> Thoughtful people in the middle of the
> political spectrum, including those charged with developing policies to
> resolve economic and financial crises in developing countries, had
> considerably more trouble effecting a resolution. They faced a complex set
> of trade-offs rather than clear precedents and had to make difficult
> judgments without either adequate background information or much time for
> reflection.
What does this mean? I believe "Thoughtful people" may represent the vast majority of the people. So, what Summers is suggesting is that the majority of the world (developing) population is confused, have not had time "for reflection" or is just missinformed", and that we should turn either to the illuminating right/left?? Oh my...
> Doug points:
> Summers suggested that institutional arrangements should be developed to
> provide
> developing countries with the longer-term capital flows they needed to
> emerge from crises and achieve sustainable growth. He also called for
> sharper thinking by international financial institutions and other aid
> providers about how the frequently cited objective of providing adequate
> social safety nets could best be achieved.
Does this represent a turn to a some type of keynesian thought? It is not clear from the IMF publication how would he go about instrumenting those "institutional arrangements". Maybe a "Global Central Bank" to obtain liquidity from surplus countries and transfer that to countries with BOP deficits? I am dreaming. am I not?
How about Safety Nets? Globalization tends to destroy safety nets. How can he (or we) argue for a more global economy and at the same time aim to stronger safety nets.
I guess they just dont know.....
> Transition economies
>
> . Russia had done particu-larly badly; in an apparent contradiction of the
> laws of economics,
> it registered simultaneous output declines and increasing inequality of
> incomes.
Again the long run view....Lets just look at Argentina, Brazil, etc. High rates of GDP growth and increasing inequality. I guess I will have to go on reading and reading and researching to find out where on earth has this type of law actually succeded under classical assumptions/policies. It did happen b/w 1950-1973 on the keynesian era in the US, did it not?
> As a result, the number of Russians living in poverty soared from
> 2 mil- lion at the start of the transition to 66 million. In stark
> contrast, China has achieved great success in both eco-nomic development
> and in making the transition from central planning to a market-oriented
> economy.
>
> Stiglitz noted that early in the transition, Eastern and Central Europe and
> the countries of the former Soviet Union had placed excessive reliance on
> "textbook economics" and too little on the political and economic
> environments in which transition was to take place.
But that is exactly what he did on the beginning of his speech!!!
Am I so wrong to think that there is a strong contradiction b/w the policies they (Summers, Stiglitz, etc.) and the objective they pursue? if I am right, why then? Is it just ideology, or what?
Juan
> There had been a strong political imperative for transi-tion economies to
> move quickly on reform to prevent their slipping back toward communism, and
> this had led to hasty and poorly conceived privatization and restructuring
> efforts. He observed that experience had now made it painfully clear that
> privatization alone could not create a market. Restructuring efforts that
> threw large numbers of people out of work had failed to generate new
> manufacturing and service sector investment and thereby to create large
> numbers of new jobs. Economist Joseph Schumpeter's notion of "creative
> destruction" did not seem to apply to many tran-sition countries, and
> creating new enterprises capable of achieving high productivity and
> sustainability proved to be quite difficult.
>
>
> Stiglitz said that privatization in the absence of a reliable regulatory
> environment had led to asset stripping in transition economies,
> particularly those with open capital markets that facilitated transfers of
> capital abroad. The need for better corporate governance was particularly
> acute, since transition's "institutional blitzkrieg" approach had destroyed
> the old forms of social capital in these countries without creating new
> ones. In China, by contrast, the stakeholder privatization of state-owned
> enterprisesdividing them into smaller, yet functional business unitshad
> worked rather well, and corporate governance had been much less
> problematic.