Free Markets Promote Unrest, Not Democracy

[vox]

Published on Friday, August 2, 2002 in the Miami Herald

Free Markets Promote Unrest, Not Democracy
by Eduardo Moncada

A recent U.N. report flies in the face of Washington's mantra that free markets are the only path to economic growth and democracy.

The Human Development Report 2002 warns that many countries that took steps toward democracy following the Cold War are either stalling or ''slipping back to authoritarian rule.'' The application of free-market nostrums in the developing world in fact has aggravated poverty. It has led to declining standards of living and widening income disparities. By the end of the 1990s, 52 countries wound up poorer than at the beginning of the decade, according to the report.

Full Story (http://www.commondreams.org/views02/0802-04.htm)

[Augusto]

You're right free market economics can not be considered "free" if the rules do not apply to all. The US should encourage the building of social and political institutions that will not only uphold the rule of law and the sanctity of property rights, but give the rule of law to all and provide property rights for all. Capitalism works in the US because it is inseperable from these institutions, it needs the same institutions to work in the third world.

[Stormin Norman]

All your point does is prove exactly how dangerous it can be when you place all your responsibilities in the hands of the government. It remains inevitable for these economies to fail. When these systems crush themselves under their own weight the consumer is hurt. He has been dependent on the state for as long as he can remember and has no idea how to generate his own means of subsistence.

Besides, exactly how free do suppose these markets were allowed to operate? Don't you think the instability, caused by the collapse of communism, created an environment where the war lords and organized crime syndicates developed the most effective means of survival. Free markets don't seem to operate in a healthy fashion when fear reigns supreme. When you have to worry about getting your head blown off, and government fails to insure the safety and freedom of its people, it could hardly be expected that anyone honest man would generate a substantial amount of wealth. It would be looted and taken from him by the powerful factions with the power to do so. That is why our system of government works so well with a free market economy. The philosophy that the government is an instrument to serve and protect its citizens, and the power to uphold the laws creates an atmosphere conducive to creating ideas that will promote growth and stability.

[vox]

Both respondants seem to have misunderstood the op ed piece, and SN displayed a huge amount of ingnorance regarding Latin America.

Augusto, however, assumes that property rights weren't protected but there's nothing in the piece that would make one thing that, is there?

This is the common way for right-wingers to respond when the real world just doesn't match their faith-based views. Rather than deal with the facts the UN presents, the right simply says "That's not surprising" and go on with their propaganda, no matter how unrelated it is to the subject at hand. SN even makes the bizarre claim that free market reforms, promoted by the West and by the US in particular as the road to success, make people somehow more dependant on the government. Amazing.

Neither chose to talk about social welfare programs, which the piece specifically calls for, as a solution. In the face of terrible poverty that increased under the Free Market doctrine, the right-wing trots out Bush's old line: Stay the Course.

How can anyone take these folks seriously?

vox

[Stormin Norman]

Are you denying that warlords and drug dealers have enormous amounts of influence in South America, Vox? How will your social programs solve that problem? Shouldn't the governments of those countries worry about creating a lawful society, before hand? Don't you think that if these social programs are introduced, the corrupt politicians will use them as a way to further line their pockets?

[peaccenicked]

''Are you denying that warlords and drug dealers have enormous amounts of influence in South America, Vox?''

I would turn the question round, are you denying that the IMF and World Bank have more influence than the warlords and drug dealers?

[Stormin Norman]

Yes I would say that corrupt regimes and warlords have more of an influence than the IMF and the World Bank. What you communists fail to understand is the mission of the World Bank. It purpose is to help the poor, something I would assume that someone who talks as you do would support. The World Bank provides assistance, with the consent of the effected nations, which fully understand that the assistance that they receive is that of a loan. It is not a forced imposition, since these nations have the ability to decline the assistance offered. Of course this is not good enough for you communists. You demand that it be given to the developing nations free of charge. Now that would be ridiculous.

Largely, I like what the World Bank has done for developing nations. The fact that is not a direct handout to the poor is a good indication for its measure of success.. Its the whole teach a man to fish idea. If you teach him how to develop technology and resources, then you should expect that one day that nation will be capable of paying back the initial amount, plus the interest on the loan.

If you fail to believe me the following explanation of the World Bank comes directly from their website. Are you telling me that you don't support helping the poor? I thought that was the basis for your ideology. Perhaps its the killing of people that you're really after.

Source:www.worldbank.org

Founded in 1944, the World Bank Group is one of the world's largest sources of development assistance. The Bank, which provided US$17.3 billion in loans to its client countries in fiscal year 2001, is now working in more than 100 developing economies, bringing a mix of finance and ideas to improve living standards and eliminate the worst forms of poverty. For each of its clients, the Bank works with government agencies, nongovernmental organizations, and the private sector to formulate assistance strategies. Its country offices worldwide deliver the Bank's program in countries, liaise with government and civil society, and work to increase understanding of development issues.

