Book Review – Bad Samaritans

Bad SamaritansHa-Joon Chang‘s Bad Samaritans – The Guilty Secrets of Rich Nations & The Threat To Global Prosperity is not an anti-trade, anti-globalization or even anti-capitalist book. It is more a primer on global economic and global governance processes from the perspective of the Global South as well as an anti-hypocrisy manifesto.

Chang’s book then explores the workings of multilateral institutions (WTO, WB and IMF) and exposes the double standards they impose on countries of the Global South through regulations and conditions that countries of the Global North never followed themselves on their path to economic development. Quite the opposite, actually. And yet, the proponents of neo-liberalization (often operating from the multilateral institutions) behave as if the story of development was one of uninterrupted liberalization and pure free market rule.

Indeed, as Chang demonstrates, this is not the case. Chang illustrates this, for instance, with the fact that it was the first Secretary of the US Treasury, Alexander Hamilton, who came up with the concept of ‘infant industry’. The concept covers the idea that emerging industries should be protected through a variety if regulations until they are strong enough to face competition on the then-international (now global) market. Chang further shows that Western countries indeed exercised enormous protectionism to shield their industries throughout their development. Only once they felt these industries could become internationally dominant did they open their market to international competition.

And yet, the multilateral institutions demand that countries of the Global South open their market, often unconditionally, to global competition and foreign investments without giving these countries the time not just to develop their own infant industries, but even without the solidification of social institutions necessary for a functioning market. The results have been expectedly disastrous, as these institutions themselves have begun to acknowledge.

And let’s not forget the massive agricultural subsidies and intellectual property regulations that countries of the Global North are able to marshal through multilateral institutions while countries of the Global South are prevented from enacting similar measures and sanctioned for doing so.

These few remarks suffice to show that Change is not anti-capitalist or anti-global trade. As mentioned before, he is anti-hypocrisy and double standards. His perspective is more akin to what Manuel Castells calls the “developmental state” (as opposed to “statist” which applies to the former USSR, for instance). Being Korean, it is not a surprise for Chang to adopt such a perspective. Castells indeed demonstrates that the success of the Asian Tigers (Taiwan, South Korea, Singapore, for instance) was based not on openness to the global market but on the support of the developmental state.

All of these countries have had majorly interventionist governments throughout their developmental years. During these years, the developmental states nurtured infant industries, allowing them to not be profitable while growing (Toyota, for instance, was a quasi-bankrupt company for a long time… so was Nokia, for about 17 years). The developmental states limited foreign investment and directed it into specific industries, imposed strong barriers. These countries slowly and progressively opened to the global market when they were ready. For instance, Korea progressively privatized industries once those proved competitive under government ownership. Indeed, the developmental state has been historically the most successful model for economic development.

Based on a developmental conception of the state, Chang then proceeds to debunk, with data, the major tenets of the neo-liberal dogma (as it is promoted with the zeal of religious dogma by the “bad samaritans”). For instance, the idea that government is always less efficient than the market (the current debate about health care in the US provides a nice example of the opposite). Chang also challenges the pillars of modernization theory, especially on the cultural deterministic conception of economic development.

Most of all, Chang’s book is a fairly thorough, data-based, balanced and very readable primer on the global economy, economic history, and global governance. It provides multiple examples from all over the world to expose the basic unfairness of the current regulatory regime (to use Alain Lipietz’s concept).

And, of course, how can one not enjoy a major take-down of Thomas Friedman (although it is like shooting fish in a barrel at this point)?

Many points that Chang makes will be familiar with readers of Manuel Castells (as mentioned above), Joseph Stiglitz or Amartya Sen. Readers will find the same concern for social justice based on rigorous economic analysis. At the same time, Chang also involves social and political factors as they, of course, influence economic decision making and as part of the global governance regime.

For instance, politics and governmentality is important when discussing corruption, often used as a convenient excuse to maintain unfair terms of trade and insufficient levels of aid. Here, to use again one of Manuel Castells’s concept, Chang explores the important of the “Predatory State” as a major explanation for African issues. There is no doubt that African nations have had their share of corrupt dictators that used the means of the state to engage in systematic looting (along with major violations of human rights) of their countries. But here again comes the hypocrisy of Western nations: many of these dictators were installed and supported, often by their former colonizers as part of the neo0colonialist regime. And quite often then, Western nations, now so concerned about corruption, turned a blind eye when a favored dictator engaged in questionable practices.

At the same time, in many developing countries, corruption is what makes things work (something I already discussed here) in the absence of fully developed social institutions regulating social life. And as Chang demonstrates, corruption, in that context, can sometimes even have positive effects on economy and development. So, here again, a balanced view is de rigueur.

This case illustrates as well another failing of the current global governance regime: its imposition of one-size-fit-all programs on developing countries (for instance, through structural adjustment programs) even though the situations in which developing countries find themselves vary wildly.

As I said, one of the strong points of this book is how highly readable it is considering the topic and considering how chock full of data and case studies it is. It addresses all the major issues of the current global system and it is especially relevant in the current context.

