Archive for the ‘Globalization’ Category

The Monfort Plan

28 October, 2009

The Monfort Plan is a modest proposal that describes the new architecture of capitalism. Jonathan Swift wrote his Modest Proposal in 1729, in which he identified three classes of readers: the superficial, the ignorant and the learned. According to Swift “the superficial reader will be strangely provoked to laughter”, whereas “the ignorant reader will find himself disposed to stare”. For years the diagnose of extreme poverty targeted Swift’s truly learned readers and forgot the superficial and the ignorant.

In a recent article on This is Africa, Columbia Professor Jeffrey Sachs wondered if the world leaders would be “brave enough to invent new programmes and institutions that have the legitimacy and commitment to pull the world through this crisis to a fairer and more sustainable future”. A new architecture is the only path to the world of 2050, a world of cornucopia (food abundance) and eutopia (universal welfare). A new architecture is the only approach to building up new programs and institutions that have Sachs’ legitimacy.

Extreme poverty continues to perpetuate because we have failed to eliminate its causes. Extreme poverty is originated and perpetuated because developed countries have failed to reform in six areas that represent the Axis of Feeble, an Axis that has to be defeated in an intellectual war with Weapons of Mass Persuasion. The six components of the Axis of Feeble are agriculture, trade and labor rights, small arms trade, extractive industries, financial architecture and brain drain.

Past wars defeated the Axis Powers and current wars aim at defeating the Axis of Evil. Past and current wars had to identify and defy the enemy and the opposition forces to be defeated. The Axis of Feeble is maintained and perpetuated by the Pirates of Heartless Capitalism and the Bretton Woods Elites, who will use their propaganda tools to oppose a paradigm shift.

In the first part of his autobiography, the American diplomat George F. Kennan pointed out that “We of this generation did not create the civilization of which we are part and, only too obviously, it is not we who are destined to complete it. We are not the owners of the planet we inhabit; we are only its custodians”. The Axis of Feeble will not be defeated unless all custodians become passengers of a Journey of no return, and not simple spectators.

My forthcoming book may be appealing to the truly learned readers. We must all become passengers of the Journey of our lifetime. The Monfort Plan is designed having in mind every audience. It proposes new content with the ability to entertain every audience. It is through entertainment that the average citizen in Europe and North America can be educated in issues that are vital for the future of our planet and the humankind. It is through education that the average citizen can raise his or her level of awareness. Only if we, as a society, raise our level of awareness, will we welcome reform in the six components of the Axis of Feeble.

For decades we lived with an architecture that played its role, an architecture that has become a caricature of what it once was, a vintage architecture not designed for the challenges of the twenty-first century.

We live the best world we have ever inhabited. We are approaching our tipping point as a global society. We must become men and women of stature. I identified the One Hundred Expert Dreamers that will become the best team of experts that has ever been put together to serve the global public interest. With their combined wisdom and intellectual strength the Expert Dreamers will defeat the Axis of Feeble and the Pirates of Heartless Capitalism.

We are not the dwellers of the blue planet, only its custodians. We must recuperate the courage of the visionaries of the 1940s and 1950s who created an architecture that changed the world for good. The Expert Dreamers are the disciples of Marshall and Truman, of Clayton and Kennan, of Monnet and Schuman. The orthodox thinkers and the current political leaders condemned the imagination and creativity in the policy-making process to perpetuate in the cage of the orthodox. We must start living a life in full color. We must again love and dream. The Sleeping Beauty must wake up and embrace the forgotten continent. The American friends will fall in love, one more time, with the Sleeping Beauty.

It is time. It is our time. Let’s move ahead.

Jaime Pozuelo-Monfort is Author of The Monfort Plan (Wiley Finance, April 2010). More information can be found at http://themonfortplan.com

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Around the World with Joseph Stiglitz

1 December, 2008

BWPI Chair and Nobel Laureate Joe Stiglitz has a new documentary just out. ‘Around the World with Joseph Stiglitz’ is a hard-hitting look at globalization. Joe takes two journeys. His own journey began in Gary, Indiana. The documentary returns to his hometown to see what shaped his thinking. It then heads across the world, taking in Botswana, Ecuador, India and China. It weaves together the social and economic effects of globalization, recommending ways to manage it for the good of all.

If you are in New York you can catch it at the Lincoln center this Wednesday (3 December).

In the meantime, check out Joe’s interview with Alex Jones on YouTube on his book The Three Trillion Dollar War: the True Cost of the Iraq War, with Linda Bilmes. And Joe on the sub prime crisis on CNBC.

