[lbo-talk] G8 debt plan

Marvin Gandall marvgandall at rogers.com
Mon Jun 13 10:10:01 PDT 2005


Wojtek wrote:


> MG: The real keys remain altering the international terms of
> trade, and increasing OECD acceptance that interference with markets by
> developing states is often essential to their progress and the long-term
> interests of the global capitalist economy.
>
>
> WS: I think that you remarks about elite corruption are right on the
> target, however, terms of international trade are of secondary importance.
> The problem is not that foreign producers are being cheated on the sale of
> their products (I do not thing they are), but insufficient local demand
> that
> makes it more profitable to export than sell domestically. The
> insufficiency
> of the local demand could be ameliorated by aggressive Keynesian policies,
> but such policies are difficult to implement in the countries in question
> due to a variety of reasons, ranging from local corruption, to
> insufficient
> industrial infrastructure, and to ideological opposition from the IMF and
> Washington.
-------------------------------- Your point about the weak domestic markets also make sense to me, but I was alluding mainly to the agricultural protectionism practiced in the OECD countries when I referred to the terms of trade. Re: domestic consumption, why is raising the minimum wage not given more prominence in the development discussions? In the case of China-US trade, to take one notable example, wouldn't raising the minimum wage simultaneously adjust the trade imbalance between the two countries, encourage the growth of the Chinese home market, and avoid a potential deflationary crisis in China resulting from any meaningful yuan revaluation? The multinationals in most cases, I think, already pay well above the minimum, so there shouldn't be pressure from that quarter. If the concern is further overheating of the Chinese economy, why not at least couple it with whatever revaluation would be necessary? Also, this measure would surely conform to the ideology of the vanguard party of the working class which governs China, no? :)

MG



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