If Free Trade is So Obviously The Best Option…

Then comes the not-really-rhetorical question…

"If firms have become so mobile as to make national regulation powerless, why are the Bad Samaritan rich countries so keen on making developing countries sign up to all those international agreements that restrict their ability to regulate foreign investment? Following the market logic, so loved by the neo-liberal orthodoxy, why not just leave countries to choose whatever approach they want and then let foreign investors punish or reward them by choosing to invest only in those countries friendly towards foreign investors? The very fact that rich countries want to impose all these restrictions on developing countries by means of international agreements reveals that regulation of FDI is not yet futile after all, contrary to what the Bad Samaritans say." (98)

Ha-Joon Chang, Bad Samaritans – The Guilty Secrets of Rich Nations and The Threat to Global Prosperity.

“My Six-Year-Old Son Should Get A Job” – A Wee Parable

Courtesy of Ha-Joon Chang, from his book, Bad Samaritans:

"I have a six-year-old son. His name is Jin-Gyu. He lives off me, yet he is quite capable of making a living. I pay for his lodging, food, education and health care. But millions of children of his age already have jobs. Daniel Defoe, in the 18th century, thought that children could earn a living from the age of four.

Moreover, working might do Jin-Gyu’s character a world of good. Right now, he lives in an economic bubble with no sense of the value of money. He has zero appreciation of the efforts his mother and I make on his behalf, subsidizing his idle existence and cocooning him from harsh reality. He is over-protected and needs to be exposed to competition, so that he can become a more productive person. Thinking about it, the more competition he is exposed to and sooner this is done, the better it will be for his future development. It will whip him into a mentality that is ready for hard work. I should make him quit school and get a job. Perhaps I could move to a country where child labour [sic] is still tolerated, if not legal, to give him more choice in employment.

I can hear you say I must be mad. Myopic. Cruel. You tell me that I need to protect and nurture the child. If I drive Jin-Gyu into the labour [sic] market at the age of six, he may become a savvy shoeshine boy or even a prosperous street hawker, but he will never become a brain surgeon or a nuclear physicist – that would require at least another dozen years of my protection and investment. You argue that, even from a purely materialistic viewpoint, I would be wiser to invest in my son’s education than gloat over the money I save by not sending him to school. After all, if I were right, Oliver Twist would have been better off pick-pocketing for Fagin, rather than being rescued by the misguided Good Samaritan Mr Brownlow, who deprived the boy of his chance to remain competitive in the labour [sic] market.

Yet, this absurd line of argument is in essence how free-trade economists justify rapid, large-scale trade liberalization in developing countries. They claim that developing country producers need to be exposed to as much competition as possible right now, so that they have to incentive to raise their productivity in order to survive. Protection, by contrast, only creates complacency and sloth. The earlier the exposure, the argument goes, the better it is for economic development." (65-6)

Compare and Contrast: 200 Dead – One Billion Hungry

As bad as it is, why does this…

Get more coverage than this?

For multiple reasons, of course, something I will touch upon in my review of Stealth Conflicts. But what is obvious is that scale is not the issue, otherwise, 1 billion hungry people would deserve front page, compared to 200 dead in Gaza (as horrific as it is). In most media, and especially in the US, it is a simple morality play: innocent Israel is defending itself against evil Hamas. In Europe, and especially in left-wing circles, fascist Israel is killing innocent Paslestinians. Of course, no one dares touching the fact that it is the clash of two types of religious fundamentalism that bear a big part of responsbility here. Also, the power differential is so great between Israel and Hamas that they cannot be equated.

On the other hand, our 1 billion hungry people, that is a more complicated story for Western audiences with short attention span:

Not to mention that hunger deaths are slow and unspectacular deaths in a world of sensationalist global media whereas blowing up stuff ("shock and awe") has greater visual impact. Mass violence rates better than structural violence.

Also, governments in general have an interest in getting coverage for things they can benefit from: the US government will never miss an opportunity to defend Israel (heck, Obama was genuflexing even before being elected) against terrorists. European governments want to appear to be defending the rights of both sides.

When it comes to hunger, no one wants to discuss the reasons for the high costs of food, agricultural subsidies or unfair trade policies that strangle the agricultural sector in developing countries or indeed, the strage fact that hunger is not connected to food shortage. The West might appear less than noble here.

David Held Was Prescient

Just as I was reading the article I shall discuss below on the need to reform the Washington Consensus system, I saw this great and very relevant cartoon that Carlos Serra had posted on his blog and I could not resist (other great comics by Gado are available on his website):

Reform

The article by David Held I wanted to discuss here is"At The Global Crossroads: The End of the Washington Consensus and The Rise of Global Social Democracy?" in Globalizations, May 2005, Vol. 2, No. 1, pp. 95-113. Held is well known for his conceptualizations on global governance as he has published extensively on the subject. The article offered here is, to put it simplistically, a short version of his book Global Covenant: The Social-Democratic Alternative to the Washington Consensus.

Held’s conception of globalization is increased interconnectedness that created overlapping communities of fate as opposed to discrete national communities of the Westphalian order. Globalization is multi-layered and is not just economic, but political and cultural as well. The question of global governance is especially crucial for Held as greater interconnectedness involves a greater reach of a body of international laws dedicated to the promotion of justice. A great deal of this body of human rights juridical activity came about after World War II and the Holocaust.

