Opinion

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What We Owe Gaza’s Journalists

Published by Anonymous (not verified) on Fri, 24/05/2024 - 3:24am in

War rages on in the months since Hamas’ assault against Israel and its ongoing retaliatory punishment of the blockaded Gaza Strip. It has been agonizing to witness. As of May, Israeli military actions are estimated to have killed more than 35,000 Palestinians, the majority of them women and children. Almost the entire population of Gaza has been displaced from their homes. A quarter of the…

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Doctor Who: How RTD Is Unlocking The Show's True Hidden Heart(s)

Published by Anonymous (not verified) on Sat, 04/05/2024 - 10:37pm in

Doctor Who Showrunner Russell T. Davies is focusing on the show's secret heart(s) - a riff on Peter Pan and the story of a lonely orphan.

Doctor Who: Do We Really Need The Doctor to Be An Action Hero?

Published by Anonymous (not verified) on Sat, 27/04/2024 - 10:38pm in

Doctor Who has always been a pacifist, though the BBC really wants us to think they're an action hero. But is that really necessary?

Doctor Who: Disney Begins Introducing Ncuti Gatwa to The World (VIDEO)

Published by Anonymous (not verified) on Wed, 17/04/2024 - 8:37pm in

Doctor Who is back in a few weeks, and the big Disney promotional push for the new series - and Ncuti Gatwa's skyrocketing star - starts NOW!

How Basic Income Can Support Climate Tech Solutions

Published by Anonymous (not verified) on Mon, 01/04/2024 - 2:05pm in

The evolution of climate action has reflected the need for affordable options. Universal basic income (UBI) has the unique opportunity to empower everyone to change the world. The warming environment necessitates rapid development and deployment of climate innovations. UBI can provide the accessibility that is crucial to the widespread adoption of solutions like solar panels, […]

How Basic Income Can Support Climate Tech Solutions

How to Unite Nations to Deal with Climate Change: Introducing New Multilateralism

Published by Anonymous (not verified) on Tue, 15/11/2022 - 1:05am in

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Opinion

The answer to this question is surprisingly simple. Climate change is not a problem that can be solved through a top-down policy architecture.

The post How to Unite Nations to Deal with Climate Change: Introducing New Multilateralism appeared first on Evonomics.

‘Developed’: What does that even mean?!

Published by Anonymous (not verified) on Fri, 14/05/2021 - 9:57pm in

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Enshrined is the label ‘developed’. Positioned as the ultimate goal, economic growth is traditionally seen as the means to achieve this label. Yet this restrictive definition leads to classifications of ‘developed’ to depend on quantitative economic tools that disregard the costs of economic growth on stakeholders (Tavernaro-Haidarian, 2019).

‘Developed’ as a term itself implies a contrast of concepts: developed versus undeveloped, civilised versus uncivilised, and economic progress versus stagnation. Inequality is thereby created from the existing value judgements implicitly present within this central term. When assigning countries varying degrees of development as a manner of categorisation, positive or negative connotations accompany it as a result. 

The Classical development view expands upon this implicit judgment through the modernisation theory, which calls for ‘poorer’ or ‘less developed’ countries to follow in the footsteps of the Global North (Baylis et al., 2019). Progress is thereby framed by the development agenda to be emulating the same structures and policies of Western ‘developed’ nations to achieve ‘good governance’ signalled by wealth and stability. But we cannot ignore the past origins of this current wealth.

Imperialism and the societal structures enforced by colonisation onto racially minoritised people have impacts that are still felt today. Bruhn’s (2010) research found that areas where large-scale exploitation of slaves occurred currently have approximately 30% lower GDP per capita due to the institutions— like banking systems— created by the colonial elite reinforcing political and socioeconomic inequalities in their favour. Previously imperial powers have set the current development agenda, yet their past actions have hindered the progress of former colonies, reinforcing inequalities.

These inequalities are also present in the mainstream narratives expressed within the field of development. Voices of national development experts are sidelined in favour of international development experts, regardless of their deeper understanding of local cultural contexts (Flint & Meyer zu Natrup, 2019). Kamruzzaman (2016) notes that ethnographies of aid, specifically the analysis of relations between the aid industry and the local population, needs to include a wider range of perspectives. 

