Naiman on Krugman

[Jim Devine <jdevine@xxxxxxxxxxxxxxx>]

for the record, here are Bob Naiman's letters.

Krugman's Sloppy Economics

April 20, 2000

Paul Krugman ("A Real Nut Case") is right about one thing: the destruction
of Mozambique's cashew nut processing industry
by the World Bank and the International Monetary Fund is my favorite
example showing why the destructive power of these
institutions must be dramatically reduced. It illustrates that the IMF and
the Bank exercise colonial power over developing
countries; that, like Krugman, they are sloppy economists; that dogmatic
trade liberalization also hurts developing countries; and
that the "Heavily Indebted Poor Countries Initiative" of the IMF and the
World Bank is unworthy of U.S. funding since it
preserves the destructive power of the IMF and the Bank over poor countries
like Mozambique.

On the paramount question of democracy, Krugman doesn't contest that the
IMF and the World Bank imposed their policies on
Mozambique-- contrary to their claims about "negotiation" and "dialogue."

As to whether the World Bank's diktat was good economic policy for
Mozambique, it is Krugman who needs to do his
homework. Krugman ignores the 1997 Deloitte & Touche study commissioned by
the World Bank, which found that
Mozambique's peasants did not gain anything from liberalized exports of raw
cashews. This single fact demolishes Krugman's
entire defense of the Bank's policy. The study also found that Indian
subsidies to its cashew nut processing industry made
competition unfair, and that Mozambique earns an extra $130 per ton
processing its own cashews, "sufficient reason to support
the processing industry against competition from India."

Mr. Krugman's arrogance in defending such errors on the basis of abstract
principles, without knowledge of crucial facts,
illustrates why it is not only immoral, but also unwise, to allow foreign
economists to make such crucial decisions for developing
countries.

-- Robert Naiman
Center for Economic and Policy Research


Robert Naiman's letter as edited and printed by the The New York Times,
April 26, 2000:

World Bank's Power

April 26, 2000

To the Editor:

Paul Krugman (column, April 19) is right that World Bank policy with
respect to Mozambique's cashew nut processing industry
is my favorite example of why the World Bank's power must be reduced.

Mr. Krugman suggests that the World Bank's policy was in the interest of
Mozambican peasants, ignoring a 1997 study
commissioned by the bank that found that Mozambican peasants did not gain
anything from the liberalized exports of raw
cashews. This fact undermines Mr. Krugman's argument.

It is not only immoral but also unwise to allow the World Bank to make
crucial decisions for developing countries.

ROBERT NAIMAN
Washington, April 20, 2000
The writer is a senior policy analyst, Center for Economic and Policy
Research.

Jim Devine jdevine@xxxxxxx &  http://liberalarts.lmu.edu/~jdevine