a grim gray cloud in the form of a post

RBA – as I am going to call the collective authorship of How to Help Poor Countries – begin their article with a comparison between Nicaragua and Vietnam.

This is a clever comparison. Both countries were majorly fucked with by the U.S., both were Cold War hotspots, and each went a separate path – the Vietnamese went supposedly left, with the victory of the communists, and the Nicaraguans went supposedly right, with the victory of the anti-Sandinista forces.

So what has happened to these two countries? The small summary goes like this:

“Vietnam faced a U.S. embargo until 1994, and it is still not a member of the World Trade Organization (WTO). Despite these obstacles, it has found markets for its growing exports of coffee and other agricultural products and has successfully begun diversifying into manufacturing as well, especially of textiles. Nicaragua, on the other hand, benefits from preferential access to the lucrative U.S. market and had several billion dollars of its official debt written off in the 1990s. Yet its coffee and clothing export industries have not been able to compete with Vietnam's.”

The large summary would emphasize a couple of other features. For one thing, Nicaragua has never had the resources, size, educated population, or leadership that Vietnam has had. For a while, under Somoza, the most flourishing export industry in Nicaragua was, literally, blood. The largest blood bank in the world was located in Managua, and through that blood bank, as sloppy and corrupt affair as everything else Somoza touched, was diffused little gifts to the world – HIV, hepatitis C, syphilis.

Douglas Starr, in Blood: An Epic History of Medicine and Commerce,
penned that little history, although few economists have pondered the fact that paying for blood significantly increases the chance that the blood will be infected. (But see CT’s Kieran for an interesting paper here ). I could go on with another depressing tale from Central America that mingles magical realism and fact – for instance, the fact that the revolution against Somoza, which is usually dated to the assassination of the editor of the one opposition newspaper in Nicaragua, could be laid at the feet of the plasma center, since the assassination was carried out by “Pedro Ramos, a Cuban American entrepreneur whose business had been attacked by La Prensa. Mr. Ramos owned a plasma processing clinic—Plasmaferesis—which used to buy blood from any Nicaraguan and then send the plasma products to the United States. Plasmaferesis was commonly known by the people as the "House of the Vampires."

In any case, the situation of Nicaragua, looked at from the view point of the international economy, is, to say the least, challenging. Besides blood, what can the country export? And is it the case that export is its only hope? These questions are generally not asked when people write about Nicaragua, since the concern is with land reform, free markets, democratization, and the whole NGO neo-liberal nine yards. But as so often, cutting to the chase is sorta difficult, since the chase is in a maze of economic jargon and agendas that are developed for constituencies far from Nicaragua. The chase for this post is measured by whether the average citizen is getting richer or poorer. By that standard, according to the EU, Nicaragua is in bad shape: the average person has gotten poorer since 1993. But you wouldn’t know that if you read a gung ho Country report about Nicaragua. The latest one, issued in June, 2005, reads:

“According to the latest revision of official data, the Nicaraguan economy grew 5.1% in 2004; a remarkable recovery when compared with the sluggish 2.3% rate recorded in 2003. The Central Bank explained that one-third of the economic growth was due to public and private construction, and was fueled by the tourism sector. We forecast economic growth of 3.9% in 2005, backed by public and private investment,
consumption stimulated by family remittances, and an expanded supply of private credit. Political conditions, however, prevent a faster recovery. During the rest of the forecast period, we foresee continued growth driven by DR-CAFTA (assuming that the National Assembly approves the treaty).

We foresee a larger trade deficit in 2005, due mainly to the faster growth of imports related to higher prices and volumes. In the medium term, the reduction of interest payments on external debt tied to the debt relief and faster disbursements of external loans would offset the trade imbalance. Therefore, we can expect a drop-off of the current-account deficit in 2005 and beyond, which would strengthen international reserves, and comfortably manage the exchange-rate path toward its continued deceleration.”

You can access the current stats on Nicaragua here.