Expanding perspectives means expanding past neoliberalism— the promotion of free markets, capitalism, and lowered government influence. This means going beyond the views of neoliberal institutions composing the Washington Consensus, namely the World Bank, the International Monetary Fund, and the Treasury of the United States. People who are personally affected by development policies need to be involved in the decision-making process in order to truly achieve progress. 

Context— including sociocultural, political, and economic factors— is essential to the realm of development. Including more narratives within this field is a crucial step in reducing inequalities among stakeholders present within the decision-making process. It is when we go beyond quantitative economic tools and the mainstream that we are able to then reach a higher level of development: improvement in overall wellbeing while respecting marginalised groups.

Written by Hui Ying Chia

Bibliography:

Baylis, J., Smith, S., Owens, P. (2019). The Globalization of World Politics: An Introduction to International Relations. 8th edn. Oxford: Oxford University Press

Bruhn, M. (2010). World Bank Blogs: Did Yesterday’s Patterns of Colonial Exploitation Determine Today’s Patterns of Poverty?. Available at: https://blogs.worldbank.org/allaboutfinance/did-yesterday-s-patterns-of-colonial-exploitation-determine-today-s-patterns-of-poverty (Accessed: 21 April 2021) 

Flint, A. & Meyer zu Natrup, C. (2019). ‘Aid and development by design: local solutions to local problems, Development in Practice’, Development in Practice, 29(2), pp. 208-19

Huang, Y. (2010). ‘Debating China’s Economic Growth: The Beijing Consensus or The Washington Consensus’, Academy of Management Perspectives, 24(2), pp. 31-47

Kamruzzaman, K. (2016). ‘Understanding the Role of National Development Experts in Development Ethnography’, Development Policy Review, 35(1), pp. 39-63

Park, J.H. (2002). ‘The East Asian Model of Economic Development and Developing Countries’, Journal of Developing Societies, 18(4), pp. 330-53

Tavernaro-Haidarian, L. (2019). ‘Decolonization and development: Reimagining key concepts in education’, Research in Education, 103(1), pp. 19-33

Covid Relief and Modern Monetary Theory

Published by Anonymous (not verified) on Tue, 30/03/2021 - 11:07pm in

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Over the last year, the United States government has used fiscal stimulus as a response to falling aggregate demand due to the Coronavirus pandemic. Last March Congress approved the $2 trillion “CARES” (Coronavirus Aid, Relief and Economic Security) act. This bill increased the U.S. government’s 2020 spending to $3.13 trillion more than it received in revenue, running its largest budget deficit ever. 

But the Coronavirus extraordinary spending has only accelerated a 20 year trend of deficits, as the U.S. government has not run a budget surplus since 2001. Consequently, the U.S. currently owes an accumulated $27.9 trillion, which could rise to $35.3 trillion by 2031. In an era when the world’s biggest economy’s national debt is growing to historic levels, should we be worried about the U.S. government becoming insolvent? And should we listen to the likes of Senator Mitch McConnell who oppose “borrowing from our grandkids” to fund more Covid relief programs? 

Firstly, I have to explain monetary policy in the context of snowballing of debt. Currently we have near 0% interest rates due to the Federal Reserve’s Quantitative Easing (QE) program, meaning their massive purchasing of Treasury securities. Basically, the Fed has bought over $7 trillion of Treasuries, crowding out investors, increasing the money supply, and maintaining a very low borrowing rate.

However, in the future a sudden increase in interest rates (perhaps prompted by negative expectations from unwinding of QE) could lead to an inability to roll-over debt. The U.S. Treasury could be unable to refinance its maturing bonds at cheaper rates if the interest rate shot up to, for example, 6%. The idea is that the U.S. would have to borrow ever increasing amounts to cover its older borrowing costs, and the debt would grow to so-called unsustainable levels. 

And even without rising interest rates, Americans could approach a situation like Japan, with a debt/GDP ratio of over 200%. As a result of its  large debt, the Japanese government allocates 50% of taxes only to paying down borrowed money. This scenario represents leaving the tab of current expenses for our grandchildren, reducing their disposable income.  

