Aurelia Butler

“This is a critical issue for almost every family in our country,” Harris told reporters. “Low-income families often spend one-third, one-third of their yearly income on childcare, more than they spend on their rent or mortgage.””No family should have to choose between high quality care for their child or to give up their career or put food on the table,” she added. The proposed rule would limit working parents’ co-payments under the Child Care & Development Block Grant (CCDBG) program to no more than 7% of a family’s income. The program subsidizes child care for families with income below 85% of their state’s median income level, but requires most to pay a small co-payment. The proposal, which will have a 45-day comment period, will encourage states to waive co-payments for families at or below 150% of the federal poverty level, the White House said in a fact sheet on the changes. A senior administration official said the Department of Health and Human Services (HHS) hoped to publish the final rule in spring 2024.Lowering childcare costs has been a big priority for the Biden administration, but a deeply divided Congress has thwarted adoption of some key proposals, including a push to make permanent an expanded child tax credit that was implemented during the COVID-19 pandemic, and other measures aimed at aiding licensed and regulated childcare providers.The proposal would also ensure that childcare providers participating in the program are paid on time, based on program enrollment instead of attendance, the White House said.It will also try to make it easier for families to access the block grant program, by encouraging states to accept online applications and making siblings of children who already receive the subsidy presumptively eligible for benefits.HHS estimates the average co-payment for child care for families benefiting from the block grants rose nearly 20% between 2005 and 2021, prompting many families to reduce their work hours or exit the workforce entirely. Costs are also disproportionately high for families with low incomes, the White House said, citing a U.S. Census Bureau survey which found that families with low incomes paid five times more than families with higher incomes, as a portion of their income.If enacted, the proposed changes would reduce co-payments for some 80,000 families, the White House said.A senior administration official said the rule would use existing resources to maximize benefits for families and child care providers. More

UK ministers used national security powers to intervene in eight transactions involving Chinese-linked investment in British companies in the past year, underlining their concern over the potential for Beijing to gain influence over vital industries. Figures published by the Cabinet Office on Tuesday showed that 866 deals were referred to the government under the National Security and Investment Act in the year to March 31, 2023. Introduced in 2021, the law is designed to protect British interests in 17 sectors, including energy, defence and communications. It gives the government powers to block investments deemed to pose a threat to national security or to require remedies to protect the UK’s interests. The act came into force partly because of concerns about Chinese investors buying up UK companies and other British assets. Ministers used these powers to call in 65 investments during the 12-month period, according to a report published by the Cabinet Office. It did not disclose which transactions were affected. More than 40 per cent of the call-in notices related to investments associated with China, more than any other country. One-third of deals subject to closer scrutiny involved acquirers associated with the UK, while one-fifth involved US-linked investors. Most transactions scrutinised by officials were cleared, but 15 were the subject of a final order, under which the government intervenes. Of these, five were blocked or forced to be unwound, with parties involved in the other 10 forced to adopt remedies to mitigate risks to national security. Some eight of the final orders related to investments linked with China, compared with four associated with the UK, three with the US and one each with Luxembourg, Jersey, the UAE, the Netherlands and Russia. The figures came as Oliver Dowden, deputy prime minister, described China as the “largest state-based threat” to Britain’s economic security. “I’m very clear that I do not want us to decouple from China; I don’t think it’s in our interest,” Dowden told the BBC. The focus on Chinese-linked deals was also explained partly by the country’s size, he said. “But at the same time, we have to be clear-eyed about protecting our national security, just in the same way that the Chinese are,” he added. Ministers intervened four times in each of the communications and the military and dual-use sectors — more than any other area of the economy. They intervened in three deals in each of the energy, defence, computing hardware and advanced materials sectors. Corporate deal advisers have warned that the national security rules risk having a chilling effect on inward investment and that the vetting process is too opaque. Dowden told the Financial Times in April that he wanted to be “more open and transparent” about how deals are scrutinised. “I want to engage properly [to show that] Britain is and should remain open for business and for investment,” he said. More