That the GDP growth rate can be divorced entirely from the average person’s own average person domestic product is the result of the usual policy of squeezing the orange. The Country Report is bubbling with enthusiasm that the government is cutting its deficit. In fact, many of the loans out to the government, which it is paying back, are tied to the government cutting its deficit. Now, do you wonder where the burden of that deficit reduction miracle is falling? Do you think the government is raising the amount it applies to education, and cutting any construction program that is merely graft, shunting money to a corrupt elite? Do you want to buy a bridge I own in Brooklyn?

We’ll end this post – a sort of laying out the problem in the style of Tristam Shandy, as it were - with a quote from RBA’s article, citing the experience of another country:

“Witness the case of Mexico. It has the advantage of sharing a 2,000-mile border with the world's greatest economic power. Since the North American Free Trade Agreement went into effect in 1994, the United States has given Mexican goods duty-free access to its markets, has made huge investments in the Mexican economy, and has continued to absorb millions of Mexican laborers. During the 1994-95 peso crisis, the U.S. Treasury even underwrote Mexico's financial stability. Outside economic help does not get much better. But since 1992, Mexico's economy has grown at an annual average rate of barely more than one percent per capita. This figure is far less than the rates of the Asian growth superstars. It is also a fraction of Mexico's own growth of 3.6 percent per year in the two decades that preceded its 1982 debt crisis. Access to external markets and resources has not been able to make up for Mexico's internal problems.”

prolegomena to a snoozer

LI has noticed a holiday decline in readership, which is just as well, since we have a yen to write extensively about the problem of primary product exporters finding their niche in the world economy. This topic will definitely put the kids to sleep.

Still, Brian’s comments on our Bolivian post express a certain understandable weariness in the developed countries (which used to be called the industrialized countries – but industrialization is no longer the sine qua non of wealth, right?) about the resiliency of poverty, and the cycle of ideological policies that have been put in place to “cure” it in underdeveloped countries. Countries like Bolivia.

I am not nearly so pessimistic. Which brings me to the article in August’s Foreign Affairs, How to Help Poor Countries, written by three heavyweights in the development economics field: Nancy Birdsall, Dani Rodrik, and Arvind Subramanian. Actually, Subramanian is not a name I am as familiar with as Birdsall and Rodrik, but what the hay.

In my next post, I’m gonna dive into the article. It should be a real snoozer – but I am compelled by a strange power, like the hero in an Edgar Alan Poe story, to seek out the more bizarre realms of Morpheus as the house of Usher crashes into picturesque ruin behind me.

Oh, and a note for readers, if you please. This has been a terribly slow month for editing. My last job was last week, and it was a small one. If anyone knows of upcoming academic conferences anywhere, mail me the details. I’m mailing out my own spam/advert to the organizers of conferences in the vague hope that these people might post it, and I might gather a clientele.

the Vacation

"We but teach / Bloody instructions, which, being taught, return / To plague th' inventor. This even-handed justice / Commends th' ingredience of our poison'd chalice / To our own lips" -- Macbeth, I, vii, 8-12

One of the more fascinating aspects of Macbeth is how Macbeth’s deed becomes embodied in various ways – as a ghost, as Macbeth’s wife’s madness, and as a prophecy about Burnam wood. The return of the repressed, here, cannot only not be repressed, but can’t even be predicted.

This multiple embodiment of a crime, an event that won’t act like an event and go away, has a lot of psychological plausibility. We can see a certain MacBeth like pattern in the way Bush operates. Whenever Bush truly fails, does something colossally bad, he will always return to it as an excuse for further action. I’ve never seen a president so use his failures to legitimate his demands. It is scary. And it has happened again. The LA Times is reporting that Bush is trying to justify his overriding of the legal procedures for wiretapping by referring to his greatest failure while in office:

In his radio address Saturday, Bush said two of the hijackers who helped fly a jet into the Pentagon — Nawaf Alhazmi and Khalid Almihdhar — had communicated with suspected Al Qaeda members overseas while they were living in the U.S.

"But we didn't know they were here until it was too late," Bush said. "The authorization I gave the National Security Agency after Sept. 11 helped address that problem in a way that is fully consistent with my constitutional responsibilities and authorities."

But some current and former high-ranking U.S. counter-terrorism officials say that the still-classified details of the case undermine the president's rationale for the recently disclosed domestic spying program.