Furthermore, the common rationale behind fearing rising interest rates is also the possibility of a default. The American public owns the vast majority of its national debt, approximately $21.8 trillion of it, with foreigners such as China and Japan owning over $1 trillion each. If the U.S. refused or was unable to repay even a small fraction of its borrowed money, this would: firstly, damage the domestic economy, as investors like pension funds would suffer; and secondly, also hurt foreign economies. A default would send shockwaves through private credit markets because ultimately sovereign bonds, specifically 10 year “T-notes” given their market size and liquidity, are the benchmark for all borrowing.

However, Warren Mosler’s Modern Monetary Theory (MMT) posits that the current functioning of the macroeconomic system is fundamentally misunderstood. I will use Mosler’s heterodox ideas in my analysis to argue that solvency is not an issue for the U.S. government. MMT argues that the U.S. cannot run out of money to pay back its debt because the Federal Government is by definition the dollar monopolist. In other words, the Federal Government owes debt denominated in dollars, which can only be created by its own computers.

Technically is it true that the U.S. could become insolvent, by choosing to declare a default or failing to raise the debt ceiling in Congress. However, there is no reason those situations would be chosen, as it would shock the entire world economy and can easily be avoided. 

Also, sovereign solvency was an issue over 50 years ago, which is why classical economic theory still fears it. Under the Bretton Woods system (1945-1971), the gold standard backed the dollar’s value by making the currency convertible to gold. Therefore, gold reserves (which the U.S. held ⅔ of the world’s supply) were central to maintaining global fixed exchange rates. The dollar was essentially a proxy for the value of a large amount of gold. Thus, spending was constrained by what the U.S. could borrow against a fixed amount of gold reserves. The government could not create more dollars than its reserves, as this could lower faith in the currency or lead to hyperinflation. 

However, since 1971 the dollar has not been backed by the precious metal. The modern dollar is a “fiat currency” which fundamentally sustains its value through the aggregate demand for it (primarily to pay taxes). The U.S. government supplies dollars into the economy, and then coerces a percentage back through the IRS, creating the constant need to use the dollar in regulated business interactions.  

So without the gold standard, if China loses faith in the dollar, or believes its Treasuries will not be repaid, it cannot request a large sum of shiny metal in exchange from the Fed. All investors in Treasuries can only be repaid in fiat dollars, which are created in today’s world at the touch of a keyboard. 

A basic understanding of reserve accounting at the Fed shows the impossibility of the U.S. running out of money to pay bondholders. To hold a U.S. T-note effectively means to have a savings account at the Fed: you deposit money to get paid interest biannually. And when the security matures, you receive the full amount invested back in a “checking account” at the Fed. These transactions all happen electronically on a large spreadsheet. Money isn’t taken from anywhere to credit your account; it is allocated digitally just like scoreboards are kept in football matches. The national debt might be $40 trillion in 2050, but nonetheless equally as manageable by marking up higher numbers. We and our children and grandchildren decades from now will continue to change numbers on the Fed’s spreadsheet to pay back debt. Money is not a finite resource that might not be around for our descendents.

In any case, the creation of more digital dollars to pay back bonds could cause high inflation, which is the only way growing debt becomes “unsustainable.” With the U.S. government being the dollar monopolist, able to choose the quantity of dollars created, it is also the price-setter in the economy. Demand-pull inflation would occur if too much new money chases too few goods and services in the economy. If aggregate demand rises past full employment, nominal GDP gains do not reflect real growth but just an over-bidding process. 

But in the era of Covid and massive productivity gains through technology (artificial intelligence) and globalization (free trade), we are not threatened by inflation. Aggregate demand and costs of inputs are falling globally. In the U.S. economy deflation is occurring, so higher inflation is desirable. In fact, despite the Fed using an arsenal of policies to stimulate growth, it has consistently underperformed in hitting the inflation target of 2% even before Covid. Arguably we are already in a liquidity trap where more monetary expansion fails to affect prices. Thus, it is only Congress that has the ability to raise prices given its control of the dollar through fiscal policy. Yet Democrats and Republicans alike still refuse to adequately grow the deficit from an irrational fear of the rising debt figure.

