Re: ``globalization'' and poverty

["Canova, Timothy" <CANOVA@xxxxxxxxxxxxx>]

See: Paul Lewis, "World Bank Says Poverty Is Increasing," N.Y. Times, June
3, 1999, at C7:  the number of people living on less than one dollar per day
rose from 1.2 billion to 1.5 billion between 1987 and 1999.

In addition:

David E. Sanger, "U.S. and I.M.F. Made Asia Crisis Worse, World Bank Finds,"
N.Y. Times, Dec. 3, 1998, at A1.

Mark Landler, "Grim Assessment by U.N. of Economic Slide in Asia," N.Y.
Times, Dec. 3, 1998, at A8 (reporting that the International Labour
Organization reported dramatic worsening in social and economic conditions
throughout Asia).

David E. Sanger, "As Economies Fall, the I.M.F. Is Ripe With
Recriminations," N.Y. Times, Oct. 2, 1998, at A1.

Thomas Friedman also makes a *specific* point that anyone who opposes the
proposed Free Trade Agreement of the Americas (FTAA) is in favor of keeping
the poorest people poor.  If we look at the specific provisions of FTAA we
will see that it is modeled after NAFTA.  Has NAFTA lifted the average
standard of living in Mexico?  No.  NAFTA's provisions for free capital
mobility have arguably exacerbated Mexico's dependence on portfolio inflows,
made the peso more susceptible to its inevitable fall in 1994-1995, and let
Mexico into the embrace of yet another IMF structural adjustment plan.

Friedman is a complete TINA ("There Is No Alternative").  He sees our
choices in dichotomous terms:  either we accept the specific form of free
trade embodied in NAFTA and FTAA or we go down the road of protectionism and
autarchy.  Taking an historical perspective, Western Europe did not recover
from WWII devastation by going down either road.  Rather, Western Europe
recovered with the help of public capital transfers (Marshall Plan grants),
and behind a wall of currency and capital controls.  Western Europe did not
achieve currency convertibility until the late 1950s or capital account
liberalization until the 1990's.  Soon after the latter, the currency
contagion can be said to have started in Western Europe in the early and
mid-1990's.








-----Original Message-----
From: Alan G. Isaac [mailto:aisaac@xxxxxxxxxxxx]
Sent: Wednesday, May 02, 2001 9:29 PM
To: pkt@xxxxxxxxxxxxxxxx
Subject: Re: ``globalization'' and poverty


> "Alan G. Isaac" wrote:
>> It would be helpful if you would contest *specific*
>> points he makes rather than reiterating your easily
>> anticipated disagreement with his general stance.

On Wed, 2 May 2001, Henry C.K. Liu wrote:
> I did just that, if you only bother to read the next sentence:
> "Freidman talks more like a political propagandist than an economist.
> The poorest parts of Africa benefit least from trade not because of a lack
> of political freedom but because of the legacy of centuries of Western
> imperialism that left "nations" that continue the imperialist
> partition of Africa.  The notion that "freedom" is necessary for trade is
> spurious, unless freedom is defined within the distorted context of
> neo-liberalism.  There is no freedom in Saudi Arabia, by Western
> standards, yet SA is very rich from oil trade."

Let's compare Henry's comments, which sound ``more like a political
propagandist
than an economist,'' as he says, with the specific point of Friedman's
that he seems concerned to deny:
>    if you actually
>    look around Africa you see that the countries
>    that are the most democratic, where the people
>    have the most freedom to choose --- South Africa,
>    Nigeria, Ghana --- are the most pro-trade, the most
>    integrated in the world economy and the most
>    globalized. The countries that are led by
>    dictators, are the least open and where the
>    people have the least freedom to choose --- Sudan,
>    Zimbabwe, Liberia, Libya etc. --- are those most
>    hostile to globalization, openness and trade in
>    goods and services.

So Henry has not spoken against Friedman's actual point at all.
Indeed, Friedmand is speaking to some basic political economy
considerations that ought to interest anyone on this list.


On Wed, 2 May 2001, James R. Olson, jr. wrote:
> Proponents of globalization like Thomas Freidman seem to prefer to keep
> their discussions of the subject on a high and theoretical plane.  Palast
> deals with the real actions that are being taken in the name of
> globalization.  The disconnect between the theoretical claims and the
> actual policies is illuminating.


Like Henry, James prefers not to deal with the actual points in
Friedman's editorial. For example, Friedman writes:
>    Last year this same anti-globalization gang, in
>    its most shameful hour, tried to block
>    Congressional passage of the African Growth and
>    Opportunity Act --- a bill enabling Africa's
>    poorest countries to export textiles to the U.S.
>    with little or no tariffs, which is critical for
>    creating lots of low-skilled jobs. Eventually the
>    bill squeaked through. The early result?
>    Madagascar's textile exports to the U.S. are up
>    120 percent, Malawi's are up 1,000 percent,
>    Nigeria's are up 1,000 percent and South Africa's
>    are up 47 percent. Real jobs for real people.

I am unable to consider this a ``a high and theoretical plane''.
Indeed, it is much more concrete than Palast's piece.  (Which is not
to claim that Palast makes no contribution to the discussion, although
Palast's discussion of IMF attitudes toward capital flows is a bit dated.)

I confess I am baffled why anyone on this list would be surprised to
learn that economic interests faced with import competition like to
foster ``anti-globalization'' sentiment.

Alan Isaac