|
Dean's new economic proposal (pg. 5)
|
View this Thread in Original format
| occrider |
| quote: | Originally posted by biznology
so maybe i mis typed (yah i saw a lot of questionable wording post-posting)
but what about US protection on agro domestically? if small, poor countries cannot afford to have $20k/year payments to their farmers - and then they are required to open up their borders to 'cheaper' US agro products, what is that going to do for their development?
basically i dont understand how an economy can be 'stabilized' by requiring that country to pay off excessive loans to Western banks, and then accept massive tariff free western imports. what will the country regain stability from?
|
Oh I don't think it's fair at all. That's why I disagree with some of the policies the IMF takes particularly with privatization of everything and relaxing all trade restrictions. However, I hate how people say that once the IMF policies were instituted utility prices jumped 20% or whatever. Well yea because that 20% was formerly subsidized by the government living beyond its means. Many of the IMF's policies ARE economic hardships that a country must endure in order to rebuild its credibilty/fiscal solvency. However, with respects to agriculture, you're picking on the wrong people. The principle reason the US is engaging in farm subsidies is to counter EU farm subsidies in order to remain competitive abroad ...
| quote: |
Rules on foreign investment proved especially controversial at Cancún. Proponents of globalisation have long argued that inward investment not only brings new money into a poor country, it also brings new expertise and technology, which “spills over” to local firms and workers. Poor-country governments have devised many a strategy to encourage these spill-overs, by requiring foreign companies to undertake joint ventures with local firms, for example. They fear that rich countries want to take these rules on investment out of their hands. Some of these fears are probably premature. Investment negotiations, if started at all, would have started small, with relatively innocuous calls for more transparency. The WTO would not write countries' investment rules for them; it would simply require them to be upfront about what those rules were.
But if poor countries do not want to hear about the Singapore issues, why are some richer countries so keen to talk about them? The United States, which invests a great deal abroad, has some interest in protecting those investments with WTO rules. It recently concluded trade pacts with Chile and Singapore, for example, that restricted their use of capital controls. But the Americans view the rest of the Singapore agenda with some diffidence. They would not take kindly, for example, to having the antitrust decisions of their judges trumped by a world competition policy set at the WTO’s headquarters in Geneva. The main proponents of the Singapore issues are the EU, already accustomed to supranational rules on competition and government procurement, and Japan. But even among the EU’s members, opinion is divided, and few companies are throwing their weight behind the EU's stance.
Some cynics suggest that the Singapore issues are just chaff thrown up by the EU and Japan to disguise their own intransigence over agriculture. Ever since the current round of trade talks was launched in 2001, Japan and the EU have been on the defensive. The Doha round’s focus on agricultural liberalisation has forced them to defend some of the most illiberal but well-entrenched systems of agricultural protection in the world. Japan’s import tariffs on rice go up to 1,000%, for instance. The EU spends more on annual subsidies for each of its cows than most sub-Saharan Africans earn in a year. Both insist on progress on the Singapore issues as a quid pro quo for long-overdue agricultural reforms that still seem politically beyond them. If poor countries refuse to yield ground, the EU and Japan can blame them for their inflexibility over the Singapore issues, rather than taking the blame for their own inflexibility over agriculture.
Nonetheless, the EU did give ground at Cancún, albeit belatedly. On Sunday afternoon, it suggested dropping all but one or two of the Singapore issues from this trade round, leaving only trade facilitation and, possibly, government procurement in the negotiations. The offer, if it was ever truly on the table, was a good one. But by this late stage, the EU's interlocutors were about ready to kick the table over. The African Union refused the Europeans' offer, partly because its own pleas for an end to cotton subsidies had been stonewalled earlier in the week by the Americans. Then South Korea (backed by Japan) insisted on all four Singapore issues being negotiated together. At that point, Mr Derbez threw in the towel.
At the end of the talks, Celso Amorim, Brazil’s foreign minister, put a positive spin on the collapse. Though Cancún had not produced an agreement, he said, it had forged a new coalition of developing countries, which had refused to fall apart or roll over. Certainly, the developing world conceded nothing at the summit. But the G22 should aim to be more than just another mercantilist negotiating block, demanding that other countries lower their barriers while resisting calls to lower its own. Poor countries have as much, if not more, to gain from lowering their own barriers with each other as they do from overcoming rich-country obstinacy.