The confusion around sovereign solvency fundamentally goes back to many people, including politicians, wrongly believing the U.S. government borrows or taxes to have money to spend; this is totally incorrect. For instance, for the CARES act Congress didn’t tax, nor the Treasury issued bonds, for several weeks before raising $2 trillion in a war chest to spend. Rather, Congress first spent, and only afterwards issued bonds through the Treasury Department. Congress could have proposed a figure of $4 trillion without any issues in obtaining that money. 

As Mosler puts it, “the government never has nor doesn’t have any of its own money;” rather, the government just credits or debits accounts with dollars, to receive tax revenue or spend, at the touch of a keyboard. When our bank account’s digital number rises because of a government transfer, it is not tax money being paid out. Instead, the government has invented it. 

Therefore, the issuing of government debt is in reality what Mosler calls a “glorified reserve drain,” or a tightening of the money supply. Although Treasuries seemingly fund government expenditures, they are functionally the same as any of the Fed’s contractionary policies. When the government spends $2 trillion, they automatically order the sale of an equal amount of Treasuries which temporarily removes that amount of dollars from the economy and also bookeeps the spending. Thus, a fiscal stimulus is followed by a monetary contraction to ensure that GDP gains are real and not just reflecting inflation.  

In conclusion, when a sovereign controls its own currency, given it is non-convertible to gold and floating exchange rates apply, there is never a solvency risk. There is, however, a possible inflation risk, which in the current state of deflation isn’t worth worrying about. 

Secondly, to wrap up the core lesson from MMT, we must note that households are not sovereigns, yet the latter are treated as if they must be fiscally austere like a family unit. Countries are viewed badly if they incur costs larger than their revenue. But households cannot print their own money! 

Of course, if a country has joined a fixed exchange rate regime or currency union then they have lost this privilege to overspend, and have rules dictated by a foreign or supranational central bank’s criteria. But the U.S. is not Greece: the Fed has a fully independent monetary policy. 

So when politicians genuinely clamor for fiscal responsibility as the real economy, jobs and growth, suffers, they are making an ignorant judgment. And I cannot get inside the mind of Mitch McConnell, but given his track record I am forced to conclude he is acting in bad faith; he cannot logically justify authorizing massive tax cuts yet caring about the debt when asked to rebuild the country. 

American grandchildren will undoubtedly suffer from a lack of quality employment, regardless of how large the national debt has become. Instead, it is fiscally austere politicians that are the threat to people’s livelihood, not the large national debt figure, which is ironically too low.

Written by Beckett White

References

Amadeo, K., 2021. The Real Owner of the U.S. Debt Will Surprise You. [online] The Balance. Available at: <https://www.thebalance.com/who-owns-the-u-s-national-debt-3306124> [Accessed 27 March 2021].

Cox, J., 2021. Deficit projected at $2.3 trillion for 2021, not counting additional stimulus, CBO says. [online] CNBC. Available at: <https://www.cnbc.com/2021/02/11/deficit-projected-at-2point3-trillion-fo... [Accessed 27 March 2021].

Datalab.usaspending.gov. 2021. Federal Deficit Trends Over Time. [online] Available at: <https://datalab.usaspending.gov/americas-finance-guide/deficit/trends/> [Accessed 27 March 2021].

Everett, B. and Forgey, Q., 2020. McConnell: House’s $2,000 stimulus checks are ‘socialism for rich’. [online] POLITICO. Available at: <https://www.politico.com/news/2020/12/31/lindsey-graham-mcconnell-separa... [Accessed 27 March 2021].

Fred.stlouisfed.org. 2021. Monetary Base; Total. [online] Available at: <https://fred.stlouisfed.org/series/BOGMBASE> [Accessed 27 March 2021].

Hutchins, G., 2020. What if the economists are all wrong on productivity?. [online] Ft.com. Available at: <https://www.ft.com/content/36d966c0-3b97-11ea-b84f-a62c46f39bc2> [Accessed 27 March 2021].

Kelton, S., Mosler, W. and Edsall, T., 2012. Governments Are Not Households. [online] Modernmoneynetwork.org. Available at: <https://modernmoneynetwork.org/symposia/governments-are-not-households> [Accessed 27 March 2021].