Leading the Global Debate from the South

12 November, 2008

The debate on global policy, including such critical issues as climate change and globalization, is still dominated by the North. Northern universities and media are well resourced. But the majority of humanity lives in the South. Recent years have seen some exciting ideas emerging from southern scholars, research institutes, and think tanks. The media in the South is exceptionally vigorous – I was impressed by the quality of debate in Uganda’s newspapers during a visit to Kampala last month.

The South Centre has played a major role in expanding the debate – especially South-to-South – and has now initiated INSouth.org. INSouth (the Intellectual Network for the South) was launched by Benjamin Mkapa, President of Tanzania (1995-2005) recently. Tanzania under the late Julius Nyerere was a hotbed of ideas about development. Walter Rodney wrote his influential How Europe Underdeveloped Africa in Dar. Not all of the ideas worked out – for Tanzania was a young country and it was very much learning by doing – but there was a time in the 1970s when Dar es Salaam was the place to be.

We are now at a defining moment in the global economy. Many of the seemingly well-established principles of how to run the global economy lie in tatters. The international financial crisis is a shock that emanates from the North with a profound impact on the South – the collapse back in global commodity prices from their highs earlier in the year is leading many governments to revisit their assumptions about economic growth for 2008-2009. The IMF is warning of a synchronised global slowdown, with potentially deep recession in the economies most severely hit by the financial meltdown. Iceland not to mention Eastern Europe look badly exposed. China has initiated an expansionary programme to offset the impact of its rapidly slowing export growth.

Appropriately INSouth has initiated a debate on revamping the global financial architecture. Will we see a new system for regulating global capital markets to ensure that future blowups don’t hit world economic prosperity? Or will it just be another patch-up that ignores the interests of the poorer and weaker economies?

Coping with Global Inflation

29 September, 2008

Our readers don’t need reminding that Inflation has been on the rise globally (although the present financial crisis could knock that on the head). The poor are being hit hard by rising food prices – the price of rice in Asia has doubled, causing real distress in countries without effective social protection. Africa is scrambling to respond.

Macro-economists in central banks and finance ministries are worried people. Today looks alarmingly like 1979-81: inflation pushed up by the second oil price spike and recession looming. That combination of inflation and recession – stagflation – is the worst scenario for policymakers. Inflation requires demand restraint, recession requires demand expansion – and policy-makers have a difficult time in choosing which direction to go down. The early 1980s are a warning of what can happen. Real interest rates (the interest rate minus the inflation rate) turned from negative to positive – pushing up the real cost of borrowing for firms already hit by weakening sales. Eventually the oil price collapsed, bringing inflation down with it, but also distress for over-borrowed oil producers such as Mexico and Nigeria. That then set the stage for the debt crisis that took a full decade to work itself out, with massive social fall out, and poverty spiking higher (the 1980s were Latin America’s “lost development decade”).

So what should today’s policy-makers do? The Centre for Development Policy and Research at SOAS has a new Development Viewpoint out on global inflation. The author, Terry McKinley, argues that they must be clear on the causes, otherwise the response could make the situation worse. Since the sources of recent oil and food inflation are ‘globalised’, developing countries cannot hope to maintain low domestic inflation by the standard practice of raising domestic interest rates, argues Terry. Such a misguided “monetarist response” would only heighten the risks of recession, he concludes. Go here for the paper, a timely contribution to the present debate — and a warning from the past.

Universal Right to Pleasure

21 September, 2008

We enjoy our grub here in Manchester. And so does Slow Food Nation which came together over Labor Day in San Francisco to celebrate an inclusive food movement to create a better American food system.

The slow food movement originated in Italy over 30 years ago, founded by Carlo Petrini. He was annoyed by a badly cooked pasta dish at a political meeting and wrote to the organizers to tell them so — who responsed that the comrades didn’t bother with such trivialities. Petrini retorted that the working class had every right to good food. And so the ‘universal right to pleasure was born’.

So, food quality shouldn’t be just a middle-class foodie concern – the way it is often presented. The link between poverty and bad nutrition remains an urgent issue in the UK (check out the Food Access Network). And then there are the 400 million-plus people in chronic poverty whose food – when they can get it – is often appalling: anyone for mud-cakes? (see this story from Haiti).

The BBC food programme covered the San Francisco event and includes a speech by Carlo Petrini himself, as well Raj Patel of Stuffed & Starved (one of our favourite books this year).

