently said she may support the idea</a> – though she’d like to see a ban also apply to the Supreme Court, which currently has no rules governing the practice. At least some Republicans, such as <a href="https://www.bloomberg.com/news/articles/2022-01-11/mccarthy-eyes-ban-on-lawmakers-trading-individual-stocks">U.S. Rep. Kevin McCarthy</a> and <a href="https://thehill.com/homenews/senate/593613-stock-trading-ban-gains-steam-but-splits-senate-gop">Sen. Ben Sasse</a>, also say they support a ban.</p>
<p>For its part, the Fed reacted to trading by its two former officials by <a href="https://www.federalreserve.gov/newsevents/pressreleases/other20211021b.htm">banning bank policymakers and senior staff</a> from buying individual stocks or bonds. </p>
<p>There are also less heavy-handed ways to curb insider trading. In recent years, policymakers <a href="https://abcnews.go.com/Politics/wireStory/labor-stop-giving-reporters-early-economic-data-70775151">in the U.S.</a> and <a href="http://theconversation.com/in-a-victory-against-spin-ministers-lose-pre-release-access-to-statistics-79793">the U.K.</a> have tightened procedures governing the release of economic data. In the U.K., for example, dozens of public officials used to get market-moving economic data 24 hours before the public release. After the practice stopped in 2017, we found evidence of <a href="http://dx.doi.org/10.2139/ssrn.3502748">significantly less informed trading</a> ahead of the release – suggesting it effectively prevented a lot of insider trading.</p>
<p>Surveys show widespread bipartisan public support for Congress to ban lawmakers from trading financial securities, with a <a href="https://conventionofstates.com/over-75-percent-of-voters-say-members-should-not-trade-stocks-while-serving-in-congress">recent poll showing 75% in favor</a>. While that doesn’t mean a law will get passed, it does put pressure on lawmakers of both parties to do something about the problem.</p>
<p>[<em>Get the best of The Conversation, every weekend.</em> <a href="https://memberservices.theconversation.com/newsletters/?nl=weekly&source=inline-weeklybest">Sign up for our weekly newsletter</a>.]</p><img src="https://counter.theconversation.com/content/176940/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A bipartisan group of US lawmakers is pushing for a ban on active trading by members of Congress following accusations that some of their colleagues may have engaged in insider trading.Alexander Kurov, Professor of Finance and Fred T. Tattersall Research Chair in Finance, West Virginia UniversityMarketa Wolfe, Associate Professor of Economics, Skidmore CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1757912022-01-26T22:50:16Z2022-01-26T22:50:16ZFederal Reserve plans to raise interest rates ‘soon’ to fight inflation: What that means for consumers and the economy<figure><img src="https://images.theconversation.com/files/442823/original/file-20220126-17-12pu2mv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">All eyes are on Fed Chair Jerome Powell as the central bank prepares to raise rates for the first time in three years. </span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/OffTheCharts-MoneyPrinter/a6f1d62158b34b549e3c907ed60bddeb/photo?Query=federal%20reserve&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=8573&currentItemNo=17">Brendan Smialowski/Pool via AP</a></span></figcaption></figure><p><em>The Federal Reserve on Jan. 26, 2022, <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20220126a.htm">signaled plans to begin raising interest rates “soon”</a> – possibly in March – in a bid to tamp down inflation before it poses a serious risk to the U.S. economy. A separate report released the next day <a href="https://www.bloomberg.com/news/articles/2022-01-27/u-s-economic-growth-quickened-last-quarter-with-inventory-boost?srnd=premium&sref=Hjm5biAW">showed the economy grew 6.9% in the fourth quarter of 2021</a>. An interest rate hike would be the first time the central bank has increased its benchmark lending rate in over three years.</em></p>
<p><em>Lifting the borrowing costs consumers and businesses pay for loans has the effect of slowing economic activity, which in turn could curb inflation. But there are also concerns that it could put on the brakes too quickly. We asked <a href="https://scholar.google.com/citations?user=JfUEmSUAAAAJ&hl=en&oi=ao">Alexander Kurov</a>, a finance professor at West Virginia University, and <a href="https://scholar.google.com/citations?user=dnCoKIUAAAAJ&hl=en&oi=ao">Marketa Wolfe</a>, an economist at Skidmore College, to explain what the Fed is doing and what it means for you.</em> </p>
<h2>1. Why is the Fed raising interest rates?</h2>
<p>Short-term interest rates in the U.S. <a href="https://fred.stlouisfed.org/series/FEDFUNDS">are now essentially zero</a>.</p>
<p>The Fed quickly cut rates to zero at the beginning of the COVID-19 crisis in March 2020 in an attempt to soften the blow of the <a href="https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions">sharp recession that began that month</a> as the U.S. went into lockdown. As a reminder of how bad things were back then, <a href="https://fred.stlouisfed.org/series/ICSA">over 40 million workers</a> – a quarter of the American workforce – filed for unemployment in the first few months of the pandemic, a staggering number with no precedent in the job market.</p>
<p>Although the recession was short-lived – lasting only two months – and the <a href="https://www.cnn.com/business/us-economic-recovery-coronavirus">economy has mostly recovered</a>, the Fed has kept rates at rock bottom because <a href="https://www.vox.com/the-highlight/22665191/covid-economy-poverty-unemployment">many workers and businesses still need support</a> as the pandemic continues to rage. </p>
<p>The big problem for the Fed now is that U.S. consumer prices have surged. For 10 months in a row, inflation has been above the <a href="https://www.federalreserve.gov/faqs/economy_14400.htm">Fed’s 2% target</a> and <a href="https://www.bls.gov/news.release/cpi.nr0.htm">reached an annual pace of about 7% in December</a>. This is the <a href="https://fred.stlouisfed.org/graph/?g=8dGq">highest rate of inflation recorded in the U.S. in the last 40 years</a>. High inflation means the prices people pay for goods and services are continually going up – <a href="https://www.bls.gov/news.release/cpi.nr0.htm">especially for basic items</a> like meat and gasoline, as well as for manufactured goods like cars. </p>
<p>The Fed can ill afford to allow this to continue because if higher inflation becomes entrenched, it <a href="https://www.ft.com/content/ddd02d7a-1557-4357-af6f-7c433da1b406">would damage the economy</a>. And the longer it lasts, the harder – and more painful for consumers and businesses – it is going to be to bring it back to a more sustainable 2%. </p>
<p>So the Fed has to act quickly before it’s too late. </p>
<h2>2. How does the Fed raise rates?</h2>
<p>The Fed sets a target range for what is called the “<a href="https://www.chicagofed.org/research/dual-mandate/the-federal-funds-rate">federal funds rate</a>.” This rate acts like a benchmark for all interest rates in the economy. </p>
<p>While the Fed’s statement didn’t specify a time when it plans to raise rates, <a href="https://www.nytimes.com/2022/01/26/business/economy/fed-interest-rates-inflation.html">Chair Jerome Powell said</a> “the committee is of a mind to raise the federal funds rate at the March meeting, assuming that the conditions are appropriate for doing so. <a href="https://www.bloomberg.com/news/articles/2022-01-26/fed-signals-liftoff-soon-sees-asset-reduction-start-afterward?srnd=premium&sref=Hjm5biAW">Analysts expect it to be a 0.25 percentage point increase</a>. This would affect banks’ cost of borrowing, which in turn slowly filters throughout the economy as lenders charge more for loans on homes, cars, businesses, college tuition and anything else you might want to buy with debt. Banks would also gradually increase the interest they offer on deposits and savings accounts. </p>
<p>The Fed does not directly control all these other rates, and the exact path they will take is not completely predictable, but the overall trend will be up if the Fed keeps raising its target rate. </p>
<p>Markets expect the Fed to raise interest rates <a href="https://www.reuters.com/business/fed-raise-rates-three-times-this-year-tame-unruly-inflation-2022-01-20/">at least two more times in 2022</a>. </p>
<h2>3. What does that mean for consumers and businesses?</h2>
<p>Put simply, higher interest rates mean borrowers would need to pay more for the loans they get. </p>
<p>If the Fed lifts interest rates this year by 0.75 percentage point, as expected, this would translate into about US$45,000 in additional interest payments on a 30-year, $300,000 mortgage.</p>
<p>[<em>Get the best of The Conversation, every weekend.</em> <a href="https://memberservices.theconversation.com/newsletters/?nl=weekly&source=inline-weeklybest">Sign up for our weekly newsletter</a>.]</p>
<p>So if you want to borrow to start a business, pay for college, buy a car or do anything else, you should expect your borrowing costs to be higher later this year. </p>
<p>On the other hand, higher rates is good news for savers and investors, as their returns from activities like making deposits and buying bonds will go up. </p>
<h2>4. And how will it affect the broader economy?</h2>
<p>Higher interest rates would likely slow down business activity. While this can help reduce inflation, it also means lower economic growth. </p>
<p>The Fed always makes decisions based on what is happening in the economy and on how economic conditions are expected to change. And changes in the economy are often hard to predict.</p>
<p>The biggest unknown at this point is what will happen to inflation later this year. This is uncertain because inflation is <a href="https://www.cwmnw.com/blog/all-you-need-to-know-about-inflation-the-reality-of-supply-chain-shortages-and-money-supply">driven by multiple factors</a>, such as supply chain shortages and strong demand. </p>
<p>In addition, the <a href="https://fred.stlouisfed.org/series/CIVPART">labor force participation rate</a> has still not recovered to pre-pandemic levels, and the economy <a href="https://www.cbsnews.com/news/covid-small-businesses-inflation-supply-chain-recruiting-federal-aid/">is experiencing labor shortages</a>, which could push wages and prices higher. If these COVID-19-related pressures don’t ease up soon, inflation could continue to stay high or continue to accelerate, which may force the Fed to increase interest rates faster than currently expected. </p>
<p>On the other hand, if economic or employment growth stalls, this will make it much harder for the Fed to raise rates without making things worse. The Fed will need to find the right balance between taming inflation and avoiding slowing down the economy too much. </p>
<p><em>Article updated to add GDP report and Powell comment.</em></p><img src="https://counter.theconversation.com/content/175791/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The US central bank said surging inflation is guiding its decision about when to lift interest rates. Two experts on financial markets explain what might happen next.Alexander Kurov, Professor of Finance and Fred T. Tattersall Research Chair in Finance, West Virginia UniversityMarketa Wolfe, Associate Professor of Economics, Skidmore CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1375882020-05-21T12:28:20Z2020-05-21T12:28:20ZCoronavirus reminds you of death – and amplifies your core values, both bad and good<figure><img src="https://images.theconversation.com/files/336088/original/file-20200519-152349-kfubb0.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C4059%2C2789&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Gustav Klimt's 'Death and Life' suggests the way many people are unaware of death's ever-present influence.</span> <span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Gustav_Klimt_-_Death_and_Life_-_Google_Art_Project.jpg">Gustav Klimt/Wikimedia</a></span></figcaption></figure><p>There’s nothing like a worldwide pandemic and its incessant media coverage to get you ruminating on the fragility of life. And those thoughts of death triggered by the coronavirus amplify the best and worst in people.</p>