Indeed, a 2002 inquiry into the case by the House and Senate intelligence committees blamed interagency communication breakdowns — not shortcomings of the Foreign Intelligence Surveillance Act or any other intelligence-gathering guidelines.”

LI has been thinking of doing a temporary blog project. It would be called: the Vacation. Like those blogs that track Pepys day by day, this would be a day by day account of the Bush’s Vacation in 2001. Each day would track what we know Bush did, and what we know was happening in the country and the world at the time – what Atta was doing, what was happening in Afghanistan, in Pakistan, etc. It would begin, of course, a little before the vacation: on August 6, of course, the day Bush might have read, or – if it was too difficult – might have had explained to him the Presidential Daily Brief he received entitled "Bin Ladin Determined to Strike in U.S." This would be an interesting project, since we still don’t know – and the Press has no interest in – what was happening in the intersection between the administration and the bureaucracy after Bush was alerted to the possibility of Al Qaeda attack. A little mapping of that time would reveal, at least, holes in our knowledge. For instance, we still don’t know if Bush directed Secretary of Transportation Mineta to be in the loop after he had supposedly absorbed the brief. A minor but telling thing, since we do know that the case of Ahmed Ressam, the man who was planning on blowing up the L.A. Airport, was well known. In Bush’s lie about Nawaf Alhazmi and Khalid Almihdhar we certainly have a MacBethian moment – for don’t their ghosts, and the ghosts of the people they killed, haunt the Oval Office? The return to those ghosts again and again, and the attempt to redo that history, is a rather pathetic thing, instancing as it does not the determination of a strong leader but the fugue of an unprepared and, it turns out, naturally unpreparable one. I am surprised that there haven’t been any books about The Vacation – it would make a great little attack book.

But I suppose that would be unseemly. Journalists, as we know, don’t want to be unseemly or partisan. Because it wouldn’t be right. But it might be just the kind of blog that would be fun – at least as much fun as licking the blood from a wound. Because blogging isn't seemly -- as the Political editor of the Washington Post said, it is just being part of the crankosphere.

Sympathy for the militias

Reading the blog conversation about the President’s illegal wiretaps, I don’t know what is more frightening: the President’s action, or the liberal critics who are crying out that, after all, a rubber stamp court will pretty much allow the executive branch to do what it wants to ride roughshod over our rights. The liberal criticism seems nuts to me -- the point should be that are rights have been shamefully eroded by this secret court anyway.

Again and again, we have to bring ourselves back to the lodestone of reality. In reality, the threat posed by the terrorists has produced this: nineteen guys, for less than a million dollars, were able to take flying lessons, make some homemade bombs, get some box cutters, and take four planes. Now, in terms of war, the threat for forty seven years after 1945 was that planes or missiles would appear in the sky – expensive planes and missiles, costing billions of dollars – and wipe out city and town, to the tune of 40 million to 100 million deaths. Yet, during that time, the U.S. was able not only to preserve the fundamental civil rights, but expand them greatly. The various House and Senate investigations in the seventies created the impetus to create a whole new barrier against encroaching on the citizen’s right not to be spied on, and it made not one dime’s worth of differenc to the Cold War.

The war on terrorism is, of course, not a war at all, but a metaphor. The war on a particular group of terrorists, conducted by Bush, has been so out of sight that we are calmly watching small terrorist organizations build up again. They will no doubt strike on their own cycle. Big news: they exist in Pakistan and in Bangladesh. Other news: we could have crushed the core of them in Afghanistan. And still other news; we didn’t because they are not a priority. They have never been a priority. This administration does not believe for a second that Al qaeda poses a threat to the U.S.

On the other hand, there is the greater threat that the Republican dominance dreamt of by Karl Rove might be overthrown. We’ve already seen Tom Delay use the office of Home(exceptforthegulfcoast)land security to put in place his redistricting theft in Texas – a theft that, incidentally, took away my, and Austin’s, representative in the House.

So here is a question for ya. We recently saw Pat Robertson threaten the President of Chavez with assassination. And we recently saw the FBI admit to “infiltrating” Peta for “terrorist” activity. Here’s a pop question: whose overseas calls do you think will be wiretapped?