We have moved into an era of global competition tempered by the need to co-operate and the fear of conflict. The main protagonists are the US and its allies on the one hand, and China and Russia on the other. Yet the rest of the world also matters. It contains two-thirds of the global population and a number of rising powers, notably India, now the world’s most populous country.Nevertheless, relations between the US and China are clearly central. Fortunately, the administration has been trying to reduce the friction, most recently with visits to Beijing by secretary of state, Antony Blinken, and Treasury secretary, Janet Yellen.Yellen’s objective was, she stated, “to establish and deepen relationships” with the new economic leadership team in Beijing. She stressed that this was part of an effort to stabilise the relationship, reduce the risk of misunderstandings and consider areas of co-operation. She added that “There is an important distinction between decoupling, on the one hand, and on the other hand, diversifying critical supply chains or taking targeted national security actions. We know that a decoupling of the world’s two largest economies would be disastrous for both countries and destabilising for the world. And it would be virtually impossible to undertake.”One must applaud this effort to clarify objectives, improve transparency and deepen relations. We must not stumble into hostilities with China as we have done with Russia. Better still, we need to make this relationship work in the interests of the world. Yet the west’s concerns must not be limited to relations with China. Better relations with the rest of the world also matter. This requires the west to recognise its own double standards and hypocrisy.Russia’s invasion of Ukraine was a dreadful violation of fundamental moral and legal principles. Many in developing countries also recognise this. But they remember, too, the long history of western countries as imperialists and invaders. Nor do they fail to realise that we care far more about fellow Europeans than about others. Too often, we have viewed grave violations of human rights and international law. Too often, we have viewed such injustices as no concern of ours. Ukraine, many feel, is no concern of theirs.

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Then there is trade. In an important speech delivered in April, Jake Sullivan, US national security adviser, repudiated the trading order his country had taken decades to build. More recently, US trade representative Katherine Tai buried it. Her speech raises many issues. Yet what cannot be ignored is the very fact of the volte-face. Many in developing countries bought into the doctrine of trade openness. Many of them prospered as a result. Now they fear they are left high and dry.

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Yet another significant issue is international assistance. Developing countries have been buffeted by a series of shocks for which they were not responsible: Covid, the subsequent sharp rise in inflation, the invasion of Ukraine, the jump in prices of energy and food and then the higher interest rates. The assistance they have received during this era of shocks has been grossly inadequate. The legacy of Covid for young people, together with the overhang of debt, might even create lost decades.

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This question of development assistance links with the challenge of climate. As everyone in developing countries knows, the reason the climate problem is now urgent is the historic emissions of high-income countries. The latter were able to use the atmosphere as a sink, while today’s developing countries cannot. So, today we tell them they must embark on a very different development path from our own. Needless to say, this is quite infuriating. Nevertheless, emissions must now be sharply reduced. This requires a global effort, including in many emerging and developing countries. Have we made progress on this task, in reality rather than rhetorically? The answer is “no”. Emissions have not fallen at all.

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If emissions are to decline rapidly, while emerging and developing countries still deliver the prosperity their populations demand, there must be a huge flow of resources towards them, not least to finance climate mitigation and the necessary adaptation to higher temperatures. In 2021, net transfers from official loans to emerging and developing countries were just $38bn. Grants were larger, but more narrowly focused.

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This is not even close to enough. There must be greater aid, debt relief, support for climate-related investment and new mechanisms for generating the needed resources, such as the proposal that countries with above average emissions per head compensate those with below average ones. Capital increases for multilateral banks are also vital.The high-income democracies are failing to offer adequate help in this longer-term task, just as they did over Covid. In the case of climate, the failure is to realise our responsibility for managing a problem the poor of the world did not create. This looks unfair, simply because it evidently is.

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We are in a competition of systems. I hope that democracy and individual freedom do ultimately win. In the long run, they have a good chance of doing so. Nevertheless, we must also remember the threats we now confront to peace, prosperity and planet. Tackling these will require deep engagement with China. But if the west is to have the influence it hopes for, it must realise that its claims to moral superiority are neither unchallengeable nor unchallenged. Many in our world view the western powers as selfish, self-satisfied and hypocritical. They are not altogether wrong. We must do far [email protected] Martin Wolf with myFT and on Twitter More

