MN Summer Book Club Choice- Stiglitz and Klein

Auditor #9 wrote:

That's a good description of Collapse - hope you're right about Rubicon for me. How's the Great Deception going ? Have you got very far in it ?

It's going well. It's a second edition so it flows very well as you read. i've got about three chapters under my belt. I'm reading another book at the moment, so I'm dividing my time between both, but I should have a good bite taken out of the Great Deception come Friday.

Well I'm entirely confused. Can someone tell me what we are reading, or are we all reading the same thing?

BOOK CLUB ANNOUNCEMENT
After a long debate and process of elimination, Machine Nation Book Club choices for summer 08 are Shock Doctrine, Naomi Klein and Globalism and its Discontents, Stiglitz (or other Stiglitz book if preferred). Anyone who wants to bring Douthwaite’s The Growth Illusion into the discussion is welcome to.

You’re welcome to start posting into the Summer Book Club thread any time you like. We’ll have a members’ session for chat on the books every Sunday night at 9 p.m FROM SUNDAY 29TH JUNE.

Cheers

If anyone else would like to start a thread on any other book they are reading - go for it. The more the merrier.

cactus flower wrote:

If anyone else would like to start a thread on any other book they are reading - go for it. The more the merrier.

I'm going to. The Great Deception is a big slab of meat I'm delightfully getting my teeth into. It's a great read, the story flows lightly but not superficially, along.

I started reading the Shock Doctrine last night and have to admit to not having slept very well. Freaking sadistic torturers are not my cup of tea whether wearing a medical coat or a uniform.

Is anyone else ready to start talking about it, or Stiglitz?
My Stiglitz hasn't arrived yet, but I had a quick browse through his book on the Iraq occupation costs while I was ordering "Globalism and its Discontents".

I'm into the Stiglitz book now, though not very far and it's great. The IMF and the World Bank as well as world economic management are dealt with immediately and in very simple terms to far.

He also talks about GATT, WTO and suchlike and the sense of injustice that comes out is astounding in terms of how the West is misbehaving financially with Third World Countries (encouraging them to start projects designed by the West, financing the projects and overseeing many of them then penalising the 3rd world country if the project fails as well as imposing on-going trade penalties and price controls and supporting unfree markets.. )

I have read the preface to Making Globalization Work (MGW). He refers to his previous book, Globalisation And Its Discontents (Disco-Tents) in a general way which makes me confident that you don't have to be familiar with Disco-Tents one to embark on MGW. J_Stig is happy enough that Disco-Tents has already contributed to a major shift in the workings of the IMF and the World Bank and that the next phase must now begin. In truth, he is a little bit cocky but only a total begrudger would hold it against him imo.

I have also dipped into the first chapter. J_Stig is generally outlining the difference of focus between developed countries which are influenced by powerful groups and developing countries. He has not started to outline the proposed solutions yet but is pointing to six main areeas to be addressed. I can't think of them all off the top of my head so I'll just leave that there to tantalise.

Just bought Shock Doctrine - will try to get it read over the weekend.

Zhou_Enlai wrote:

I have read the preface to Making Globalization Work (MGW). He refers to his previous book, Globalisation And Its Discontents (Disco-Tents) in a general way which makes me confident that you don't have to be familiar with Disco-Tents one to embark on MGW. J_Stig is happy enough that Disco-Tents has already contributed to a major shift in the workings of the IMF and the World Bank and that the next phase must now begin. In truth, he is a little bit cocky but only a total begrudger would hold it against him imo.

I have also dipped into the first chapter. J_Stig is generally outlining the difference of focus between developed countries which are influenced by powerful groups and developing countries. He has not started to outline the proposed solutions yet but is pointing to six main areeas to be addressed. I can't think of them all off the top of my head so I'll just leave that there to tantalise.

And tantalised I am. My copy won't arrive until Monday, so I will push on with Shock. After Shock, Collapse and Discontent I will be rooting for a very upbeat book title next time.

I got Discontents today and am about to turn over in the leaba and get reading now. Hope to have something to say for tomorrow night on the preface at least. He writes a good preface, does Stiglitz.

But in terms of globalisation in general there is an interesting short article in the Economist about how microfinancing, which I always saw as a way of picking up the pieces left as globalisation sweeps through a society, seems to be going global itself with a Mexican bank, Compartamos saying that it should be a profit making operation - and it charges upwards of - wait for it, 79% on loans that average E450.

That said, it doesn't target the poorest of the poor, has a high satisfaction rating and ran a financial literacy courses last year for 60,000 of its clients. It currently has 900,000 clients and believes that charging the interest allows it to provide a better service and therefore loans to far more people.

I think it's an interesting sidebar to the globalisation discussion.