It is at times like these that I must admit to supporting the right to bear arms from more than rational, market-driven reasons. We have right bastards in office, and they are definitely gnawing on our rights for their own slimey political ends.

And let’s end this, well, the President already has and needs every power in the world to violate our rights so that 19 guys don’t hijack another 4 planes. If the 19 guys come, it will be due to the fact that the taps are worthless, the commander in chief is clueless, and the ability of the FBI to really integrate its investigations with, say, those of European police agencies is still at Grade C. We already know what this president does when presented with a memo that says Al qaeda attack imminent in the U.S. He takes a vacation.

five points about iraq

To understand what is happening in Iraq through the medium of the American press is much like estimating the height of a distant mountain through a heavy fog. But sometimes the fog lifts. This election, for instance, has thrown a startling, and no doubt ephemeral, contrast between the agencies of projection – the media, the D.C. clique, and the Snopes cocoon - and reality. The NYT today, which had based its delusional reporting on John Burns’ paen to the latent Americophilia in the Baghdad streets on election day and an account, echoing an account in the WP, of an obscure secularist candidate in Basra to which reporters had been herded, no doubt, by U.S. army spokesman, now gives us this hilarious phrase:
“What was also apparent was the staunchly religious nature of the electorate, in a country that many experts had proclaimed before the American-led invasion to have a large secular middle class.”

Ah, the passivity of experts, and the coyness of reporters. The machine has written, and having written, passes on.

Still, for that vast, vast minority that actually pays attention, a few things to note.

1. The election was proceeded by the publication of a poll, conducted by the Oxford Research Institute and supported by the BBC, ABC, etc. The poll was much discussed on the blogs. LI thought that the poll vastly overcounted one segment of the Iraqi population – that “large secular middle class.” Well, LI can gleefully say we were right. The ORI poll isn’t even within shooting distance of the results. While that seems a small and parochial thing, it indicates a large and non-parochial matter – the American press, and the American political establishment, simply can’t penetrate to or establish any relationship to an Iraqi populace that, at the moment, is undergoing incipient civil war plus incipient Great Depression. If Iraq really is suffering a rate of unemployment of 60%, the underlying and real American policy towards Iraq – privatize the oil – is a pipe dream. It is not only a pipe dream, but it is being pursued by means that are blowing up in our face.
2. The neurotic pattern for discussing this war is to ignore these moments of clarity and delve, infinitely, into the American cocoon. That is why the hot issue remains the invasion itself, instead of the occupation. LI was opposed to the invasion, but our opposition was not based on what was good for Iraq. It was based on what was good for America. It was good for Iraq that Saddam Hussein fall – that was obvious, and has been obvious. It would have been good for Iraq that Saddam Hussein be captured by Iraqi partisans and be given the Mussolini treatment.
3. However, what was bad for Iraq from the getgo, and is now a disaster for America, was acceding to the imperialist impulse and occupying a country that could handle its own affairs better than any foreign proconsul could. Immediate elections, a cancellation of Iraqi debt and war reparations, and withdrawal of the Coalition forces by the end of 2003 – that would have been the wisest course for both parties.
4. We know how Iraq has suffered due to American incompetence and war crimes. But take a look, for a second, at how American interest has suffered. American interest can’t be to liberalize and seize the oil sources in the Middle East – that will lead to less oil, for one thing, as oil becomes a victim to violence. American interest should be to stabilize the Middle East to the extent that two of the region’s main players, Iran and Israel, come to some non-hostile accord. Instead, this happened: just as the Iranian revolution led to a surge in Islamic fundamentalist violence throughout the region, the American incubation of Islamic fundamentalism in Iraq has been the predictor of the hard line victory in Iran. First Basra, then Teheran – that is the structural logic here. It is, of course, not even seen by Americans who think the world is watching American Idol with breathless anticipation. The world isn’t.
5. To those who think that it is good that America loses in the Middle East, I would ask who bears the cost of that loss. True, American prestige is probably fated to either diminish or transform as time goes on – this is what happens to debt-ridden empires. But American power is a wild card, and simply baiting it is a game in which other people – millions of people – are hurt. And, frankly, living inside the Behemoth, I have no desire for the Behemoth to be scattered to the winds. Jeremiah was ascetic enough to like living in the well into which he’d been thrown – but yours truly likes his trips to Whole Foods. The idea that American losses under Bush give us room to jibe at Bush is, well, a contagious infantile disorder. There is more going on here than sticking it to the retarded Texan. American narcissism knows no ideological boundaries.