<p>The results of this psychological phenomenon are all around: people <a href="https://theconversation.com/theres-plenty-of-toilet-paper-so-why-are-people-hoarding-it-133300">hoarding toilet paper and hand sanitizer</a>, hurling ethnic slurs and <a href="https://www.nytimes.com/2020/03/23/us/coronavirus-asian-americans-attacks.html">attacking Asian Americans</a>, heaping praise or scorn on President Trump, hailing new political and health care heroes. Sheltering at home has <a href="https://blogs.scientificamerican.com/observations/the-potential-upside-of-sheltering-in-place-for-couples/">drawn some families closer together</a>, but is a <a href="https://theconversation.com/domestic-violence-growing-in-wake-of-coronavirus-outbreak-135598">crucible of domestic</a> <a href="https://www.ajc.com/news/breaking-news/stay-home-order-poses-new-problems-for-family-violence-victims-shelters/HKeZoZvHJIoKVzi8fI7okO/">violence for others</a>. For many, <a href="https://theconversation.com/social-distancing-comes-with-social-side-effects-heres-how-to-stay-connected-133677">social distancing has increased feelings of isolation</a>, <a href="https://www.cnn.com/2020/04/09/health/coronavirus-mental-health-long-term-wellness/index.html">boredom, anxiety</a> <a href="https://www.kff.org/coronavirus-covid-19/issue-brief/the-implications-of-covid-19-for-mental-health-and-substance-use/">and despair</a>.</p>
<p>What’s behind these attitudinal and behavioral shifts?</p>
<p><a href="https://doi.org/10.1007/978-1-4613-9564-5_10">Back in 1986</a>, <a href="https://scholar.google.com/citations?user=TO_85KUAAAAJ&hl=en&oi=ao">we first</a> <a href="https://scholar.google.com/citations?user=VpjTUG0AAAAJ&hl=en&oi=ao">developed an idea</a> called <a href="https://www.elsevier.com/books/handbook-of-terror-management-theory/routledge/978-0-12-811844-3">terror management theory</a> that explains how people double down on their essential beliefs, without even noticing, when confronted with their own mortality.</p>
<p>Hundreds of psychology experiments from the past 30 years have explored how people react to the thought of their own death. These reminders <a href="https://doi.org/10.1037/0022-3514.58.2.308">bolster people’s core worldviews</a>, <a href="https://doi.org/10.1111/j.1751-9004.2008.00144.x">making racists</a> <a href="https://doi.org/10.1016/j.jesp.2008.12.001">more hateful</a>, the <a href="https://doi.org/10.1177/0146167212449361">religious more devout</a>, the <a href="https://doi.org/10.1177/014616702236834">charitable more giving</a> and <a href="https://doi.org/10.1016/j.jesp.2009.09.002">constituents more suportive of charismatic leaders</a>.</p>
<p>At a moment when the idea of death is front and center for many people, this psychological tendency has important implications for everything from how grocery store cashiers are treated to how people will vote in the upcoming presidential election.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/336541/original/file-20200520-152338-lxnrpf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/336541/original/file-20200520-152338-lxnrpf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/336541/original/file-20200520-152338-lxnrpf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=292&fit=crop&dpr=1 600w, https://images.theconversation.com/files/336541/original/file-20200520-152338-lxnrpf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=292&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/336541/original/file-20200520-152338-lxnrpf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=292&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/336541/original/file-20200520-152338-lxnrpf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=367&fit=crop&dpr=1 754w, https://images.theconversation.com/files/336541/original/file-20200520-152338-lxnrpf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=367&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/336541/original/file-20200520-152338-lxnrpf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=367&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Life ultimately has the same ending for everyone.</span>
<span class="attribution"><a class="source" href="https://unsplash.com/photos/mIE3n4ECKJg">Elizabeth Jamieson/Unsplash</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>No one gets out alive</h2>
<p><a href="https://tmt.missouri.edu/index.html">Terror management theory</a> acknowledges that human beings are animals biologically predisposed to try to survive. But at the same time, people also realize how dangerous the world is, how vulnerable we are and that ultimately the quest for continued existence is doomed to fail.</p>
<p>Knowing that we will all die, and it can happen at any time, can give rise to potentially paralyzing terror. To manage this fear, people work to see themselves as valuable contributors to a meaningful universe. Viewing yourself as an important worker, entrepreneur, teacher, artist, scientist, lawyer, doctor, parent, spouse and so forth allows you to feel like you’re not just a material creature who will disappear upon death. </p>
<p>Rather than dwelling on that disturbing thought, you can believe in things like immortal souls, in your offspring carrying on your genes and values or in your work having an enduring impact. It’s comforting to believe that some part of you will continue after death, through your connections to your family, profession, religion or nation.</p>
<p>Thoughts of death lead people to cling more tightly to these soothing beliefs. Such thoughts can be triggered by simply reading a news <a href="https://doi.org/10.1007/BF02692399">story about a murder</a>, being <a href="https://doi.org/10.1177/0146167204267988">reminded of 9/11</a> or even glancing <a href="https://doi.org/10.1177/014616702236834">at a funeral home sign</a>.</p>
<p>Death reminders first trigger immediate, front-line defenses – you want to feel safe by getting death out of your mind right away. Then subconscious downstream defenses work to fortify the protective bubble of the symbolic reality you believe in. Researchers have found that these downstream defenses include more <a href="https://doi.org/10.1037/0022-3514.57.4.681">punitive reactions to criminals</a>, increased rewards for heroes, <a href="https://doi.org/10.1037/0022-3514.58.2.308">prejudice toward other religions and countries</a> and <a href="https://doi.org/10.1177/0146167204267988">allegiance to charismatic politicians</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/336543/original/file-20200520-152320-1t8esry.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/336543/original/file-20200520-152320-1t8esry.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/336543/original/file-20200520-152320-1t8esry.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/336543/original/file-20200520-152320-1t8esry.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/336543/original/file-20200520-152320-1t8esry.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/336543/original/file-20200520-152320-1t8esry.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/336543/original/file-20200520-152320-1t8esry.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/336543/original/file-20200520-152320-1t8esry.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Strange new parts of everyday life keep coronavirus and its risks top of mind.</span>
<span class="attribution"><a class="source" href="https://unsplash.com/photos/Z9arfr0f248">Adam Nieścioruk/Unsplash</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>Pandemic provides nonstop reminders of death</h2>
<p>Because of the coronavirus, death reminders are all around. Front-line reactions range from efforts to shelter at home, maintain social distancing and wash hands frequently to dismissing the threat by comparing it to the flu or calling it a political hoax meant to undermine the economy and thwart President Trump’s reelection effort.</p>
<p>People who are more optimistic about their coping skills and have confidence in health care providers are <a href="https://doi.org/10.1177/0963721416689563">prone to react constructively</a>. They typically follow the recommendations of health care experts.</p>
<p>But people prone to <a href="https://doi.org/10.1177/0963721416689563">pessimism and skepticism regarding health care authorities</a> are more likely to deny the threat, ignore recommendations and react hostilely to expert advice.</p>
<p>These first-tier defenses banish death thoughts from consciousness, but do not eliminate their influence. Instead the thoughts linger just outside your attention, triggering downstream defenses that reinforce your valuable place in your world.</p>
<p>One way to enhance your value is through contributing to and identifying with heroic efforts to defeat this threat. That can happen via your own behavior and by lauding those leading the charge, such as first responders, health care workers, scientists and political leaders. Even those who inhabit social roles not usually given their due are recognized as heroes: grocery cashiers, pharmacists and sanitation workers.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/336586/original/file-20200520-152338-b3hhk6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/336586/original/file-20200520-152338-b3hhk6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/336586/original/file-20200520-152338-b3hhk6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/336586/original/file-20200520-152338-b3hhk6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/336586/original/file-20200520-152338-b3hhk6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/336586/original/file-20200520-152338-b3hhk6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/336586/original/file-20200520-152338-b3hhk6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/336586/original/file-20200520-152338-b3hhk6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Protesters outside a grocery store during the pandemic support higher wages for workers.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Virus-Outbreak-Fred-Meyer/71a3cc2cf1f94b19bd7ef69e985afdee/1/0">AP Photo/Ted S. Warren</a></span>
</figcaption>
</figure>
<p>At the same time, many people <a href="https://doi.org/10.1177/0963721415625218">question their value more</a> because of the pandemic. Earning a living to provide for one’s family and connecting with others are fundamental ways to feel valuable. <a href="https://www.forbes.com/sites/brettwhysel/2018/06/27/3-vicious-cycles/#454cb3ad540d">Pragmatic health and economic concerns</a> and <a href="https://www.mentalhealth.org.uk/statistics/mental-health-statistics-relationships-and-community">impoverished social connections</a> can combine to threaten those feelings of meaning and value. In turn they can <a href="https://doi.org/10.1080/02699930902847144">increase levels of anxiety</a>, depression and mental health problems.</p>
<p>Existentially threatening times also tend to <a href="https://doi.org/10.1037//0022-3514.57.4.681">create heroes and villains</a>. American scientists, <a href="https://www.menshealth.com/health/a32346551/anthony-fauci-coronavirus-fans/">like Anthony Fauci</a>, and political figures, <a href="https://www.latimes.com/entertainment-arts/story/2020-04-28/andrew-cuomo-sexual-ellen-degeneres-youtube">like New York Governor Andrew Cuomo</a>, are more widely admired. President Trump’s approval rating <a href="https://www.realclearpolitics.com/epolls/other/president_trump_job_approval-6179.html">temporarily increased</a>. In times of crisis, people typically <a href="https://doi.org/10.1111/asap.12143">turn to their leaders</a>, and <a href="https://doi.org/10.1177/0146167204267988">put additional faith in them</a>.</p>
<p>At the same time, people also <a href="https://doi.org/10.1177/0146167297238008">seek to assign blame</a>. Some turn their fear and frustration about the coronavirus that first emerged in China into hate toward Asians and Asian Americans. Others, depending on their political leanings, blame the World Health Organization, the mainstream media, or President Trump.</p>
<p>Even if the coronavirus abates, thoughts of mortality will linger on the fringes of consciousness as the November election approaches. If President Trump is perceived as a heroic wartime president who got the country through the worst of this invisible enemy, such death reminders <a href="https://theconversation.com/dont-expect-the-coronavirus-epidemic-in-the-us-to-bring-down-president-trump-133684">could work to his advantage</a>.</p>
<p>If, however, the president is viewed as an incompetent bungler responsible for the virus spreading and the economy collapsing, the same death reminders could undermine his chances.</p>
<h2>We’re all in this together</h2>
<p>If you’re interested in trying to short-circuit some of these unconscious defenses, <a href="https://www.penguinrandomhouse.com/books/170217/the-worm-at-the-core-by-sheldon-solomon-jeff-greenberg-and-tom-pyszczynski/">our research</a> suggests a few promising possibilities. Maybe the best approach is to consciously acknowledge your mortal fears. By doing so, you can gain some reasoned control over their influence on your judgments and behavior.</p>
<p>We also suggest keeping in mind that all human beings are one interdependent species sharing the same planet. Recognizing that the coronavirus poses the same existential threat for all of us helps underscore that humanity is a group we all belong to. It’s by working together and not turning on each other that we will be able to recover our economic, physical and psychological vitality.</p>
