Re: Ashish' post dated November 21 ---One version of free trade

[Ashish Hanwadikar <ashish_hanwadikar@yahoo.com>]

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IPI_Marker

The Case against Capital Controls
Financial Flows, Crises, and the Flip Side of the
Free-Trade Argument
http://www.cato.org/pubs/pas/pa403.pdf

I hope you all read this paper.
Regards,
Ashish
--- venugopal <gvvs@nird.ap.nic.in> wrote:
> ---------------------------------------------------------------------
> Please help make the Manifesto better, or accept it, and propagate
> it!
> ---------------------------------------------------------------------
> IPI_Marker
> Hello Ashish,
> Are you suggesting opening up imports while the developed countries
> continue
> giving huge agricultural subsidies to their farmers? What about the
> TRIPS?
> How would these things possibly promote free trade? Which are the
> stupid
>
> regulations? Can you identify some of them? Perhaps they can be dealt
> with
> case by case. In this post, I want to quote from an article about
> Stiglitz.
> Of course, all this may or may not be applicable to India's
> situation.
> Nevertheless, it gives some idea of the picture:
>
> Nobel Prize winning economist Stiglitz, who was earlier Chief
> Economist
> of
> the World Bank is reported to have admitted that before prescribing
> country-specific strategy, the World bank team conducted thorough
> investigations. These investigations " consist of close inspection of
> a
> nation's 5-star hotels. It concludes with the Bank staff meeting some
> begging, busted finance minister who is handed a 'restructuring
> agreement'
> pre-drafted for his 'voluntary' signature"
> It is also interesting that each Nation's economy is individually
> analysed.
> But the same set of 4 prescriptions are given to everybdoy. 1)
> Privatisation: " Step One is Privatization - which Stiglitz said
> could
> more
> accurately be called, 'Briberization.' Rather than object to the
> sell-offs
> of state industries, he said national leaders - using the World
> Bank's
> demands to silence local critics - happily flogged their electricity
> and
>
> water companies. "You could see their eyes widen" at the prospect of
> 10%
>
> commissions paid to Swiss bank accounts for simply shaving a few
> billion
> off
> the sale price of national assets."
> 2)"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"
> 3."Step Three: Market-Based Pricing, a fancy term for raising prices
> on
> food, water and cooking gas. This leads, predictably, to
> Step-Three-and-a-Half: what Stiglitz calls, 'The IMF riot.' The IMF
> riot
> is
> painfully predictable. When a nation is, "down and out, [the IMF]
> takes
> advantage and squeezes the last pound of blood out of them. They turn
> up
> the
> heat until, finally, the whole cauldron blows up," as when the IMF
> eliminated food and fuel subsidies for the poor in Indonesia in 1998.
> Indonesia exploded into riots, but there are other examples - the
> Bolivian
> riots over water prices last year and this February, the riots in
> Ecuador
> over the rise in cooking gas prices imposed by the World Bank. You'd
> almost
> get the impression that the riot is written into the plan. (....and
> by
> riots
> I mean peaceful demonstrations dispersed by bullets, tanks and
> teargas...) "
> 4."Now we arrive at Step Four of what the IMF and World Bank call
> their
> "poverty reduction strategy": Free Trade. This is free trade by the
> rules of
> the World Trade Organization and World Bank, Stiglitz the insider
> likens
>
> free trade WTO-style to the Opium Wars. "That too was about opening
> markets," he said. As in the 19th century, Europeans and Americans
> today
> are
> kicking down the barriers to sales in Asia, Latin American and
> Africa,
> while
> barricading our own markets against Third World agriculture. In the
> Opium
> Wars, the West used military blockades to force open markets for
> their
> unbalanced trade. Today, the World Bank can order a financial
> blockade
> just
> as effective - and sometimes just as deadly.
> Stiglitz is particularly emotional over the WTO's intellectual
> property
> rights treaty (it goes by the acronym TRIPS, more on that in the next
> chapters). It is here, says the economist, that the new global order
> has
>
> "condemned people to death" by imposing impossible tariffs and
> tributes
> to
> pay to pharmaceutical companies for branded medicines. "They don't
> care,"
> said the professor of the corporations and bank loans he worked with,
> "if
> people live or die."
> By the way, don't be confused by the mix in this discussion of the
> IMF,
> World Bank and WTO. They are interchangeable masks of a single
> governance
> system. They have locked themselves together by what are unpleasantly
> called, "triggers." Taking a World Bank loan for a school 'triggers'
> a
> requirement to accept every 'conditionality' - they average 111 per
> nation -
> laid down by both the World Bank and IMF. In fact, said Stiglitz the
> IMF
>
> requires nations to accept trade policies more punitive than the
> official
> WTO rules."
> The quotes above are from an article by Greg Palast published in the
> 10th
> October, 2001 issue of The Observer, London. Following is the link:
> http://www.zmag.org/noblestiglitz.htm



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