"[Those involved in drafting these universal principles of human rights] rejected the view of national and moral particularists that belonging to a given community, limits and determines the moral worth of individuals and the nature of their freedom, and they defended the irreducible moral status of each and every person. The principles of equal respect, equal concern and the priority of the vital needs of all human beings are not principles for some remote utopia; they are at the centre of significant post-Second World War legal and political developments." (96)

The global crossroads mentioned in the title of the article refer to the dilemma faced by the international community: promote and extend this human rights regime, or let be eroded and dismantled. And Held is rather pessimistic (remember, that was in 2005 although I don’t think there is much reason to be more optimistic now). For Held, the human right regime is particularly threatened by four crises:

1. The collapse of the Cancún trade talks

And the correlative rise in bilateral and preferential trade agreements. This goes back to the fact that the global trade system is rigged against developing countries and therefore is of questionable legitimacy.

2. Little progress on the Millenium Development Goals

I have blogged extensively on the MDGs and the lack of progress is attaining these goals is a massive failure of the moral conscience of the international community. I would add that this is even more shameful now considering that the cost of reaching these goals does not compare to the money poured into the financial system to rescue the developed economies.

3. Little progress on a sustainable framework to deal with global warming

And the lack of real progress at Poznan shows that this is still an issue today and we are already witnessing some of the effects of this in the form of more frequent violent storms, resource wars (especially for water, oil and land) as well as climate migrants and refugees.

4. The threats to the multilateral order by the unilaterialism initiated by the US in Iraq

Incidentally, the change in administration might not change much on that. The additional problem is that other countries can use the same doctrine to go it alone against defined enemies, further undermining the multilateral order and weakening the UN system.

All these crises are both symptoms of increased interconnectedness and crises that threaten the global order. According to Held, what is missing is greater integration and greater commitment to social justice. This is so for two main reasons: the Washington Consensus and the Washington Security Agenda.

The Washington Consensus

This one is well known and rather well defined. It is understood as the underpinning of the global spread of global capitalism through liberalization. The Washington Consensus was promoted and pushed though global institutions such as the IMF and the World Bank who imposed conditions – structural adjustments – on developing countries, forcing them into integration into the global market.

This Washington-driven economic agenda has come under heavy criticism for a number of reasons and after years of being forced on developing countries, it does not have much to show for it. Held (99) cites three major points made by Branko Milanovic (2003: 679):

  1. How to explain why after sustained involvement and many structural adjustment loans, and as many IMF Stand-bys, African GDP per capita has not budged from its levels of 20 years ago. Moreover, in 24 African countries, GDP per capita is less than in 1975, and in 12 countries even below its 1960s level;

  2. How to explain the recurrence of Latin crises, in countries such as Argentina, that months prior to the outbreak of the crisis are being praised as model reformers;

  3. How to explain… ‘pupils’ among the transition countries (Moldova, Georgia, Kyrghyz Republic, Armenia), after setting out in 1991 with no debt at all, and following all the prescriptions of the IFIs, find themselves 10 years later with their GDPs halved and in need of debt-forgiveness.

So, on the one hand, the Washington Consensus failed many developing countries and at the same time, the countries that have experienced growth and development are those that stayed outside of that system (China and the emerging Asian tigers as well as India, for instance).

"There is much evidence to suggest that a country’s internal economic integration – the development of its human capital, of its economic infrastructure and robust national market institutions, and the replacement of imports with national production where feasible – needs to be stimulated iniitally by state-leg economic and industrial policy. The evidence indicates that higher internal economic integration can help generate the conditions in which a country can benefit from external economic integration (Wade, 2003). The development of state regulatory capacity, a sound public domain and the ability to focus investment on job creating sectors in in competitive and productive areas is more important than the single-minded pursuit of integration into world markets." (100)

The Washington Consensus has eroded the state capacity to promote internal integration, promoted the misleading view that there is only one path to development and growth and aggravated the major asymmetries of global market access and power and therefore made things worse for developing countries.

"Leaving markets to resolve alone problems of resource generation and allocation misses the deep roots of many economic and political difficulties; for instance, the vast asymmetries of life chances within and between nation-states which are a source of considerable conflicts; the erosion of the economic fortune of some countries in sectors like agriculture and textiles while these sectors enjoy protection and assistance in others; the emergence of global financial flows which can rapidly which can rapidly destabilize national economies; and the development of serious transnational problems involving the global commons. Moreover, to the extent that pushing back the boundaries of state action or weakening governing capacities means increasing the scope of market forces, and cutting back on services which have offered protection to the vulnerable, the difficulties faced by the poorest and the least powerful – north, south, east and west – are exacerbated. The rise of ‘security’ issues to the top of the political agenda reflects, in part, the need to contain the outcomes which such policies provoke.

The Washington Consensus has, in sum, weakened the ability to govern – locally, nationally and globally – and it has eroded the capacity to provide urgent public goods. Economic freedom is championed at the expense of social justice and environmental sustainability, with long-term damage to both. It has confused economic freedom and economic effectiveness." (102)

Attempts at reforming the Washington Consensus have been meek and unconvincing. For Held, the alternative lies with a social-democratic approach. Held defines social-democratic view as follows:

"Traditionally, social democrats have sought to deploy the democratic institutions of individual countries on behalf of a particular project: a compromise between the powers of capital, labour and the state which seeks to encourage the development of market institutions, private property and the pursuit of profit within a regulatory framework that guarantees not just the civil and political liberties of citizens but also the social conditions necessary for people to enjoy their formal rights. Social democrats rightly accept that markets are central to generating economic well-being, but recognized that in the absence of appropriate regulation they suffer various flaws, especially the generation of unwanted risks for their citizens and an unequal distribution of those risks, and the creation of negative externalities and corrosive inequalities." (103)

The problem is then how to extend social-democratic policies on a global scale in the context of diminished capacities of the states. That is the major challenge for Held: how to create a global social democracy based on transparency, accountability, commitment to social justice, equitable distribution of life chances, public management of global flows of various sorts, corporate governance and environmental sustainability. Held provides a fairly detailed laundry list to make this happen. And, again, the question of cost is no longer a valid one in the context of massive bailouts.