The World Bank is owned by more than 180 member countries whose views and interests are represented by a Board of Governors and a Washington-based Board of Directors. Member countries are shareholders who carry ultimate decision-making power in the World Bank.

The Bank uses its financial resources, its highly trained staff, and its extensive knowledge base to individually help each developing country onto a path of stable, sustainable, and equitable growth. The main focus is on helping the poorest people and the poorest countries, but for all its clients the Bank emphasizes the need for:

- Investing in people, particularly through basic health and education
- Focusing on social development, inclusion, governance, and institution-building as key elements of poverty reduction
- Strengthening the ability of the governments to deliver quality services, efficiently and transparently
- Protecting the environment
- Supporting and encouraging private business development
- Promoting reforms to create a stable macroeconomic environment, conducive to investment and long-term planning.


Through its loans, policy advice and technical assistance, the World Bank supports a broad range of programs aimed at reducing poverty and improving living standards in the developing world.

The global fight against poverty is aimed at ensuring that people everywhere in this world have a chance for a better life for themselves and for their children. Over the past generation, more progress has been made in reducing poverty and raising living standards than during any other period in history. In developing countries:

- Life expectancy has increased from 55 to 65 years
- The number of literate adults has doubled
- The total number of children in primary school has risen from 411 million to 681 million
- Infant mortality has been reduced by 50 percent


Despite these successes, massive development challenges remain. Of the 4.7 billion people who live in the 100 countries that are World Bank clients:

-3 billion live on less than $2 a day and 1.2 billion on less than $1 a day
-Nearly 3 million children in developing countries die each year from vaccine-preventable diseases
-113 million children are not in school
-1.5 billion do not have clean water to drink


Effective poverty reduction strategies and poverty-focused lending are central to achieving the Bank's objectives. Bank programs give high priority to sustainable, social, and human development and strengthened economic management, with a growing emphasis on inclusion, governance and institution-building.

The Bank is also helping countries to strengthen and sustain the fundamental conditions they need to attract and retain private investment. With Bank support—both lending and advice—governments are reforming their overall economies and strengthening banking systems. They are investing in human resources, infrastructure, and environmental protection, which enhances the attractiveness and productivity of private investment.

Themes of Bank assistance in FY 2001 to developing countries included the following:

Accelerated debt relief. Significant process was made in FY2001 to provide deeper, broader, and faster debt relief to some of the world's poorest countries, many of them in Africa, under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative framework. As of June 30, 2001, 23 countries-compared with 7 the year before-were receiving debt relief under this framework, amounting to more than $34 billion over time. After HIPC (and combined with traditional) debt relief, the 23 countries will witness a two-thirds reduction in total debt, increase social expenditures, and reduce spending on debt service.

Support of the fight against HIV/AIDS. The HIV/AIDS epidemic now poses a paramount threat to Sub-Saharan Africa. In collaboration with partners, the Bank launched in September 2000 the Multi-Country HIV/AIDS Program (MAP) for Africa-the first of its kind. Under the MAP, flexible and rapid funding will be committed, on International Development Association (IDA-the Bank's concessional lending window) terms, to individual HIV/AIDS projects developed by countries.

Multidimensional support for poverty reduction. The Bank's World Development Report 2000/2001 emphasized opportunity, empowerment, and security as keys to reducing multidimensional poverty. To this end, Bank lending to fight communicable diseases amounted to $608 million, twice the average for the past four years; Bank support for education is emphasizing access, quality, and equity; working toward a cleaner, healthier environment has entailed extensive global consultations to inform a forthcoming environment strategy; and a fast-growing area of Bank support is law and justice, where Bank focus has evolved from specific law reform to encompass legal education for the public, anticorruption programs in the judiciary, indigenous dispute resolution mechanisms, and legal aid for poor women.

Improved development effectiveness. The number of projects considered "at risk" in the Bank's portfolio has been cut in half over the past five years and is now the lowest it has been in many years. The quality of project appraisal and supervision has also improved substantially; a similar trend is emerging with respect to nonlending services.

In addition to IDA and the International Bank for Reconstruction and Development (IBRD), which provides loans and development assistance to middle-income countries and creditworthy poorer countries, the World Bank Group is made up of three other institutions:

The International Finance Corporation (IFC). IFC promotes private sector investment, both foreign and domestic, in developing member countries. Its investment and advisory activities are designed to reduce poverty and improve people's lives in an environmentally and socially responsible manner. Its work includes activities in some of the riskiest sectors and countries. IFC serves as an investor and an honest broker to balance each party's interest in a transaction, reassuring foreign investors, local partners, other creditors, and government authorities. IFC advises businesses entering new markets and governments trying to provide a more hospitable business environment, to create effective and stable financial markets, or to privatize inefficient state enterprises.

