Via The Real News Network; Part 1 of 2.
RICHARD KOZUL-WRIGHT: We know that debt fueled booms tend to end badly. We don’t know when they end, and we don’t exactly know how they end. But we do know that they’re not sustainable. And that, I think, should cause pause for very serious thought in terms of the stability and sustainability of the current global growth path. For us behind that is a series of policy measures that have come to dominate the post crisis period which have not produced inclusive and sustainable growth. That began with a major effort to save the banks after 2008, 2009. One can justify that, although there are issues about exactly how that was done. But that was far too quickly followed by a push for austerity.
We talked about that in last year’s Trade and Development Report, the toleration, as I said, of shadow banking, the encouragement of mega-mergers which have hit, again, historic highs in recent months, and the endless beating of the free trade drum has provided what we see as the economic beat for- and I will use the term from the Chicago economist Luigi Zingales, the “Medici vicious circle” in which growing economic power and rent-seeking behavior has reinforced and captured political power, reinforcing economic power.
By Gino Brunswijck
Cross-posted at Eurodad.
Against a backdrop of public protests, on 25 October the Argentinian government approved the 2019 budget including US$10 billion worth of cuts in essential areas such as education and public works. The next day, the Executive Board of the International Monetary Fund (IMF) completed the first review of a loan agreement paving the way for the disbursement of a tranche of US$5.7 billion to the debt-stricken country. At the same time, the Board gave the green light to increase Argentina’s bailout loan to US$56.3 billion. However, this loan comes with a significant price tag.
The higher the bailout, the greater the austerity
The IMF review calls for stronger and faster fiscal consolidation in Argentina. The budgetary targets for the short and medium term were tightened compared to the initial agreement. Initially, the IMF allowed Argentina to maintain a 1.3 per cent deficit for 2019. Following the first review, the Fund is now demanding a zero deficit, which must be turned into a surplus above one per cent from 2020.
A range of budget cuts and increased taxation will seal the deal, while the insurance policy is provided by new structural conditionalities that promise to lock in these fiscal targets for the foreseeable future. For instance, the Argentinian government was required to present a budget in line with the zero deficit target to Congress to secure the next tranche of the IMF bailout loan. Unsurprisingly, one new conditionality gave Congress a November deadline for approving this budget – which it did last Thursday, representing a clear restriction on the parliament’s budgetary rights.
To satisfy the terms of the agreement, Argentina also has to pursue a restrictive monetary policy, complemented by keeping interest rates above 60 per cent as long as inflation is high. The bottom line is that Argentina will get more funding in exchange for more belt-tightening measures.
Timothy A. Wise
On July 26, 2018, farmers in Xai-Xai, Mozambique, achieved a milestone. They met to formalize their new farmers’ association, elect leaders, and prepare a petition to the local government for land. The association, christened Tsakane, which means “happy” in the local Changana language, was the culmination of six years of resistance to a Chinese land grab that had sparked protest and outrage. The association now has a request pending for its own land.
With the Chinese rice plantation floundering, the Tsakane farmers offer a vivid demonstration that perhaps the best way to grow more food is to give poor food producers more land.
The rise and fall of a land grab
I first visited the vast rice fields of Xai-Xai, three hours up the coast from the capital city of Maputo, in 2017. Since 2008, Mozambique had been one of the leading targets of large-scale agricultural investment projects, widely denounced as land grabs by critics. Community resistance had halted most such projects in Mozambique, including ProSAVANA, the controversial Brazil-Japan initiative, which was intended to be the largest land grab in Africa.
By Timothy A. Wise
This article was published in September at Common Dreams, before Canada’s negotiators signed onto the “new NAFTA” (officially, the United States-Mexico-Canada Agreement, or USMCA). The agreement still needs to be ratified by the legislatures of each country, and opposition by Mexico’s farm movement could induce the new president, López Obrador, to oppose it. –Eds.
The smooth ride to a new North American Free Trade Agreement (NAFTA) may have just hit the bumpy roads of rural Mexico. On Tuesday, leaders of Mexico’s farm movement strongly condemned the new agreement announced between the United States and Mexico, calling on the new president they supported in recent elections to get involved and slow the race to the new agreement.
“We need to push our new president to stop the signing of this agreement,” said farm leader Gerónimo Jacobo in an interview. “This is life or death for us. With NAFTA it will be a slow death. Our national sovereignty is at stake here!”
On August 27, U.S. President Donald Trump announced he had reached a deal with the Mexican government on a new version of the NAFTA. In a garbled televised phone call, the president congratulated lame duck Mexican President Enrique Peña Nieto, claiming he had fulfilled his campaign promise to “replace NAFTA” and christening the new deal “The U.S.-Mexico Free Trade Agreement.” For his part, Peña Nieto, whose party was trounced in July 1 elections, claimed the agreement as his legacy.
