The G 20, comprising the twenty nations which account for some ninety-five percent of the global GDP, is meeting this weekend in Washington, D.C. at the invitation of George W. Bush. The topic is the current global financial contraction.
Nothing much will happen. There will be no big news. The conflab will not take up French President Sarkozy's hyperbolic notion of a "second Bretton Woods," a redrafting of the international financial system. As has already been shown in the European Union, countries will protect their own financial systems first, even at the expense of others. This means words will fill the air. Reporters will file copy. Promises will be made. Shakes and grins will be exchanged by all hands for the benefit of cameras and the "folks back in Buncomb County."
Translated, this means the G-20 meeting will be a load of bunk. Hyped bunk.
The League of the High Minded led by UN SecGen Ban Ki-moon and the capo of the UN's Millennium Development Campaign, Salil Shetty, want the G-20, and more to the point, the G-8, to do a lot more than palaver earnestly and grin for the cameras. These two worthies as well as their equally High Minded supporters want the G-20 nations, or at least the G-8 group, or at the worst the G-7 (that's the G-8 less Russia), to spend a lot of money.
Salil Shetty, showing a rare ability to totally lack a grip on reality, avers that there is no lack of money among the developed nations. He proves his point by noting that the governments of the G-7 and even some of the "emerging" economies such as that of China had no difficulty producing torrents of cash to bail out their crashing banks and other financial institutions.
He concludes that these governments lack the political will to cough up the bucks needed to achieve the Utopian goals set in 2000 for the Millennium Development Campaign. Shetty goes on to argue that if these miserly, self-centered rich countries don't spew out the streams of cash thought to be needed to achieve the grand anti-poverty scheme, all hell will break loose.
Shetty paints a dystopian view of a world absent the successful achievement of the Millennium Goals which out does the bad acid trip visions of the Apocalypse set out by somebody named John. There will be wars beyond count. Disease will run rampant not only in the impoverished areas but everywhere. Presumably wolves would be heard howling in the rubble of a civilization brought down by the selfish greed of countries such as the US which did not pony up the lousy mite of seven tenths of one percent of the GDP.
Ban Ki-moon was not given to the bleak, second rate sci-fi picture of the world in flames. His letter to the jefes of the G-8 was far more restrained. It was no less demanding of urgent, expensive action on the part of the developed nations. The UN SecGen exhorted the rich of the world to "stand in solidarity" with the poorest people of our planet.
(The Geek always chuckles when a "statesman" shows his age by dredging up from the Vault of Treasured Cliches some ancient commie-type motto. In this case it was "to stand in solidarity." The Geek remembers hearing or reading that verbal excretion hundreds, if not thousands, of times back in the Sixties--and not always from foreign sources.)
It's time do something that the Clinton Administration and oh, so many others failed to do back in the glory days of Y2K (and subsequently.) It's time to get a grip.
As a matter of ethics, or if you are religiously inclined, morality, the notion of the prosperous economies giving 0.7% percent of their GDPs to the UN to dole out through a host of programs run by both governmental and non-governmental entities so that extreme poverty might be cut in half by 2015 is completely unobjectionable.
Along with the other components of the Millennium Development Goals, it is even laudatory. Eliminating poverty, enhancing basic education, empowering women, reducing disease, lowering child and maternal mortality, making the world safe for the color green are all worthwhile causes. The Geek can cheer those who would undertake the tasks, rise to the challenge and similar trite, hackneyed cliches.
The attempt by the League of the High Minded, which includes President-elect Obama, to cozen and coerce the citizens of the wealthy countries of the world to accept an involuntary transfer of money from their national economies to the UN and through that entity to a host of governmental bodies and NGOs is neither laudable nor appropriate. The attempt to sell the Utopian ideals embodied in the Millennium Goals as a matter of self-interest and national security on the part of the developed countries is both intellectually and historically dishonest.
The record of foreign aid in terms of its authentic accomplishments, its benefits to either the quality of life for the citizens of recipient nations or the legitimate, definable national and strategic interests of the donor is spotty--at the very best. More often than not, the aid has assisted only intermediaries such as NGOs and bureaucracies, portions of the donor nations' economies, and the personal wealth of members of the recipient nations' elites.