The Slow Food Story: Politics and Pleasure by Geoff Andrews traces the origins of the movement. In the UK it is still early days. The industrial revolution, rapid urbanization, and the second world war did much to destroy English food culture, and it has only really started to recover over the last 20 years.

Kate Colquhoun’s The Story of Britain’s Cooking tells a dismal tale. Ian Jack in the New York Times asks why we developed such a poor cuisine despite so many excellent ingredients (‘the roast beef of old England’) and finds it in “… the triad of the Industrial Revolution, empire and free trade. The first drove people from the fields to the factories; the colonies of the second grew what Sidney Mintz has called the tropical ‘drug foods’ (including sugar and tea); the cheap imports encouraged by the third drove out the homegrown”. By 1800 according to Colquhoun:

“… the poor in Britain were now subsisting not on a diet that had remained broadly unchanged for centuries of ale, grain and vegetables and a modicum of fatty meat, but on a vastly less nutritious mix of often adulterated white bread, cheese, tea and sugar”.

The slow food movement in the UK has so far focused largely on quality. It is only now taking on the ethical and political issues that Petrini championed, according to the BBC food programme. “What’s good, clean, and fair” are the watchwords, and Petrini urges us to be curious about food: because it tells us much about the culture of the people who produce and eat it.

To that end, to maintain the ‘Ark of Taste’, the movement has supplied vacumn packing machines to India to market more widely a rare variety of basmati rice. Globalization has made us aware of other food cultures but it has also endangered local food cultures as well. And as Petrini emphasizes, when a food culture is threatened, a whole life style is endangered.

Far from Correcting the Distortions of Unbridled Capitalism, the Political Process Makes Them Worse

29 August, 2008

So says Sam Brittan in today’s FT, reviewing Robert Reich’s Supercapitalism: the Battle for Democracy in an Age of Big Business. You’ll remember Reich as Bill Clinton’s secretary for labor.

In a nutshell, Reich argues that the golden age of capitalism — the rebuilding of the post-war years up to the 1970s — delivered enough prosperity to win the allegiance of most ordinary folk. That got replaced by ‘supercapitalism’ which has delivered our present mess.

For Brittan the novelty in Reich’s book lies in his rejection of a central role for corporate social responsibility. Instead, Reich gets into the intellectual bed of Milton Friedman — who famously argued that it’s the job of businessmen to make lots of dosh, and that’s their sole responsibility. For Reich we need to strengthen states to ensure that dosh-making is compatible with society’s goals — as set out by democracy.

Brittan likes this (unexpected) approach. But he’s less optimistic about democracy pushing business in the right direction. US energy policy is Brittan’s example (presumably excessive subsidies for biofuels driving up world food prices). And Brittan cautions that this might also let business off its (moral) hook:

“… there is a danger that the Friedman-Reich position could inadvertently give sustenance to the “I was only doing my job” defence for evil actions”.

We continue to think this one over while awaiting our copy of Reich’s book. In the meantime, you can read his excellent blog here.

Creative Capitalism?

8 August, 2008

If you feel that capitalism could create something better, or that it’s just fine as it is, then check out the Creative Capitalism discussion here. Contributors include: Nancy Birdsall, Esther Duflo, Bill Easterly, Michael Kremer, and Martin Wolf among many others.

The site expands on Bill Gates’ talk about creative capitalism in his 2007 Harvard commencement speech, and at the last World Economic Forum. In Time, he says:

“Capitalism has improved the lives of billions of people — something that’s easy to forget at a time of great economic uncertainty. But it has left out billions more. They have great needs, but they can’t express those needs in ways that matter to markets. So they are stuck in poverty, suffer from preventable diseases and never have a chance to make the most of their lives”

Many of those are the chronically poor. Read the 2008-2009 Chronic Poverty Report here. We recommend increased social protection: put money into the hands of the poor through measures like contingent cash transfers. Then they have more resources with which to shape the markets and societies in which they make their livelihoods and their lives. But watch out for the counter-attack by some of the world’s wealthy who don’t want the poor to challenge their political power: not everyone is as generous as Bill Gates.

Tax Food Speculators to Subsidize the Poor

8 August, 2008

Tax food speculators, and use the money to subsidize the poor. That’s the conclusion of ‘Investors Punish the Poor’ in today’s The Australian. Raghbendra Jha of the Australian National University argues that the huge spike in rice prices over the last year is mostly due to speculation.

