Policy Of Restraint Research Articles

Mexico: Stabilization, Debt and Growth

Mexico Rudiger Dornbusch Mexico today is at a crossroads. As the de la Madrid presidency, which has been dominated by the debt crisis, comes to an end, a number of major policy difficulties remain: inflation is still a problem and the continuation of stagnation in a country where the population grows by 3% a year is clearly unsustainable. The outlook for inflation is dependent on the government's ability to keep its budget under control. The stabilization programme has been quite successful in this respect, but the cost in terms of foregone growth is staggering. The issue here is how to collect the disinflation benefits of policy restraint. Analysing the peculiar process of rapid inflation, both in Mexico and elsewhere, the author calls for an incomes policy. As for growth, it is closely linked to the external situation. Mexico, which triggered the debt crisis in 1982, has made remarkable progress in achieving a non-interest current account surplus. Yet its external debt remains huge and requires a continuation of net transfers abroad. The experience though, is that debt service comes at the expense of productive investment and growth. The author proposes to escape from the unacceptable choice between debt service and growth by adopting what he calls ‘interest rescheduling’, a debt-equity swap applied to interest payments rather than to the principal.

Nuclear proliferation: who's next?

Unsettling developments in the past 18 months could lead to nuclear competition and terrorism in the world's least-stable regions. US efforts to stop the proliferation of nuclear weapons seem ineffective in view of such unsettling developments, especially among the states whose programs are most advanced. The task is more difficult than it was a decade ago. Then the policy of export restraint on the part of nuclear supplier countries formed the basis for a unified strategy that helped retard proliferation across the board. Today each country on the nuclear threshold must be addressed individually, taking into account its unique regional concerns and its particular relations with the US. If there is a unifying thread to US efforts to stop proliferation, it is that these have become increasingly political and diplomatic. In such a setting it is all the more important to make nonproliferation a top priority on the US foreign policy agenda. Unfortunately, other concerns have eclipsed nonproliferation in the recent past. The effect of that neglect is increasingly evident. 9 references, 1 figure, 1 table.

Economic crisis and economic policy in the thirties and the seventies

This article studies the causes of the deterioration of the Dutch economy after 1930 and after 1973 and potential remedies. An originally Keynesian model from the Central Planning Bureau is extended with some crucial financial feedbacks. Foreign factors and restrictive policy explain the bulk of unemployment growth in the 1930's; the opposite holds for the 1970's. Optimal control suggests the feasibility of a somewhat less restrictive policy in the 1930's, at the cost of financial targets. Fiscal discipline, combined with a less restrictive monetary policy and wage restraint in the 1970's would have improved the initial conditions for the 1980's.

Ontario Revenue Budgets 1960-1980

A review of Ontario revenue budgets over a twenty year period, designed to permit comparison with those in Quebec over the same two decades. Before 1967, budgets in Ontario were prepared with little apparent attention to the stabilization potential of provincial fiscal actions. After 1967, the province adopted a more explicit fiscal stance in each budget and, in the last five or six years, has preferred shortterm, narrowly targeted tax adjustments rather than across-the-board changes. Since 1977, the government has pursued a policy of public sector spending restraint which, combined with a reluctance to raise taxes, has signalled a commitment to "supply-side" strategy. The implicit preference for private-sector economic solutions is demonstrated as well by the shifting of tax burdens in the two decades from corporations and fuels taxes to personal income and retail sales taxes. The importance of federal transfers is also evident, as is the role of federal income tax adjustments in constraining provincial tax policy.

Normative and Policy Restraints on War

Normative and Policy Restraints on War

Agriculture and the Rest of the Economy: Macroconnections and Policy Restraints

The first two sections of the paper are devoted to a combination of Kuznets and structuralist stories, where we ask how the agricultural/nonagricultural terms of trade and income distribution must adjust to permit both savings and investment and commodity market balance to be assured. It will be shown that inflationary processes can easily be kicked off by terms of trade movements in the short run. In the next two sections we follow Chichilnisky in working out a longer run, Lewis-style model in which economic dualism plus an elastic labor supply can lead to severe problems with realization of the marketed surplus and agricultural exports abroad. A brief final section summarizes the major implications of the models for policy choice.

Arms Control and Security in Europe: Assumptions and Essentials for Alternative Strategies

Thee, M. Arms Control and Security in Europe: Assumptions and Essentials for Alterna tive Strategies. Cooperation and Conflict, XIV, 1979, 211-221. The military build-up in Europe, contrary to the theory that it serves the maintenance of peace, undermines efforts at détente and is a threat to peace. It has become evident that arms control is in deep crisis. Rather than to be brought under control, the arms race tends to get out of control. The concern in Europe turns to the spread of 'grey area' weapons of a Eurostrategic range which are covered neither by SALT nor by M(B)FR negotiations. To achieve military détente basic new departures and initiatives are needed. A set of measures for short and long-term implementation, as a comprehensive security strategy, could include: (a) a conscious and resolute policy of political and military restraint, (b) confidence-building measures aimed at greater openness in military affairs, (c) risk-free unilateral and reciprocated tension-reduction and disarmament initiatives, (d) efforts at gradual military disengagement in Central Europe, and (e) possible denuclearization of Central Europe.