<p>[<em>Insight, in your inbox each day.</em> <a href="https://theconversation.com/us/newsletters?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=insight">You can get it with The Conversation’s email newsletter</a>.]</p><img src="https://counter.theconversation.com/content/137588/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeff Greenberg has received funding from NSF and NIH for research guided by terror management theory, although he is not currently funded by these agencies. </span></em></p><p class="fine-print"><em><span>Sheldon Solomon receives funding from The National
Science Foundation and The Ernest Becker Foundation.</span></em></p>It’s human nature to try to insulate yourself from the unpleasant realization that death comes for all of us eventually.Jeff Greenberg, Professor of Social Psychology, University of ArizonaSheldon Solomon, Professor of Psychology, Skidmore CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1139062019-05-17T10:45:04Z2019-05-17T10:45:04ZWhat’s behind the belief in a soulmate?<figure><img src="https://images.theconversation.com/files/274704/original/file-20190515-60563-15cr0bg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Many people believe in the idea of a soulmate - one person who will make us whole and happy.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/tender-loving-senior-wife-caress-beloved-1207103986?src=D4REDrfJgcEZdRYM2qtI3Q-1-44">fizkes</a></span></figcaption></figure><p>The United States appears to be in a romantic slump. Marriage rates have <a href="http://www.pewresearch.org/fact-tank/2017/10/11/the-share-of-americans-living-without-a-partner-has-increased-especially-among-young-adults/">plummeted</a> over the last decade. And compared to previous generations, young single people today are perhaps spending more time on social media <a href="https://www.theatlantic.com/family/archive/2018/12/tinder-changed-dating/578698/">than actual dating</a>. They are also having <a href="https://www.theatlantic.com/membership/archive/2018/11/whats-causing-the-sex-recession/575890/">less sex</a>.</p>
<p>Despite these trends, a yearning for a soulmate remains a common thread across the generations. Most Americans, it seems, are still looking for one. According to a 2017 <a href="https://www.nj.com/healthfit/index.ssf/2017/02/two-thirds_of_americans_believe_in_a_soulmate_poll.html">poll</a> two-thirds of Americans believe in soulmates. That number far surpasses the percentage of Americans who believe in the <a href="http://www.pewforum.org/wp-content/uploads/sites/7/2018/04/Beliefs-about-God-FOR-WEB-FULL-REPORT.pdf">biblical God</a>. </p>
<p>The idea that there is a person out there who can make each of us happy and whole is constantly conveyed through portrayals in <a href="https://www.imdb.com/list/ls008719611/?sort=release_date,desc&st_dt=&mode=detail&page=1">films,</a> <a href="https://www.imdb.com/title/tt0029583/">books,</a> <a href="https://www.cosmopolitan.com/sex-love/news/a41698/find-your-soulmate-in-8-simple-questions/">magazines</a> and <a href="https://www.huffingtonpost.ca/2018/02/08/tv-show-couples-love-lessons_a_23356753/">television</a>. </p>
<p>What accounts for the persistence of the soulmate ideal in the contemporary age?</p>
<h2>Origins of the soulmate myth</h2>
<p>Ten years ago, after a hard breakup, I decided to investigate. As a scholar of <a href="https://skidmore.academia.edu/BradleyOnishi">religion and culture</a> who was trained in the history of ideas, I was interested in connecting the various iterations of the soulmate ideal through time. </p>
<p>One early use of the word <a href="https://scholarworks.umt.edu/cgi/viewcontent.cgi?article=1003&context=eng_pubs">“soulmate”</a> comes from the poet Samuel Taylor Coleridge in a <a href="https://www.academia.edu/1320004/_Soulmates_in_The_Encyclopedia_of_Love_in_World_Religions_ABC-CLIO_World_Religions_Project_Ed._Dr._Yudit_Kornberg_Greenberg_Santa_Barbara_California_et._al._November_2007_pp._593-597">letter from 1822</a>: “To be happy in Married Life … you must have a Soul-mate.” </p>
<p>For Coleridge, a successful marriage needed to be about more than economic or social compatibility. It required a spiritual connection. </p>
<p>Several centuries prior to Coleridge, the Greek philosopher Plato, in his text “Symposium,” wrote about the reasons behind the human yearning for a soulmate. Plato quotes the <a href="https://theconversation.com/what-plato-can-teach-you-about-finding-a-soulmate-72715">poet Aristophanes as saying</a> that all humans were once united with their other half, but Zeus split them apart out of fear and jealousy. <a href="http://classics.mit.edu/Plato/symposium.html">Aristophanes explains</a> the transcendent experience of two soulmates reuniting in the following way:</p>
<blockquote>
<p>“And when one of them meets with his other half, the actual half of himself … the pair are lost in an amazement of love and friendship and intimacy, and one will not be out of the other’s sight, as I may say, even for a moment.” </p>
</blockquote>
<h2>The religious sources</h2>
<p>These references aren’t limited to Coleridge and Plato. In numerous religious traditions, the human soul’s connection to God has been envisioned in similar ways. While the examples from religious traditions are numerous, I will mention just two from Judaism and Christianity. </p>
<p>At different points in the history of these these two faith traditions, mystics and theologians employed erotic and marital metaphors to understand their relationships with God. Despite important differences, they both envision amorous union with the one divine force as the pathway to true selfhood, happiness and wholeness.</p>
<p>This idea is expressed in the Hebrew Bible, where God is consistently seen as the one to whom his chosen people, Israel, are betrothed. “For your Maker is your husband,” <a href="https://www.biblegateway.com/passage/?search=isaiah+54&version=NRSV">a passage in the Hebrew Bible</a> says. Israel – the ancient kingdom, not the modern nation-state – plays the role of God’s spouse. </p>
<p>Throughout Israelite history this idea frames the relationship between the people of Israel and God, whom they know as Yahweh. When Yahweh ratifies his covenant with Israel, his chosen people, he is often referred to as Israel’s husband. In turn, Israel is envisioned as Yahweh’s wife. For the Israelites, <a href="https://www.biblegateway.com/passage/?search=Jeremiah+31%3A31-32&version=NRSV">the divine one</a> is also their <a href="https://www.biblegateway.com/passage/?search=Hosea+2&version=NRS">romantic soulmate</a>. </p>
<p>This is illustrated in the Song of Songs, <a href="https://www.biblegateway.com/passage/?search=Song+of+Solomon+1&version=NRSV">an erotic love poem</a> with a female narrator. The Song of Songs is written from the perspective of a woman longing to be with her male lover. It’s filled with vivid physical descriptions of the two characters and the delights they take in each other’s bodies.</p>
<p>“Your channel is an orchard of pomegranates with all choicest fruits,” the narrator recounts her man saying to her, before proclaiming that her garden is <a href="https://www.biblegateway.com/passage/?search=Song%20of%20Solomon+4&version=NRSV">“a fountain, a well of living water, and flowing streams from Lebanon</a>.”</p>
<p>Song of Songs is not only an unquestioned part of Jewish and Christian scripture, it’s been understood for millennia by Jewish sages as the key to understanding the most important events in Israelite history. </p>
<h2>Erotic mysticism</h2>
<p>By the second century A.D., Christians too began framing their relationship with the divine in erotic terms through the Song of Songs. </p>
<p>One of the first, and most influential, was <a href="https://plato.stanford.edu/entries/origen/">Origen of Alexandria</a>, a second-century mystic who became the first great Christian theologian. <a href="https://books.google.com/books/about/The_Song_of_Songs.html?id=Mjxy0Fl7VMsC">According to him</a>, the Song is the key to understanding the soul’s relationship to Christ. </p>
<p>Origen calls it an “epithalamium,” which is a poem written for a bride on the way to the bridal chamber. For him, the Song is “a drama and sang under the figure of the Bride,” who is about to wed her groom, “the Word of God.”</p>
<p>Origen views Jesus as his divine soulmate. He anticipates the end of time when his soul will “cleave” to Christ, so that he will never be apart from him again – and he does this by using erotic terms.</p>
<p>His writings on the Song founded a rich and expansive tradition of Christian <a href="https://books.google.com/books?id=99CNMQmzpKIC&printsec=frontcover&dq=song+of+songs+mysticism+christianity&hl=en&sa=X&ved=0ahUKEwj--4qquZ3hAhUSVN8KHRpcBl4Q6AEINDAC#v=onepage&q=song%20of%20songs%20mysticism%20christianity&f=false">mystical texts</a> based on the soul’s erotic and marital union with Christ.</p>
<h2>The power of the myth</h2>
<p>By tracing the soulmate ideal to these religious sources it’s possible to gain fresh perspective on its power and function in an age when more Americans identify as having no religious <a href="https://www.scientificamerican.com/article/the-number-of-americans-with-no-religious-affiliation-is-rising/">affiliation</a>. </p>
<p>The soulmate myth informs the reality show “The Bachelor,” where young women wait for the attention of one chosen “bachelor” in hopes of finding true love. It is the same in the film adaptation of Nicholas Spark’s novel “The Notebook,” which follows the path of two lovers separated at various times by war, family and illness. </p>
<p>And then there are the Tinder users – wading through an excess of possible romantic partners, perhaps hoping that their one and only will eventually make them whole and happy. </p>
<p>In light of the myth’s history, it’s not surprising that even at a time when fewer Americans may be turning to God, they are still looking for their one true soulmate.</p><img src="https://counter.theconversation.com/content/113906/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bradley Onishi does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Many of us go through life in the hope of finding the ideal soulmate – our missing half. The reason may be deeply embedded in religious beliefs.Bradley Onishi, Associate Professor of Religious Studies, Skidmore CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/689592016-11-28T01:25:59Z2016-11-28T01:25:59ZMexicans are migrating, just not across the US border<p>Mexican migration to the U.S. is <a href="https://theconversation.com/more-mexicans-are-leaving-the-us-than-coming-across-the-border-51296">in decline</a>. The <a href="http://www.pewhispanic.org/2015/11/19/more-mexicans-leaving-than-coming-to-the-u-s/">Pew Hispanic Research Center</a> has found that since 2009, more than one million native-born Mexicans living in the U.S. returned to Mexico. But many other Mexicans never crossed the U.S.-Mexican border in the first place.</p>
<p>Why are some Mexican migrants choosing to stay home? What does it mean for the U.S. border with Mexico? </p>
<p>The decline in migration to the U.S. is not simply linked to building more <a href="http://www.wsj.com/articles/trumps-crumbling-wall-plan-1460320010">barriers at the border</a>. Changing demography, economy, the difficulties of living in the U.S. and a growing sense of <a href="http://www.latimes.com/nation/la-na-ff-mexican-immigration-20151118-story.html">opportunity at home</a>, among many other factors, are <a href="http://scholars.unh.edu/cgi/viewcontent.cgi?article=1246&context=carsey">shifting Mexican migration to the U.S.</a></p>
<p>Every year millions of Mexicans travel from their hometowns to other parts of the country for work, education and personal freedoms that domestic life and traditional expectations often limit. Migrants who decide to travel to Mexican cities, tourist sites like Cancun, factories and farms may not earn the wages that lie just across the border. Yet, they also avoid the difficulties that often come with adapting to the U.S.</p>
<p>Internal migration is not new, and moving within Mexico <a href="http://latimesblogs.latimes.com/laplaza/2011/08/drug-war-refugees-violence-asylum-mexico.html">has a rich history</a>. It is something that rural folks have done for generations, while migration to the U.S. grew only in the 1980s and 1990s.</p>
<p>Based on <a href="http://www.tandfonline.com/doi/full/10.1080/00207659.2016.1197721">our research</a> published in the International Journal of Sociology, we argue that internal migration is an important and viable alternative for people who are in search of security and opportunity and will not or cannot cross the U.S. border.</p>
<h2>Oaxacan migrants in Mexico</h2>
<p>We spent time with families in rural villages in the southern Mexican state of <a href="https://en.wikipedia.org/wiki/Oaxaca">Oaxaca</a>, and learned that internal migration has a long history in the region. Through the mid-20th century, Oaxacans found opportunities as itinerant vendors traveling throughout the region and working on coastal plantations during the harvest season. </p>
