Re: Stiglitz on Global Financial Reform

["Schulte-baeuminghaus" <schulte.baeuminghaus@xxxxxxxxx>]

William Hummel writes -

"Finally, it seems to me that there are many nations that simply don't
have the institutions necessary to make proper use of the funds that
Stiglitz would provide through his new "IMF".  This is  particularly
true of those nations in which autocratic rule has been the norm, as
in much of Africa, South America, southeast Asia, and the middle East.
Financial rescue packages in those regions have often simply ended up
in Swiss bank accounts and lavish lifestyles for the autocrat and his
retinue.  Stiglitz needs to address this problem and not lump the
countries together as if they were all well-behaved partners in his
grand scheme. "

This is absolutely correct; and it is why VOW has emphasised the PROCESS as
crucial to the successful implementation of programs to encourage growth and
eliminate both "cyclical" and chronic poverty around the world.
The existing procedures for "aid" are mostly ineffective and do little to
achieve the objectives for which they are notionally devised.
What is needed is a PROCESS something along the lines of the Marshall Plan
after WW2, applied on a worldwide basis with planning and implementation in
the hands of what might be seen as a cooperative, coordinating group. The
"autocrats" would be disciplined or replaced. In any event, there would be
no room for them if they were merely to participate on the basis of the
arrangements that have ruled for the past several decades.
In a sense, there might seem to be some loss of sovereignty in such VOW
programming and implementation.
In fact of course, there would be a real opportunity, through such
arrangements, to pass sovereignty to the mass of the people who would
benefit from them.
There is economic purpose in all this; but there is of course underlying
social and political purpose too. Somehow we must devise methods to take
power out of the hands of the "autocrats" and to reduce the risks of having
more and more of what we have come to call "failed states."
We do not want a reversion to colonialism or imperialism; but we do want to
find a way out of the already widespread and still growing anarchy in so
many parts of the world - an anarchy that brings so much misery to so many
ordinary men, women and children who are exploited and tyrannised by their
own despots, warlords, "autocrats" or whatever - as well as still,
sometimes, by outsiders.
VOW is a means whereby the less anarchic world may take hold of the problem
of restoring economic, social and political order. If present trends -
including strategic trends - persist, disaster in some and perhaps a variety
of forms is likely to overwhelm us all.


James Cumes
http://VictoryOverWant.org
http://crystaldreamspub.com/bios/authors/A-E/cumes_j.htm


----- Original Message -----
From: "William F Hummel" <wfhummel@xxxxxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Tuesday, July 29, 2003 11:20 PM
Subject: Re: Stiglitz on Global Financial Reform


> Gunnar Tomasson wrote:
>
> >In his article below, Joseph Stiglitz makes an imaginative proposal for
SDR creation by the IMF.
> >
> >Stiglitz did not spell out the "details" of how his proposal might be
implemented.
> >
> >As and when these were worked out, the proposal might become the
cornerstone of an integral world-wide economic reconstruction effort, with
newly-created IMF SDRs absorbing the external financing impact of public and
private sector investment projects across the globe.
>
> Stiglitz proposes the creation of new "global greenbacks" without
> making clear how they differ from the existing special drawing rights
> (SDRs) under the IMF.    He justifiably criticizes the IMF, yet
> doesn't explain how this new global greenback will be created and
> administered.  I'd appreciate any clarification on this.
>
> Stiglitz condemns the huge US trade deficit, but notes that:
> "The arithmetic of global trade implies that the sum of all trade
> deficits equals the sum of all trade surpluses.  This means that one
> country's deficit is another country's surplus.  If some countries,
> like Japan and China, insist on running surpluses, then other
> countries must run deficits.  Thus deficits are as much the fault of
> surplus countries as they are of deficit countries."
>
> As I have been arguing, the US trade deficit is not _caused_ by
> excessive borrowing from foreign trading partners.  Rather it is the
> inevitable result of their policies to promote trade surpluses for
> domestic reasons, including actively supporting the exchange rate of
> the dollar vis-a-vis their own currencies.
>
> Stiglitz goes on to say:  "If every country tried simultaneously to
> cut back on their trade deficits, but no pressures were imposed on the
> surplus countries, earlier fears of a deflationary bias in the global
> economy would be realized."
>
> Indeed, if the US created effective barriers to imports in an effort
> to reduce its trade deficit, the result would likely be a serious
> world-wide depression.  Other countries without exception complain
> about the US trade deficit because of the effect it may have on the
> exchange value of the dollar and thus the value of their own
> dollar-denominated assets.  Yet no country appears willing to revise
> its policies to reduce its bilateral trade surplus with the US.  I am
> well aware that the US also actively protects some of its industries
> with tariffs or subsidies, but the aggregate result is obviously in
> favor of those exporting to the US.
>
> Stiglitz proposes some sort of an international body, a World Court,
> that would administer cases of sovereign bankruptcy with the object of
> providing work arounds that don't impose excessive demands on the
> economy of the bankrupt nation.  While this is laudable, I find it
> somewhat unrealistic.  To make it less so, he needs to be far more
> specific on how it would be implemented.
>
> Finally, it seems to me that there are many nations that simply don't
> have the institutions necessary to make proper use of the funds that
> Stiglitz would provide through his new "IMF".  This is  particularly
> true of those nations in which autocratic rule has been the norm, as
> in much of Africa, South America, southeast Asia, and the middle East.
> Financial rescue packages in those regions have often simply ended up
> in Swiss bank accounts and lavish lifestyles for the autocrat and his
> retinue.  Stiglitz needs to address this problem and not lump the
> countries together as if they were all well-behaved partners in his
> grand scheme.
>
> William F Hummel
>
>