A steady upward trend in food prices is driven by the switch of cropland to biofuels and other structural factors (including the rising demand associated with growth in China, India and the other emerging economies). But the huge jump in prices from late 2007 accompanied the credit crunch in financial markets: hedge funds and others shifted from stocks and bonds into commodoties — which have relatively fixed supplies in the short term, and so prices take most of the (upward) adjustment).

The price spike hits the poor hard, and threatens the MDGs. Raghav concludes:

“This eruption of food prices represents the most regressive form of taxation…. This also represents a significant shift in the global distribution of income and calls for the taxation of speculative profits and the subsidisation of the poorest consumers”.

We agree. So how best to organize the tax? And how best to get the poor the help they need? Suggestions please.

Reasons to be Cheerful, Part 2

27 February, 2008

I started the year with Reasons to be Cheerful, Part 1. And promised Part 2. The winter gloom then stalled me (the nadir was reached on January 24). But I rallied, and here is Part 2:

1. Plumpy’nut is gaining ground. Famine and cheerfulness certainly don’t go together. But we should celebrate Plumpy’nut — a peanut paste containing vitamins, minerals and powdered milk. It did wonderful work during the 2005 Niger famine (go to MSF here). Created by André Briend, a French scientist, Plumpy’nut can be made locally, and eaten straight from individual foil packets, allowing most malnourished children to be treated at home, not in the (often unavailable) hospital.

2. The Davos Bubble finally burst. After years of pushing hot air above a small town in the Swiss mountains, folk now realize that nothing comes of these mega-events — except a great deal of posturing. Did Davos generate anything useful? We doubt it. But let us know if we’re wrong (in the meantime for some Davos substance read Simon Maxwell’s posts on the ODI blog).

3. The Mail & Guardian goes from strength to strength. But in a Monocle interview proprietor Trevor Ncube worries about press freedom in South Africa: “The test often comes during bad times. Bad times come when politicians feel under threat. With 20 million South Africans living below the poverty line there could be a revolution. But one gets comfort from our constitution and the vibrant, civil society”

4. Malaria vaccines now look feasible. Trials of a malaria vaccine in Mozambique cut the infection rate of infants under five months by 65%. And providing free bed nets (a passion of Jeff Sachs) really does work according to a new WHO study. Malaria can be beaten back.

5. The Second Chronic Poverty Report is nearly complete, and will be out by mid-year. In the meantime, you can read the first one here.

So on to Part 3 soon (maybe by the Spring). Meanwhile, you can check out the Ian Dury version here.

Can Donors Help Cook Up Growth?

15 February, 2008

Making an economy grow should be easy. Just invest in technology (to raise labour productivity — a new seed variety for instance). Add lots of education (especially high quality primary schooling). And then a dash of institutions (protecting the property rights of investors). Oh, and don’t forget the infrastructure. Voilà! 10 per cent growth year-on-year, and before you know it everyone will be rich (and moaning about how unhappy they are).

So, all you need is a growth cookbook (maybe this is Nigella’s next opus?). You could pick up a US one (a bit tired around the edges, but well-tested homely fare). Or an Asian takeaway (select from Malaysian, Korean, Chinese, or Vietnamese). Or how about Scandinavia’s rather bland — but very successful — growth Smörgåsbord? (Finnish being our favourite).

What you will not find is much from Africa. Indeed the shelf is largely bare, Botswana and Mauritius excepted. And it is Africa that aid donors are mostly concerned about (although the Pacific islands and Haiti are huge challenges too). True, Africa is now growing, pushed ahead by rising commodity prices. But Africa has been here before (the 1970s, when it largely squandered the fruits of the last commodity boom — resulting in economic turmoil, spectacularly so in Nigeria). Nobody is yet writing up Africa as a growth success-story — because recent growth seems so fragile.

And a lot of that growth doesn’t reach the people who need it: GDP is rising fast in Angola and Equatorial Guinea but the average person doesn’t see much benefit, let alone the poor (on Angola see my book here). Nigeria looked more hopeful last year, especially after the debt deal. But never underestimate the ability of Nigeria’s politicians to clear the pot before anyone else gets a turn (see recent back-sliding on corruption).

So what’s an aid donor to do? This is now becoming urgent — we hear that donors are pushing growth up their priority list. Seems sensible: countries will remain aid-dependent until they get their GDP up. And growth can reduce poverty, especially when new jobs and tax revenue (for pro-poor public spending) are the result (however, the chronically poor can miss out, and some types of growth harm poor people — see our recent post).

But which growth cook-book will donors turn to? And will the recipes be palatable to aid-recipients? We’ll return to this theme in a future post. Meanwhile, over to Nigella.