MN Summer Book Club Choice- Stiglitz and Klein

Klein gives a lot of nitty gritty about how the US were involved in drawing up privatisation legislation.

In October 1991 Yeltsin lifted price controls and then started privatising 225,000 state owned companies.

Klein says that at this stage nearly 70% wanted workers co-ops to run the companies, as had been the case in Poland, and also wanted full employment policies.

She quotes Stiglitz as calling them "market Bolsheviks" because it was a (counter) revolution. Yeltsin promised that after a bad six months Russia would turn around and be the fourth strongest economy in the world.

The reality was pretty horrible. Millions had lost their savings and were not being paid. Consumption fell by 40% between 1991 and 1992. In 1993 the voters tried to pull Yeltsin and the Chicago Boys back into line and he declared a State of Emergency. The US (Clinton) and the rest of the west backed Yeltsin against the Parlament.
Yelsin tried to close down the Parliament when they brought in a budget in breach of IMF guidelines. He tried to close the Parliament by referendum. On a low turnout a small majority voted Yes, in favour of an election. She says he had slipped in a clause about support for reforms.

The IMF threatened to pull over 1.5 billion in loans. Yeltsin dissolved Parliament.
Yeltsin sent troops to Parliament and cut of electricity and phone lines. Thousands of people demonstrated in favour of Parliament over a few weeks. He raised the army's pay and beseiged Parliament. A demonstration on a TV station demanding news was machine gunned. Yeltsin closed down local councils. Parliament was shelled and after 500 people were killed and many more wounded and arrested.

Warren Christopher, US Secretary of State went to Moscow and is quoted as saying "The US does not easily support the suspension of parliaments. But these are extraordinary times." Klein said that Russians who had supported democracy were horrified.

Apparently Jeffrey Sachs doesn't mention any of this in his account in "The End of Poverty" - have you read that 905?

Background on Stiglitz - This is a very short summary of Stiglitz's World Bank career


From a New Statesman article on Stiglitz LINK

Quote :

"The US has pushed a particular model on the rest of the world. It might work for America, but is totally not acceptable in many other parts of the world where a sense of social solidarity is important or need to be important for those societies to function."

Where developing powers India and China have resisted US-led pressure to move towards instant privatisation of state functions, and refused to swing open their doors to multi-nationals without qualification, they have created much stronger societies, Stiglitz argues.

"These countries managed globalisation: it was their ability to take advantage of globalisation, without being taken advantage of by globalisation, that accounts for much of their success."

More transparency, easier to access information, and stronger civil societies are wearing away some of the power in the relationship between the developing and developed countries, he argues.

"Using the internet they can see what is going on in a way that we might not like," he says relating a story about the recent US-Korea bi-lateral talks where, after the US negotiators had finished a deal they told the Koreans was good and fair, the write-up on the US government website told a different story. "Basically it said: 'we managed to screw the Koreans'." Korean access to that information is likely to have a powerful influence on future negotiations.

With the US presidential primaries in full swing, the timing may be right for this man with global stature, and the ear of influential Democrats, to be heard by policy makers back home. Knowledge of foreign policy and the continuing role of the US in Iraq have both emerged as part of the cut and thrust of debates between Barack Obama and Hillary Clinton as they tussle for votes. And Stiglitz has a lot of knowledge and experience to offer. He acknowledges that he has regular conversations with the three Democratic front runners, and you can imagine he is likely to be snapped up as an advisor by the Democratic candidate next year.

This is an article by Stiglitz on the Russian economy, in which he says that wrong advice from the IMF lead to an increase in poverty from 2% to 40% of Russians.


http://www.guardian.co.uk/world/2003/apr/09/russia.artsandhumanities

IMF's Four Steps to Damnation

By Gregory Palast



If you only read one thing about Stiglitz, this would do.

cactus flower wrote:

IMF's Four Steps to Damnation

By Gregory Palast



If you only read one thing about Stiglitz, this would do.