<p>Don Betto, who lives in the Sierra Madre del Sur, told us about his trips to southern Mexico in the 1950s and 1960s. (Our study was designed to ensure our subjects remained anonymous, so Don Betto is not his real name. All subjects’ names have been changed.) Following the planting season, he carried cookware on his back, selling door-to-door to earn the cash that his family could count on during the year.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/146844/original/image-20161121-4528-7uex0s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/146844/original/image-20161121-4528-7uex0s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=477&fit=crop&dpr=1 600w, https://images.theconversation.com/files/146844/original/image-20161121-4528-7uex0s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=477&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/146844/original/image-20161121-4528-7uex0s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=477&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/146844/original/image-20161121-4528-7uex0s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=600&fit=crop&dpr=1 754w, https://images.theconversation.com/files/146844/original/image-20161121-4528-7uex0s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=600&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/146844/original/image-20161121-4528-7uex0s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=600&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Oaxacan vendor selling wares.</span>
<span class="attribution"><span class="source">Jeffrey Cohen</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>By the later half of the 20th century, many Oaxacans ventured a bit farther from home and settled in Mexico City. They found jobs, opportunities for education and, for at least a few men, brides. Through the 1990s and into the 21st century, Oaxacans <a href="https://utpress.utexas.edu/books/cohcul">continued to migrate</a>. And while many Oaxacans sought opportunities in the U.S., a minority stayed in Mexico and settled in tourists cities like Cancun, or the agricultural fields of Baja California.</p>
<p>The incomes earned by migrants who stay in Mexico do not compete with the wages paid in the U.S. Nevertheless, many Mexicans are quite clear as to why they prefer to stay close to home. Don Alejandro, a young Oaxacan from the state’s central valleys region, described why he traveled to find work in the resort town of Cabo San Lucas in Baja California rather than crossing into the U.S.:</p>
<blockquote>
<p>“Up north you work then pay bills, then work more to pay more bills… it’s okay here; it’s not much but it’s mine.”</p>
</blockquote>
<p>Don Maurico, an older wood carver from the village of San Miguel, was even clearer, balancing his critique with a bit of sarcasm: </p>
<blockquote>
<p>“Look, if I go over there [the U.S.] I’ll make a lot of money, but it is so expensive. If I stay here, well that’s okay. Why would I want to go and have to pay hundreds of dollars for a toaster? I’m happy earning a little right here.”</p>
</blockquote>
<h2>Migrating without leaving home</h2>
<p>The Oaxacans we worked with during our research are a few of the many Mexicans who migrate within national boundaries. The National Institute for Statistics, Geography and Information <a href="http://www.inegi.org.mx/default.aspx">estimates</a> these migrants are 4 to 5 percent of the nation’s total population of about 130 million people. In other words, about six million Mexicans are moving within the nation’s borders. And while some of these migrants might elect to cross into the U.S. in the future, it’s unlikely given the legal challenges of border crossing, as well as what <a href="http://www.theatlantic.com/business/archive/2015/05/a-lonely-life-for-immigrants-in-americas-rust-belt/394082/">Alana Semuels</a> of The Atlantic describes as a lonely life for immigrants. Mexicans travel within the boundaries of their nation to find opportunity and to keep the stresses of crossing into the U.S. at arm’s length. </p>
<p>In Mexico, they are not questioned over the status of their citizenship. They share a common language, culture and history. Staying within Mexico does not lead to riches, but as Don Valeriano described his situation, “he can be a leader at home” and participate fully in the civil life of his village.</p>
<p>Migrants balance risk and opportunity as they decide to move. Fostering the continued growth of those possibilities within Mexico, and the continued strengthening of the Mexican economy can help build a future without building a <a href="http://www.nytimes.com/2016/09/07/business/economy/the-crumbling-case-for-a-mexican-border-wall.html?_r=0">wall</a>.</p><img src="https://counter.theconversation.com/content/68959/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeffrey H. Cohen received fieldwork and research funding from The National Science Foundation for some of the data reported on here.</span></em></p><p class="fine-print"><em><span>Bernardo Ramirez Rios does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>US elections surfaced fears of Mexicans crossing into the US. But their numbers are actually in decline. Why are they choosing to stay in Mexico? Two migration experts went there to find out.Jeffrey H. Cohen, Professor of Anthropology, The Ohio State UniversityBernardo Ramirez Rios, Professor of Anthropology, Skidmore CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/446362015-07-14T02:36:07Z2015-07-14T02:36:07ZGreece’s total surrender to German demands shows failure of euro integration<figure><img src="https://images.theconversation.com/files/88291/original/image-20150714-11801-r9sxtc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Unfortunately, the eurozone doesn't exactly fit together like a puzzle.</span> <span class="attribution"><span class="source">Euro puzzle via www.shutterstock.com</span></span></figcaption></figure><p>Germany demanded <a href="http://www.bloomberg.com/news/articles/2015-07-13/eu-demands-tsipras-capitulation-as-bailout-costs-spiral-ic1mkgo3">unconditional surrender</a> from Greece and got what it wanted. </p>
<p>The result is that severe punishment in the form of austerity will continue, along with the humiliation of the Greek people. Democracy in the eurozone has been severely strained. </p>
<p>While the six-month battle between Greece’s anti-austerity Syriza government and its German and other creditors resulted in a deal this weekend that prevents a Grexit for now, this much is clear: there will be no end to Europe’s <a href="http://www.bruegel.org/publications/publication-detail/publication/776-europes-growth-problem-and-what-to-do-about-it/">economic malaise</a>, of which Greece is only the most extreme case. </p>
<p>Rather, the <a href="http://www.bloomberg.com/news/articles/2015-07-13/greek-deal-makes-europe-more-german-but-at-what-cost-">gradual dismantling</a> of the euro – a project of integration that began in 1999 and brought 19 countries together under a single currency – will continue as long as its biggest member refuses to ease up on the austerity and other policies that are <a href="http://www.boeckler.de/pdf/p_imk_study_42_2015.pdf">suffocating</a> Europe’s economy.</p>
<p>The Greeks themselves, of course, cannot be pardoned from their fair share of blame for their predicament, as I’ve noted many times. </p>
<p>But Germany as Europe’s powerhouse is the one running the show. And based on my experience and research, it bears a large share of the blame both for creating many of the <a href="http://www.boeckler.de/pdf/p_imk_study_42_2015.pdf">conditions</a> that led us here and by showing little to no flexibility in resurrecting Greece’s economy.</p>
<h2>Another dose of austerity</h2>
<p>The sad truth is that Germany’s finance minister – who has pushed austerity on all its neighbors including Greece at any cost, despite the often abysmal results – remains firmly in charge of economic policy and is determined to impose more of the same folly. </p>
<p>The eurozone remains stuck in a process of <a href="http://www.cer.org.uk/insights/eurozones-ruinous-embrace-competitive-devaluation">competitive internal devaluations</a> – in which members suppress wages to boost their competitiveness – that suffocate domestic demand. This leaves the currency block extraordinarily vulnerable. </p>
<p>Continuing to freeload on external demand through euro depreciation, thereby also undermining the global recovery, excessive thrift (via austerity) rather than <a href="https://theconversation.com/germany-may-be-the-biggest-loser-if-it-doesnt-start-spending-32726">investment</a> leaves the land of the euro destined for socioeconomic stagnation. </p>
<p>And if it can be believed, another especially <a href="http://www.project-syndicate.org/commentary/greece-debt-agreement-risks-by-barry-eichengreen-2015-07">high dosage</a> of that austerity has been reserved for Greece, even though it is already suffering a <a href="https://theconversation.com/time-to-end-europes-disgrace-of-holding-greek-people-hostage-42939">humanitarian crisis</a>. </p>
<h2>What happened to political integration</h2>
<p>Matters are even worse politically. The idea of European integration as a means to secure peace and prosperity was founded on solidarity, tolerance and compromise – a supposed union of equal partners, ending Europe’s long history of conflict and domination. </p>
<p>The euro in particular was meant to end Germany’s <a href="http://www.spiegel.de/international/germany/german-power-in-the-age-of-the-euro-crisis-a-1024714.html">monetary hegemony</a> over the continent that characterized the previous currency arrangement: the European Monetary System. </p>
<p>The plan backfired badly. By undermining everyone else’s competitiveness through persistent <a href="http://www.ft.com/cms/s/0/4f7656de-3a25-11e0-a441-00144feabdc0.html#axzz3foC4Gzmn">wage repression</a>, Germany has maneuvered itself into a hegemonic creditor position that has secured the country even more leverage over the economic policies of its “partners.” </p>
<p>In other words, low labor costs at home have made it easier for German manufacturers to undercut its competitors’ prices, leading to a massive trade surplus relative to most countries in the euro. The corresponding deficits have left Germany’s euro partners in their vulnerable debtor positions.</p>
<p>Greece merely provides the most clear-cut case: offered the choice between Grexit and the de facto replacement of its sovereignty with external control over financial and other policies, Greece, for the time being at least, is opting for the status of a vassal state. </p>
<h2>Greece’s blame, Germany’s forgiveness</h2>
<p>Greece is neither flawless nor blameless. Compared with its peers, it suffers from more than its fair share of corruption. It fudged its numbers and broke the euro’s fiscal rules by a wider margin and for more years than Germany itself. </p>
<p>But if Germany at least in part believes that Greece must be punished for its sins, it should look to its past and the magnanimity with which it was dealt after World War II: with the Marshall Plan and London Debt Agreement, which <a href="http://qz.com/445373/thomas-pikettys-wise-words-on-german-hypocrisy-and-how-to-solve-the-greek-debt-crisis/">resulted</a> in the forgiveness of 60% of German foreign debt, according to Thomas Piketty. </p>
<p>Why is Greece’s case so much different, and by what kind of moral, political or economic standards can the deal be justified? </p>
<h2>France, a counterweight no more</h2>
<p>France has often been a counterweight to Germany in these matters, and at times, including this past weekend, tried to fight in Greece’s corner. But in the face of German rigidity, it was able to achieve only a deal that provided the Greeks with a draconian choice: Grexit or vassal. </p>
<p>For not even France, pressured to restore its competitiveness vis-à-vis Germany and embrace austerity more fully, is more than a junior partner these days. </p>
<p>This outcome is clearly unsustainable. A plan such as the one I <a href="https://theconversation.com/the-eurozone-needs-a-new-treasury-to-revive-it-33909">suggested</a> earlier this year that would create a European treasury – in a move toward a closer union – could help solve the economic and fiscal problems that plague Europe and spur much-needed investment. Unfortunately, Germany stays on this destructive course. </p>
<p>As a German, I am simply dismayed by the unrelenting conduct of my government, which reached a new climax this weekend when it dug its heels in further than ever before. </p>
<p>But there is no way around it: this weekend has pushed European integration firmly into reverse, and the pessimist in me has to admit that at some point “Germexit,” a German exit from the euro, would probably be the least terrible outcome for Europe.</p><img src="https://counter.theconversation.com/content/44636/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joerg Bibow is affiliated with: Levy Economics Institute of Bard College and the Bretton Woods Committee.
