ooooooooo Kevin Dean Buffalo, NY ***Visit http://www.yaysoft.com for the latest in computers, politics and strange off-the-wall news and discussions!*** ICQ # 8616001 ooooo ----- Original Message ----- From: <DavidMcR at aol.com> To: <socialistsunmoderated at debs.pinko.net> Sent: Thursday, August 02, 2001 9:14 PM Subject: [SOCUNMOD] NYTimes.com Article: Mainstream Economists Deny Basic Facts Abou...
>
> Mainstream Economists Deny Basic Facts About Poverty
>
> By JEFF MADRICK
>
>
>
> THERE has been little headway made in the fight against world
> poverty in the last decade. Yet when Group of 8 leaders met in
> Genoa, Italy, two weeks ago, they chastised protesters with
> warnings that they would only obstruct progress for the poor.
>
> Considering the facts, that was quite a display of arrogance. The
> World Bank calculates that a third to a fourth of the world's
> people still live in severe poverty — and this is based on minimal
> rates of $1 to $2 a day. The overall proportion has fallen only
> slightly the last 10 years, and poverty levels have risen in many
> countries. Moreover, in poor regions, except Asia, income
> inequality has widened.
>
> The insensitivity to the stunning facts is not limited to Western
> leaders. Mainstream economists have been notable for their silence.
> At the John F. Kennedy School of Government at Harvard, a weekend
> seminar was held in June on the Clinton administration's economic
> policies. Yet hardly a word of criticism was raised about the
> Treasury's heavy-handed advocacy of the rapid liberalization of
> capital flows, which many mainstream economists now concede
> contributed to the Asian financial crisis in 1997 and 1998, sending
> many into poverty.
>
> Today, Argentina and New Zealand, once models for the liberalizing
> policies so widely encouraged by economists and global investors,
> are in serious trouble. Argentina, which linked its currency to the
> dollar in 1991, amid plaudits from disciplinarians, totters on the
> brink of a financial crisis that could sweep up Brazil as well. New
> Zealand's growth rates are among the worst in the Organization for
> Economic Cooperation and Development. Yet there is little public
> outcry about mistaken policies.
>
> In June, a small dissenting group of international economists and
> political scientists met to discuss this absence of a full public
> discourse. The conference was organized by two Harvard professors,
> Dani Rodrik, an economist at the Kennedy School, and Roberto Unger,
> a law professor. In the spring, the two had taught a
> standing-room-only course at Harvard Law School on alternative
> development strategies.
>
> The participants essentially found themselves up against a wall.
> Nations have little leeway to adopt policies that deviate from
> those accepted by institutions like the International Monetary Fund
> or those demanded by the financial markets. If they do, capital
> flees, interest rates rise and loans are not renewed.
>
> But the truly regrettable paradox is that the strategies advocated
> by the economic and financial mainstream — reduced government
> spending, privatization, unrestricted capital flows and completely
> free trade — are not the policies that gave rise to the rapid
> growth of developing nations in the recent past. Had South Korea,
> Taiwan, Thailand or Brazil been restricted to the policies
> considered acceptable today, they would not have been such success
> stories.
>
> As Mr. Rodrik points out, Taiwan and South Korea adopted
> aggressive industrial policies to subsidize crucial industries.
> Many of the fastest-growing nations owned and ran major industries
> and protected infant industries with high tariffs. Government
> investment in education was often strong in these nations. Most
> slowly depreciated their currencies, rather than adopt the floating
> currencies advocated today (or the fixed-currency regime used by
> Argentina). In sum, these nations integrated their economies with
> the advanced world — not right away, but only when they had matured
> and grown more prosperous.
>
> Moreover, not only are successful policies often abandoned, but as
> the current plight of Argentina and New Zealand suggests,
> liberalizing policies often fail, too. Robert Wade, a political
> scientist at the London School of Economics, argues that few
> nations that were largely dependent on commodity exports, like New
> Zealand, have been able to transform themselves into successful
> producers of advanced goods based on such policies.
>
> For Mr. Wade, such a transformation still requires an industrial
> policy. At times, to take one example, it may require an import-
> substitution policy of high tariffs to protect developing domestic
> industries. But such policies were widely criticized as the main
> source of failure in Latin America in the 1980's. Mr. Wade counters
> that it was the indebtedness of many Latin American nations that
> created crises and poor growth in the 1980's, not import
> substitution, and that the establishment has essentially twisted
> the argument in its favor.
>
> Neither Mr. Wade nor Mr. Rodrik, whose most recent book is "The
> New Global Economy and Developing Countries: Making Openness Work"
> (Overseas Development Council, 1999), says he thinks there is one
> policy to fit all sizes. Import substitution may be appropriate to
> some, but not others. Both argue strongly that local conditions
> should be allowed to determine the right course, not international
> institutions with universal formulas.
>
> To Mr. Unger, however, the author of "Democracy Realized: The
> Progressive Alternative" (Verso Books, 1998), only more sweeping
> change has a chance to work. Mr. Unger proposes not so much a
> blueprint but a profoundly new direction that includes high levels
> of government investment and taxes, required voting and forced
> savings to buffer states from the influence of international
> investors.
>
> Mr. Unger says his ideas have certainly not caught on among the
> establishment, but he is attracting a lot of interest from the
> younger generation. Given the levels of poverty, this is no
> surprise.
>
> Yet the protesters in Genoa and elsewhere also naïvely denigrate
> the value of economic growth. Mr. Wade, for example, points out
> that there is no evidence that local participation in devising
> economic strategies, so widely advocated by protesting groups, will
> provide an answer to alleviating poverty unless it is accompanied
> by other pro-growth strategies.
>
> What is surely the case, however, is that if nations remain under
> the thumb of single- minded international investors and their
> institutional surrogates, there will be little room for new ideas.
> Mr. Rodrik says the financial turmoil in Turkey, for example, has
> been made worse by the immediate demands by institutions for
> liberalization. Mr. Wade says serious industrial policy is hard to
> undertake in current circumstances.
>
> To mitigate the power of the financial markets requires leadership
> from the powerful themselves. But such leadership is absent not
> only in Washington and most other Western capitals but also in
> America's major academic centers.
>
>
>
http://www.nytimes.com/2001/08/02/business/02SCEN.html?ex=997806197&ei=1&en=
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> a110ba688fe791
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