I think the Stiglitz book would be more recomendable. It's more informative and less cartoonish.

I had a long detailed summary of Stiglitz's book Making Globalization Work, but MY FUCKING COMPUTER ATE IT! Is there nothing, nothing we can do about the horrific fucking knack the website has of logging people off who spend too long on their posts? It basically a penalty on trying to deliver good posts, and is far and away the most annoying thng about the site.

Anyway, the book was very interesting, but I'm fucked if I'm writing out that summary again. There are chapters on trade, intellectual property and global debt. For the most part it was very accesible, apart from the chapter on global reserves, in which I was quite lost. Icouldn't work out who was doing who a favour, with the Chinese (and now we hear, the Russians) using the dollar as the bulk of their reserve. He was very critical of it anyway and advocated some very Keynesian idea of a special reserve currency. Apparantly the South Asians are doing something like that, and keeping the money in their own region.

905 wrote:

cactus flower wrote:

IMF's Four Steps to Damnation

By Gregory Palast



If you only read one thing about Stiglitz, this would do.

I think the Stiglitz book would be more recomendable. It's more informative and less cartoonish.

I had a long detailed summary of Stiglitz's book Making Globalization Work, but MY FUCKING COMPUTER ATE IT! Is there nothing, nothing we can do about the horrific fucking knack the website has of logging people off who spend too long on their posts? It basically a penalty on trying to deliver good posts, and is far and away the most annoying thng about the site.

Anyway, the book was very interesting, but I'm fucked if I'm writing out that summary again. There are chapters on trade, intellectual property and global debt. For the most part it was very accesible, apart from the chapter on global reserves, in which I was quite lost. Icouldn't work out who was doing who a favour, with the Chinese (and now we hear, the Russians) using the dollar as the bulk of their reserve. He was very critical of it anyway and advocated some very Keynesian idea of a special reserve currency. Apparantly the South Asians are doing something like that, and keeping the money in their own region.

Bad luck with the post. It happened to me on Friday. The only safe thing to do is to type long posts up as a word doc and then paste them in. Or else do a little copy of long posts every paragraph. I try to do that but still I lose them sometimes.

The business with the Chinese is that they were holding a lot of the profits from their production in dollars in the US banks, allowing the US banks to keep lending out silly money for housing and so on ( at least I think thats what it is). There is a post today in the Dollar thread showing that the Chinese have started to shift this back to China. It will cost them because the dollar's value has fallen but they are obviously worried about the state of the US banks.

I agree with you that Stiglitz is more persuasive. His insider status gives him credibility. I learned a lot from the books as a pair though and was glad I read them. I'll carry on reading what Stiglitz writes - Globalpolicy.org carries a lot of his articles.

I think that he has had a real impact, along with the evidence on the ground, in convincing people that the IMF/World Bank formula is more than ineffective, it is actually malign.

Sorry about the post 905 - does the website log you out after a while if you're idle on it, posting or not? I must get Gerry Daly to test it out to see if it's an administrator benefit to never be logged out. Could it be your browser settings? Check to see if you get automatically logged out after an idle period and I'll see if there's a solution on the help site if it's the site's responsibility.

That's spot on with the Palast desctiption - I find him cartoonish too though I'll try to get through his book again at some point. Stiglitz has the right balance for me and I must try to get onto his second book soon now...

Does anyone think globalisation can be made to work?

cactus flower wrote:

Bad luck with the post. It happened to me on Friday. The only safe thing to do is to type long posts up as a word doc and then paste them in. Or else do a little copy of long posts every paragraph. I try to do that but still I lose them sometimes.

I don't have any such tool as a word document on this computer. Anyway the fault is ith the site and there should be a way to remedy it.

cactus flower wrote:

The business with the Chinese is that they were holding a lot of the profits from their production in dollars in the US banks, allowing the US banks to keep lending out silly money for housing and so on ( at least I think thats what it is). There is a post today in the Dollar thread showing that the Chinese have started to shift this back to China. It will cost them because the dollar's value has fallen but they are obviously worried about the state of the US banks.