The Washington Security Agenda

For anyone who has been following the doctrines of the Bush administration, this is a familiar story of the US policy after the terrorist attacks of 9/11. The choice faced by the US government was to either strengthen the multilateral order or to undermine it. We all know which path the administration chose.

"After 9/11, the US and its major allies could have decided that the most important things to do were to strength international law in the face of global terrorist threats, and to enhance the role of multilateral institutions. They could have decided it was important that no single power or group should act as judge, jury and executioner. They could have decided that global hotspots like the Middle East which feed global terrorism should be the main priority. They could have decided that the disjuncture between economic globalization and social justice needed more urgent attention. And they could have decided to be tough on terrorism and tough on the conditions which lead people to imagine that Al-Qaeda and similar groups are agents of justice in the modern world." (106)

They decided none of these things and the rest is history with side effects with long-term impacts and none of the issues above addressed.

In other words, both the Washington Consensus and the Washington Security Agenda are massive failure and this is even more visibly true now than it was when Held wrote his article. But Held does not end with this pessimistic diagnosis. He offers specific prescriptions for a global social-democratic agenda based on some basic principles:

  • Commitment to the rule of law and development of multilateral institutions

  • Generation of new forms of legitimacy for global political institutions for security and peace-making

  • Acknowledgment that ethical and justice issues based on the global polarization of wealth, power and income, the asymmetries of life chances

None of these can be solved by the market. Similarly, security must be reconceptualized from a narrow conception (protection from coercive power and violence) to a broader meaning (economic, political and environmental protection especially for the vulnerable). So, indeed, what Held suggests is a global social covenant to promote fair trade rules, more democracy at the global level, a more just and equitable world order. This is also means a more open mode of governance including the global civil society.

Held was indeed prescient when he wrote this article and the current disastrous financial and economic conditions should, if reason prevailed, mark the end of the Washington Consensus and the final days of the Bush administration should also be the final days of the Washington Security Agenda. However, Held was somewhat pessimistic then, and there is no reason to be less so now. Leadership on these issues will not come from the US. According to Held, the only other likely candidate for such leadership is Europe.

ASA Meeting – Final Plenary Session

In addition to the plenary session which I’ll talk about below, I attended a couple of teaching workshops sessions that are probably of interest only to me, but they provide me with materials for

Things that suck and make me run out of the room within the first 20 minutes of a session

Notes to my presenting colleagues: please, do NOT read the 50-page research paper you’ve written, thinking you can cram it all within the 15 minutes allotted to you… it’s BORING, incomprehensible and deadly especially for an 8:30am session to someone like me, that is NOT a morning person at all.

Oh, and I know we’re supposed to hate and trash powerpoint, but you know what, having the basic points of your paper on slides REALLY help keeping track of what you’re talking about and where you’re going (however, kudos to Bruce Western who took the whole powerpoint presentation to a whole new level of fancy editing and transition and animation!)

However, if you do use a powerpoint presentation, please check BEFORE that the background color you use for your slides will not make your audience’s eyes bleed.

Things that totally rock!

Meeting someone whom I already consider a friend, VastLeft! We had

  • matching polo shirts (not intentional, I swear, although he had told me what he would wear, I just picked the shirt at the top of pile in my suitcase)
  • a nice lunch
  • a great conversation

VL was, of course, a perfect gentleman (although between blog posts and comments, it’s like I already knew him).

I had a great time. I hope he did too and that we can do that again!

Things that don’t suck

The final plenary session : Barriers and Bridges – A Dialogue on US-Mexico Immigration, moderated by New York Times immigration editor Julia Preston, and with a panel with Douglas Massey (check out his book, Beyond Smoke and Mirrors: Mexican Immigration in the Era of Economic Integration) and Jorge Castaneda, former foreign minister of Mexico during the Fox administration, from 2000 to 2003 (his book, Ex-Mex: From Migrants to Immigrants). Since it was a dialogue, my notes are a bit disjointed.

Imagine that: a panel on a serious issue where the panelists are asked intelligent questions and where they have the time to respond and no one interrupts them until they’re done so that they can establish context and background to their answers… what a concept!

Bottom line: the current immigration situation is absurd: the backlog at the INS, the stupid wall, the militarization of the border, the raids, all these things, according to Doug Massey to increasing illegal immigration into the US… before the current trend of nativism (which increased after 9/11… never mind that Mexico has never been a base of terrorism, no terrorist has ever come from Mexico… as far as terrorism is concerned in North America, the US should look North: Canada… there are real cells there and there is recruitment going on).

How has this increased immigration? Because the strengthening of border controls makes it difficult for Mexican to enter the US but it also makes it hard for them to go home the same way. Before the current situation, individual men would come, work here for years, send back remittances. Some of them would settle but many would return. Now, it is entire families who come undocumented, because they know it is going to be hard to return. This situation creates hybrid families as far as immigration status is concerned. One spouse may have a visa but not the other, some of the children were brought over from Mexico (therefore undocumented) while others are born in the US.