Foreign aid, no matter how well-intentioned, no matter how generous has, with very few exceptions, skewed the economies of the recipients, sapped the internal problem solving capacities of the recipients, fostered long-term dependence on foreign assistance, caused crises of rising expectations, and spread corruption. The Law of Unintended Consequences applies with singular vigor when wealth is transferred for lofty or for basely self-interested reasons.
Since to be successful all foreign policy must begin with a realistic appreciation of national and strategic interests and a clear-eyed understanding of the policy's interlocutor, it is necessary to ask two fundamental questions.
What national security or strategic interest does the US have at stake in any particular impoverished society and its (typically) inept, corrupt and barely legitimate country? To put it another way: Does it really matter to the present and future security and prosperity of the US and its citizens if a country, say the Democratic Republic of Congo, energetically disassembles in a welter of blood and body parts?
The second question is equally blunt. Will the aid have a real, positive and long term beneficial effect upon the recipient society? Given the contextual realities of geography, climate, demographics and history, will the aid that seems so beneficial turn out to be such over time?
To zero in on one component of the Millennium Goals: Long term would it be good or bad to lower child mortality in a society which already exceeds the carrying capacity of the territory it occupies? Or, to take another of the Millennium Goals: If a country actually has no viable economic reason to exist, just how does one go about developing it? With what? For what end?
Not wanting to seem to be a model of the flinty-eyed, cold-hearted realpolitiker, the Geek has a modest proposal to make. Ask every American family if it would like to donate 0.7 percent of its "GDP" (pre-tax income) to be transferred via the UN and its subsidiaries including NGO's and national governments alike. For those which reply in the affirmative, provide a means for automatic deduction from paycheck or bank account.
Of course honesty would require that that the families be informed that the UN, were it to be a private entity, would be subject to prosecution under the Racketeer Influenced and Corrupt Organisations Act. The same proviso must be entered regarding a number of NGO's to say nothing of recipient governments.
Honesty and fairness (both qualities high on the list of virtues espoused by the League of the High Minded) would also require a disclaimer not unlike those found on ads for new stock issues. It might read something like this: "History shows that most, if not all wealth transfers of this nature have failed in their purpose and brought about adverse consequences."
Bet Ban Ki-moon and Salil Shetty won't go along with this way of doing business. Realism and High Mindedness don't play well with each other.
Showing posts with label G-7. Show all posts
Showing posts with label G-7. Show all posts
Friday, November 14, 2008
Monday, November 10, 2008
Move Aside, G-7--The Big Posse Is Taking Over
BRIC and the rest of the Group of 20 have decided that the industrialised nations of the Group of 7 aren't doing a good enough job of mismanaging the global financial system. So, they want to move on in.
"Wait one, Geek! What's this BRIC thing?"
The acronym stands for the following countries: Brazil, Russia, India and China. These are the biggest of the so-called "emerging economies." They believe they are very, very important to the health and stability of the global financial system.
The new posse had a meeting in Sao Paulo, Brazil a couple of days ago. At the meeting last Friday, which preceded a conference of the finance ministers and central bankers from the G-20 nations, the president of Brazil blamed the current financial meltdown and its consequence, a global recession, on the G-7 states.
Well, golly, President Luiz Inacio Lula da Silva, you must be a combination of Allen Greenspan and Sherlock Holmes to have figured that out. It seems about as difficult as determining that a heart attack starts with the heart.
And, whether President Lula likes it or not, the countries of the G-7 are the economic heart of the planet. That reality governs whether you look at the global economy from the perspective of Beijing, or Moscow, or East Clearfahrt, North Dakota.
An equally unpleasant reality is that the United States sits at the very center of the Earth's economic heart. This is true whether one looks at consumption and all the global activity that liberal bete noir creates or finance and all that implies in the movement for good or ill of capital, risks and jobs.
The Brazilian president and his confreres want, even demand, a greater role for the emerging economies of BRIC and the other G-20 members as well as the lesser developed countries in the creation and running of a new international financial structure. In Lula's words "a new, more open and inclusive governance."
Right. The Geek agrees. It's a nice idea. Utopian even. But, the Geek wonders, just who is going to participate in this more open and inclusive system?
Obviously, the lads from BRIC believe they should play a major role. OK. Why not?