You'll find the article here.

If it merits further discussion, we can start another thread, rather than hijacking this one.

Anyone up for Book Club? I think there is some kind of soccer match on, so it may not have been the best night for it...

I was looking for SeathrunCeitinn's sofa when I found this photograph of New Orleans after Hurricane Katrina.
Katrina is the first example Naomi Klein uses of what she calls "The Shock Doctrine". She writes about Milton Friedman urging the privatisation of schools after the hurricane. The public school system was replaced by privately run/publically funded "Charter Schools" - all the teachers were sacked first and then some of the younger ones reemployed on less money.

http://english.aljazeera.net/programmes/insideiraq/2008/06/2008620145420472566.html

There is a report here from aljazeera on the new oil law being put through by the Iraqi government - it says that most of the oil is going to foreign companies and that the deals are being signed even before the law is passed.

I am guessing that soccer rules tonight, and as I'm in the middle of something time consuming I'm going to head off. I'll post a bit more on "Shock" tomorrow. One thing I'm not clear about yet is if she is saying that this is a new phenomenon or if it has always been integral to economic systems/capitalism...can anyone help out on that?

I don't much internet at the weekend CF. I think your efforts were doomed with the soccer on the box in any event. I still haven't really got into Making Gloabalization work. I think I am the only one reading it though. Keep up the good work with Shock Doctrine. It is a book I looked at before - I think I preferred the original arresting yellow cover.

Zhou_Enlai wrote:

I don't much internet at the weekend CF. I think your efforts were doomed with the soccer on the box in any event. I still haven't really got into Making Gloabalization work. I think I am the only one reading it though. Keep up the good work with Shock Doctrine. It is a book I looked at before - I think I preferred the original arresting yellow cover.

You're not alone Zhou, I managed to put down my Chapman for a bit and I'm on Stiglitz's second chapter.

It's a strange book. He basically seems to be saying: "I'm right, everyone knows I'm right, why aren't we all doing as I say?" You get the impression that the international economic community might not be as behind him as he thinks. His nobel prize winning work on information access sounds interesting, and I know nothing of economics (sounds more like Foucault's 'knowledge is power'). He references this more than he does his earlier book.

It's very well laid out with all the sub-titles; making it accessible without turning it into a text-book.

I don't mind his over-confidence. In the acknowledgments section he refers to other authors who oppose his ideas and admits that they didn't change each others minds having discussed the issues with each other. I think the fact that he writes so clearly make him more convincing.

Yes it's well laid-out as you say 905 - I'm impressed he keeps managing to come up with new sub-titles and subjects (liberalisation, trade barriers etc.) and make them interesting and accessible although I'm having a bit of a hard time trying to imagine the liberalisation of financial markets. He calls something 'hot money' is it speculation he is referring to in terms of loans that are nothing more, he says, than bets on a currency? This practice must be outlawed among world governments or financiers - I don't know exactly as he doesn't give a background to international finance.

Something Zhou Enlai has mentioned before, his thesis seems to be that the IMF and World Bank is a blind machine, exasperatingly obedient to the laws of technique and 'one size fits all' laziness and arrogance that have caused all kinds of very stupid and avoidable trouble (the Moroccan chickens). I'd say this is a stumbling block for many different styles and kinds of organisation and I wonder if there is a positive mentality emerging as an antidote to this which might guide organisations through some of the practices they engage in along the lines he is talking about. His ideas are very human and humanitarian and very tuned into the idea of growth at a suitable and organic rate depending on the local conditions be it in Morocco, Ethiopia or Argentina.

The book also gives an interesting impression of what may be getting bandied about in boardrooms of those insitutions he is criticising.

Greg Palast's interpretation of "hot money":

After briberization, Step Two of the IMF/World Bank one-size-fits-all rescue-your-economy plan is 'Capital Market Liberalization.' In theory, capital market deregulation allows investment capital to flow in and out. Unfortunately, as in Indonesia and Brazil, the money simply flowed out and out. Stiglitz calls this the "Hot Money" cycle. Cash comes in for speculation in real estate and currency, then flees at the first whiff of trouble. A nation's reserves can drain in days, hours. And when that happens, to seduce speculators into returning a nation's own capital funds, the IMF demands these nations raise interest rates to 30%, 50% and 80%.

"The result was predictable," said Stiglitz of the Hot Money tidal waves in Asia and Latin America. Higher interest rates demolished property values, savaged industrial production and drained national treasuries.

For the record, I read "Teh Best Democracy Money Can Buy" and found it unconvincing. Palast is another Michael Moore type character.

Is that hot money thing what Ireland is going through now Zhou?