The result is that whereas the Latino population used to be concentrated in the Southwestern states (where there are still in large numbers), they are now in the 50 states and especially in the South (Massey conducted studies in North Carolina, among other states) where nativist reactions have been quite strong.

Everyone on the panel agrees that there is no such thing as the status quo, just a lousy and absurd situation and that there will be no resolution until the change of the guard in the executive, whoever that happens to be. At the same time, immigration will probably not be a big topic in the campaign: McCain is at odds with his base on this (which means he’s not an insane nativist convinced that La Reconquista is on the way and La Raza is its 5th column) and Obama cannot take any chances with Latinos since they can give him a 6% (Latinos are 9% of the voting population, and Obama should get about 70% of them) advantage right off the bat (that was Castaneda’s point, of course, he stated, it’s not what matters but still) whereas McCain seems to have already conceded the Latino vote.

Both agree that any immigration reform will include some components: regularization for some undocumented, guest work program (the right wants what amounts to indentured servants by giving employers the visas, whereas Massey is a big promoter of giving the visas to immigrants and let them find their niche on the labor market).

Castaneda stated that no immigration policy can be separated from policies to push for the development of Mexico… right before the Bush administration took office in 2000, Castaneda and his groups discussed this with them. The Bush administration refused to consider the development side of things, just the immigration side… with great results (is there anything these people haven’t totally FUBARed? Don’t answer that) but Castaneda means that this is essential and if the powers that be are so concerned about immigration, then they should put their money where their mouth is.

What about the argument that the American people would never go for that? That Americans don’t want to pay for foreign development and that the US is not in the business of developing countries? Well, there is ample historical evidence to the contrary from the Marshall Plan to the Iraq War and lots of examples in-between. Massey added that it works, citing the case of the Spanish and Portuguese integration within the European Union.

The story here is that there is a persistent wage gap between Southern and Northern Europe. When Portugal and Spain were considered for membership into the EU, they had to undergo drastic structural adjustments. At the same time, the EU poured a lot of money into the economies of these countries so that when they became part of the EU, with open borders, the shock would be more easily absorbed, there would be no massive emigration out of Portugal and Spain. It worked. Actually, Portuguese and Spanish ex-pats returned.

Finally, when it comes to immigration reform, recent history shows that piecemeal legislation does not work. It has to be the whole package or nothing.

Forests = Food + Fuel – A Planned Tragedy

RRI

Via the BBC,

"Demand for land to grow food, fuel crops and wood is set to outstrip supply, leading to the probable destruction of forests, a report warns."

Rainforest

The report in question was drafted by the coalition Rights and Resources Initiative focused on global forest policy. They advocate sustainable management of forestry as well as respects for the people living in and from the forests in their rights not to be forcibly displaced by logging companies who deprive them of their livelihood. As stated in the BBC,

""Arguably, we are on the verge of a last great global land grab," said RRI’s Andy White, co-author of the major report, Seeing People through the Trees.

"It will mean more deforestation, more conflict, more carbon emissions, more climate change and less prosperity for everyone."

Rising demand for food, biofuels and wood for paper, building and industry means that 515 million hectares of extra land will be needed for growing crops and trees by 2030, RRI calculates.

But only 200 million hectares will be available without dipping into tropical forests."

Well, for logging companies and well as the biofuel and ranging sector, there is no problem: let’s just tap into these ttopical forests.  But this would make climate change worse since deforestation already accounts for 20% of carbon emissions. But the need for both fuel and food has triggered land speculation and whatever the global financial markets want, they usually get. It is a very unequal battle between Big Money and the rights of indigenous people to land.

The bottom line is the question of ownership. Who owns the trees? Who owns the land? We already know that land tenure issues are a major source of conflict. RRI advocates community ownership in order to promote indigenous peoples’ rights, livelihood through sustainable forest management and pro-poor growth through community development. As their site states,

"An estimated 350 million indigenous and tribal peoples are at least partly dependent on forests, including some 60 million who are substantially dependent on forests for their subsistence and livelihoods. Forests are also particularly important to poor women, who shoulder much of the burden for hauling wood and collecting and marketing forest products.

Dominant models of forest industry and conservation have often exacerbated poverty and social conflicts and have precluded pro-poor economic growth. The lack of clear rights to own and use forest land, develop enterprises, and trade in forest products has driven millions of forest dwellers to poverty and encouraged widespread illegal logging and forest loss.

The world will not meet national and global goals to reduce poverty and protect the environment unless poor peoples’ rights to land and resources are strengthened. Neither will the world effectively mitigate or adapt to climate change without clarifying local tenure and governance. The next two decades are critical–both for the poor and for the forests.

There are reasons for optimism. Organizations of indigenous peoples and forest-dwelling communities are gaining voice and opportunity, and after decades of limited action many countries are beginning to consider far-reaching legal and policy reforms. There is a major opportunity to advance the rights and livelihoods of forest peoples by establishing the institutional foundations for sustained conservation and forest-based economic development."

Other posts on deforestation here, here, here, here, and here.

Organized Criminal Networks as Global Powers

Organized crime has gone global. That is an accepted fact but it makes life for national anti-mafia services miserable. Going global has done for organized crime what it has done for transnational corporations: it has made these groups more powerful, more flexible; it has given them a greater reach into markets they did not yet have access to; it has allowed them to make connections with other "like-minded" groups whereas before, such contacts would have been limited by geographical distances and barriers.