PS - those who like their news from Iraq to be all happy and pro-war might be interested in this column in the New York Sun -- which is somewhat to the right of the NYPost -- written by one of those adorable Iraqi bloggers cultivated by the Neocon crowd. Lovely stuff like this:

"Iran's mullahs, who are increasingly getting belligerent across the board, pulled off a coup in Baghdad right under the very noses of the United States."

We also liked the comment about Sistani being a communist. Wow, and I thought the Iraqi communists, solidly supporting Allawi, were proof positive of the new, democratic wave sweeping through the Middle East! I guess it is time for the old switcheroo, and bringing out the commie menace card. We are menaced by the commies that we are fighting for... A little confusing, no? I'm just so... surprised that Chalabi has a constituency of 0.00001 percent in Iraq, when it comes down to it. Gee, besides having guessed it in almost every post I've ever written about Iraq, I gotta say: who coulda guessed it? Especially as the NYT and the Washington Post have featured him with a monomaniacal intensity every time they talk about the political leadership of Iraq. How to put the whole ridiculousness of that? It is as if one were to include a discussion of Jerry Brown in every article about the political leadership of the U.S.

between the devil's capitalism and God's own country

The election to watch this week is … the one in Bolivia. Those looking for some good Bolivian blogs should check out the Evo Morales leaning Blog from Bolivia. The guy who runs that blog, Jim Schultz, is one of those astonishing, tireless lefties willing to work in obscurity and discomfort for years to see the People, united, will not always be defeated.

Mapp is another Bolivian blog with useful, worms-eye view of the election, to the right of Schultz.

One of the more interesting aspects of the Bolivian election, to my mind, is the growth of a indigenous reaction, long in coming, to forty years of narco-repression in Latin America. Bush’s favorite government, Uribe’s in Colombia, just made a deal with narco-growers that the U.S. is winking at. The deal is: Colombia will not allow judicial extradition. In return, these growers – most of them on the paramilitary right – have “agreed” to stop producing the one thing that makes them money. Agreements like that are very useful, if you have run out of tissuepaper in your bathroom – otherwise, they are just the kind of joke that makes the American war on narcotics such a frustrating imperial experiment. In order to support the old semi-fascist elite so dear to the D.C. heart, the U.S. has always gone out of its way to support the biggest narco exporters and their political stooges. But in order to continue placate the conservative forces of coercive moralism in the U.S., the D.C. crowd is forced to periodically whip up the anti-drug frenzy.

In Bolivia, things are easier. Evo Morales is a former coca grower and an ally – shudder – of Hugo Chavez. This is a quote from the Guardian article about Evo:

“Coca is at the centre of Bolivia's election campaign. Mr Morales, 46, comes from a mining family, but when the mining sector collapsed at the end of the 1970s his family, like many others, moved from the high plains in the east near La Paz and turned to agriculture in the lower, central lands. Coca was the most lucrative crop, a plant revered for its curative properties and role in indigenous rituals; but then the US cracked down on drugs, coca growers became criminals and the sector collapsed. Today a limited amount of coca is grown in Bolivia.
"I want to make an alliance with the US, with others, a real alliance against drug trafficking, but not against the cocaleros [coca growers]," Mr Morales says, sitting in his campaign headquarters at La Paz. "Zero cocaine, but not zero coca." A handsome man, with a mop of black hair, he is usually clad in black jeans, T-shirt and fleece and has a reputation as something of a swinging bachelor.
He fidgets, looking around the room as questions are asked, but when it is his turn to talk, he engages. "For the US," he continues, "the war on drugs is an excuse to better control other countries. In Latin America it is narco-terrorism. In Iraq, preventative wars and weapons of mass destruction. And what do they really want? To control the oil."