Mosler, W., 2010. Seven deadly innocent frauds of economic policy. 1st ed. [Saint Croix, Virgin Islands]: Valance Co., pp.55-70.

Neely, C., 2019. The Asset Holdings of the Bank of Japan. [online] Economic Research: Federal Reserve Bank St. Louis. Available at: <https://research.stlouisfed.org/publications/economic-synopses/2019/07/1... [Accessed 27 March 2021].

Shephard, A., 2021. Larry Summers Is Finally, Belatedly, Irrelevant. [online] The New Republic. Available at: <https://newrepublic.com/article/161269/larry-summers-finally-belatedly-i... [Accessed 27 March 2021].

Statista. 2021. U.S. – projected inflation rate 2008-2024 | Statista. [online] Available at: <https://www.statista.com/statistics/244983/projected-inflation-rate-in-t... [Accessed 27 March 2021].

Vote Smart. 2020. The Voter’s Self Defense System. [online] Available at: <https://justfacts.votesmart.org/candidate/key-votes/53298/mitch-mcconnel... [Accessed 27 March 2021].

Economics Education is Still Dominated by Men

Published by Anonymous (not verified) on Sat, 20/03/2021 - 11:09pm in

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Opinion

Gender inequality is ubiquitous in economics. The recent Women in Economics Index (2020) found that men still dominate the economics profession across the academic, private and public sectors. It highlighted academia as particularly bad; finding that men comprise 80% of the staff in the world’s top 25 economics departments, 95% of the world’s top 100 economics authors, and 75.4% of positions within the world’s top think tanks. Moveover, while gender inequality exists within academia across social sciences, it is far worse in economics, where women are ‘woefully underrepresented’ (Formella et al, 2020). 

The lack of gender diversity within the economics department at the University of Manchester (UoM) is synonymous with the findings of this report despite UoM striving to ‘employ a workforce and educate a student body that reflects the diverse community we serve’ (UoM, 2021)UoM offers two, single honours, undergraduate economics degrees: BScEcon and BAEcon. The Economics BSc programme has fifteen compulsory modules across first and second year and the Economics BA programme has four. All of the nineteen compulsory modules are taught by men. Furthermore, the majority of optional economics modules are also taught by men – making it very easy for students, through no fault of their own, to experience a three-year undergraduate course, with exclusively male lecturers.

Very low or no gender parity within economics departments has major implications on the education of economics students; it limits diversity of thought, excludes the lived experience of half of the population and deters female students from pursuing academic careers. Research by May et al (2018) illustrates the differing views of male and female economists, finding significant differences in opinion across: core economic principles and methodology; market solutions versus government intervention; government spending, taxation, and redistribution; environmental protection; and gender and equal opportunities. Moreover, ‘female economists place much less confidence in the market than their male counterparts do when it comes to solving problems in the economy and society’. While economics curricula exclude the voices of female economists, they are delivering an education with an inbuilt bias towards favouring market outcomes.

The Women in Economics Index (2020) concludes that ‘economics as a discipline will be able to serve society best when we recognise and foster talent of every kind’; to do so requires institutions to challenge the systemic barriers to equality and diversity within the profession. Economics departments have a responsibility to improve their practices, such that they perpetuate gender equality. I believe this requires departments to recognise: firstly, that the perspectives of women are essential to economics education; secondly, gender, race and class must be present in economic analysis; and finally, accepting that the inclusion of pluralist economic perspectives can attract a broader range of students towards studying economics. While men gate-keep economics, the discipline is losing relevance, talent and credibility; reform is just, necessary and urgent.   