Moreover, the liberalization of trade and capital as well as the removal of effective border controls within specific regional blocs, such as the European Union, has made circulation of illicit goods and services even easier and more lucrative. Criminality thrives in unregulated environments and failed / failing states. What’s not to love about globalization?

None of this has gone unnoticed, of course, and we are starting to see now real signs of concerns regarding the expanding activities of organized criminal networks, as illustrated by a flurry of articles all over the press across continents.

Continue reading

Irony Officially Died – WTO Edition

Seems like the World Trade Organization (WTO ) Director-General, Pascal Lamy , deplores that lack of regulations that could have prevented the current economic troubles (via the BBC ):

"The boss of one of the world’s most important economic organisations has said the lack of regulation in world markets was the root cause of the financial crisis which has hit world economic growth. (…)

Pascal Lamy, the director-general of the World Trade Organisation (WTO), told the BBC that "a little more prudential regulation" could have helped prevent the banking crisis that has engulfed the US and Europe.

Mr Lamy said that the fundamental problem was that here was no international consensus on how to regulate the rapidly changing world financial markets or who should be the regulator.

The WTO boss also said that workers hurt by globalisation should receive more help from their governments.

Mr Lamy’s remarks put him at odds with the so-called "Washington consensus" that liberalisation, privatisation, and open markets are the only way to bring about economic growth."

Well that’s a bit rich considering how much the WTO has done to precisely create the conditions under which the system finds itself in crisis today. So, now, governments are supposed to pick up the tab for unscrupulous investors, but heaven forbid that they tax said investors for that purpose.

However, the shift away from the Washington Consensus (something already noted here ) is actually interesting.

"The WTO chief said he well understood the concerns of those workers who feared that globalisation would cost them their jobs, but argued that the WTO was "not an advocate of unfettered globalisation.’

And he criticised governments – including the US – for not providing enough domestic support, including retraining and job programmes, to help workers displaced by changing global trading patterns.

Trade was often just "an excuse" for not making the necessary adjustments in domestic policy to support workers hit by globalisation, he said.

And he added that he was not surprised that protests were strongest in the US, because it has the weakest system of social protection."

Yeah, no kidding. How about not creating conditions that leave people in such precarious situations? Because, at the end of the day, Mr Lamy does not question nor challenge the economic system that displaces workers. He has the same "evolutionary" view of economic globalization… workers displacement is just a necessary step towards a better world. So, first, let’s create conditions that displace workers, THEN, provide social services to help them. How about creating economic conditions where workers don’t get displaced in the first place? That never comes into the discussion (Well, Hillary Clinton talked about that in her campaign). And, of course, Mr Lamy rejects protectionism, especially in the US form of massive subsidies. Is that really new thinking in the Transnational Capitalist Class of which Mr Lamy is a member? Hardly. Case in point:

"Mr Lamy said there was no doubt that the effects of the global financial crisis were extremely serious, especially for the US and Europe.

World economic growth and world trade are both slowing sharply.

But Mr Lamy argued that the growing economic power of emerging market countries such as Brazil, China, and India was a crucial counter-weight to the slowdown in the rich countries, adding that this would not have been possible without the expansion of free trade."

Duly noted. There is still quite a bit of evidence to the contrary though.

The End of the Washington Consensus?

That’s what Le Monde states, based on a recently released report from the Commission on Growth and Development and titled The Growth Report – Strategies for Sustained Growth and Inclusive Development . The Commission was composed of 21 members, most of them prestigious economists, former heads of state, former prime ministers or finance minister from a variety of countries as well as high-ranking member of the United Nations Development Program (UNDP ) as well as bankers. It was chaired by Michael Spence , 2001 Nobel prize of economics winner. In other words, it was not composed of dirty fucking hippies and anti-globalization types. The goal of the Commission, according to its chairman?

"We chose to focus on growth because we think that it is a necessary condition for the achievement of a wide range of objectives that people and societies care about. One of them is obviously poverty reduction, but there are even deeper ones. Health, productive employment, the opportunity to be creative, all kinds of things that really matter to people seem to depend heavily on the availability of resources and income, so that they don’t spend most of their time desperately trying to keep their families alive."

And according to Le Monde article, the report challenges a number of neoliberal assumptions, often nicknamed the Washington Consensus . So, what’s in that report that is so earth-shattering? The Commission studied the countries that experienced sustained growth since 1950 and created a list: Botswana, Brazil, China, Hong kong, Indonesia, Japan, Malaysia, Malta, Oman, Singapore, South Korea, Taiwan and Thailand and asked, what did they do right? This is especially interesting considering the major differences between these countries, from the giant China to the small Malta, from the open market in Singapore to the state-controlled economy of Malaysia.

The report does not challenge or question the necessity of globalization or economic openness and free trade as the only path to wealth and development. The closing off of national markets and protectionism are not seen as long term solutions. Nothing new or controversial here.

The focus on poverty reduction is new as it is often perceived as the magical side effect of the wonders of the free market. The other novelty is the recognition of the crucial role of public administration in development and growth. So, there should be long-term planning and better paid (that is, less corruptible) public servants. This also means that there should be public investments in infrastructures as well as health and education since those stimulate private investments rather than impede it.