Besides, that obstinacy needs to be properly tested. The American delegation, for one, came to this summit talking a good game. They proposed to eliminate tariffs on all manufactured and consumer goods by 2015, and to cut agricultural tariffs by 76% over five years. They were prepared to be bold, they said, if other countries were bold too. Of course, this might have been empty posturing. If so, Cancún was a missed opportunity to call their bluff.
http://www.economist.com/agenda/dis...tory_id=2065723
|
and
http://www.tranceaddict.com/forums/...threadid=111776
Funny how nobody protests eu subsidies ... |
|
|
| cfyoung4 |
| quote: | Originally posted by occrider
Funny how nobody protests eu subsidies ... |
That is only too true. I'd like to think it's not being done out of maliciousness, which is why I'm trying to understand how some are able to find fault with U.S. subsidies, but nonchalantly accept those of the E.U. It begins to look like a double standard. |
|
|
| biznology |
well it all started with Lome.
now because the US protested EU tariffs on W Indy bananas Jamaica's economy has gone to | |
|
|
| occrider |
| quote: | Originally posted by biznology
well it all started with Lome.
now because the US protested EU tariffs on W Indy bananas Jamaica's economy has gone to | |
All what started with Lome? Are we talking about subsidies or tariff wars? The EU was in violation of WTO trade rules in providing favoritism for the ACP bananas over the bananas produced by the Latin American producers. In as much as the WTO ruling against US steel would allow the EU to levy billions in sanctions against the US, the US threatened to levy sanctions against the EU. Besides, the ACP bananas were doomed to failure anyway. ACP banana production suffers from poor terrain, poor soil conditions, independent farmers, natural disasters, and more expensive shipping costs rendering them twice as expensive to produce as Latin American bananas. The whole concept of Lome was outdated and encouraged inefficiency and dependancy. |
|
|
| rupert |
I wholeheartedly agree with Biznology's statements about the IMF and would add only a little.
| quote: | | And everyday banks are answerable to its creditors as well ... what's the difference? The goal is not to cause economic collapse ... how are they going to get their money back? The objective is to create a strong economy in order to regain loans. |
The difference is the IMF isnt a bank. It was set up to be a lender of last resort to maintain economic stability to avoid political instability.
During the crisis' of the 1990's it policies far exceeded what it was originally envisaged to do. Abolishing oil subsidies in Indonesia was part of the preconditions of the IMF loan. Course Indonesia did what it was told and got rid of the subsidies and of course the price goes up causing riots in the street. Now maybe the people at the Chicago School think riots are conducive to economic growth but common sense would indicate otherwise.
Rather than go into more detail about case scenarios perhaps looking at the references from economists about the IMF policies:
http://pages.stern.nyu.edu/~nroubin...ViewFT1297.html
http://www.ksg.harvard.edu/news/new...obalization.htm
http://econ161.berkeley.edu/macro_o..._Argentina.html
http://www.nber.org/feldstein/ft030598.html
http://www.geocities.com/insaafin/asbgWB.htm
| quote: | | Care to elaborate? I haven't researched the IMF all that much, but the WTO is very transparent. |
Joseph Stiglitz work adequately explodes the workings of the IMF and muck raking journalist Greg Palast has quite often got leaked information about how it works.
| quote: | | But wait? I thought that the flight of workers from OECD nations would help developing nations? All the workers are being outsourced correct? This isn't leading to wage improvements at ALL??? That seems somewhat contradictory to economic belief since wages would naturally rise to accomdate increased economic demand. Well if not free trade/labor markets, are we then to argue for labor force trade protectionism? Tarriffs to keep jobs at home and all that jazz? |
That is quite true, when Boeing moves its factory to India from America the global loss of jobs is zero. In fact the global supply of jobs probably increases because Indian workers would be less productive than american ones meaning more people have jobs. But the factory worker in the third world is going to be paid a lot less, you can guarantee they wont be flying very often on the planes they build.
The IMF isnt the cause of all the worlds problems, just more than its fair share. It and its ideology are part of why things wont change. Look at Bolivia, Brazil, Argentina. They did what the IMF and the Chicago School wanted them to do, balance the budgets, open capital markets, break the unions, privatisation and the rest. Are they any better off?
Western countries didnt get to have high living standards by exports alone. Plenty of third world countries have balance of payment surplus' and their people are no better off. Exports gets the economy part of the way. To go the rest of the way requires a boost in domestic consumption. And this requires breaking the power of the elites who own most of the wealth and usually most of the land in those countries.
Concentration of wealth guarantees impoverishment and lack of democracy and unless that is dealt with first all the rest is meaningless. |
|
|
| occrider |
| quote: | Originally posted by rupert
The difference is the IMF isnt a bank. It was set up to be a lender of last resort to maintain economic stability to avoid political instability.
|
It was never designed to be a charity.