</span></em></p>The last-minute bailout deal will keep Greece in the common currency, but at a cost of the dream that was the euro.Joerg Bibow, Professor of Economics, Skidmore CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/417242015-06-18T10:05:25Z2015-06-18T10:05:25ZFor believers, fear of atheists is fueled by fear of death<figure><img src="https://images.theconversation.com/files/85284/original/image-20150616-5829-m8pcga.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Recognizing death's inevitability, people find comfort in their beliefs.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/chemicalbrother/4131622460/in/photolist-5QSaTr-5XBAyf-212iL1-6Z48GU-npgJpu-8hnc4C-dHZhpJ-n9PGmQ-bUg9rd-npgCow-acsT3p-b1FKni-2RLRUV-drehcm-91u91a-asBf8f-acsUaR-nrjdJP-n9PM3p-2RLX3X-cAE2hN-acvJaA-nr2Shz-acvHFQ-n9PN5d-n9PRPB-acsSZR-du8m97-MRaiv-MR1Qy-4NiJnN-2RMt4v-MRagi-8hiWvz-MR227-nrmrpo-4XPydq-npgNud-58FrAo-MR2id-acvHvN-prq7MS-bmHDfa-74MTEe-uxX51-WWqf4-X1dnw-X19BE-X1937-7i6Dq1">Andreas Hunziker/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>Skepticism about the existence of God <a href="http://www.pewforum.org/religious-landscape-study/">is on the rise</a>, and this might, quite literally, pose an existential threat for religious believers.</p>
<p>It’s no secret that believers generally harbor extraordinarily negative attitudes toward atheists. Indeed, <a href="http://www.gallup.com/poll/155285/atheists-muslims-bias-presidential-candidates.aspx">recent polling data</a> show that most Americans view atheists as “threatening,” unfit to hold public office and unsuitable to marry into their families. </p>
<p>But what are the psychological roots of antipathy toward atheists? </p>
<p>Historically, evolutionary psychologists argue that atheists have been denigrated because God serves as the ultimate source of social power and influence: God rewards appropriate behaviors and punishes inappropriate ones. </p>
<p>The thinking has gone, then, that believers deem atheists fundamentally untrustworthy because they do not accept, affirm and adhere to divinely ordained moral imperatives (ie, “God’s word”). Research has backed up the deep distrust believers feel toward atheists. For example, in one <a href="http://psycnet.apa.org/psycinfo/2011-25187-001/">study</a>, Canadian undergraduates, who are typically less religious than their US counterparts, rated atheists as more untrustworthy than Muslims – and just as untrustworthy as rapists! </p>
<p>Still, it hasn’t been clear why the leeriness of atheists is so profound. We decided to find out, and through two separate studies, <a href="http://spp.sagepub.com/content/early/2015/04/27/1948550615584200.abstract">discovered</a> that believers’ overwhelming scorn of atheists may come from a surprising source: fear of death. </p>
<p>According to the <a href="http://www.tmt.missouri.edu/index.html">terror management theory</a> (TMT), human beings are unique in that we are self-aware and can anticipate the future. For the most part, these are highly beneficial cognitive adaptations. They allow us to formulate plans and foresee the consequences of our actions. <a href="http://www.amazon.com/The-Worm-Core-Role-Death/dp/1400067472">But they also make us realize that death is inevitable and unpredictable</a>. </p>
<p>These unwelcome thoughts give rise to a potentially paralyzing terror: the fear of death. This fear, then, is “managed” by embracing cultural worldviews – beliefs about reality that we share with others – that provide us with a sense of comfort. It could mean becoming involved in religions that espouse spiritual immortality, or by strongly valuing one’s national identity. </p>
<p>This process works the other way around, too: when confronted with threats to our cherished worldview beliefs, our protective “terror management” shield drops and our apprehension about death resurfaces. </p>
<p>We then cling to those beliefs more tightly, and respond more negatively to those who threaten us. For example, research <a href="http://www.sciencedirect.com/science/article/pii/S0022103112002107">shows</a> that in the wake of the September 11 terrorist attacks, Islamic symbols increased thoughts of death in non-Muslim Americans. Likewise, concern for death increased hostility toward Islam. </p>
<p>So how do existential concerns about death relate to atheism? </p>
<p>Past research has shown that hostility toward atheists is partly driven by the fact that many perceive atheists as <a href="http://psycnet.apa.org/psycinfo/2014-33993-001/">a threat to morals and values</a>. </p>
<p>So we reasoned that if atheists threaten values, then they also likely threaten worldview beliefs. </p>
<p>We then hypothesized that atheists, simply by existing, would likely elicit intimations of mortality – which, in turn, would promote increased negativity toward atheists.</p>
<p>We tested this idea in two different experiments. In the first, we recruited 236 students from the College of Staten Island CUNY. We excluded the few participants who reported as atheist or agnostic, and we asked half of the remaining participants to answer two questions: “What do you think will happen to you as you physically die?” and “What are the emotions that the thought of death causes for you?” The other half responded to similar questions about being in extreme pain. </p>
<p>After thinking about either death or pain, half of the 236 participants were asked to provide their attitudes toward atheists, while the other half responded with their attitudes toward Quakers – a nonthreatening religious group. Participants reported their overall warmth, their levels of trust, and behavioral avoidance by indicating how they felt about these people “marrying into their family” or “working in their office.” </p>
<p>As expected, participants were more negative toward atheists overall than toward Quakers. More importantly, however, we found that thinking about death increased negativity toward atheists – but not toward Quakers. </p>
<p>Those who had pondered their own death showed <a href="http://i.imgur.com/9YaglCB.png?1">less warmth</a>, <a href="http://i.imgur.com/TWwg3Ym.png?1">greater behavioral prejudice</a> (also known as social distancing) and <a href="http://i.imgur.com/TWwg3Ym.png?1">greater distrust</a> toward atheists, while thoughts of death did not affect reactions toward Quakers, a fellow theistic group.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/85289/original/image-20150616-5854-18xuq5w.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/85289/original/image-20150616-5854-18xuq5w.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=503&fit=crop&dpr=1 600w, https://images.theconversation.com/files/85289/original/image-20150616-5854-18xuq5w.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=503&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/85289/original/image-20150616-5854-18xuq5w.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=503&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/85289/original/image-20150616-5854-18xuq5w.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=632&fit=crop&dpr=1 754w, https://images.theconversation.com/files/85289/original/image-20150616-5854-18xuq5w.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=632&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/85289/original/image-20150616-5854-18xuq5w.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=632&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Participants who thought about their death felt more prejudice toward atheists.</span>
<span class="attribution"><span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>In the second experiment, we directly measured whether simply thinking about atheism would increase unconscious thoughts of death. We asked 174 Staten Island students (excluding atheists and agnostics) to describe their emotions toward one of three topics: pain, death or atheism. We then presented them with a word completion task designed to capture thoughts of death. For example, the word “SK - - L” could be completed as either “skill” or “skull” and “COFF - -” could be “coffee” or “coffin.”</p>
<p>Not surprisingly, those who pondered their own mortality indicated greater thoughts of death than those who thought about being in pain. However, thinking about atheism also increased thoughts of death – to the same extent as thinking about death itself. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/85291/original/image-20150616-5846-8zughn.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/85291/original/image-20150616-5846-8zughn.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=465&fit=crop&dpr=1 600w, https://images.theconversation.com/files/85291/original/image-20150616-5846-8zughn.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=465&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/85291/original/image-20150616-5846-8zughn.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=465&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/85291/original/image-20150616-5846-8zughn.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=584&fit=crop&dpr=1 754w, https://images.theconversation.com/files/85291/original/image-20150616-5846-8zughn.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=584&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/85291/original/image-20150616-5846-8zughn.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=584&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Those who thought about atheism were just as likely to think about death than those specifically tasked with thinking about death.</span>
<span class="attribution"><span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>These findings suggest that there is something deeper to the overwhelming negativity people hold toward atheists. Yes, on the conscious level, they’re deemed untrustworthy because in the eyes of believers, they have no God or values. </p>
<p>But at an unconscious level, it seems that atheists threatens our beliefs about the nature of existence itself. They serve as a constant reminder of death by denying the presence of a supernatural power who regulates human affairs and monitors the gateway to immortality.</p>
<p>Of course, atheists are no less moral or trustworthy than their theistic counterparts. In light of these findings, we hope that perhaps believers might temper their contempt for atheists.</p><img src="https://counter.theconversation.com/content/41724/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sheldon Solomon receives funding from the National Science Foundation. He is affiliated with the Ernest Becker Foundation.</span></em></p><p class="fine-print"><em><span>Corey L Cook does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Why are atheists deemed as untrustworthy as rapists?Corey L Cook, Lecturer of Psychology, University of WashingtonSheldon Solomon, Professor of Psychology, Skidmore CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/429392015-06-10T10:19:59Z2015-06-10T10:19:59ZTime to end Europe’s disgrace of holding Greek people hostage<figure><img src="https://images.theconversation.com/files/84471/original/image-20150610-6798-u51v9d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Euro wasn't meant to be a prison but a means to a shared prosperity. </span> <span class="attribution"><span class="source">Pantheon via www.shutterstock.com</span></span></figcaption></figure><p>It was never going to be easy. That much was known from the outset.</p>
<p>Greece’s newly elected government and the country’s creditors started from too far apart to quickly settle on anything that would be easily sellable to their respective constituencies. </p>
<p>Greece’s radical left-wing Syriza party came to power on a <a href="http://www.irishtimes.com/news/world/europe/syriza-leader-says-greek-people-have-given-him-mandate-to-end-austerity-1.2079214">mandate</a> to end austerity. The Greek people had experienced the worst crisis of any Western country in the postwar era; in the previous five years, their economy <a href="http://qz.com/248821/greeces-collapse-is-officially-worse-than-the-us-great-depression/">had shrunk</a> by one-quarter, and unemployment skyrocketed, while indebtedness exploded accordingly. </p>
<p>No other Western nation has come even close to suffering a humanitarian crisis of this dimension for generations. A people in despair – brought to their knees, the Greeks are yearning for a revival of their fortunes. </p>
<p>Remarkably, in utter denial of the fact that the brutal austerity experiment imposed on Greece since 2010 had proved outstandingly <a href="http://www.project-syndicate.org/commentary/greece-eurozone-austerity-reform-by-joseph-e--stiglitz-2015-02">counterproductive</a>, Greece’s creditors remained set to continue with what to them had become business as usual. They held out sizable fresh austerity, naively expecting the Greeks to shoulder the costs of the administered austerity wreckage alone. </p>
<p>Their so-called bailout program <a href="http://www.keeptalkinggreece.com/2015/02/20/greeces-mission-impossible-bailout-demands-primary-surplus-that-not-even-germany-can-achieve/">assumed</a> that Greece would run primary budget surpluses of 4.5% of gross domestic product as far as the eye could see. No other country had ever done so – but the Greek people were meant to endure lifelong punishment and smile in gratitude along the way. </p>
<h2>Shared responsibility</h2>
<p>It is good and right that the Greeks decided to not put up with this folly for any longer. </p>
<p>It is good for Greece, and it would be good and right for Europe to finally accept that the calamity that happened in Greece in recent years is one of shared responsibility, but not of Greece alone. It would be best if euro members remembered that their relationship was meant to be one of partnership: equal partners of a union with a common destiny. </p>
<p>The main problem is that governments in creditor countries, with Germany being the key one, have systematically misled their people. Their so-called bailout programs for Greece <a href="http://www.bloombergview.com/articles/2012-05-23/merkel-should-know-her-country-has-been-bailed-out-too">were never</a> primarily a bailout of the Greek people. </p>
<h2>Whose bailout?</h2>