Written by Paddy Nelson

References:

May, A. M., McGarvey, M. G. and Kucera, D. (2018) ‘Gender and European Economic Policy: A Survey of the Views of European Economists on Contemporary Economic Policy’, Kyklos, 71(1), pp. 162–183. https://onlinelibrary.wiley.com/doi/abs/10.1111/kykl.12166 

May, A. M., McGarvey, M. G. and Kucera, D. (2018) ‘Including More Women Economists Influences Policy Choices, Research’, IMF F&D Magazine. https://www.imf.org/external/pubs/ft/fandd/2018/06/including-more-women-economists-influences-policy-and-research/may.pdf 

Formella, C et al. (2020) ‘The Women in Economics Index 2020’. https://women-in-economics.com/wp-content/uploads/2020/10/WiE_Index_2020.pdf 

Advani, A et al. (2019) ‘Economics in the UK has a diversity problem that starts in schools and colleges’ VoxEU.org 

https://voxeu.org/article/increasing-diversity-uk-economics

Hanspach, P et al. (2021) ‘Few top positions in economics are held by women’ VoxEU.org

https://voxeu.org/article/few-top-positions-economics-are-held-women

University of Manchester (UoM) (2021), ‘Equality Information Report 2021’. 

https://documents.manchester.ac.uk/display.aspx?DocID=52967

Gary Becker, Shantay you stay

Published by Anonymous (not verified) on Mon, 01/03/2021 - 11:12pm in

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Opinion

February is considered to be the ‘LGBT History Month’ and so its aim is to give visibility to the history of the LGBT community, which has often been ignored by mainstream society. The amount of economic research that could give an insight on the conditions of queer people in history has been scarce in the beginnings, since most investigations have been carried out in the past few years. Besides addressing the issues of a potential wealth gap or wage discrimination, economics can also raise awareness on LGBT discrimination in our everyday life.

Could we draw any conclusions on LGBT discrimination by running an elementary econometric model which could potentially analyse a gap in the relationship between the set of skills of contestants in different reality shows – LGBT-themed and non-LGBT – and their corresponding social media presence? Let’s analyse the multiple necessary skills to be an influencer and the number of Instagram followers between the cast of RuPaul Drag’s Race and the participants of another reality show with no queer visibility in the same streaming service, for example, the show Too Hot To Handle which became popular last April. Drag Queens, compared to the cast from Too Hot To Handle, are required to have at least some advanced skills in sewing, dancing, makeup art, acting and singing plus all of the necessary communication skills to make it funny and engaging. On the other hand, the contestants of Too Hot To Handle were required to follow the Aristotelian morality, apparently still inherent in Western culture, in which they had to repress their human passions and instincts by not having sexual relationships until a meaningful relationship was made with another person.

Running up some calculations the average increase of followers for every contestant in the latest season of RuPaul Drag’s Race is 249.7K while for the cast of Too Hot To Handle was 468.6K ten months ago, when the reality show was aired. These numbers are helpless unless we add a more serious amount of data and other required variables. Nonetheless, even though we cannot draw any serious conclusions, this example is insightful in two different ways. Firstly, it can be proved to a wider audience the scope that quantitative research – often used as a tool by economists – has to address any amount of social issues that our imagination can think of. And secondly if it seems that, in this case, it is required for drag queens to have a higher set of skills to gain an additional follower in social media, we can start now to ask ourselves to what extent we can find this discriminatory pattern in traditional labour markets also. 

Do LGBT people need a higher set of skills to earn an additional pound? And to even get access to a job? Have living standards increased at the same rate for LGBT individuals than for the rest of the people throughout history? Economics can help us to give a response to this set of questions but more specifically, Gary S. Becker developed a model to explain labour discrimination for black employees in the US that is helpful to explain these potential discriminatory patterns for the queer community in labour markets.

Gary Becker’s taste-based model is useful to explain the reason behind wage discrimination. In this case, homophobia, biphobia, or transphobia is added up to the wage rate as the discrimination coefficient which represents a disutility for employers. Looking for a utility-maximisation production outcome, if the wage rate of LGBT workers – including the discrimination coefficient – is higher than the wage rate of gender-normative individuals, the amount of hired gender-normative workers is higher. In a state of a discriminatory labour market, LGBT workers will have to overcome these patterns by either being more productive at a given wage or, consistently, accepting a lower wage rate for the same productivity level. 

This case can easily be found in reality as recent reports show that there is a significant proportion of employees that suffer from emotional distress and mental health issues due to discrimination in the workplace. In this case, LGBT employees are required cope with this type of discrimination while keeping the mandatory level of productivity which entails a higher effort. Additionally, for countries that do not cover a public mental healthcare programme, discrimination within the workplace implies a costly condition for the queer community which may result in a lower real disposable income since acquiring some sort of psychological help to overcome discrimination becomes necessary in order to keep a good mental health condition. It is also worth noting that this kind of discrimination affects women in a deeper extent since research shows poverty rates could drop dramatically for all couple types that include at least one woman.