If the Geek remembers correctly, back in the 1930s and even in the 1950s there were economists predicting that Brazil along with Argentina would rival or even surpass the US economically by the end of the 20th Century. What happened? To compress a long and dreary history punctuated from time to time with blood, both states careened from Statism of the Left to Statism of the Right. This lurching in a drunkard's walk search for prosperity had the wondrous effect of retarding both countries.
The Russian experience with open and inclusive markets is, if one feels charitably inclined, minimal. The Russians have shown over the course of the past century that they are equally inept at operating command economies, a wide-open frontier market, and the new, improved Putin-directed hemi-demi-semi capitalist system. There is no doubt that the Kremlin input to a new global system would be more to the perceived advantage of Russia than the rest of the world.
The same may be said of China. The Chinese Miracle of Growth has been predicated upon the rampant exploitation of labor, wholesale destruction of the environment and promotion of greed on a level which would (almost) shame the famed Robber Barons of the US more than a century ago. Furthermore, the Chinese Miracle of Growth would not have happened without the ill-advised giveaway brokered by President Clinton around ten years ago. The Chinese neo-mandarinate has copious skills focused with laser intensity on the promotion of Chinese strategic interests. Trade and finance are like guns and warships--instruments of national power. Period.
While India has torn itself away (in part) from its long love affair with Left Statism, its current growth is predicated upon a small sector of overall economic activity with the result that the distribution of wealth in the country is even more deformed (if such could be possible) than it is in the United States. India has a large population of very poorly paid individuals for whom the government still believes it has a responsibility. Wealth transfers (both internal and from external sources) of a very major nature will be necessary in the short- and mid-term if the needs of this economically marginal majority are to be met--and, Indian political stability not more impaired than it already has been.
President Lula averred that the IMF agrees with the crucial nature of the developing countries to the world economy by quoting a statement by the Fund's president to the effect that seventy-five percent of the global economic growth will be seen in the developing world. Duh. Percentages are a sleazy game to play. The IMF chief and Lula both know that very small absolute changes become very large percentage shifts when the starting point is low.
Don't get the idea that the Geek is a cheerleader for the fad of the past twenty years--globalization--let alone the dictatorial thuggery engaged in by the IMF and World Bank in promoting the interlocking agendas of globalization and privatization. He is not. The human costs of these handmaidens of change have been high, too high. The impact of privatization and the movement of capital across borders, particularly as enforced by the World Bank and IMF, has been huge, and largely negative. The Law of Unintended Consequences was invoked as seen by the election of such as Chavez and Morales.
The same Law may be invoked again--soon. And, not to the advantage of the US and other members of the G-7. The negatives of globalization and privatization have rested too hard on the lesser developed countries of the world. The benefits have accrued too exclusively to the G-7 and (much as the governments would deny it) BRIC countries as well.
The uniquely Western tendency toward recurrent waves of guilt over success and prosperity as well as the drive to "fairness" and "equality" which break the surface of Western thought so often and so strongly make most of the G-7 countries ripe for acceptance of the argument put forth at the BRIC meeting. The message? It's time for a change.
The Geek agrees that change is necessary. But, it must not be a "change" dictated by debtor nations, or the ambitious and far from altruistic BRICers. Any movement by the US toward embracing necessary changes in the international finance system must be made in the same way as conservative foreign policy generally.
Proceed from a realistic understanding of national and strategic interests of the United States, first and foremost; understand the historical context driving the actions of all the actors; go with a course of action which meets American needs and interests at the lowest realistic loss to others.
Anything else will bring the invariable Law of Unintended Consequences into play again.
"Wait one, Geek! What's this BRIC thing?"
The acronym stands for the following countries: Brazil, Russia, India and China. These are the biggest of the so-called "emerging economies." They believe they are very, very important to the health and stability of the global financial system.
The new posse had a meeting in Sao Paulo, Brazil a couple of days ago. At the meeting last Friday, which preceded a conference of the finance ministers and central bankers from the G-20 nations, the president of Brazil blamed the current financial meltdown and its consequence, a global recession, on the G-7 states.
Well, golly, President Luiz Inacio Lula da Silva, you must be a combination of Allen Greenspan and Sherlock Holmes to have figured that out. It seems about as difficult as determining that a heart attack starts with the heart.
And, whether President Lula likes it or not, the countries of the G-7 are the economic heart of the planet. That reality governs whether you look at the global economy from the perspective of Beijing, or Moscow, or East Clearfahrt, North Dakota.
