Bell Curve The Law Talking Guy Raised by Republicans U.S. West
Well, he's kind of had it in for me ever since I accidentally ran over his dog. Actually, replace "accidentally" with "repeatedly," and replace "dog" with "son."

Friday, June 08, 2007

G8 Summit

G8 Summits always bother me. They are an excercise in greed, it seems. They are designed to promote the business interests of the developed world. They make the typical non-promises, such as the renewed "dedication" to giving $60 bil in aid to Africa for HIV. Of course, they didn't say when the aid would be delivered. Gotta love that.

President Bush didn't attend the meeting on Africa because he had a sick tummy. That said, he still made it too lunch and dinner. We all know how much President Bush likes to eat. Read on.

From this morning's NYT Online edition:

Dan Bartlett, counselor to the president, said Mr. Bush awakened “feeling very much under the weather,” and decided to “dial it back a bit” by meeting Mr. Sarkozy in his room. The president rested until noon and then rejoined the leaders for lunch, and expects to continue on with a planned trip to Poland for dinner with that country’s president, Mr. Bartlett said.

“He’s not 100 percent but he felt well enough to return to the talks,” Mr. Bartlett said. He said the ailment was likely a stomach virus, and not a reaction to the summit food.

OK, someone in PR really screwed up, either that or someone at the NYT has a sense of humor.

I refer you to this visit to Germany on July 2006, "And I guess that's about all -- we discussed a lot of things, in other words. And thank you for having me. I'm looking forward to that pig tonight."


The Law Talking Guy said...

To my mind, the whole purpose of the G8 summit is to have a place where world leaders get together on a regular basis. I don't think they accomplish much for business, development, or anything else. I approve of having world leaders expect to have to meet one another face to face from time to time.

USWest said...

I tend to disagree. I think LTG takes a simplistic view of these meetings. It may not look like they accomplish much, but I think a fair number of deals get made.

Any time you put that many powerful people together, you can bet some "informal" horse-trading gets done. I don't object to world leaders meeting. This has to happen. But G8 summits are about economics and business.

The summit is the cummulation of meetings that have been going on all year. It is true that the G8 deals with all sorts of topics ranging from security to economics. But all of this is interconnected and in the end, it is all about businesses and the corporations that can benefit from the deals. G7 (G8 minus Russia) , which is part of the year-around meetings, focuses on economics and finance. The G8+5 are meeting between the finance ministers and energy ministers with ministers from China, Brazil, South Africa, China, and I believe India.

The G8 account for something like 2/3 of the world's GDP and they deal with issues of poverty, trade policy, finance policy ( including debt to developing countries).

In other words, this is more than a little meeting between world leaders who want to eat and chat. It is a meeting of first world members (Russia being somewhat questionable in this reagard) who are tapping down informal deals about how the "corporatocracy" ( or plutocracy if you prefer) will work over the next year. Developing nations need not participate. And decisions are being made on how the developed world can best exploit the developing world. I am not sure I like the whole idea of Globalization and "free trade" anymore. It isn't helping the HIV victims in Africa, free trade.

USWest said...

I would add to this that any notion that the IMF and World Bank are meant to help developing nations is absurd. They are meant to indebt developing nations and force them to adopt Western-style reforms that may actualy hurt them, so that in the end, they will default on the loans and then be forced to pay us back in terms such as oil concessions, military base authorizations, construction contracts, etc. These are institutions either run by or dominated by the U.S. The U.S. get's to appoint the president of the World Bank for heaven's sake. Don't think tha tthe G8 doesn't discuss World Bank and IMF projects. And don't think "aid" is offered out of the kindness of our hearts.

Raised By Republicans said...

The G8 has been used as a forum in which to build general consensus about things like currency policy etc. For example, in the 1970s the G7 was the forum for dealing with the fall out from Nixon taking the US off the gold standard.

The IMF in particular has made a number of recent macro economic errors but even their more legit critics (like Stiglitz) acknowledge their good faith intent to help developing countries avoid cripling financial crises.

The World Bank is even more benign. The World Bank focusses on loans for all the stuff people who care are supposed to care about - like infra structure development, schools, roads etc.

The personal corruption of Wolfowitz aside, I'm not ready to go along with an image of the IMF and World Bank leaders twirling their mustaches and tying up developing countries on the fiscal rail road tracks.

USWest said...

I don't think the IMF or World Bank "Twirl their mustaches". There isn't some grand conspiracy. However, the road to hell was paved with good intentions. The organizations themselves may have the best of intentions. But the resounding result is that many developing nations are not able to repay their loans and the austerity measures they are forced to take result in cuts to social services such as health and education that are desperately needed. When 50% of their GDPs go to repaying their loans, there is a problem. You only have to look to the years of history in Latin America to see that.