The Washington consensus also turned a blind eye to the social consequences of its policies. The Commission, on the other hand, is convinced that economic insecurity, poverty weaken population support to economic reforms (no kidding) necessary for success in the global context. So, lay-offs should be accompanied by social programs to help the unemployed adapt to the new economic conditions (haven’t we heard that before? Oh yeah, for the past 25 freakin’ years). Similarly, it calls for governments to limit the level of stratification and inequalities that always increase when economies open themselves to the global market.

On the other hand, the Commission has nothing to say as to political regimes and systems and very little to say about the environment. It only states that subsidies to energy and biofuels should stop in core countries. It also incites developing countries to pay attention to greenhouse gases and water pollution without delay.

So, yes, overall, it’s less orthodox than strict neoliberalism, but quite frankly, there is nothing earth-shattering here. It is more of the same, in a nicer packaging, as if someone were riding Jeffrey Sachs’s brand of modernization theory.

So, is this the end of the Washington Consensus? Not likely.

Global Food Crisis – Update

Weeks after the food riots spread around the world, a flurry of articles have been published all over the place, taking stock of what is happening, providing analysis and critique as well as prospects on global food production and policy. So let’s review.

Who’s To Blame for Food Prices?

Speculators

According to the BBC, financial speculation has a lot to do with the soaring food prices:

“It is inevitable that financial investors are going to latch onto any cyclical commodity that’s seeing sharp price rises. Property may have bombed, demand for industrial raw materials may be peaking. Yet everyone has to pay more for food, so why not invest in farm products?

Right now, everything seems to be conspiring to push up basic food prices. From drought to poor crops, from high fuel prices to explosive demand, and changing diets in China and the Far East. And most of all, precious farmland being switched to crops for biofuels.

Small wonder that in their quest for investments to beat inflation, even some traditional pension funds are trading in the likes of wheat, soya beans and livestock.”

Continue reading

Why Am I Not Surprised? Burger King Edition

CIW

From the Independent,

“Activists have outed a corporate dirty tricks operation tied to Burger King aimed at discrediting efforts to improve the often horrific conditions of migrant workers in Florida’s tomato fields.

It emerged yesterday that a top Burger King official is being investigated for using his young daughter’s online alias to make derogatory comments about the farm worker group, the Coalition of Immokalee Workers, which is asking the fast food chain to raise tomato pickers’ pay by a cent for every pound picked.

Burger King’s vice president Steven Grover was fingered as the source of venomous online attacks on student activists. “Senior management of the company had no knowledge of Grover’s postings,” Burger King spokeswoman Denise Wilson said. “We are conducting an internal investigation, and appropriate disciplinary action will be taken.”

The farm workers coalition discovered that abusive emails and comments under the names “activist2008″ actually originated at the Miami headquarters of Burger King. The e-mail Internet protocol addresses are the same as Burger King’s.”

Hmm… using your daughter’s online account to accuse activists of being in it for the money, now, that’s courageous and brave. Here is the hilarious (and pathetic) part though:

“Mr Grover has not commented on the episode, but Burger King said “comments attributed to Steve Grover do not reflect Burger King’s desire to find a way to assure decent wages and modern working conditions for the tomato harvesters.””

Well, of course it does not. but that’s not all. Apparently, a security firm has been discovered trying to infiltrate a students’ group supporting the rights of migrant workers. The firm was paid by corporate spies.

“The attempted infiltration of the activists by paid corporate spies was noticed when Cara Shaffer, who described herself as a college student said she wanted to start an activist group at a Virginia university. The activists quickly discovered that she actually heads a company named Diplomatic Tactical Services. She now refuses to discuss her attempted involvement with the farmworker group. A Burger King spokesperson said he “knows nothing about any Burger King effort to spy” on the student group.”

Man, so many coincidences and things happening that BK knows nothing about! Of course, there are no such things as coincidences in such matters. These incidents are coming to light as the US Senate is investigating working conditions of migrant workers, especially tomato pickers, whose wages have not increased since 1978. Many work in quasi-slavery and they get regularly harassed, beaten, abused and intimidated. And many are held in debt bondage, which is the most common contemporary form of slavery.

“Detective Frost said the conditions of some workers in Florida were equivalent as human trafficking. The large tomato producers shield themselves from prosecution by hiring subcontractors, who are responsible for human trafficking, he testified.”

Subcontracting has become the habitual alibi for corporations who don’t want to be bothered with working conditions, fair wages and environmental regulations. If something bad happens, they can always blame the subcontractor and claim no knowledge. Subcontracting provides (more or less) plausible deniability.

The tomato growers, unsurprisingly deny all that. To listen to them, one would think that everything is peachy. However, I would bet that BK is not the only one engaging in such dirty tricks.

And just to piss off the big bad corporations, just click on the logo above and read on these workers conditions and what can be done.

Bolivia on the Brink – Part I

Bolivia is quite an interesting country, politically, these days. It seemed to have been at the forefront of some major struggles relating to the globalization of capitalism. First, there were the water wars, so brilliantly presentes by a PBS Now report (back in the days where the show was an hour long, hosted by Bill Moyers) in partnership with Frontline World, the best TV program available in the US on world affairs, IMNSHO.

What were the water wars? In many ways, Bolivia’s economic situation at the beginning of the 21st century was comparable to that of a lot of peripheral countries. So, when Bolivia elected a former IBM executive for president, he decided to modernize the country, strengthen the currency and reduce debt levels, as well as open the country to foreign investment. To do so, he called on to the World Bank for help and received the same one-size-fit-all list of requirements to make Bolivia part of the global economy and attractive to foreign investments. One such recommendation was the privatization of water in Cochabamba, a city in the Andes with 800,000 inhabitants, largely poor and indigenous.

