The problem with economics educations these days is that the most important points – such as market failure (e.g., failure to account for the cost of polluting mutually beneficial community space) – become so marginalized they eventually become tossed by the roadside of free-marketeerism. [google: environmental economists]
And so we fall into the sheeple mentality where “our leaders” will do something about it. “Our leaders” will stand for us. “Our leaders” will protect us, etc.
Leaders can include all types of people, and they’re not necessarily evil. But when people such as the President or pastors are looked at as “lifelong” or even just “life” leaders, we’ve got a big problem.
That is why I write this blog. I want to challenge you to think independently, think logically (e.g., why trust the government vs. “just don’t trust the government”), and to seek God’s guidance and Jesus’ example in thinking correctly (or alternatively, with moral responsibility).
99.9% of our “leaders” lack this attitude, and that is why the continued exploitation of the poor, among many other injustices, will continue to the very end of the Age.
New York Times via International Herald Tribune.
By Steven R. Weisman The New York Times
SEPTEMBER 17, 2006
SINGAPORE Even before the conclusion of the annual gathering of the World Bank and the International Monetary Fund, a striking swing in the global order has been obvious. China and other fast-growing developing countries are demanding a bigger say in the aging institutions that superintend the world economy.
The demands of China and other countries are stirring a fear in the West that agencies like the monetary fund, set up in the 1940s to stabilize the global economy, are in danger of fragmenting – a sobering thought for those worried that the breakdown of global trade talks last summer imperiled the future of global economic cooperation.
The richest countries of the world are scrambling to make sure that this fragmentation does not happen. Accordingly, an American-backed plan that would give a bit more of a say at the fund to China, South Korea, Mexico and Turkey appears headed for passage Monday.
The plan is what the United States calls a “down payment,” paving the way for more power to be given to other developing countries at the monetary fund, which is responsible for monitoring the global economy and rescuing countries from default. But that process is likely to produce much wrangling over the next year or two.
Judging from the comments of countries like India, Brazil, Argentina and Egypt, which have said they oppose the “down payment” idea, there is a clear residue of distrust from the poor or developing countries that feel left out of the process being discussed at these annual meetings. That criticism underscores the general anxiety about the future of the global economy and the systems set up to secure it.
Despite a healthy world growth rate of 5 percent in the past year, economists here are warning that the rise of protectionist sentiment, soaring oil prices, the huge American overhang of debt and other factors are casting a shadow over the future. “Clearly there are still risks in the global economy,” said Jean-Claude Trichet, president of the European Central Bank. “A lot of homework still has to be done.”
One piece of that “homework,” everyone agrees, is the overhaul of institutions like the International Monetary Fund. But that has proved difficult, in part because countries with existing power at the fund, including some in Europe, are nervous about being marginalized after decades of power.
Gordon Brown, the chancellor of the Exchequer in Britain and chairman of a committee that helps set policy for the fund, said Sunday that he expected that Europeans and others who might lose power to the Asians “will approach this in a statesmanlike way” and voluntarily give up some of their clout.
Another bit of “homework,” people here say, is for the World Bank, which lends more than $20 billion a year to poor countries, to figure out a new relationship with those countries like China, Thailand, Mexico and others with economies strong enough that they can borrow in commercial markets more cheaply than from the bank.
A decade ago, the fast-growing countries of Asia and Latin America that were termed “emerging markets” were on the defensive after the collapse of their economies and the embarrassment of elaborate rescues carried out by the United States and the International Monetary Fund. But now some of these same countries are, along with the oil- producing countries, sitting on piles of reserves while the United States is the world’s biggest debtor nation after years of running budget deficits and importing far more than it exports.
There is a new phrase at the World Bank that captures this situation. Many of these countries are “emerging donors,” not just “emerging markets.” China and India get loans from the World Bank because together they have more poor people than sub-Saharan Africa.
But China is also using its reserves to hand out billions of dollars in loans to Angola, Sudan, Nigeria, Zimbabwe and increasingly in Southeast Asia in a way that the West criticizes because many of these same countries have recently negotiated debt forgiveness packages and are in danger of sinking back into debt.
