Tuesday, July 08, 2008

An 'End' Too Late

This pronouncement has probably come a decade too late. Now people recognise the failure of deifying 'markets.' Well, experiments have been done, with countries in the 'Third World' as guinea pigs, but we can hardly turn back to the clock. No use crying over spilled milk. Joseph Stiglitz writes:

The world has not been kind to neo-liberalism, that grab-bag of ideas based on the fundamentalist notion that markets are self-correcting, allocate resources efficiently, and serve the public interest well. It was this market fundamentalism that underlay Thatcherism, Reaganomics, and the so-called “Washington Consensus” in favor of privatization, liberalization, and independent central banks focusing single-mindedly on inflation.

For a quarter-century, there has been a contest among developing countries, and the losers are clear: countries that pursued neo-liberal policies not only lost the growth sweepstakes; when they did grow, the benefits accrued disproportionately to those at the top.

Though neo-liberals do not want to admit it, their ideology also failed another test. No one can claim that financial markets did a stellar job in allocating resources in the late 1990’s, with 97% of investments in fiber optics taking years to see any light. But at least that mistake had an unintended benefit: as costs of communication were driven down, India and China became more integrated into the global economy.

While I am now far too old to reify global regulating institutions like the IMF and the World Bank and label them as 'evil' and such, maybe it is time to recognise them as open to politicisation and personal interests. Robert Zoellick, current WB President, was appointed by El Dubya. This might explain why the biofuel report was suppressed - Zoellick didn't want to make his benefactor look like an ass. Among other things.

Maybe it is also time for a bit of diversity amongst the twin institutions' staff. They have not benefited from intellectual in-breeding - their staffers coming from pretty much the same universities and such. And wouldn't it be great if they actually put a non-American and a non-European as heads of these institutions? Especially for the World Bank. I mean, come on. This should be common sense. How can you make policy prescriptions for the Third World having never lived there?

I volunteered for a development conference in Brisbane last January. I took away a couple of things from the week-long experience. First, 'development' really has become an industry of sorts. There is an army of professionals out there who make 'developmen' their business. Second, there were two moments that would forever be etched in my mind.

I sat in the opening plenary session where Graeme Wheeler, WB Managing Director, was speaker. I sat there and heard him tell me that the world has experienced 'unprecedented growth' in the last forty years. I do wonder where this 'growth' has occured. In the same breath he then said that income inequality has increased in less developed countries. And with new calculations based on purchasing power parity, surely there was now more than one billion people living on less than a dollar a day. Huh?!?

During one of the coffee breaks I had a bit of talk with a young economist from Portugal. I think my questions became a bit too critical, I mean, questions are by nature critical aren't they? He had a bit of a start as though a thought had just occured to him. After which he looked me accusingly in the eyes and said, "Oh wow. You're one of the NGO types aren't you?" As though that invalidated everything else I had said. I was not an economist and therefore I was not worth wasting his breath on. He said the words as though they left a filthy aftertaste in his mouth. I cringe now at the memory. I hope he doesn't ever climb the ranks.

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