An equally unpleasant reality is that the United States sits at the very center of the Earth's economic heart. This is true whether one looks at consumption and all the global activity that liberal bete noir creates or finance and all that implies in the movement for good or ill of capital, risks and jobs.
The Brazilian president and his confreres want, even demand, a greater role for the emerging economies of BRIC and the other G-20 members as well as the lesser developed countries in the creation and running of a new international financial structure. In Lula's words "a new, more open and inclusive governance."
Right. The Geek agrees. It's a nice idea. Utopian even. But, the Geek wonders, just who is going to participate in this more open and inclusive system?
Obviously, the lads from BRIC believe they should play a major role. OK. Why not?
If the Geek remembers correctly, back in the 1930s and even in the 1950s there were economists predicting that Brazil along with Argentina would rival or even surpass the US economically by the end of the 20th Century. What happened? To compress a long and dreary history punctuated from time to time with blood, both states careened from Statism of the Left to Statism of the Right. This lurching in a drunkard's walk search for prosperity had the wondrous effect of retarding both countries.
The Russian experience with open and inclusive markets is, if one feels charitably inclined, minimal. The Russians have shown over the course of the past century that they are equally inept at operating command economies, a wide-open frontier market, and the new, improved Putin-directed hemi-demi-semi capitalist system. There is no doubt that the Kremlin input to a new global system would be more to the perceived advantage of Russia than the rest of the world.
The same may be said of China. The Chinese Miracle of Growth has been predicated upon the rampant exploitation of labor, wholesale destruction of the environment and promotion of greed on a level which would (almost) shame the famed Robber Barons of the US more than a century ago. Furthermore, the Chinese Miracle of Growth would not have happened without the ill-advised giveaway brokered by President Clinton around ten years ago. The Chinese neo-mandarinate has copious skills focused with laser intensity on the promotion of Chinese strategic interests. Trade and finance are like guns and warships--instruments of national power. Period.
While India has torn itself away (in part) from its long love affair with Left Statism, its current growth is predicated upon a small sector of overall economic activity with the result that the distribution of wealth in the country is even more deformed (if such could be possible) than it is in the United States. India has a large population of very poorly paid individuals for whom the government still believes it has a responsibility. Wealth transfers (both internal and from external sources) of a very major nature will be necessary in the short- and mid-term if the needs of this economically marginal majority are to be met--and, Indian political stability not more impaired than it already has been.
President Lula averred that the IMF agrees with the crucial nature of the developing countries to the world economy by quoting a statement by the Fund's president to the effect that seventy-five percent of the global economic growth will be seen in the developing world. Duh. Percentages are a sleazy game to play. The IMF chief and Lula both know that very small absolute changes become very large percentage shifts when the starting point is low.
Don't get the idea that the Geek is a cheerleader for the fad of the past twenty years--globalization--let alone the dictatorial thuggery engaged in by the IMF and World Bank in promoting the interlocking agendas of globalization and privatization. He is not. The human costs of these handmaidens of change have been high, too high. The impact of privatization and the movement of capital across borders, particularly as enforced by the World Bank and IMF, has been huge, and largely negative. The Law of Unintended Consequences was invoked as seen by the election of such as Chavez and Morales.
The same Law may be invoked again--soon. And, not to the advantage of the US and other members of the G-7. The negatives of globalization and privatization have rested too hard on the lesser developed countries of the world. The benefits have accrued too exclusively to the G-7 and (much as the governments would deny it) BRIC countries as well.
The uniquely Western tendency toward recurrent waves of guilt over success and prosperity as well as the drive to "fairness" and "equality" which break the surface of Western thought so often and so strongly make most of the G-7 countries ripe for acceptance of the argument put forth at the BRIC meeting. The message? It's time for a change.
The Geek agrees that change is necessary. But, it must not be a "change" dictated by debtor nations, or the ambitious and far from altruistic BRICers. Any movement by the US toward embracing necessary changes in the international finance system must be made in the same way as conservative foreign policy generally.
Proceed from a realistic understanding of national and strategic interests of the United States, first and foremost; understand the historical context driving the actions of all the actors; go with a course of action which meets American needs and interests at the lowest realistic loss to others.
Anything else will bring the invariable Law of Unintended Consequences into play again.
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