Oddly, Evo Morales is campaigning both to do something stolidly capitalistic – reinstate the market in a highly competitive product – and against capitalism. However, the against capitalism motif may be highly exaggerated -- and exaggerated by two sides -- touristic lefties in search of a Che Guevara high, and beefchewing righties in search of a coup -- according to this analysis in Open Democracy. Myself, I wouldn't put the odds on Bolivia in the wrestling match between Bolivia and the Behemoth, which is why I hope that Morales just neglects all enforcement of anti-coca law, without overturning it explicitly. The bigger question to my mind is: can the old path of dependence that comes from being a primary product producer be modified, even overturned, by smart economic policies? Of course, the U.S. will try its best to make that an academic question by subverting democracy in Bolivia, if the outcome goes to Morales. Look for two things: the natural gas rich region of Bolivia has a separatist movement that will be receiving a mysterious influx of money, soon; and then the traditional coup, preceded, of course, by the Washington Post editorial about what an undemocratic dictator was elected by the democratic process. Perhaps the WP can have its old fave, Henry Kissinger, write another op ed piece.

announcement

The NYT article about Jack Abramoff’s covert payments to a Cato Institute columnist, Doug Bandow, includes this interesting graf:

“A second scholar, Peter Ferrara, of the Institute for Policy Innovation, acknowledged in the same BusinessWeek Online piece that he had also taken money from Mr. Abramoff in exchange for writing certain opinion articles. But Mr. Ferrara did not apologize for doing so. "I do that all the time," Mr. Ferrara was quoted as saying. He did not reply to an e-mail message seeking comment on Friday.”

We were a little heartened by Ferrara’s damn the torpedoes attitude because.. and we say this with great sorrow in our hearts – LI, too, has been on, or can be construed by some pink liberal commentator as being on, Abramoff’s retainer. In our position as policy coordinator at the libertarian “Abolish taxes and borrow money until 2100 comes around” institute – known around D.C., affectionately, as the Raw Steakeaters thinktank and mudwrestling extravaganza – we, well, we had a little gambling problem developed when we were scientifically researching the exciting field of Public Choice theory in Reno at The Golden Spur. As a result of this unfortunate shortfall, we were more open than we perhaps should have been to Jack Abramoff’s suggestion that we rename our institute “Abolish taxes and make gambling illegal except on Indian Reservations and borrow money until the Year 2100.” By the way, we have now gone back to our old name. And we – or at least me – LI – is going to return every hot cent of that inducement that, in the new era of puritanical morality, is being called a bribe. Returning that money will require a brief trip, in the spring, to the Preekness, but we have a pretty good line on a couple of ponies recommended by Bill Bennett. In the meantime, we’d like to issue an apology, and assure our base of supporters that we will continue to issue our fine white papers, such as the one coming out: “How lowering the tax rate to 0 percent for incomes over 200 thousand actually increases government revenue: the latest napkin graph.” We are scotching the one entitled: “Much wampum, make woopee, why Ralph Reed is good for America.”

ps -- continuing on the corruption note:

If you wonder why the American perception of Iraq is confused, consider this: a minor candidate in Basra whose party leader just happened to go to Israel last year gets profiled as a sort of representative of Iraq not just by the Washington Post, but by the New York Times, too.

Neither article voices any criticism of him at all. Neither paper accompanies any non-secular candidates at all. Imagine two newspapers in France covering the American election in 2004 by concentrating on a socialist candidate for mayor in Burlington, Vermont, and you get the feeling for the propaganda outlets that the major media have become.

Amazing. No wonder the AEI crowd still thinks we “won the war’ in Iraq.

Our major newspapers can only become the garbage outlets for Bush propaganda for so long before they will simply disconnect from their readership altogether. I wonder if the journalists and editors think it is worth sacrificing the business in order to be counted among the movers and shakers in D.C. I guess I shouldn't wonder, though. The governing class has little interest in telling the truth to the governed, and every interest in keeping America confined in the bubble of its projection -- that projection that sees little wannabe Americas all over the world.