Once they default, developed nations have these poor nations in their back pockets. And developed nations then wonder why local communities are so hostile. After all, we built you these nifty schools, and let you work on our banana plantations! So what if the pesticides make you sick. We have this great medical care facility. Oh, you can't access it because it is a 4 day walk from your village? Oh, well let us tear down this rain forest and build a road for you. Oh, the road isn't safe because of bandits, let us use these troops trained at the School of the Americas to keep you safe. Oh, they are corrupt and charge tolls? Oh, well file a complaint with your local government. Oh, then you face reprisals? And so it goes. Suddenly the delicate balance that these people maintained for centuries is screwed up and they suffer as a result. It is no different than what we did to our own Native Americans. And the result is that local people see their standard of living decrease as control over their communities weakens. And this is what we call "interdependency theory" in IR circles.

Anyone who studies or works in the development field is well aware than providing development assistance where it is most needed in a way that won't do undue damage to local communities is one of the toughest challenges out there. The mistake that is often made is that developed nations try to export their ideas rather than work with the local people. It's like someone giving you a gift that they think you need rather than something they know you'd like because of course, they know better than you what you need. This charity is a poisoned chalice. Now they are said to be correcting this shortcoming as their sophistication improves. But I am skeptical.

Furthermore, development infrastructure ends up being provided by large private firms, such as Bechtel, who are supposed to use local labor. However, the local labor ends up serving more as guardians for the corporate interest than service providers for the company. Just look at Nigeria right now. Last year, local women went out in small boats and barricaded the ports preventing Shell oil tankers from leaving the Niger Delta. More recently there have been attacks at large oil facilities by "militants" Why? Because between corrupt leaders and big business, the environment was being destroyed along with the local food sources, and the local people weren't even reaping the benefit of their nation's natural resource. But they are just pesky "militants". Those pesky types cut oil production by 25%. We should be taking notice.

No matter how you slice it, the "economic assistance" usually finds its way back into the pockets of big industry in developed nations. Nothing is done for free, or purely out of kindness. That isn't to say that donors shouldn't get some benefit. They should. But the benefit should be counted in something other than dollars. I think we need to much more critical of large aid organizations and the promises made to poor countries, promises that are often unfulfilled or whose ramifications aren't adequately considered.

For as much of a jerk as Hugo Chavez is, he has a legitimate argument and he isn't the only one making it. And we all know that if the US weren't so busy in the Middle East, Chavez would be 6 feet under by now.

Raised By Republicans said...

I would just caution against lumping the IMF and World Bank together.

Also, economic conditions in Latin America are as much a result of misguided spending priorities (on among other things - ag subsidies) as the result of IMF proscriptions to fix those problems.

Of course we in the developed world are to blame for much of the spending on ag subsidies as we force that kind of thing with our own subsidies. But it is over stating things considerably to say that "any notion that the IMF and World Bank are meant to help developing nations is absurd."

The Law Talking Guy said...

I still don't agree with USWest about the significance of the G8 summit meetings. The real work, we concede, is largely done elsewhere, beforehand. Meetings of world leaders are, I think, rarely important except for symbolic purposes.

As for the IMF/World Bank, I take a much dimmer view of these institutions than RBR. The problem is that the IMF in particular has a "free market" ideology that can be dangerous and shortsighted. There should be other ways for third world countries to get money rather than paying homage to neoconservative economics.

Raised By Republicans said...

The problem with the IMF isn't that they are too free market oriented. It's that they have a tendancy towards corporatism in which they see themselves as protecting large banking interests.

But let's not kid ourselves. Latin American countries are in the problems they are largely because of their frequent experiments with protectionist political economy. To the extent that they are doing better now it is because they have turned towards more market oriented policies - largely at the insistence of organizations like the IMF.

If you want to bash the IMF look at the mess they made of the SE Asian crisis back in the 90s. There they assumed that the problems there were caused by the same misguided populist policies common in Latin America in the 1970s and 1980s. The IMF's "one solution fits all" approach resulted in a distortion of the market in SE Asia where it had reinforced the market in Latin America.

I think Stiglitz's book and also work by Bhagwati give a good - and reasonable - criticism of the IMF.

As for finding other ways to get money. The market is the only way. It is not merely an ideology or soemthing that people have "pay homage to". Rather it's a natural force (or a set of natural forces). It's like water going downhill, you can dam it up for a while, you can even hook up generators to it or divert its course a little but the water will eventually go to the sea and if you try to stop it too much for too long, you'll be hurt when the over loaded dam finally bursts.

USWest said...

There is no arguing that Latin American countries, like all underdeveloped countries, be they in Asia or the Middle East are partially responsible for their problems.

I think RBR is arguing that since the Asian Crisis, IMF, and WB have learned to do things differently. Great. But the problems to which I am referring are systemic.