The Multilateral Investment Guarantee Agency (MIGA). Foreign direct investment is an important driver of growth in emerging economies. MIGA's mandate is to promote foreign direct investment by offering political risk insurance (guarantees) to investors and lenders, and by providing skills and resources to help emerging economies attract and retain this investment. Projects MIGA supports typically convey many direct benefits to host countries, including jobs created for local workers; accompanying and enduring investments in skills and training for employees; and a general impact on the national economy as a whole, as provided by tax revenues and foreign exchange earnings through exports.

The International Centre for Settlement of Investment Disputes (ICSID). ICSID provides facilities for the settlement—by conciliation or arbitration—of investment disputes between foreign investors and their host countries.

The World Bank's President is by tradition a national of the largest shareholder, the United States. Elected for a five-year renewable term, the President chairs meetings of the Board of Executive Directors and is responsible for overall management of the World Bank.

The World Bank raises money for its development programs by tapping the world's capital markets, and, in the case of IDA, through contributions from wealthier member governments.

[vox]

Comrades,

Notice that, in his direct response to me, SN again decides to introduce conjecture rather than fact. His whole post is, in fact, a rhetorical call for speculation that has nothing to do with the reality that the UN found in its report. Right-wingers want nothing more than to turn readers from inconvenient facts to a rhetorical fantasy realm of speculation and faith-based belief.

More laughable, though, is his long copy and paste job from the WB, introduced with the proposterous suggestion that we seek violence instead of poverty-reduction. This is another tactic of the right-wing: throw bombs and hope one of them hits something.

Nowhere, of course, does SN attempt to explain why, if the WB and the IMF are so good at what they do, and they have been doing it for so long, they consistently make the situation in Latin America worse. Nowhere does SN talk about the "structural adjustment" programs that have been shown, in the real world, to increase poverty for the many while increasing profit for foreign investors. The facts fly in the face of his propaganda.

But you don't have to take my word for it, folks. Look at how the IMF and WB helped out in Colombia (http://www.commondreams.org/views02/0404-06.htm) for a typical example of their policies in action. If that's not enough, maybe you'd like to hear from Joseph Stiglitz (http://www.thenation.com/doc.mhtml?i=20020610&s=press), the formet chief economist at the WB.

The right-wing will, undoubtedly, keep swinging blindly in the dark, hoping to hit something. I'm confident, however, that more people here would rather see the light than live in a cave.

vox

[Stormin Norman]

Your first source uses the ENS for all of its figures. The ENS is a left wing organization.

I will have to get back to you about your second source. Gotta go.

[IzmSchism]

floating exchange rates, financier capitalism promote catasrophic fallouts. i.e, south east asia crisis.

[vox]

Me again, folks.

"Your first source uses the ENS for all of its figures. The ENS is a left wing organization."

Notice that SN doesn't deny that the piece I linked is accurate. Nothing of the sort. Rather, SN simply makes a statement and, for him, that's the end of it. Typical, but not very convincing, is it?

vox

[Social Democratic]

So, to sum up, "the oppresion of sth america and south east asian nations is freedom"?
Free market may make life wonderful for a small few, but this is not democracy at all, the majority has the trump, so capitalism is not democracy because it puts the wishes of few ahead of the majority!

[ArgueEverything]

SN tries to discredit vox for citing an article about the WTO which uses stats from ERL ("a left wing organization"). SN, of course gave us much more reliable info about the WTO, the stats came straight from....the WTO. gimme a break.

[marxistdisciple]

SN actually thought the sole aim of the World Bank was to help poor countries. Give me a break. It's a bank.

Why did western nations suddenly start believing that the free market was the miraculous road to democracy and out of poverty? What countries has this worked for? Why should it work by itself, it is not founded on anything but economics. To me it sounds like a cop-out and away of avoiding social responsibilities. Much as it might surprise people, escape from poverty needs social and educational methods too. If I gave you a free market system but you had no food, how would that help you? If the free market meant that foreign imports were cheaper than your own food, which you therefore couldn't export, why would that help you?

This argument seems very short of factual information, and very high in rhetoric and economist Bs. Why should anyone trust an economist when he says anything about the world's poor? I doubt most people that interested in money know much about the complex social and environmental situations that contribute to the problems.

[marxistdisciple]

lol actually argueeverything, that is kind of funny what you said about SN trying to disprove vox by quoting the WTO. It's almost as silly as the article i read in the Guardian when their journalist asked why this florida newspaper didnt run the story on Bush's vote fixing, and got the answer "well, we called jeb bush's office..."

Crazy.

lol

[Stormin Norman]

"To me it sounds like a cop-out and away of avoiding social responsibilities"

Like I said in my other post, you liberals want something for nothing. The only reason you have a problem with this program lies in the fact that the World Bank fails to provide hand outs. After all, it is a bank. Do you expect them to lend money free of charge?