<p>Instead, they were <a href="http://foreignpolicy.com/2015/01/08/why-greeces-economy-needs-syriza-to-win-election/">foremost</a> a bailout of German and French banks, the masters of irresponsible lending in Europe and abroad. The German government had put German taxpayers on the hook for the banks’ colossal losses suffered in the context of the US “subprime crisis.” </p>
<p>They were too scared of going back to them for more of the same when Greece then faltered. They were in a tough spot as they equally <a href="http://www.nytimes.com/2015/03/20/world/europe/greece-debt-default-european-union.html">feared</a> that allowing Greece to default on its debts, as West Germany itself had done after the Second World War and as Greece should have done in 2010, would blow up the euro and bestow even bigger costs on German taxpayers – apart from also spoiling Germany’s export-led growth model. </p>
<p>And so the convenient narrative of a sovereign debt crisis joined by the need to rescue Greece in order to save the euro was invented. Essentially, the creditor countries arranged from new loans so that Greece could repay its excessive old loans rather than default on them. Fast-forward five years, and the same Greek drama is still on display. </p>
<p>Once again, the Greeks are supposed to sign off on inhumane conditions for <a href="http://www.wsj.com/articles/deadline-for-greek-bailout-agreement-still-june-1433156631">new bailout loans</a> so that they can repay old bailout loans. </p>
<p>Greece is still in need of a proper debt restructuring. The only real difference today is that Greece is now also in the middle of a full-blown humanitarian crisis – a crisis Greece owes in good part to the insane austerity inflicted on it by its euro partners since 2010. In the name of both humanity and sanity, it is high time to change course, and do so decisively. </p>
<p>The likes of Spain, Portugal and other smaller euro crisis countries <a href="http://www.nytimes.com/2015/06/08/business/international/greek-greece-european-commission-president-juncker-criticizes-tsipras-on-rejection-of-debt-offer.html">may cry foul</a> if Greece were to receive “better” treatment than they themselves have by being granted debt relief and an end to austerity. If they do, they are not only dishonest regarding the degree of austerity and depth of the crises that they endured compared with Greece, they also <a href="http://www.wsj.com/articles/why-spain-and-other-eurozone-countries-arent-feeling-the-recovery-1433299113">delude themselves</a> in thinking that their own crisis may be over.</p>
<p>Their economies can hardly withstand the shock that a “Grexit” or “Graccident” is likely to trigger. Political instability at home is just one step away. They have nothing to gain from beating up Greece even more to uphold failed principles and beliefs. </p>
<h2>Moment of truth</h2>
<p>The small portion of bailout loans owed to the International Monetary Fund (IMF) that became due last week and which Greece chose not to repay at that time is insignificant by itself. Technically, the IMF was able to simply bundle it with other payments due to it within the next few weeks. But the moment of truth is arriving quickly. </p>
<p>It would be unfortunate for the IMF to be the party to pull the trigger in the ongoing Greek drama, just as it would be wrong for the European Central Bank to find itself in that position. It is for no one else but Europe’s democratically elected governments to accept their shared responsibility for past mistakes – and embark on a path that promises a better future for all involved. </p>
<p>The Greek people acknowledge that their current predicament is partly due to their society’s own failings. Even after overcoming military dictatorship and joining the European Union, Greek governments generally prioritized securing the wealth and power of a small oligarchy through favoritism and corruption. </p>
<p>This includes previous Greek governments that the “troika” (IMF, EU and European Central Bank) chose to cooperate with in the past five years, which made no real effort to break with the past of pervasive corruption and tax evasion, and were not required to do so, either, as long as they collaborated in imposing austerity and arranging for fire sales of Greek assets. </p>
<p>The Syriza government <a href="http://www.theguardian.com/business/live/2015/jun/09/greek-pm-grexit-warning-bailout-extension-live-updates">has committed</a> to reforming Greece and the ways in which it governs itself. Greece will need the support of its euro partners to erase corruption and tax evasion, for instance. The conditionality of loans should focus on what are the true structural problems of the Greek economy. And external help may well need to encompass administrative support and effective surveillance in these critical areas. </p>
<h2>Humanitarian crisis</h2>
<p>But Greece does not need pressure for even deeper cuts in pensions and wages when almost half of its pensioners are already <a href="http://www.nytimes.com/2015/06/09/world/europe/greece-pensions-debt-negotiations-alexis-tsipras.html">living</a> below the poverty line, and wage cuts in the order of 20% or more have not boosted employment but propelled unemployment into <a href="http://www.latimes.com/world/europe/la-fg-greece-youth-economic-woes-20150602-story.html">inhumane territory</a> instead. </p>
<p>By contrast, creditor countries, foremost Germany, have yet to acknowledge that they and their preferred austerity policies share part of the “schuld” (German for guilt) and hence should also shoulder part of the “schulden” (German for debt) that continue to suffocate Greece, preventing its renaissance and holding its people hostage in what has become Europe’s euro disgrace. </p>
<p>German Chancellor Angela Merkel will finally need to explain to the German people what really went wrong with the euro and that the matter is truly one of shared responsibility. Failure to end Europe’s euro disgrace, the ongoing humanitarian crisis in Greece, is bound to turn the euro itself into Europe’s disgrace. </p>
<p>The euro will not survive as a prison – if not a torture chamber. Rather, it must be a means to shared prosperity.</p><img src="https://counter.theconversation.com/content/42939/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joerg Bibow is affiliated with: Levy Economics Institute of Bard College and the Bretton Woods Committee. </span></em></p>The euro will not survive unless Europe ends the ongoing humanitarian crisis in Greece.Joerg Bibow, Professor of Economics, Skidmore CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/360412015-01-13T10:28:10Z2015-01-13T10:28:10ZEurope must drop austerity and end Greece’s pain to save euro<p>Greece is again making headlines, and markets are concerned the euro crisis is back. </p>
<p>Actually, the crisis never left. It is just that for a little while both the authorities and the markets chose to cherish the delusion that policies and institutions were set in place that would shore up Europe’s troubled currency union. How wrong they were. </p>
<p>Stuck in gloom and stagnation, the euro area is dancing on the <a href="http://seekingalpha.com/article/2800125-german-delusion-could-lead-to-acropolis-now-redux">edge of the abyss of debt deflation</a>, in which falling prices and incomes make paying off obligations increasingly difficult. </p>
<p>Perhaps the euro will stumble on for a few more years, but as things stand, in my view the union remains on track to flounder terminally. The situation in Greece should serve as a wake-up call, an opportunity to seriously consider a change of course – rather than stubbornly cling to the failed strategy of austerity and under-investment.</p>
<p>But Greece is not the only serious acute challenge the euro faces. The European Central Bank, the institution that has played the lead role in efforts to rescue the currency union, may soon have its hands tied behind its back – or at least one of them – because of Germany’s unwillingness to change track. </p>
<h2>A critical court ruling</h2>
<p>Tomorrow the European Union’s Court of Justice’s advocate general is set to publish an opinion on the bank’s <a href="http://www.ecb.europa.eu/press/pr/date/2012/html/pr120906_1.en.html">“Outright Monetary Transactions” program</a> that successfully calmed markets in 2012 – even though it was never actually used. </p>
<p>The program, which has been under sharp attack by Germany’s monetary orthodoxy ever since, would allow the ECB to buy the bonds of certain euro member countries to lower their interest rates under certain conditions. The OMT is <a href="http://www.bundesverfassungsgericht.de/SharedDocs/Entscheidungen/EN/2014/01/rs20140114_2bvr272813en.html">under review by Germany’s own Constitutional Court</a>, which published its own unfavorable preliminary assessment of the program a year ago when it referred the case to the ECJ. <a href="http://www.bloomberg.com/news/2014-10-13/draghi-s-whatever-it-takes-plan-faces-trial-at-eu-court.html">Advocate General Pedro Cruz Villalon’s opinion</a> may well be critical of certain aspects of the OMT and is likely to shape the ECJ’s eventual ruling on the matter.</p>
<p>This matters because unconventional policies like the OMT are exactly what the central bank will need to fight deflation and rev up the bloc’s economies. </p>
<p>A negative opinion from the court <a href="http://seekingalpha.com/article/2814315-greek-spanish-yields-fall-as-ecb-heads-for-decision">could create constraints</a> for how the ECB designs its strategy of “quantitative easing,” (QE) or injecting new money into the monetary system by purchasing government bonds in an effort to push down borrowing rates and spur spending and inflation. (The OMT program, by contrast, wasn’t a form of QE because no new money would have been “printed” buying bonds.)</p>
<p>Though the OMT never needed to be used – its creation alone caused the soaring interest rates of indebted members like Italy and Spain to come down to Earth – it clearly served its purpose well. <a href="http://www.wsj.com/articles/europes-highest-court-begins-case-on-ecb-policy-1413284439">Many credit it with preventing</a> the breakup of the eurozone. </p>
<h2>QE: better late than never</h2>
<p>That the ECB will eventually embark on QE, perhaps as soon as next week, is widely expected, despite the court’s ruling and even though its members <a href="http://www.nytimes.com/2015/01/12/business/international/european-central-bank-policy-makers-remain-divided-on-bond-purchases.html?_r=0">remain divided</a>. It’s rather late, given the eurozone has now officially entered a state of deflation, but as always better late than never. </p>
<p>But how can the ECB embark on purchasing government bonds if the situation in Greece and hence the euro’s fate remain unresolved? Any nation leaving the euro would have little incentive to fully honor its debts.</p>
<p>No doubt <a href="http://www.ncpa.org/sub/dpd/index.php?Article_ID=23658">Greece got itself into trouble</a> partly through its own fault. Under the euro, the country’s borrowing costs declined sharply, leading to a massive boom in private borrowing and real estate. At the same time, the Greek government ran up perilously large public debts, hidden behind a wall of fudged statistics.</p>
<p>As a result, Greece ran up a large external imbalance. A country that borrows excessively from foreigners to finance internal spending needs continued access to willing foreign lenders. But when the music finally stopped in 2009 after the global financial crisis struck, private lending dried up over night, leaving Greece dependent on bailouts from abroad. Greece became and remains the vassal of its creditors, led by Germany. </p>
<h2>Pain and no gain</h2>
<p>The brutal austerity they’ve inflicted on Greece – and resulting carnage – has exceeded by far the country’s “sins.” Promises that pain would be short-lived, as austerity and reform would quickly boost growth, were either delusional or dishonest from the start. Ex-Treasury Secretary Tim Geithner’s narrative of events in his book Stress Test is quite graphic on this, describing the attitude of Greece’s euro partners of wishing to teach the Greeks a lesson as keeping “their boots on Greece’s neck.” </p>
<p>And quite a costly lesson that has turned out to be. Even though Greece’s economy <a href="http://www.wsj.com/articles/greek-economy-grows-for-first-time-in-six-years-1415962022">eked out a bit of growth</a> last year for the first time in six years, its GDP today is about a quarter smaller than it was prior to the crisis, with lost output more than what was sustained by the US during the Great Depression. The official unemployment rate exceeds 25%, while youth unemployment is twice as high. Poverty is rampant. <a href="http://www.nytimes.com/2010/09/15/business/global/15drachma.html?pagewanted=all">Mass emigration</a> of young Greeks makes for a permanently smothered nation, not just a lost generation. </p>
<p>Austerity has not delivered any healing but made the patient only sicker. The official “bailout” loans of some 240 billion euro were <a href="http://www.washingtonpost.com/business/economy/most-greek-bailout-money-has-gone-to-pay-off-bondholders/2011/10/22/gIQAsV336L_story.html">mainly used to service private debts</a> owed to foreigners, which prevented bank failures in creditor countries but provided little if any actual support for Greeks. It is quite clear at this point that the official loans will never get repaid in full, but euro politics and policies remain focused on punishment rather than forgiveness. </p>
<p>There are signs that the Greeks have had enough. Snap elections for the Greek parliament are scheduled for January 25. Syriza, the anti-austerity, left-wing party led by Alexis Tsipras, is ahead in the polls. If elected, <a href="http://www.cnbc.com/id/102328584">he aims to renegotiate the debts</a> and policies that continue to suffocate Greece. </p>
<p>German government officials promptly declared that there was nothing to renegotiate and even suggested a Greek exit <a href="http://www.spiegel.de/international/europe/merkel-and-germany-open-to-possible-greek-euro-zone-exit-a-1011277.html">would no longer pose any serious threat</a> to the euro, according to Der Spiegel.</p>
