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Not long after I moved to the DC area, Janel and I joined a protest against the IMF and World Bank with some friends. (Our protest signs included classic phrases* such as "IMF'ing mad" and "There's no IMF in TEAM", and Dave played into stereotype by fashioning an off-topic sign that said "War is dumb") In explaining what we were protesting, it came down to the fact that we didn't think the neo-liberal economic agenda was going to benefit developing countries for a variety of reasons, but we aren't economists and didn't pretend that we could stand our own in a debate against anyone. (In fact, if any of the media that covered the event had happened to pull us aside for an interview, it's an open question as to whether we'd be able to produce a soundbite any better than the people Dave was stereotyping with his sign). Ha Joon Chang's latest book, Bad Samaritans, would have been a great help to us.

Not only is Mr. Chang an economist, he also examines some of the key neo-liberal trade theories from a historical perspective -- so it is slightly less of a my-theory-vs-your-theory stalemate and more of a description of how things have and haven't worked in the past. He uses some memorable metaphors to illustrate his ideas, such as this image to show why forcing an underdeveloped economy to open itself up through free trade and the gamut of modifications required by the World Bank or IMF:

"I have a six-year-old son. His name is Jin-Gyu. He lives off me, yet he is quite capable of making a living. I pay for his lodging, food, education and health care. But millions of children his age already have jobs. Daniel Defoe, in the 18th century, thought that children could earn a living from the age of four.

Moreover, working might do Jin-Gyu's character a world of good. Right now he lives in an economic bubble with no sense of the value of money. He has zero appreciation of the efforts his mother and I make on his behalf, subsidizing his idle existence and cocooning him from harsh reality. He is over-protected and needs to be exposed to competition, so that he can become a more productive person. Thinking about it, the more competition he is exposed to and the sooner this is done, the better it will be for his future development. It will whip him into a mentality that is ready for hard work. I should make him quit school and get a job...

I can hear you say I must be mad. Myopic. Cruel. You tell me that I need to protect and nurture the child. If I drive Jin-Gyu into the labor market at the age of six, he may become a savvy shoeshine boy or even a prosperous street hawker, but he will never become a brain surgeon or a nuclear physicist--that would require at least another dozen years of my protection and investment...

Yet this absurd line of argument is in essence how free-trade economists justify rapid, large-scale trade liberalization in developing countries."

If you are interested in global economics (even if you don't know much about it), I would recommend this book, which will definitely be a thought provoking read and probably start a few good conversations. It is surprisingly easy to read and doesn't get nearly as bogged down in numbers as I expected it to.

*phrases probably copyrighted by Luke Shannon

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laryn - Measuring the Ingredients Of E   | Super Administrator | May 22, 2008 (15:43:19) WSJ: Measuring the Ingredients Of Economic Growth Quote: The 21-member Commission on Growth and Development, headed by Nobel Prize-winning economist Michael Spence, spent two years and $4 million trying to figure out a fundamental economic question: Why do only some countries get rich and the vast majority don't? The panel, funded by the World Bank, the Hewlett Foundation and grants from several nations, studied the 13 economies that have grown at least 7% a year for at least 25 years since 1950 to divine what they did right, in order to make recommendations for the laggards. The commission urged poor countries to lash themselves tightly to the global economy as a way to boost jobs through exports and to import technology and investment. But departing from free-market orthodoxy, the panel also said that governments had a far greater role to play in development than was recognized in the markets-are-king 1980s and 1990s. To boost growth, the panel urged developing nations to spend heavily on infrastructure and endorsed, with some reservation, government subsidies to build local industries. "Governments in the high-growth economies were not free-market purists," the Growth Commission report said. "They tried a variety of policies to help diversify exports or sustain competitiveness." Among the findings that are bound to stoke the most controversy: Democracy isn't essential for growth. Autocratic governments that allow "vigorous debate" internally on economic policies are sufficient, the report said. Free trade isn't a prerequisite either. Some fast-growing economies kept high barriers to imports, even as they promoted exports, the report said. *Sent to me via email -- the link may expire after a week or so. Reply | Quote 0   0

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Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved.