-----Original Message----- From: John Hermann <[EMAIL PROTECTED]> To: John Hermann <[EMAIL PROTECTED]> Date: Monday, 6 September 1999 6:47 PM Subject: Review of PANIC RULES! by Robin Hahnel >Economic Reform Australia >ERA EMAIL NETWORK > >Date: Sat, 04 Sep 1999 >From: Chris Watkins <[EMAIL PROTECTED]> > >Here is today's ZNet Commentary Delivery from Jeremy Brecher. To pass this >comment along to friends, relatives, etc. please note that the Commentaries >are a premium sent to Sustainer Donors of Z/ZNet and that to learn more >about the project folks can consult ZNet (http://www.zmag.org) and >specifically the Sustainer Pages >http://www.zmag.org/Commentaries/donorform.htm) which include lists of >writers, writer biographies, and other features of the Z Sustainer Program. >------------------------------------------ > >Review of PANIC RULES! by Robin Hahnel >By Jeremy Brecher > >A funny thing happened on the way to the New Millennium: the Old Millennium >crashed. According to economist Paul Krugman, "Never in the course of >economic events -- not even in the early years of the Depression -- has so >large a part of the world economy experienced so devastating a fall from >grace." > >If you leaf back through the writings of mainstream economists and media >pundits over the past decade, you will discover that such a global economic >crisis couldn't happen; that it wasn't happening; that it wasn't as bad as >people said; that it probably was a good thing in the long run; and that, >anyway, it's over. If you want to escape this miasma of denial, read Robin >Hahnel's Panic Rules! Hahnel, himself an economist, challenges the economic >dogma that unregulated markets, free trade, and globalization necessarily >improve global economic efficiency, let alone that they must lead to >benefits for all. Since the market doesn't charge firms for the >environmental and social damage they do, unregulated markets give them an >incentive to dump their wastes as cheaply as they can and to drive small >farmers off the land even if they then have to live in squalor in >already-bursting cities. Conversely, the market doesn't give individual >firms an incentive to invest in education or healthcare, even if these are >far more "efficient" means of creating well-being for society as a whole >than producing sports utility vehicles. > >When corporations and private wealth can move without regulation in the >global free market, workforces, communities, and countries are forced to >compete to attract footloose capital. The result has been called a "race to >the bottom," in which environmental standards, social protections, and >incomes are drawn down toward those of the poorest and most desperate. >Hahnel shows that this was occurring -- even in globalization's boom phase. > >Something else was happening, too -- the accelerating growth of a global >financial capital with little or no relation to the production of goods and >services. New borrowing worldwide increased twenty fold from 1983 to 1998 >while production only tripled. Daily trading in currency markets grew from >$0.2 trillion in 1986 to $1.5 trillion in 1998. Less than two percent of >that $1.5 trillion is used to finance international trade or investment in >plant and capacity; an incredible 98 percent is for purely speculative >activity. > >Officials from the U.S. and the IMF (International Monetary Fund) roamed >the world, encouraging countries to "liberalize" their economies -- open >them up to unrestricted flows of goods, services, and capital. Speculative >capital poured into so-called emerging markets: Investment by mutual funds >in emerging markets, for example, increased from $1 billion in 1991 to $32 >billion in 1996. Trouble was, the money could pour out even faster than it >poured in. Hahnel traces how an apparently local crisis in Thailand rapidly >spread around the globe. In 1998, Thai GDP fell by 8 percent; in Indonesia >it shrunk by 14%; there were roughly comparable declines in South Korea, >Hong Kong, Malaysia, and Russia. In Indonesia, 20 million people lost their >jobs in a year as the unemployment rate rose from less than 5 percent to >more than 13 percent, and the number living in absolute poverty quadrupled >to 100 million. Faced with what threatened to become a global financial >meltdown, the IMF rode in to the "rescue." Oh, woe to those visited by such >rescuers! In exchange for further loans, it imposed ruinous >"conditionalities" under which countries had to raise interest rates, >privatize public investments, open their economies to unlimited foreign >ownership, cut social welfare, and rewrite their labor laws to eliminate >workers' rights. The goal was to turn each stricken country into what >Hahnel calls a "debt-repayment machine." Hahnel quotes, of all people, >conservative economist Milton Friedman saying that "IMF bailouts are >hurting the countries they are lending to, and benefiting the foreigners >who lend to them. . . . This is a different kind of foreign aid. It only >goes through countries like Thailand to Bankers Trust." One example of the >suffering caused by IMF "conditionalities": Oxfam International estimates >that, in the Philippines alone, IMF-imposed cuts in preventative health >care programs will result in 29,000 deaths from malaria and an increase of >90,000 in the number of untreated tuberculosis cases. Tribunals >investigating "crimes against humanity": Take note! > >Business page headlines proclaim that stocks have rebounded, currencies >have recovered, and the crisis is therefore over. True, some stock markets >and some currencies have rebounded, but 40 percent of the world remains in >recession and poverty continues to grow. And since the tidal waves of >speculative capital sloshing around the world remain undiminished, a global >meltdown remains a catastrophe just waiting to happen. > >Meanwhile, global corporations based in the U.S. and Europe are gobbling up >the economic resources of countries that have spent the past century >struggling to escape from colonialism. A Washington Post article in late >1998 describes how "Hordes of foreign investors are flowing back into >Thailand, boosting room rates at top Bangkok hotels despite the recession. >Foreign investors have gone on a $6.7 billion shopping spree this year, >snapping up bargain-basement steel mills, securities companies, supermarket >chains and other assets." And IMF "conditionalities" require that countries >eliminate laws that might prevent this neocolonial asset grab. Perhaps this >is one of the reasons that the world's 200 richest people have doubled >their wealth in the past four years. > >The economic mainstream is divided on what to do to prevent future >meltdowns. What Hahnel dubs the "A Team" -- AKA free-traders, globalizers, >or the Washington Consensus -- calls for even more liberalization and even >less "interference" with the workings of the market. An emerging "B Team," >in contrast, is modernizing the ideas economist John Maynard Keynes >developed in the Great Depression regarding the need for global financial >regulation and coordinated fiscal and monetary policies worldwide in order >to ward off economic meltdowns in the future. > >The A Team's approach, according to Hahnel, is just what got us into the >global mess in the first place. Some of the B Team's proposals could help >stabilize the system, but without additional, more radical measures, they >will also perpetuate the global economy's drive toward increasing >inequality and environmental degradation. They only deserve support if they >are combined with other measures which would actually reduce inequalities >and environmental destruction -- such as major debt relief for impoverished >countries and price supports for third world exports. > >When Hahnel presents his own alternatives, it is a shock to hear him, >sounding like the most orthodox of economists, calling for more "global >efficiency." But he makes clear that "efficiency" should not be equated >with "profitability" -- because private profit leaves out all those >"external" costs and benefits that accrue to society as a whole rather than >to wealth holders. And he makes clear that environmental destruction is the >most blatant kind of inefficiency. Instead, true efficiency requires that >non-market institutions compensate for the "inefficient" biases of the >market in order to "get prices right." He also points out that, in today's >global economy, equity requires international cooperation to set non-market >interest rates and terms of trade to distribute more of the benefits of >globalization to the poorer economies. And Hahnel makes clear that >"efficiency" should not be pursued at the expense of other values like >equity, democracy, diversity, solidarity, or environmental sustainability. > >How are these goals to be achieved? Hahnel describes what has been called >the "Lilliput Strategy," in which grassroots organizations, unions, and >independent institutes and coalitions cooperate across national borders to >contest the negative aspects of globalization. He points out that this >approach has already won some important victories -- such as the global >grassroots campaign that recently blocked negotiation of the MAI >(Multilateral Agreement on Investment), scotching what has been called a >Magna Carta for global corporations. While the immediate objective of the >Lilliput Strategy, Hahnel argues, should be to stop corporate-sponsored >globalization in its tracks, it can and should also start the process of >building a system of equitable international cooperation. Only in such a >system can globalization provide the benefits that today it promises but in >reality denies. > >After describing the economic "A Team" and the "B Team", Hahnel states that >"a C Team with a very different agenda and policies is needed." Panic >Rules! provides the "C Team's" play book. > >----ooOoo---- > ---------------------------------------------------------------- This is the Neither public email list, open for the public and general discussion. 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