Saturday, January 05, 2002

Remora

Limited Inc realizes that our fascination with some of the tedious arguments in the dismal science is not winning this site any popularity awards. Actually, according to our site meter, our most popular posts inevitably include the words Lolita, or tits, of sex, or girles -- so we included them in this sentence to trap the unwary, horny surfer. Ha ha.

But Limited Inc has always pricked up its ears at the sound of a trumpet, the old gray battle horse within stirring to scenes of past Agincourts. Today, the trumpet resounds from the Center for Economic Policy, curtesy of a link on the Arts and Letters site. Let us go then, you and I, to the article entitled A Closer Look at the World Bank's Most Recent Defense of Its Policies by Mark Weisbrot, Dean Baker, Robert Naiman, and Gila Neta. You'll notice the date on this paper -- August 2000. We can't explain why the A & L people spotlighted it a year later, but the paper foregrounds some future post we will no doubt be writing concerning the current turmoil in Argentina. The meat, here, is in the comparison of growth figures. The world bank paper that Mssrs. Weisbot, et al are replying to makes the banal point that growth is good for the poor. It extrapolates that point into another point: that the IMF doctrine of "anti-inflationary" fiscal policy, liberalisation of global financial markets, and openness to international trade are good for the poor. The inference being, these are growth oriented policies. The further inference being, past policies were not growth oriented.

Well, this is a sand castle of an argument, and W.B.N.N. knock it down with one swift kick, consisting of a graph comparing growth rates. The gross and oh so out of fashion Keynsian world displays the kind of growth undreeamt of in the sleek IMF model. If we are looking for policies that help the poor (and this is not something the IMF really is set up to do), unsurprisingly, the poor aren't helped by accident. They aren't, in other words, helped by helping the rich, which is what the IMF all neo-liberal political economics would have us believe. The comparison is strikingly in favor of the Keynsian mix of inflationary/ anti-inflationary measures, and national policies that regulate exports and imports.

Here are some important grafs:


In Latin America, for example, GDP per capita grew by 75 percent from 1960-1980, whereas in the latter period it has only risen 6 percent. For sub-Saharan Africa, GDP per capita grew by 36 percent in the first period, while it has since fallen by 15 percent.

These are enormous differences by any standard of comparison, and represent the loss to an entire generation-- of hundreds of millions of people-- of any chance of improving its living standards. Even where growth was significant, as in Southeast Asia, it was still better in the earlier period. The only exception to this trend was East Asia, which grew faster from 1980 to 1998 than in the previous period. But this is due to the quadrupling of GDP, over the last 18 years, in China (which has 83 percent of the population of East Asia).

In short, there is no region of the world that the Bank or Fund can point to as having succeeded through adopting the policies that they promote-- or in many cases, impose-- upon borrowing countries. (They are understandably reluctant to claim credit for China, which maintains a non-convertible currency, state control over its banking system, and other major violations of IMF/Bank prescriptions).[6]

One cannot stress too strongly the failure of these policies on the measure of economic growth, even ignoring income distribution. The debate over Dollar and Kraay's paper, for example, has simply assumed-- as the authors have-- that IMF/Bank policies do promote growth, and the only question is how well the poor have fared under the growth that has resulted from these policies."

The last is the assasin graf -- the look, the Emperor has no clothes graf. But before Limited Inc puts down our money on Keynsian policies, we feel like these statistics have to be fed into, well, reality. The era of spectacular growth spotlighted the Mssrs. et. al might, indeed, be impossible to replicate even with Keynsian economics. The reason for this is simple: a snapshot of the political economy of, say, Brazil in 1900 compared to Brazil in 1980 is going to be incredibly different; but it is hard to imagine the same technological/sociological/economic alteration occuring in the next twenty years under no matter what economic regime.

A further caveat has to do with the environment. The stats for the first half of the century simply ignore environmental degradation. But we are now more keenly aware that there are social costs to dams, irrigation projects, monocultural agriculture, and other featurs of growth. This impinges, of course, on both sides of the argument, but it is too little taken into account by the same groups who, admirably, dissent from the current model of IMF growth.

No comments:

Lovecraft

“If Lovecraft was an odd child,” his biographer L. Sprague de Camp writes, “his mother showed signs of becoming even odder. In fact, she gav...