There was another part to the story, with the Chinese using the dollar as the basis of their reserves. As they convert their reserve to something more stable like the Euro America suffers. This is what the 'long live the dollar...' thread is about, or so I gather.

cactus flower wrote:

I agree with you that Stiglitz is more persuasive. His insider status gives him credibility. I learned a lot from the books as a pair though and was glad I read them. I'll carry on reading what Stiglitz writes - Globalpolicy.org carries a lot of his articles.

I think that he has had a real impact, along with the evidence on the ground, in convincing people that the IMF/World Bank formula is more than ineffective, it is actually malign.

I wonder why he's only spreading the message now though, when it's perfectly clear that IMF policies don't work. There's been criticism of this lot since the eighties, I'm thinking of Susan George's book 'A Fate Worse than Debt'. I suppose he was trying to change the system from the inside, something that doesn't seem to worked out so well. Or did he only come to these conclusions recently?

I've moved the new book discussion to a thread of its own. I just hope I've done it right.

905 wrote:

I've moved the new book discussion to a thread of its own. I just hope I've done it right.

Aye aye cap'n.

http://www.globalpolicy.org/socecon/bwi-wto/critics/stiglitzindex.htm

Just found that link 905

cactus flower wrote:

Does anyone think globalisation can be made to work?

I do. Free market capitalism allied with liberal democracy building a global trading area on an incremental basis is the recipe for sustained prosperity in the global economy. The EU is an example of the transformative effect which knocking down trading barriers can have on economies in bringing them to prosperity. If the EU experience can be replicated across the world this century, we'd be doing very well.

I think that if tarriffs are steadily reduced, global standards are slowly implemented, the necessary socio-political reforms necessary to accomodate economic openess are implemented then globalisation can be made to work.

I do not fear globalisation since, in the long run, the gain outweighs the pain.

You don't think the EU model worked precisely because it was contained in one region? To expand that model to the rest of the world would be very difficult indeed. It's tricky enough holding it together in Europe as it is.

905 wrote:

You don't think the EU model worked precisely because it was contained in one region? To expand that model to the rest of the world would be very difficult indeed. It's tricky enough holding it together in Europe as it is.

It would, but I think it is worth the effort. I see a world market as being one of the main means with which we can avert a future world war. If we work to give every country a stake in a global market and get every country investing in, trading and engaging with each other then we would see a greater global stability and a platform for more economic growth and development.

If we work on making the EU, ASEAN, AU, NAFTA and the SCO all work well as free market areas then we can take the next step and fuse these blocs together. I see this as a very long-term project which should consume the lion's share of this century. The advances in communication technology, transportation and the like should assist us in this worthy endeavour.

905 wrote:

You don't think the EU model worked precisely because it was contained in one region? To expand that model to the rest of the world would be very difficult indeed. It's tricky enough holding it together in Europe as it is.

Oh no, the common market is the rock solid foundation on which the EU stands and regardless of what is built on top of it it's going nowhere. Access to it is the sugar than each country needs in other to swallow whatever bitter pills they must to play in our garden. There is no trick to holding it together, it's what has come after that's teh tricky bit.

Look at the amount of effort that goes into making Europe's free trade work. You have endless legislation about jam labelling and lawnmower noise and the colour of free-range eggs. Could all that be done on a world wide basis?

905 wrote:

Look at the amount of effort that goes into making Europe's free trade work. You have endless legislation about jam labelling and lawnmower noise and the colour of free-range eggs. Could all that be done on a world wide basis?

Yes. We manage it with half a billion people as it is. Had you said that 100 years ago you would have been locked up.

There would of course be opposition to it, from China I'd imagine, but if the force was big enough (and we see that the benefits of the common market outweigh the losses) they would eventually fold and come on line with us.

cookiemonster wrote:

905 wrote:

Look at the amount of effort that goes into making Europe's free trade work. You have endless legislation about jam labelling and lawnmower noise and the colour of free-range eggs. Could all that be done on a world wide basis?