Let's take the WB. What are WB loans given for? Development. WB offers "technical and financial assistance" and it offers loans, grants, and credits for infrastructure, communications, etc. Now, where does WB get research they need in order to determine who is credit worthy? Well, it has some of its own researchers. But there then there are private groups, businesses, investment groups (like Carlyle group) who send their own people in. These guys are supposed to put out tons of numbers that will show the growth potential in these countries and then convince their governments to seek WB and IMF loans in order to build the infrastructure the businesses in question will need.

I know a little it about this because I had to do it. I worked in a similar field for about a year and a half. I had to produce 10 year projections on multichannel markets around the world, including Latin America. even if my model showed negative growth after a certain point, I was told that I had to tweak it so that it showed growth, no less than 3%. When I complained that I didn't have enough information to properly judge a market, I was told to "make it up because no one else does either."

These are the types of numbers that businesses, governments, and international organizations use to then determine policies. At the same time, the numbers are massaged by these same organizations so that they can sell their plan. It isn't a conspiracy, it is how things work. But to say, "well capitalism and free trade are the way of the world so no one has a choice but to get on board" is a straw man. True, we can’t go back, but we can proceed more prudently. Like it or not, Castro never got on board. Saddam never got on board. Chavez, North Korea, Iran aren't getting on board.

Now, some of those nations aren't doing well. But they now present a threat to Global security. They are rocking the boat. And that means one of three things will happen. 1) we will continue to hand out huge loans or use sanctions knowing that they will default or that their economies will collapse so that we can corner them financially 2) if that fails, we will try to rile up some internal revolution to overthrow the uncooperative government 3) when that fails, we send in the military. And this will be our undoing. We are already witnessing it.

These nations, for all their "evilness, have valid points of view and valid national interests that we have to respect when we start doling out aid. But so long as we view aid as a means of building an empire, that won't happen and we will continue to see global security eroded.

Raised By Republicans said...

I'll stick my neck on this and say that not all forms of government or policies espoused by governments are equally valid. Regimes like those in pre-2003 Iraq, Iran, North Korea, Cuba, Venuzuela are simply misunderstood. They are nasty petty dictatorships that brutalize their people and threaten their neighbors.

I'm not a big advocate of using military force to deal with them all the time but let's not make the mistake of thinking of them as a bunch of misunderstood Euro-socialists or something.

USWest said...

agree with RBR that not all positions are equally valid. They are not. But they do all contain information that is useful to us. We built the petty dictatorship of Iraq and Iran. We proved to be a perfect enemy for Cuba and now for Venezuela. At some point, our failure to understand certain elements in these societies led to very poor policy decisions on our part. We were too busy sucking oil out of Venezuela to care much about the large number of poor people who where not profiting from their resource. And Chavez is the blowback for that failure. This is one example.

If a nation picks a leader that we don't like or who chooses to pursue an economic policy that is different than what the US promotes (i.e. liberal and market based), then we seem to think that the people must either stupid, corrupted, or terribly misguided. And so we should poo poo the concerns that motivated that electorate in the first place? Should we ignore their ideas and continue pursuing our own policy goals despite them? Then, when they rise up against us by say nationalizing our companies or blockading their ports in protest, or refusing to sell us oil, or maybe taking American businesspeople hostage, we are shocked and appalled.

Saddam was a tyrant. It sounds bad, but better a tyrant we can control than a nation we can't. But he was very clever and we weren't as good at controlling him as we wanted to be. So we wiped him out. Now we have Pandora’s box over there. We don't control the oil that we so desired. We don't even control the water resources and now we are sitting ducks in the middle of a civil war that we hardly understand, so desperate we are now arming our “enemies” the Sunnus. It wasn't Saddam that destabilized that region. It was us.

I don’t think the US or its multinationals are so grand that they should be exporting their systems all over the place. And we don’t export our system because it is good for anyone else but ourselves. This is the argument made by the developing nations. These are nations that have tribal interests and systems that organize their societies. When you start undermining these systems by insisting on certain economic or social policies, then you are playing a dangerous game.

When a nation of people elects a Hugo Chavez or an Evo Morales you have to ask why. Indigenous movementsin places like Ecuador and Peru are growing in number and in strength. These are nations with huge income gaps, where 1% of the population (usually the non-indigenous) owns 85% of the land and resources and in effect, the poor (indigenous) are now finding leaders who promise to do them justice. And that opens the door for petty despots. Just witness Zimbabwe. So long as the poor see that they are being cared for, they don’t care if the guy is a petty dictator. Chavez has nationalized oil and is promising to use the money to pay for services. Had their previous government, and those foreign governments who funded it provided those services, then the likelihood of Chavez’s multiple victories would have been reduced. So yes, RBR is correct that to a certain degree, these poor countries are responsible for their plight. No question. But we don’t make it better by forcing a nation to accept the terms dictated by Exxon in coordination with the White House.

USWest said...

here is a prime example of why the IMF and World Bank are really US run and operate. See what happens when a socialist leader attempts to pull out of the system.