One reason for the push to give China more power at the fund, American and European officials say, is to get it to be more “responsible” in its lending practices and also to allow its currency to fluctuate more freely and not artificially intervene in currency markets.
The United States asserts that Chinese intervention in the markets, keeping its currency at an artificially low level in relation to the dollar, is aimed at pumping out exports and is partly responsible for the United States’ importing more than it exports.
But the countries with the reserves have mixed feelings about the monetary fund. They say they want more power there, but they also do not look back fondly on the period when they had to swallow harsh austerity plans in return for being saved in the 1990s.
“Many large countries in the world are building up their own reserves to make sure they do not have to come back to the fund,” said Ariel Buira, a Mexican economist who serves as a spokesman for a group of 24 African, Asian and Latin American nations. “They are demanding more of a say in what the fund does in the future.”
And they are threatening to go their own way, possibly following China’s lead to set up an Asian monetary agency that would rival the monetary fund, long the unquestioned province of the United States and Europe. In addition, the poor countries of Africa have joined with the economically better-off poor countries to object to the fund’s overhaul because they fear that they will be left out of the process.
Margarito Teves, the Philippines finance secretary, said the plan now on the table to overhaul the monetary fund was inadequate. But “that doesn’t mean we would vote against the proposal,” he said, adding that voting for it might be the best way of improving it.
In the past, those risking oversimplification tended to see these annual gatherings as battlegrounds between rich and poor countries, especially because of the anti-globalization protests like the one in Seattle in 1999. Protests have not been much in evidence here because of tight security; Singapore has banned demonstrations and refused visas to people it deemed to be troublemakers.
Representatives of 500 nongovernmental groups, many of them dissenting vehemently from policies at the World Bank and the monetary fund, have been holding quiet seminars on the fringes of the meetings calling attention to the problems of poverty, environmental degradation and diseases like Aids. What these meetings show is that there are actually three groups of nations here: the rich, the poor and the “middle income” poor, led by China but including India and many of the countries that surround Singapore.
Lawrence Summers, the former Treasury secretary and former Harvard president, has also been on the fringes here, talking about how unprecedented it is that in the past few years, the “poor” countries of the world have ended up being the bankers of the United States. Summers estimates that “emerging markets” possess $2 trillion in “excess reserves,” or what is in excess of what is normally considered necessary to protect against trade and economic downturns.
In effect, the poor countries are helping Americans consume more and save less. If the situation were reversed, many economists say, the United States would be enlisting the International Monetary Fund to demand austerity of the errant poor countries.
Like the International Monetary Fund, the World Bank is also wrestling with the phenomenon of “middle income” poor countries and plans to issue a report on the subject on Monday. Many of these countries, though nominally “middle income,” are still poor in the eyes of the bank.
Does it make sense for the bank to continue to lend money to China when China is lending money to Asian and African countries that are among the poorest of the poor? In a paper due out on Monday, the bank argues that China and other “middle income” poor countries not only continue to need loans to help the poor; they also need loans to clean up their environment and fight disease.
Even more than that, they continue to need expertise in these areas, bank officials say. The fear that China may go its own way on global economic policy is another reason for the urgency of roping China into the monetary fund on the issue of voting power. But it is not clear that China will cooperate, even if it gets more of a say at the fund.
Asked if Chinese cooperation on currency and lending issues were a kind of quid pro quo for greater voice at the fund, Rodrigo de Rato, the fund’s managing director said no. He also said China should not feel under more pressure to cooperate with rich countries once it gets more of a voice at the fund.
“I don’t think that a bigger role makes you subject to more pressures,” de Rato said. “There is no pressure. But China, like any country in the IMF, is subject to surveillance.”What the World Bank and the monetary fund, along with the United States and Europe, fear most is that the global system that helped countries in bad times could unravel in the good but precarious times prevailing at present. The fear is that when the next crisis occurs, the system that has worked in the past will not be as strong in the future.
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