Trade talks between Australia and the EU were halted on Tuesday after Australian minister Don Farrell cut short a visit to Brussels without resolving a dispute over meat quotas. Farrell told EU negotiators that he had to consult his cabinet before he could compromise further on ambitions for more Australian beef, lamb, sugar and dairy to be allowed into the EU’s protected market. Negotiations will continue, before Farrell holds meetings with his EU counterparts in August. “We will continue constructive discussions with the ultimate aim of reaching an agreement,” Farrell said. The two sides had hoped to strike a deal during the current trip. Canberra wants to diversify its economy away from reliance on a hostile China while Brussels is keen for better access to Australia’s vast mineral resources, vital to renewable energy industries and the green transition.Trade commissioner Valdis Dombrovskis has prioritised the Australia agreement after struggling to conclude deals with developing countries because of the EU’s insistence on high environmental and labour standards.Miriam Garcia Ferrer, European Commission spokeswoman for trade, said it regretted the breakdown. “We made progress, but more work is required to address key outstanding issues. Our respective teams will continue to work on bridging remaining gaps.”The agreement “between two like-minded partners is important and will unlock many opportunities for our businesses and farmers”.Still, question marks remain over how much beef and sheep meat from Australia’s vast ranches should enter the EU tariff-free. The EU increased its initial offer of an annual beef quota of 24,000 tonnes, but the new number and quotas on sheep meat fell far short of what Farrell could accept. Farrell has noted in the past that current restrictions mean each European can only eat an Australian steak once every 40 years. At present, Australia has a guaranteed quota of 3,389 tonnes of beef that it can export to Europe annually. Even this limited amount falls under a tariff of 20 per cent. EU officials say the UK’s deal with Australia, which came into force in May, has complicated matters. The UK will eliminate all tariffs and quotas on Australian meat over the next 10 years. Don Farrell spoke to reporters in a Brussels park. ‘We’ve made it very clear right from the start that we won’t simply accept any agreement,’ he said © Phil Blenkinsop/ReutersIrish and French farmers fear losing market share in the UK as a result and are not willing to allow a big increase in imports from Australia. Speaking in an impromptu press briefing in a Brussels park, Farrell said: “We’ve made it very clear right from the start that we won’t simply accept any agreement. The agreement, from the Australian point of view, has to achieve meaningful agricultural access to European markets.”There are also outstanding disputes on the continued use of EU-protected names, such as feta and prosecco, in Australia, and the pricing of energy and raw materials. Brussels wants a commitment from Canberra that it will not charge EU customers more than what domestic buyers pay.Australian ministers are wary of disappointing farmers and food producers ahead of a sensitive referendum this year on giving its indigenous communities a greater say in running the country.Garcia Ferrer added: “We rely on our Australian partners to work with us to get this over the line soon. Our door remains open.” More

Sinéad O’Sullivan is a former Senior Researcher at Harvard Business School’s Institute for Strategy and Competitiveness.The Bank of England recently admitted it had “big lessons to learn” from its failure to forecast inflation using existing models.It’s not alone: the story of the past two years has been central bankers being caught out, repeatedly, by price increases.So what models should they be using?A recent paper by Parisian quant fund manager Jean-Philippe Bouchaud and co-authors Max Sina Knicker, Karl Naumann-Woleske and Francesco Zamponi holds a possible answer. Title aside, “Post-COVID Inflation & the Monetary Policy Dilemma: An Agent-Based Scenario Analysis” was one of the more thrilling monetary policy publications to drop in H1.Unlike the static formulae in most macroeconomists’ toolbox, Agent-Based Models (ABM) are scenario-generators in which a large number of “agents” interact based on a set of behavioral rules. Here’s Bouchaud advocating for this approach in the FT’s letters pages way back in the mists of time 2018. (If you’re a macroecon nerd who’s wondering why you have never heard of ABMs before — this blog post helps to explain why.)Using agent models, economists can understand and learn about the outcomes of the interactions of different complex scenarios, which often lead to emergent and unpredictable behaviour. Such as, oh I dunno, inflation and our global economy. Summing up the approach, Bouchaud said:The philosophy behind the model is to generate qualitatively plausible scenarios — we want to be roughly right and not precisely wrong, to quote Keynes.This paper contributes to the growing dogfight on the appropriate responses to post-Covid inflation by creating a flexible framework to assess different policy options in the context of various inflation drivers, including demand-pull, cost-push and profit-driven inflation, which has been the topic of all sorts of grinding economic discourse lately.You can read the full paper here, and for a TL;DR, Bouchaud’s Substack lists some key conclusions. Here are some of the most interesting takeaways I found:1) Central Banks are… important? Who knew? The paper’s model initially assumed an “Inactive Central Bank”, something that many economists have insisted has already been the case for a long time. Turns out that without a central bank, small fluctuations in the economy become big fluctuations pretty quickly. “In the absence of an active central bank target, the amplitude of the resulting inflation oscillations is found to be substantial, ranging between 2 per cent and 8 per cent p.a”.2) Low central bank trust and inflation go hand in hand Bouchaud et al. find that when people trust an “active” central bank, reining in inflation is the outcome of trust, not interest rates. Bringing down inflation “is not primarily due to the impact of interest rate policy but rather to the strong anchoring of expectations, which significantly dampens expected (and thus realized) inflation”. So just how well are central banks doing at building trust? Ummm… yikes.3) Job losses are inevitable and unavoidable When the economy is hit by an external shock (hi, Covid!), a fiscal package in the form of helicopter money can very quickly lead to a recovery of production to the pre-shock levels. Hurrah! However, without monetary intervention, Bouchaud’s model finds this cash injection creates double-digit inflation. Boo. The higher the stimulus, the higher the inflation peak (and for longer). The higher the stimulus, therefore, the higher rates will have to be increased. The higher the rates, the higher the unemployment. And so forth. In short, all else being equal, external economic shocks = increased unemployment. Again, these conclusions won’t come as a surprise to anybody. What is new is being able to see the dynamic nature of how this plays out on the researchers’ dashboards. ABMs are bound to have idiosyncratic flaws. But given the recent performance of central bank models… could it hurt to have a look? More