Yes. We manage it with half a billion people as it is. Had you said that 100 years ago you would have been locked up.

Fair point. But, just playing the devil's advocate for a moment (where's Aragon when you need him?), one might argue that the EU system only works because of our protectionist policies towards the rest of the world.

Also, European countries have a long history of state control, thus enabling them to pass such outlandish regulation on the straightness of bananas and the like. Could this level of aquiesance from private interests be expected in every country around the world?

905 wrote:

cookiemonster wrote:

905 wrote:

Look at the amount of effort that goes into making Europe's free trade work. You have endless legislation about jam labelling and lawnmower noise and the colour of free-range eggs. Could all that be done on a world wide basis?

Yes. We manage it with half a billion people as it is. Had you said that 100 years ago you would have been locked up.

Fair point. But, just playing the devil's advocate for a moment (where's Aragon when you need him?), one might argue that the EU system only works because of our protectionist policies towards the rest of the world.

Well one might, and to a certain respect one would be right. Which is all the more reason to expand the scope of our makrket. It would also be less destructive if we played by own own rules on the way out too.

Quote :

Also, European countries have a long history of state control, thus enabling them to pass such outlandish regulation on the straightness of bananas and the like. Could this level of aquiesance from private interests be expected in every country around the world?

Interesting point, about state control. But given how it ended up in most cases I would imagine it would be more an incentive to repel against any form of control rather than embrace it.
The straight banana thing is nonsense, but for other things which have popped up they have done so mostly for very sound reasons (at least initially).

On the point of aquiesance, I don't believe it exists, well not as such. Thatcher accepted the EU on foot of the common market. But at the level above national level teh construct of the European insitiutions is such that the warring between social democratic left and liberal market right is toned down and we don't get the wide spectum of each in the legislation that comes out, they exist but the margin between them is driven closer together so it may seem that there is a tacit acceptance of "straight bananas" or whatever but it's in actual fact the acceptance of consensus or compromise on X issue in order for each side to benefit a little each, the EU seems to have mastered efficient policy and we don't do redistributive policy at all. I think this needs to change, but that's another thread!

I should point out that I was sing the straight bananas remark asshorthand for all the various directives that emerge from Brussels, on arcane issues like lawnmower noise regulation. I'm aware it's rubbish.

905 wrote:

I should point out that I was sing the straight bananas remark asshorthand for all the various directives that emerge from Brussels, on arcane issues like lawnmower noise regulation. I'm aware it's rubbish.

Well we have to blame the lefties for the likes of lawn mower noise regulation.

cookiemonster wrote:

905 wrote:

I should point out that I was sing the straight bananas remark asshorthand for all the various directives that emerge from Brussels, on arcane issues like lawnmower noise regulation. I'm aware it's rubbish.

Well we have to blame the lefties for the likes of lawn mower noise regulation.

And the wingnuts to blame for everything else??

cookiemonster wrote:

There would of course be opposition to it, from China I'd imagine, but if the force was big enough (and we see that the benefits of the common market outweigh the losses) they would eventually fold and come on line with us.

One of the ways in which we can create a global consensus on a worldwide free trade area would be to bring the rich world into such an area. It would be relatively easy to integrate the markets of the EU with the US, Canada, Australia, New Zealand, Singapore, Japan and South Korea. These are all rich, developed, sophisticated market economies with common languages and outlook.

From this very large basis, the likes of Argentina, Brazil, Peru, Colombia, South Africa and so on can be admitted on a case-by-case, step-by-step basis. Once these countries have entered, China and India would be next followed by the likes of Pakistan and Iran.

The EU started with just six nations and, if you were to say that Bulgaria would be a full member of that club just 50 years ago, you would be laughed at. In 50 years we can and should have a free trade association encompassing the world.