<h2>It’s time to invest</h2>
<p>Of late, however, the tone in Berlin is slightly more humble, even though most of the German population still blames the “lazy” Greeks as singly <a href="http://thenationonlineng.net/new/germans-open-greek-euro-exit/">responsible for their lot</a>. Only one thing is clear at this point: that the dynamics of this complex process could go seriously astray as resistance to austerity and even European integration grows in all the region’s capitals. The euro authorities, and anyone else, ignore this at their own peril. </p>
<p>The euro authorities have wasted the last two years suffocating their economies. What’s needed now is a <a href="https://theconversation.com/the-eurozone-needs-a-new-treasury-to-revive-it-33909">joint investment program funded</a> by bonds issued jointly by eurozone member governments to rejuvenate and re-inflate their economies. </p>
<p>The euro is running out of time.</p><img src="https://counter.theconversation.com/content/36041/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joerg Bibow does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Greece is again making headlines, and markets are concerned the euro crisis is back. Actually, the crisis never left. It is just that for a little while both the authorities and the markets chose to cherish…Joerg Bibow, Professor of Economics, Skidmore CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/339092014-11-10T06:12:44Z2014-11-10T06:12:44ZThe eurozone needs a new treasury to revive it<figure><img src="https://images.theconversation.com/files/64004/original/tgkvrsq3-1415378338.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Help needed.</span> <span class="attribution"><span class="source">ilolab via Shutterstock</span></span></figcaption></figure><p>The crisis of growth in the eurozone economy is now in its seventh year and the outlook is <a href="http://www.theguardian.com/world/2014/nov/04/european-commission-cuts-eurozone-growth-forecasts">truly grim</a>. But a new consensus is gradually emerging that could help lift euro countries out of this ongoing crisis. It emphasises the need for Europe’s currency union to reinvigorate public investment by some joint endeavour.</p>
<p>Some version of this is recognised by all the EU’s key leaders. Back in July, now-president of the European Commission, Jean-Claude Juncker, <a href="http://www.reuters.com/article/2014/07/15/eu-commission-juncker-idUSB5N0N102R20140715">called for a €300 billion public-private investment program</a>. European Central Bank (ECB) president Mario Draghi lent his support to the idea in his <a href="http://www.theguardian.com/business/2014/aug/22/mario-draghi-eurozone-governments-boost-economies">Jackson Hole speech</a>, acknowledging that the eurozone is suffering from deficient aggregate demand. </p>
<p>And former EU Commission president, Mario Monti, has said that <a href="http://www.ft.com/cms/s/0/ba9cd208-4d5e-11e4-bf60-00144feab7de.html#axzz3INkBJrku">public investment has been crushed</a> by the Stability and Growth Pact and relentless austerity drive undertaken across the continent in its name. The IMF also highlighted that public investment is currently as close to a free lunch as it ever gets in its latest <a href="http://www.imf.org/external/pubs/ft/weo/2014/02/">World Economic Outlook</a>. So countries renege on their grandchildren’s possibilities by not going for it. </p>
<p>For far too long, the debate in Europe was exclusively focused on the liability side of the public ledger: debt. But it is the asset side – whether or not investment is made in public infrastructure such as transport and energy, health, education and research – that is far more relevant in shaping our future. </p>
<h2>Special opportunity</h2>
<p>While ECB president Mario Draghi dangles <a href="http://www.bbc.co.uk/news/business-29933943">more stimulus measures</a> in front of investors, more important will be to embark on a joint public investment initiative. Now represents a special opportunity for the eurozone, a chance to fix the euro regime’s ultimate defect: the lack of fiscal union. Creating a <a href="http://www.lse.ac.uk/fmg/workingPapers/specialPapers/PDF/SP227.pdf">joint treasury for eurozone members</a> would be a simple and straightforward way of doing this.</p>
<p>This euro treasury would act as a vehicle to pool future eurozone public investment spending and have it funded by proper eurozone treasury securities. The euro treasury would allocate investment grants to member states based on their GDP shares. And it would collect taxes to service the interest on the common debt, also exactly in line with member states’ GDP shares. </p>
<p>The arrangement amounts to a rudimentary fiscal union, not a transfer union though, as benefits and contributions are shared proportionately. Nor would the joint public debt issued for investment purposes cancel out any existing national debts. Instead, the euro treasury securities would provide the means to fund the joint infrastructure spending which is the basis for the union’s joint future. </p>
<p>Currently, eurozone public investment spending is at a very depressed level of around <a href="http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&language=en&pcode=tec00022&plugin=0">2% of members’ GDP</a>. Public investment should be boosted to 3 or 4% of GDP for a few years and thereafter grow at an annual rate of, say, 5%. Once the key parameters are set, there would be no discretion in fiscal decision making at the centre. </p>
<h2>The golden rule</h2>
<p>The euro treasury would function on the basis of a strict rule, the so-called golden rule of public finance, which foresees that public investment should be debt financed. Member states would still be required to abide by all the rules of the current euro regime, but this would apply to current public expenditures only – as national public capital expenditures would form a separate capital budget funded through common securities. </p>
<p>The current austerity crusade rejects the conventional understanding of the golden rule and <a href="http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=tec00115">impoverishes Europe</a>. The euro treasury would turn that golden rule into the anchor of the European integration process; with investment grants being automatically withheld in case of non-compliance.</p>
<h2>Resolving the euro crisis</h2>
<p>The lack of fiscal union is the ultimate flaw in the current euro regime and at the heart of the unresolved euro crisis. The euro has decoupled the monetary and fiscal authorities, a divorce that has left all parties concerned extremely vulnerable. Lacking a central bank partner, the national treasuries are subject to default and, hence, runs. </p>
<p>Lacking a euro treasury partner and euro treasury debt, the ECB is subject to legal challenges to its quasi-fiscal policies, as applied to national debts. Today, there is little the ECB can safely buy without opening the can of worms that has the <a href="http://www.economist.com/node/17632957">“transfer union”</a> label on it – the unpopular idea that the wealthier sections of the eurozone must prop up the poorer parts. The euro treasury would establish the vital axis of power between treasury and central bank. </p>
<p>And, while the flawed euro regime has caused a massive investment slump, the treasury scheme would steady public investment spending. This would safeguard the eurozone’s infrastructure and common future – and it would also help stabilise economic activity and investment spending generally. </p>
<p>With public investment organised at the centre and funded through common debt, national public debt ratios can decline to low and safe levels. The term structure of euro treasury debt would become the common benchmark for financial instruments issued by debtors of euro member-states, irrespective of nationality – the promise of the common market and common currency would finally be fulfilled.</p>
<p>The original euro experiment has failed and it is high time to relaunch it on sounder footing. The <a href="http://www.levyinstitute.org/publications/the-euro-treasury-plan">euro treasury</a> would not only heal the euro’s potentially fatal birth defects but would also contribute to overcoming the ongoing crisis.</p>
<hr>
<p><em>A version of this article was also published by <a href="http://www.social-europe.eu/2014/11/eurozone-needs-treasury/">Social Europe</a>.</em></p><img src="https://counter.theconversation.com/content/33909/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joerg Bibow does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The crisis of growth in the eurozone economy is now in its seventh year and the outlook is truly grim. But a new consensus is gradually emerging that could help lift euro countries out of this ongoing…Joerg Bibow, Professor of Economics, Skidmore CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/327262014-10-21T09:55:42Z2014-10-21T09:55:42ZGermany may be the biggest loser if it doesn’t start spending<p>There’s growing pressure on Germany to spend more to support Europe – and for good reason. But it’s proving to be a hard sell to the country’s leaders.</p>
<p>Germany’s budget is balanced and the government insists that its current policy stance is the best it can do – for itself, the eurozone and the world at large. The government’s mantra is that a balanced budget inspires confidence, which in turn propels growth. That’s not actually happening of course, as is plainly visible for anyone to see, yet the ongoing stagnation and sense of crisis felt across the eurozone have only encouraged the German government to repeat its flawed logic.</p>
<p>The rest of the world is not amused, especially eurozone members that have been at the receiving end of Germany’s economic policy wisdom and have been more actively pushing against its gospel of austerity of late. </p>
<p>For much of the time since the euro was launched in 1999, Germany has depended on foreign purchases of its exports for its own meager growth, particularly when domestic demand <a href="https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/NationalAccounts/kvgr115.html">stagnated</a> for much of the 2000s, just as it does today. But Europe’s biggest country has not been willing to return the favor, as public and private investment remain severely depressed. Even as the government has just cut its own growth forecast for this year and next, it also signaled its continued stubborn refusal to change course. </p>
<h2>A nation of surpluses</h2>
<p>That protracted stagnation in domestic demand helped cause Germany to run up huge and persistent current account surpluses, <a href="http://www.tradingeconomics.com/germany/current-account-to-gdp">averaging about 7% of GDP</a> since 2006. Germany’s current account surplus, on pace to be the world’s largest for a second year in a row, is significantly bigger than China’s, which has <a href="http://www.tradingeconomics.com/china/current-account-to-gdp">declined sharply</a> as a share of GDP from 10% to 2% since the financial crisis. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/61718/original/qy284f9z-1413307233.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/61718/original/qy284f9z-1413307233.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/61718/original/qy284f9z-1413307233.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=438&fit=crop&dpr=1 600w, https://images.theconversation.com/files/61718/original/qy284f9z-1413307233.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=438&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/61718/original/qy284f9z-1413307233.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=438&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/61718/original/qy284f9z-1413307233.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=551&fit=crop&dpr=1 754w, https://images.theconversation.com/files/61718/original/qy284f9z-1413307233.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=551&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/61718/original/qy284f9z-1413307233.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=551&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p>Meanwhile Germany’s has gone the other way, and its leaders do not see anything wrong with that. Rather, the government views it as evidence of the country’s sound policies and restored competitiveness. Eurozone partners are invited to follow the German lead. They are told to balance their budget, liberalize their labor markets and improve their own competitiveness. </p>
<p>There is something fundamentally wrong about this prescription. It is actually no surprise that the eurozone remains stuck in crisis today, a crisis that is in some respects worse than the experience of the Great Depression of the 1930s. Unless the rest of the world starts booming soon – and there’s no sign that it will – the situation in the eurozone is more likely to deteriorate further than improve on its own. Germany would do itself a big favor by finally acknowledging that its own model is not working for the eurozone and change track. </p>
<h2>‘Sick man of the euro’</h2>
<p>It may be a good starting point to highlight that Germany’s current account surplus was a <a href="http://www.imf.org/external/np/res/seminars/2010/paris/pdf/obstfeld.pdf">key factor</a> in bringing about the euro crisis in the first place. </p>
<p>Basically, a country that runs a current account surplus earns more than it spends and acquires net claims against the rest of the world. A country that runs a current account deficit spends more than it earns and accumulates net debts against the rest of the world. Prior to the crisis the eurozone as a whole had a nearly balanced external position. But internally the eurozone became severely unbalanced as more than two thirds of Germany’s external surplus was balanced by its own eurozone partners. When Germany followed the very same policies it now prescribes to its euro partners, the predictable consequences were just as those witnessed elsewhere today: at the time, Germany was known as the “sick man of the euro”. </p>