Via the Real News Network; Pt. 2 of a series, “US Policy Toward Global Internet Governance Is Misguided Says Richard Hill.”
LYNN FRIES: It’s The Real News. I’m Lynn Fries. We are continuing our discussion with Internet governance expert Richard Hill. Richard Hill is president of the Association for Proper Internet Governance and a former official at the International Telecommunication Union. Welcome back, Richard.
RICHARD HILL: Thank you.
LYNN FRIES: Let’s pick up where we left off in Part 1. Your concluding point was that there should be no discussion of free flow of data at the World Trade Organization until certain preconditions are met; notably, global agreement on antitrust regulation and on data privacy protections. Talk now about the background to this. Talk more about this U.S.-led push.
Via the Real News Network; Pt. 1 of a series, “US Policy Toward Global Internet Governance Is Misguided Says Richard Hill.”
LYNN FRIES: It’s The Real News. I’m Lynn Fries.
The U.S. and the private companies it backs have far more say regarding the global internet than anybody else, and they use this power for political ends, mass surveillance; and for economic ends, the very high profits reaped by companies such as Google. The U.S. and its allies have systematically blocked discussion on Internet governance as it pertains to public policy at any United Nations forum that might not conform to U.S. expectations. The U.S. largely denies that certain internet services should be public services, or public goods, and rejects any intergovernmental role in supervising, much less regulating, the Internet.
These are all points related to internet governance raised by Richard Hill. Here to talk to us about all this is Richard Hill. Richard Hill is president of the Association for Proper Internet Governance, and a former senior official at ITU, the International Telecommunications Union. Dr. Hill holds a Ph.D. in statistics from Harvard, and is author of The New International Telecommunication Regulations and the Internet. Welcome, Richard.
RICHARD HILL: Thank you.
LYNN FRIES: What do you make of this call by Microsoft for governmental regulation of face recognition software?
By William G. Moseley (guest post)
While it might not seem like it now, President Donald Trump is a gift to free market-oriented economists and policymakers. His clumsy approach to protectionism has ignited a trade war that inevitably will harm the U.S. economy. When the pendulum inexorably swings the other way after the Trump fiasco, free trade ideology will return with a vengeance. This is a potential tragedy for left-leaning policy analysts who have long been concerned about the excesses of neoliberalism and argued for a more measured use of tariffs to foster local economic development. As such, it critical that we distinguish between Trump’s right-wing nationalist embrace of tariffs and the more nuanced use of this tool to support infant industries.
As a development geographer and an Africanist scholar, I have long been critical of unfettered free trade because of its deleterious economic impacts on African countries. At the behest of the World Bank and the International Monetary Fund, the majority of African countries were essentially forced, because of conditional loan and debt-refinancing requirements, to undergo free market–oriented economic reforms from the early 1980s through the mid-2000s. One by one, these countries reduced tariff barriers, eliminated subsidies, cut back on government expenditures, and emphasized commodity exports. With the possible exception of Ghana, the economy of nearly every African country undertaking these reforms was devastated.
This is not to say that there was no economic growth for African countries during this period, as there certainly was during cyclical commodity booms. The problem is that the economies of these countries were essentially underdeveloped as they returned to a colonial model focused on producing a limited number of commodities such as oil, minerals, cotton, cacao, palm oil, and timber. Economic reforms destroyed the value-added activities that helped diversify these economies and provided higher wage employment, such as the textile, milling, and food processing industries. Worse yet, millions of African farmers and workers are now increasingly ensnared in a global commodity boom-and-bust cycle. Beyond that cycle, they are experiencing an even more worrying long-term trend of declining prices for commodities.
Mainstream economics clearly failed humanity in 2007, when, as the world sat on the brink of the biggest economic crisis since the Great Depression, mainstream economic models were predicting that 2008 was going to be a great year.My favourite such prediction was the OECD’s bi-annual Economic Outlook, which proclaimed in June of 2007 that “the current economic situation is in many ways better than what we have experienced in years“.
ACHIEVING FURTHER REBALANCING
In its Economic Outlook last Augutm, the OECD took the view that the US slowdown was not heralding a period of worldwide economic weakness, unlike, for instance, in 2001. Rather, a “smooth” rebalancing was to be expected, with Europe taking over the baton from the United States in driving OECD growth.
Recent developments have broadly confirmed this diagnosis. Indeed, the current economic situation is in many ways better than what we have experienced in years. Against that background, we have stuck to the rebalancing scenario. Our central forecast remains indeed quite benign: a soft landing in the United States, a strong and sustained recovery in Europe, a solid trajectory in Japan and buoyant activity in China and India. In line with recent trends, sustained growth in OECD economies would be underpinned by strong job creation and falling unemployment.
That was two months before the crisis began.