And what should Indonesia do? Maintain it's unsustainable subsidies? Yes the IMF advocates restricting government spending, boosting domestic savings, raising interest rates, scaling back big infrastructure projects and paring growth targets. Yes the results are rising prices, reduced social services and more unemployment, in extreme cases leading to political instability and even riots ... however, the alternative is most assuredly worse: steadily draining financial reserves, capital flight and economic meltdown. No matter what the scenario is, you can spend more than you earn for only so long. Bear in mind I'm not defending some of the mistakes the IMF has made, however, the purpose of the IMF is to laregely prevent the worst of what COULD happen (as a result of no outside intervention), not make everything all peachy.
As for your examples, I haven't studied any of the case studies except for South Korea, and I disagree with that article strongly (especially since it does 0 data analysis :rolleyes: ). Korea did not have a chronic account problem??? I beg to differ, as a result of over 4 decades of unsupervision and collusion between the the government, the banking industry, and the chaebols (Korea's big conglomerates), there was aggressive, unchecked expansion and lax financial supervision such that the debt/equity ratio of the 30 largest chaebols was 500 percent. As some of its large industries began to default on their promissary notes, a chain reaction ensued exposing their mercheant bank's liquidity problems. It's ratio of short-term foreign borrowing to foreign exchange reserves shot up above 285 percent. As the crisis in the mercheant banks penetrated the commercial banks, the Japanese, who were also suffering from lending in S E Asia and domestically, began a widespread withdrawal in loans from $20 billion to less than $9 billion. As markets began to react to Korea's inability to roll over loans, currency markets put the won in a free fall. At THAT point, the IMF interveneed and approved a loan at Korea's request to stabilize foreign exchange reserves. Since the article is somewhat dated, it fails to mention that after only a YEAR Korea recovered from its currency market panic as a result of the IMF bailout, payment reprogramming, tight monetary policy, and the collapse of import demand.
Here's a somewhat recent article that does an informed, economic analysis of the crisis with actual data:
http://www.dallasfed.org/research/efr/2001/efr0104c.pdf
Furthermore, the author's suggestions that IMF's funds "would have had to be available for immediate disbursal, not held back until these countries demonstrated their willingness to carry out major structural reforms." is simply ludicrous. You have a crisis arising out of proven economic mismanagement and we're to simply pump MORE money into a failing system without insisting on structural reform??? Sure, why don't we also expand the credit line of that guy who gets daily calls from the collection agency while we're at it?
| quote: |
That is quite true, when Boeing moves its factory to India from America the global loss of jobs is zero. In fact the global supply of jobs probably increases because Indian workers would be less productive than american ones meaning more people have jobs. But the factory worker in the third world is going to be paid a lot less, you can guarantee they wont be flying very often on the planes they build.
|
BUT the worker would be employed, decrease the labor pool, and increase wages as a result. They would most certainly be better off than otherwise ... regardless if they're flying any planes or not.
| quote: |
The IMF isnt the cause of all the worlds problems, just more than its fair share. It and its ideology are part of why things wont change. Look at Bolivia, Brazil, Argentina. They did what the IMF and the Chicago School wanted them to do, balance the budgets, open capital markets, break the unions, privatisation and the rest. Are they any better off?
|
The question to ask is are they better off than they would be if the IMF were to not interfere at all? I guess we can look to Zimbabwe to see what happens when the IMF decides to not intervene. Additionally, wasn't Mexico an example of a succesful IMF intervention?
| quote: |
Western countries didnt get to have high living standards by exports alone. Plenty of third world countries have balance of payment surplus' and their people are no better off. Exports gets the economy part of the way. To go the rest of the way requires a boost in domestic consumption. And this requires breaking the power of the elites who own most of the wealth and usually most of the land in those countries.
Concentration of wealth guarantees impoverishment and lack of democracy and unless that is dealt with first all the rest is meaningless. |
Ideaological so I have no comment. |
|
|
| biznology |
| quote: | Originally posted by occrider
... Additionally, wasn't Mexico an example of a succesful IMF intervention?
... |
No, Mexico has been ravaged by Nafta and the IMF. It was far better off during the days of ISI - a policy which also had its fair share of problems| |
|
|
| rupert |
| quote: | | It was never designed to be a charity. |
" The IMF and World Bank were established to help maintain stability by providing assistance to countries in need-in the IMF's case by making it possible for countries to cope with short-term current account difficulties."
Taken from a speech from a deputy director of the IMF
http://www.imf.org/external/np/speeches/2003/081303.htm
How does removing fuel subsidies help Indonesia in dealing with current account difficulties? Sounds like mission creep.
| quote: | | Here's a somewhat recent article that does an informed, economic analysis of the crisis with actual data: |
I will print the article out and read it at work tomorrow - hopefully.
| quote: | | BUT the worker would be employed, decrease the labor pool, and increase wages as a result. They would most certainly be better off than otherwise ... regardless if they're flying any planes or not. |
Yes that worker in India is better off, but he wont be flying on the plane he helps build. That is my point. Multiply that by every plant that has moved to China and that is the global economy writ large, more manufacturing capacity but a diminishing supply of customers capable of purchasing the products of that capacity.