<p>But Germany got lucky. As interest rates fell across the eurozone, credit and spending booms were ignited in today’s crisis countries. Their spending fired the German export engine, while German banks were all too happy to refinance loans in Spain and elsewhere. So Spain and the other crisis countries ran up net external debts that reached about <a href="http://www.rte.ie/news/business/2014/0930/649073-spain-gdp-2015/">100% of GDP</a>. When crisis struck, private lending froze, leaving the currency union divided into debtors and creditors (mainly Germany), and separated by a severe competitiveness imbalance. </p>
<h2>Germany’s painful prescription</h2>
<p>This is where Germany’s austerity prescriptions for crisis countries come into play. These countries are lacking the external lifeline – booming exports – that rescued Germany a decade ago. Instead, they are sinking ever deeper into what is known as debt deflation, when their attempts to reduce indebtedness actually raises the real burden of the debt. To restore their competitiveness, they have to engineer a lower rate of inflation than Germany’s, so that their goods are cheaper. That’s tough given German inflation is only 0.8%. </p>
<p>And restoring competitiveness by deflation is especially painful. To actually reduce their indebtedness, the countries need to run current account surpluses and grow their GDP. That requires trade partners who are willing to spend – something that is hard to come by these days.</p>
<p>Certainly Germany is not returning the favor of increased spending that it received during the last decade. Indeed, the German government is adamant about not spending more. The euro crisis has proved too convenient for Germany, providing super-low interest rates and a euro exchange rate that has allowed the country to shift its notorious surpluses elsewhere. But Germany will be the biggest loser if the euro comes apart. Hopefully its leaders will wake up from their austerity-propels-growth dreams before it is too late.</p><img src="https://counter.theconversation.com/content/32726/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joerg Bibow does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>There’s growing pressure on Germany to spend more to support Europe – and for good reason. But it’s proving to be a hard sell to the country’s leaders. Germany’s budget is balanced and the government insists…Joerg Bibow, Professor of Economics, Skidmore CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/102352012-10-25T19:30:16Z2012-10-25T19:30:16ZPresidential politics: the true US national pastime<figure><img src="https://images.theconversation.com/files/16803/original/zzxtr85p-1350963289.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">President Obama's sporting prowess has helped his popularity among the wider American electorate.</span> <span class="attribution"><span class="source">EPA/Kevin Dietsch</span></span></figcaption></figure><p>For many Americans, it seems, politics is the ultimate sport, the true national pastime. </p>
<p>Like athletes, political candidates are written about and widely seen as heated rivals – for popularity, power, and prestige. Debates are opportunities to score points with pundits and the public. </p>
<p>And in the end, after a long, tough political season, and after the polls have closed and the ballots have been counted, we have clearly delineated winners and losers, hopefully. At this point the newly elected or re-elected sing the praises of his or her campaign managers, teammates, and supporters and, in a gesture of good sportsmanship, usually try to mend fences with the opposition and its partisans. </p>
<p>Presidential politics in the US, in particular, draw on the rhetoric and iconography of sport. </p>
<p>On this very website, Luke Freedman began <a href="https://theconversation.com/us-presidential-debate-obama-gets-his-game-on-10175">his commentary</a> on the second presidential debate by using sports metaphors. “The president probably wished he could have taken the shot again after his listless debate performance two weeks ago,” Freedman wrote. “There are no do-overs in politics. But then, in the second debate in New York, he just about managed to hit a pretty good one out of the rough.” </p>
<p>Putting aside Freedman’s political analysis (which seems correct to me), President Barack Obama <a href="http://www.cbsnews.com/8301-503544_162-57454890-503544/president-obama-plays-100th-round-of-golf-draws-fire-from-critics/">does in fact golf</a>, like many of his predecessors, Democrats and Republicans alike. Indeed, according to Golf Digest, President Dwight Eisenhower played some <a href="http://www.golfdigest.com/golf-tours-news/2008-04/ike">800 rounds of golf</a> during his two terms in office. </p>
<p>It’s probably even better known that Obama truly loves basketball. He played the game as a boy (in 1971, his father gave him a <a href="http://sportsillustrated.cnn.com/vault/article/magazine/MAG1150686/2/index.htm">basketball for Christmas</a>), as a student at <a href="http://articles.latimes.com/2008/nov/10/sports/sp-crowe10">Occidental College</a>, and he still does. His <a href="http://www.vanityfair.com/politics/2012/10/michael-lewis-profile-barack-obama">regular pickup game</a> often attracts former college players and, on special occasions, like the <a href="http://www.washingtonpost.com/wp-dyn/content/article/2010/08/09/AR2010080901392.html">president’s birthday</a>, some NBA stars. Since one’s <a href="http://www.youtube.com/watch?v=JIbp5C-5WXM">Basketball Jones</a> might strike at any moment, the White House <a href="http://www.whitehouse.gov/interactive-tour/basketball-court">reports</a> that:</p>
<blockquote>
<p>Shortly after taking office, President Obama had the White House tennis court adapted so it could be used for both tennis and basketball. </p>
</blockquote>
<p>A Chicago sports fan (he roots for the Bulls, Bears, and the South Side White Sox, not the Cubs), Obama regularly meets with championship teams at the White House - continuing a long-standing tradition - and has also <a href="http://www.youtube.com/watch?v=5DGVTBtFTdI">appeared on ESPN</a> to explain his college basketball “March Madness” bracket choices. </p>
<p>In all these and other ways, Obama is enacting a presidential tradition: public displays of athleticism, as a participant or as a fan. </p>
<p>In his <a href="http://www.amazon.com/The-Games-Presidents-Play-Presidency/dp/080188425X">engaging history</a>, The Games President’s Play: Sports and the Presidency, John Sayle Watterson traces this phenomenon back to the eighteenth century. But it was only in the last century that “presidents generally showed more interest in sports and used their sports - and games - for personal and political purposes,” Watterson notes.</p>
<p>“Sports and political character might be more intimately connected than is commonly acknowledged,” Watterson argues.</p>
<p>He continues:</p>
<blockquote>
<p>Presidential sports might even influence a president’s career and his approach to foreign and domestic policy. Furthermore, through sports and games, presidents can create a positive image and schmooze with those who can be of use. And, of course, presidents use games and sports for rest and recreation. </p>
</blockquote>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/16804/original/b6rwj4xs-1350963717.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/16804/original/b6rwj4xs-1350963717.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=991&fit=crop&dpr=1 600w, https://images.theconversation.com/files/16804/original/b6rwj4xs-1350963717.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=991&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/16804/original/b6rwj4xs-1350963717.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=991&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/16804/original/b6rwj4xs-1350963717.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1245&fit=crop&dpr=1 754w, https://images.theconversation.com/files/16804/original/b6rwj4xs-1350963717.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1245&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/16804/original/b6rwj4xs-1350963717.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1245&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">President Obama playing golf while on vacation in Massachusetts.</span>
<span class="attribution"><span class="source">EPA/CJ Gunther</span></span>
</figcaption>
</figure>
<p>From Teddy Roosevelt’s well-publicised <a href="http://www.buzzfeed.com/toddvanluling/teddy-roosevelt-hunting-endangered-animals">big game hunts</a> and mountain climbing adventures, to Woodrow Wilson’s <a href="http://www.theatlantic.com/politics/archive/2011/06/when-presidents-play-golf/240645/">hours on the links</a>, to JFK’s famous <a href="http://www.jfklibrary.org/Exhibits/Past-Exhibits/Shaping-up-America.aspx">touch football</a> games, to Gerald Ford’s <a href="http://bleacherreport.com/articles/1218861-michigan-football-gerald-fords-legendary-number-48-getting-un-retired">gridiron success</a> at the University of Michigan, and George H. W. Bush’s <a href="http://static.espn.go.com/mlb/bush/family.html">exploits</a> as a baseball player at Yale, virtually every American president has emphasised his athletic skills or at least his interest in sports. </p>
<p>Doing so is good public relations, to be sure, and hence good politics, as it accentuates one’s fitness, strength, stamina, and virility. Sometimes, it seems like the president’s masculinity and athleticism are intertwined. When the president is engaged in a salutary physical activity, it presumably enriches not just him, but also the nation and its citizens. It also makes him more accessible and likable to many sports-loving voters. </p>
<p>Obama clearly understand this, as does his Republican opponent, former Massachusetts Governor Mitt Romney. </p>
<p>In <a href="http://www.amazon.com/Real-Romney-Michael-Kranish/dp/0062123289/ref=sr_1_1?s=books&ie=UTF8&qid=1350931233&sr=1-1&keywords=real+romney">The Real Romney</a>, journalists Michael Kranish and Scott Helman report that, while Romney ran cross-country track in high school, “like his father, Mitt was never much of an athlete”. Be that as it may, Romney plays tennis, snow and water skis, and enjoys taking his boat out. He also apparently has done some <a href="http://www.youtube.com/watch?v=-1ZTIbr8MuY">hunting</a>. </p>
<p>A more important sport bona fide is how Romney successfully administered the 2002 Winter Olympics in Salt Lake City, after the games had become embroiled in a bribery scandal. Under Romney’s leadership, the Salt Lake Organizing Committee restored integrity, enthusiasm, and fiscal responsibility to the games. According to the <a href="http://www.nytimes.com/2007/09/19/us/politics/19romney.html?_r=1&">New York Times</a>:</p>
<blockquote>
<p>In rescuing the 2002 Salt Lake City Winter Games, which had been tarnished by scandal, Mr. Romney learned the ways of Washington and the hurly-burly of politics, mastered the news media, built a staff of loyalists and made fund-raising connections in Utah that have proven vital to his presidential campaign. </p>
</blockquote>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/16809/original/f4r7kcx3-1350964684.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/16809/original/f4r7kcx3-1350964684.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=746&fit=crop&dpr=1 600w, https://images.theconversation.com/files/16809/original/f4r7kcx3-1350964684.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=746&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/16809/original/f4r7kcx3-1350964684.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=746&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/16809/original/f4r7kcx3-1350964684.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=937&fit=crop&dpr=1 754w, https://images.theconversation.com/files/16809/original/f4r7kcx3-1350964684.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=937&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/16809/original/f4r7kcx3-1350964684.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=937&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">President Bush with Washington Nationals baseball player Brian Schneider after throwing out the ceremonial first pitch.</span>
<span class="attribution"><span class="source">EPA/Shawn Thew</span></span>
</figcaption>
</figure>
<p>Not all of Romney’s associations with sports have been as successful. The son of former auto industry executive, Romney attempted to connect with NASCAR fans when he visited the Daytona International Speedway back in February. While there, he was asked if he follows stock car racing. Romney replied, “Not as closely as some of the most ardent fans, but I have some friends who are NASCAR team owners,” the Associated Press <a href="http://sportsillustrated.cnn.com/2012/racing/wires/02/26/3010.ap.car.nascar.daytona.romney.1st.ld.writethru.0797/index.html">reported</a>. </p>
<p>A few months later, in April, Romney was at Fenway Park in Boston on Patriots’ Day. At the time, one sportswriter <a href="http://www.nesn.com/2012/04/mitt-romney-soaks-up-fenway-park-atmosphere-during-red-sox-rays-patriots-day-clash-photo.html">noted</a>: “maybe he’s trying to win some brownie points with members of Red Sox Nation, or maybe he just wanted to enjoy the nice weather”. Either way, it doesn’t seem to have helped Romney with Massachusetts voters, who <a href="http://www.realclearpolitics.com/epolls/2012/president/ma/massachusetts_romney_vs_obama-1804.html">currently prefer</a> President Obama as a candidate, 54.7 to 39.7. </p>
<p>Pick your metaphor. Here in the US, we’re approaching the ninth inning, the fourth quarter, or the final round, and thus we’ll soon find out who will be wearing the presidential laurel crown. </p><img src="https://counter.theconversation.com/content/10235/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Daniel Nathan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>For many Americans, it seems, politics is the ultimate sport, the true national pastime. Like athletes, political candidates are written about and widely seen as heated rivals – for popularity, power…Daniel Nathan, Associate Professor of American Studies, Skidmore CollegeLicensed as Creative Commons – attribution, no derivatives.