The problems started when only one company bid for the water distribution system, Aguas del Tunari, a subsidiary of corporate giant Bechtel. It was a sweet deal for Aguas del Tunari as the government guaranteed them a 15 to 17% profit margin (so much for liberalization and letting the market set prices). Immediately, Aguas del Tunari jacked up the price of water so that a lot of peasants could no longer afford it. More than that, privately dug wells were by law to be controlled by Aguas del Tunari. Finally, once private, water distribution decreased and shortages started. Unsurprisingly, unrest and riots ensued, followed by government repression. Ultimately, the executives of Aguas del Tunari fled the country, but sued the Bolivian government for 25 million dollars (the lawsuit was withdrawn in 2006). In Cochabamba, indigenous and labor leaders decided to take over water distribution but no one, neither the government not the World Bank, offered to help them. (Liberation’s Autour du Monde blog has a good summary of the issue here and here)

The victory of the peasants and indigenous peoples over the corporate giant opened the way for the election of Evo Morales in 2005, the first indigenous president. It is not a surprise that one of his first decisions was to create a Ministry of Water headed by one of the leaders of the demonstrations. The public company that now manages water distribution in Cochabamba can boast that it has extended the grid and kept prices low based on a sliding scale. In the absence of support from the government or the World Bank, most financing for infrastructure comes from European foreign aid and non-governmental organization. There are still problems, though: about half the city receives no water and has to rely on water cisterns and individually-dug wells. The infrastructure is aging and the public company has produced only deficit.

This struggle seems to be a catalyst of all the issues related to economic globalization: the role of international institutions such as the World Bank, the power of Transnational Corporations such as Bechtel, the reduction in power of national government used only as conduits to liberalization, the winners and losers of structural adjustment programs, the plight of indigenous peoples, and the difficulties involved in trying to forge an alternative model for the delivery of basic services, conceived as rights rather than commodities. All these issues zeroed in on Cochabamba and there does not seem to be an easy or just solution to all this.

What is very clear, however, is that the global economic system is not a fair one. It is heavily biased in favor of investors and large corporations, and stacks the deck against peasants, indigenous peoples and labor. So far, attempts at correcting such gross imbalances have been unsuccessful and the current riots related to the food situation are a global extension of the conflict that exploded in Cochabamba in 2000. Unless the issues of the inequalities and loss of quality of life are addressed, it is a fair assessment to say that the global economic system will generate more chaos and instability in the world.

The “Duh” of the Day: Poor Countries Have Not Benefited from Trade Liberalization

Really?? Quelle surprise! This one comes from the United Nations News Center:

UNCTAD

“Landlocked and least developed countries (LDCs) have been further marginalized as a result of trade liberalization, which has led to increased growth in many parts of the world, a senior United Nations official has said.

Addressing the 12th UN Conference on Trade and Development (UNCTAD), taking place in Accra, Ghana, Cheick Sidi Diarra lamented the fact that many of these countries have experienced a further loss of their market share as a result of trade liberalization.”
Seems to me that UNCTAD is kinda late in the game on this because a lot of people have been screaming about the increasing polarization of the world economy for a while now, from alter-globalization activists to Nobel-prize winning economists such as Amartya Sen, Muhammad Yunus or Joseph Stiglitz. And the consequences of this phenomenon have been thoroughly studied.
And this has been the case even though we still hear the prevailing Friedmannian view that globalization, as trade liberalization, was going to lift all boats, trickle down economic bonanzas, promote democracy and world peace once everyone had access to a McDonald’s. What gives?
“Landlocked developing countries are particularly marginalized in the international trading system, Mr. Diarra [the UN’s High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States] pointed out, owing to their remoteness from major world markets and excessive transit transport costs. The High Representative said that addressing this situation requires the establishment of viable transit transport systems and the building up of export capacity.”
Really? That’s all you’ve got to offer to poor and landlocked countries? That’s your solution. Nothing on the joke that is “free trade”? Nothing on the double standard on subsidies and trade restrictions? Nothing on the devastating effects of structural adjustment programs?
I mean, isn’t UNCTAD supposed to promote sustainable development, and not exclusively trade liberalization? How sustainable and development friendly has trade liberalization been? Isn’t it time for a more critical and thorough review of the current system. I think it is.Anyhoo… for those of you inspired by this, the UNCTAD Accra Conference issued a Declaration (the Accra Declaration). It is nice to see that the Declaration refers to the importance of taking into account global climate change and the need to increase the role of women in trade and the economy. Although, not to be picky, but these issues come up as points 16 and 17 out of 18.

Dismantling Neocolonialism in the Congo

According to Le Monde,

L’Etat congolais veut remettre à plat les contrats miniers conclus par les régimes précédents
LE MONDE | 22.03.08

© Le Monde.fr

The government in the Congo is taking a second look at mining contracts awarded to private companies throughout the 1990s because it suspects these were negotiated under very unfavorable conditions (for the Congo, that is, private companies did just fine). Over the 61 contracts that a government commission reviewed, not a single one was declared fair. The commission recommended that 37 be renegotiated and the remaining 14 be cancelled altogether. As a result of these contracts, the country collected very little tax revenue from the mining industry, which should have constituted a major source of funds. At the same time, corruption from local officials also represents a major source of lost revenues for the central government.