It isnt just first world economies that have real problems with free trade, the SE asian economies, Mexico etal are losing manufacturing to China because they cant compete with the low wages. And China is that large and has that large a surplus labour force it can keep wage inflation down for many,many years.
| quote: | | The question to ask is are they better off than they would be if the IMF were to not interfere at all? I guess we can look to Zimbabwe to see what happens when the IMF decides to not intervene. |
No the IMF isnt to blame for everything that goes wrong in the world.
Global stability and economic development comes from addressing inequalities of wealth. It is that fundamental.
| quote: | | Ideaological so I have no comment. |
What does that mean?
Every statement is ideological.
The key question is why does capitalism and democracy work in the west and fail everywhere else? That is an economic question as much as a political one. So often I have read statements from economists that ignore political, cultural and environmental issues as if they dont count. |
|
|
| biznology |
| quote: | Originally posted by rupert
....
The key question is why does capitalism and democracy work in the west and fail everywhere else? That is an economic question as much as a political one. So often I have read statements from economists that ignore political, cultural and environmental issues as if they dont count. |
It also relates to the time when the IMF and WB came into development - under Keynesian economics. Currently most W countries have shifted away from Keynesian policy - while the IMF still makes assumptions about international forces based on an outdated idea| |
|
|
| occrider |
| quote: | Originally posted by rupert
" The IMF and World Bank were established to help maintain stability by providing assistance to countries in need-in the IMF's case by making it possible for countries to cope with short-term current account difficulties."
Taken from a speech from a deputy director of the IMF
http://www.imf.org/external/np/speeches/2003/081303.htm
|
Exactly ... assistance. It was never designed to be a free lunch or welfare ... although in some instances countries are given grants or debt relief.
| quote: |
How does removing fuel subsidies help Indonesia in dealing with current account difficulties? Sounds like mission creep.
|
Simple ... if I stop subsidizing my alcohol consumption, I save more money.
| quote: |
Yes that worker in India is better off, but he wont be flying on the plane he helps build. That is my point. Multiply that by every plant that has moved to China and that is the global economy writ large, more manufacturing capacity but a diminishing supply of customers capable of purchasing the products of that capacity.
It isnt just first world economies that have real problems with free trade, the SE asian economies, Mexico etal are losing manufacturing to China because they cant compete with the low wages. And China is that large and has that large a surplus labour force it can keep wage inflation down for many,many years. |
That might be the case in a closed economy. However, once that Indian worker receives wages/higher wages it increases their purchasing power, and they then proceed to increase their consumption, which stimulates additional consumption for say other products, etc. Money shall always circulate such that it will reach those capable of purchasing products of that capacity.
| quote: |
Global stability and economic development comes from addressing inequalities of wealth. It is that fundamental.
|
Then I should see many examples of countries that adopt more socialist practices to be far more economically developed than those countries that are not.
| quote: |
What does that mean?
Every statement is ideological.
The key question is why does capitalism and democracy work in the west and fail everywhere else? That is an economic question as much as a political one. So often I have read statements from economists that ignore political, cultural and environmental issues as if they dont count. |
Well it was ideaological in the sense that it's a statement that departs from the specific discussion at hand and delves into the macro factors of the nature of economics. It is an entirely new can of worms that could probably enjoy a thread of its own. My simple answer to that question however ... they have nothing to barter. |
|
|
| rupert |
I have had a chance to read below. It just confirms everything that I said about the IMF. It might not be the cause of problems, but it doesnt help and in the case of Korea, the article specifically states that the IMF policies made things even worse.
http://www.dallasfed.org/research/efr/2001/efr0104c.pdf
| quote: | | Then I should see many examples of countries that adopt more socialist practices to be far more economically developed than those countries that are not |
The word socialism is really just a meaningless label. By any measure Western countries are incredibly socialist. In Australia the government subsidises or at the very least grossly distorts the market in health care, education, medicine, child care, electricity, fuel, food.
If the lads from the Chicago school and the free marketeers had their way all of those things would be gone. And what would that achieve - increased profits for the corporations and increases in wealth inequality.
The reason "socialist, planned economies are not more economically advanced is because of concentration of power. Absolutism leads to inefficiency.
It is concentration of power whether it be concentration of economic or political power (I would argue that the two are indistinguishable) which leads to economic backwardness. The ruling class in Brazil and the ruling class in the former Soviet Union are virtually indistinguishable, they use the state to ensure the preservation of their privileges. The state exists to exclusively serve their interests rather than the interests of the people and economic development can never really occur when that happens. |
|
|
|
|