I need to read something on how this all works. Stiglitz has arrived at the bookshop and I need to go and pick him up. I've order both the Globalisation books god help me. I looked at his book on the cost of the Iraqi war in the shop - it seemed to be a long list of what the 3 trillion it has cost was spent on - worthy, but without much analysis. However, flicking through in the middle of a busy bookshop is not the way to judge an author fairly, and I would never knock solid, worthy research work.

Has anyone else read the Shock Doctrine - it is a passionate and moving book, well worth reading - but do you think it adds to our understanding of how the economic system "works"?

I started looking at Douthwaite again as the question of whether an economy can function well without growth seems such a a current issue. If anyone else has read it I'd be interested in going through the Irish chapters with them in particular.

cactus flower wrote:

Is that hot money thing what Ireland is going through now Zhou?

I don't know - I think the inward investment we get is less of an asset stripping variety. A-T might know better. We are certainly not in the same boat as developed countries in that we are linked to a more stable currency and interest rates.

Zhou_Enlai wrote:

cactus flower wrote:

Is that hot money thing what Ireland is going through now Zhou?

I don't know - I think the inward investment we get is less of an asset stripping variety. A-T might know better. We are certainly not in the same boat as developed countries in that we are linked to a more stable currency and interest rates.

If we accept that, "Cash comes in for speculation in real estate and currency" is the definition of "hot money", then we are not in receipt of hot money. Microsoft, Intel, Dell, Wyeth, Pfizer, Citigroup, Genzyme and so on have all invested in our country to open offices, headquarters, factories and research/development facilities.

Ireland is a location full of young, well-educated, English-speaking people which come with very little in the way of non-wage costs. MNCs therefore establish here to hire from this pool of talent.

We receive very little currency speculation investment since we're in the €uro and that is done at a European level. Real estate investment by international groups would be largely limited as well.

I flew through "The Shock Doctrine". It's written almost like a thriller but you forget she's referencing real-world financial information. It makes a powerful case when you look at the security boom. And Ganley's mention earlier in this thread is pretty apt...

I read Stiglitz's Globalisation And Its Discontents years ago. It's an excellent and easy(ish) read for an economics book.

He does make a bit of a historical mistake on the history of the creation of the World Bank/IMF tho', but he's hardly alone in that. As pointed out by Monbiot in the "Age of Consent: Manifesto for a New World Order" (and referencing a respected biography of Keynes), Keynes did not support their creation but instead proposed an International Clearing Union (ICU) to prevent debts mounting up. The US as the dominant party had their way of course.
Apart from that it's very enlightening.

Discontents is edited by Ha-Joon Chang. And I think Chang's historical approach is more immediately obvious than Stiglitz's 'cover everything' insider-critique.

Chang is also much more amusing!

Why the World Isn't Flat
https://www.youtube.com/watch?v=T5-ojv5-b3U




Speaking of which I might just propose "Bad Samaritans: Rich Nations, Poor Policies and the Threat to the Developing World"* as a future book for us to talk about?

*
http://www.prospect-magazine.co.uk/article_details.php?id=9653

cactus flower wrote:

I was looking for SeathrunCeitinn's sofa when I found this photograph of New Orleans after Hurricane Katrina.
Katrina is the first example Naomi Klein uses of what she calls "The Shock Doctrine". She writes about Milton Friedman urging the privatisation of schools after the hurricane. The public school system was replaced by privately run/publically funded "Charter Schools" - all the teachers were sacked first and then some of the younger ones reemployed on less money.

Privately run but publicy funded. Hmm sounds like Palast's "NO Child behind left" section of Armed Madhouse.* Where he points out how school 'vouchers' become in effect, discount coupons for those who can already afford the full cost of a private school education.

For instance according to the National Conference of State Legislatures, 76% of the money handed out for Arizona’s voucher program has gone to children already in private schools.

A poor kid would only get a few weeks education using such a "discount coupon" while his or her parents' taxes are regressively paying a subsidy for the education of wealthier parents' kids.



* ( scroll to> The Great School Voucher Hoax )
http://www4.gregpalast.com/no-childs-behind-left/

I think Klein (quoting Friedman or rumsfeld?) described it as a hollowing out of the state.

She is no economist and says that she relies on a number of economists, including esp. Stiglitz (and her brother, or did I dream that? ). A very good read though. Traces themes rather than setting out a new theoretical framework.

Will post more tomorrow

thanks for links above Pax, looks interesting, will read tomorrow

There is a short film, also entitled The Shock Doctrine, on Klein's website. Directed by Alfonso Cuaron and narrated by Klein, it has some disturbing images. Gives an overview of what's in the book.

http://www.naomiklein.org/shock-doctrine/short-film

If you can post a clearer link to that, Cactus, pls feel free to amend accordingly.