Now, what happens if the wage rate from LGBT workers is lower than the wage rate of gender-normative workers? In this case firms will, analogically hire more LGBT employees. This is also very likely to happen, a situation that yields a segregated workforce which, according to Becker, is caused by the existence of this discriminatory taste and also, as it would be Pareto-improving for minority workers to work in their own businesses and correspondingly for majority workers, since the cost of distaste would be removed. In this scenario, LGBT employers would hire LGBT workers, and sell to LGBT customers, etc. Though, the fact that gender-conforming individuals may have more complementary nonhuman resources per capita would lead to this type of segregated economy to have lower wages for LGBT workers than the potential wages that a discriminatory – and not segregated – workforce would have for them. This situation would make it more likely for LGBT individuals to work under discriminatory but not segregated conditions, as long as it is allowed for them. 

This case of segregated workforce is a clear example of the current situation that transgender individuals face when trying to access the formal labour market. According to a study published by the National Center for Transgender Equality (NCTE), 15% of transgender people face unemployment in the US. It is worth mentioning that this is an abysmal unemployment rate since it is three times higher than the national one. In other countries like the UK, data from the National LGBT Survey Summary Report suggests that 35% of trans women and 43% of trans men did not have a paid job in the 12 months preceding the survey. With such a high unemployment rate for trans individuals, particularly trans women have been segregated into sex labour. Key findings from the ‘Meaningful Work’ report carried out by the NCTE, suggest that 10.8% of the respondents reported having participated in sex work. This rate is specifically high among black respondents whose rate of sex trade participation is 39.9%. The amount of data that shows that transgender individuals face these discriminatory patterns within the labour markets is large, and yet it has not been even mentioned as an economic issue in economics education whatsoever. Even worse, it has not even been approached as an economic issue by policymakers in most governments.

As a final remark, the aim of this article is to prove how, even in countries where LGBT rights are recognised, the community is still in a situation of an economic disadvantage with respect to gender-conforming individuals as they have a higher probability to fall into poverty, especially when it comes to transgender people. Moreover, it is also worth noting how most of the economics curriculums have avoided addressing this issue, resulting in a lack of serious political intent that economics should have as a social science and, as a diverse discipline. In clear terms, the fact that a model in labor economics which was used to analyse the situation of black workers in the US is useful to also examine how LGBT workers face discriminatory conditions in labor markets, and additionally, how economic inequality can strengthen discrimination and segregation in some communities are topics that urgently need to be studied in economics in a major way.

“Darling, I don’t have a job. I’m on welfare. I have no intentions of getting a job as long as this country discriminates against homosexuals.”

                                                                                     (Marsha P. Johnson)

Written by Diego Pablo Sanchez

 Bibliography

Autor, D. H. (2003). Lecture Note: The Economics of Discrimination – Theory. Massachusetts: MIT.

Badgett, M. V., & Schneebaum, A. (2015). The Impact of Wage Equality on Sexual Orientation Poverty Gaps. The Williams Institute.

Carperter, C., & Gonzales, G. (2020, February 13). Transgender Americans are more likely to be unemployed and poor. The Conversation.

Fitzgerald, E., Elspeth Patterson, S., Hickey, D., Biko, C., & Tobin, H. J. (2015). Meaningful Work. National Center for Transgender Equality.

Government Equalities Office. (2019). National LGBT Survey: Summary report. Government Equalities Office.

Make The Road New York. (2010). Transgender Need Not Apply: A Report on Gender Identity Job Discrimination. New York.

Meyer, I. H. (2003). Prejudice, Social Stress, and Mental Health in Lesbian, Gay, and Bisexual Populations: Conceptual Issues and Research Evidence. Psychological Bulletin, 674-697.

Reder, M. W. (1958). Reviewed Work: The Economics of Discrimination by Gary S. Becker. The American Economic Review, 495-500.

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