Critique of Jacques A. Barbier’s “The Culmination of the Bourbon Reforms, 1787-1792”*

Jacques Barbier argues forcefully in recent article in the HAHR that the division of the Ministry of the Indies in 1787 and the abolition of separate colonial ministries in 1790 represented not, as previous commentators have assumed, conservative reaction in Madrid against imperial reform, but the logical culmination of process of ministerial and institutional reorganization which can be traced back to the reign of Philip V.1 He suggests, moreover, on the basis of an analysis of the business of the newly-formed Junta de Estado, or cabinet, in 17881791 that the reform program continued to be pushed ahead vigorously, notably in areas such as the extension of free trade which were likely to produce economic benefits for Spain. Decisions which have been interpreted as contradictions rather than continuations of the work of Jose de Galvez-for example, the abolition of independent superintendencias in the viceregal capitals in 1787-1788-are attributed not to reaction as such but to determination to avoid provocation of both colonists and older vested interests. Focusing on Peru, he sees the recall in 1787 of superintendent (and former visitador general) Jorge de Escobedo, and the confirmation by the cabinet in 1788-1789 of administrative and personal changes in the city of Cuzco as indicative merely of a policy of restraint in taxation and expenditures and cc ~~~~~~~~~~~2 more civil behavior towards colonists. This brief essay is not designed to question Professor Barbier's basic argument. On the contrary his article demonstrates persuasively that in Madrid, if not in Lima, the innovations which followed the

Force versus Restraint in Prison Riots

The 1971 tragedy at Attica has prompted a controversy over whether a policy of force or restraint should be used to settle prison riots. Many prison administrators maintain that restraint encourages further resistance. This article analyzes the official policy (restraint or force) adopted at each nationally reported prison riot since the Civil War. According to this historical analysis, a policy of restraint does not encourage further rebel lion, and it is almost without exception more successful than force in preserving human life.

The Excess Burden of Monetary Policy; A Discussion of the Hodgman and Mayer Papers

The papers by Donald Hodgman and Thomas Mayer are concerned with two general questions: (1) The differential effects of monetary policy on different sectors of the economy, and (2) the use of selective credit controls to implement both general monetary policy and to alter the allocation of credit. Both Hodgman and Mayer pay particular attention to specific questions of interest to them. Mayer concentrates on the alleged discriminatory impact of tight money on housing. Hodgman devotes much of his paper to the use of selective credit controls as a tool for altering the allocation of credit in the market. Implicit in both analyses is some theory of optimal policy execution in a setting where the free market allegedly fails to produce socially acceptable results. Much theory has been put forth in this setting as far as tax and expenditure policies are concerned. Very little general theory has been developed as far as monetary policy is concerned. Both Mayer and Hodgman present theoretical discussions of specific issues but do not relate this theory to an overall approach to monetary policy execution. This is an ideal opportunity to initiate a discussion along such lines. There are, really, two topics for consideration. The first topic concerns the optimal execution of an overall policy of monetary ease or restraint, while the second issue concerns the optimal execution of a policy to alter the allocation of credit. Each will be discussed in turn. Let us assume for the moment that in all segments of the economy social costs equal private costs and social benefits equal private benefits. The imposition of monetary ease or restraint (in order to maintain full employment without inflation) must, therefore, take place without altering the efficiency of the free market's allocation of resources.1 In other words, we must minimize the welfare costs of a given monetary (or stabilization) policy. Assuming that some stabilization policy is

Communist China's Strategy of Economic Development 1961-1966

The economic disruption brought about by the ideologicallydetermined policies of the Great Leap Forward (1958-60), the abrupt withdrawal of Soviet experts (mid-1960), and the natural calamities of the three bad years (1959-61) led to a rethinking of communist China's approach to economic development and a revision of key economic policies. By the second half of 1960 it became clear to even the most dogmaticallyminded Chinese leaders that ideological faith and centrally-inspired mass enthusiasm were not substitutes for economic calculation. The result was the introduction late in 1960 of a series of new economic policies collectively known as Readjustment, Consolidation, Filling-Out, and Raising Standards. The methodological guidelines for the new course were gradualness, a modicum of intersectoral balance, an appreciation of the overwhelming rural realities of China's society, and a new understanding of quality as an important dimension of economic growth. However, hand in hand with the policy of prudence, moderation, realism, and restraint, went a renewed assault on the citizens' political consciousness under the name of Socialist Education. Launched in 1962, the campaign was aimed at preventing the essentially revisionist economic policies from seeping through into the realms of culture and politics and turning into the muchfeared Soviet-type revisionism after the disappearance of the present generation of Chinese leaders. Both in its intensity and the shrillness with which it was pursued, the socialist education campaign (culminating in what came to be known as the Proletarian Cultural Revolution) revealed the anxiety with which China's aging leaders viewed the possible future course of events in the country, and the continued suspicion in which they held the rising generations of technocrats, engineers, and other experts.' The campaign is still on. It injects into the new economic course an element of tension and a suggestion of impermanence which may in the end threaten the real achievements made since the abandonment of the Great Leap. Agriculture as the Foundation In a reversal of the 1953-57 Soviet-type, capital-intensive, heavy industry-oriented planning, and the 1958-60 Great Leap industry-oriented but labor-intensive political drive, the new policy inaugurated in the latter part of 1960 stresses sectoral balance and pays special attention to the hitherto most neglected sector-agriculture. In December 1964 Chou En-lai

Four Japanese: Their Plans for the Expansion of Japan to the Philippines

Between 1886 and 1891, four Japanese nationalist-activists – Yoko Tosaku, Sugiura Jugo, Suganuma Teifu and Fukumoto Makoto – described their plans for Japanese expansion to the Philippines. These men, writing during the time of ideological ferment in the early Meiji period, represented a significant trend of thought when Japan was greatly concerned with the problem of attaining an international position to assure her national security. This was also a period when the Japanese government, guided by the Meiji oligarchs, adopted a “policy of restraint” from territorial expansion which might involve Japan in foreign conflicts while they were undertaking the modernization as well the industrialization of the country.