Some months back the World Bank issued a report titled “Global Economic Prospects 1998/1999”. The report’s foreword, written by Joseph Stiglitz, World Bank Chief Economist, is demonstration of how statists blame capitalism and free-markets for the disatrous effects of the policies.
Stiglitz maintains that most of the world’s emerging market problems can be blamed on “international capital market imperfections”. Secondary villains, he asserts, are “excessive deregulation” and inadequate “social safety nets”. So, the World Bank would have us all believe that the cause of this world crisis is: capitalism, insufficient government regulation, and poor welfare programs.
As “proof” Stiglitz offers this metaphor: “When a single car has an accident on a bend in the highway, one might infer something about the driver or his car. But when, at the same bend, there are accidents day in and day out, the presumption changes — there is probably something wrong with the road. The fact that such a large number of countries have been affected by this crisis and required large official bailouts suggests some fundamental systemic weaknesses.” Oh Please! I prefer: “When a driver visits the World Bank rest stop for directions & an economic road map they are escorted to the tavern for a nip of moonshine policy. After which they tend to run off the road.”
Open capital markets are a friend to countries pursuing pro-capitalist policies; equally, they punish countries pursuing anti-capitalist policies. Perhaps this is why Stiglitz seems to dislike the markets — the markets dislike his policies. They make him, and those who implement his policies look bad. When markets are closed, few notice the failure of World Bank airports, roads and other such projects in third world nations. But when markets are free, they can decline dramatically highlighting any policy weakness.
The report itself is not as bad as Stiglitz’ forward. Not to say that I like it, but it does include some interesting facts and historical information. Predictably, the World Bank interprets recent history in a most self-serving manner. Of course it concludes that it and the IMF are not to blame for the recent crises; rather, that global financial markets overreacted negatively to certain policies they favored.
The World Bank makes some predictions (the poor will suffer most in the next few years) but states six developments which they believe are “moving the world economy back to a safer direction”. I think it is intended to be reassuring. But somehow I find myself even more concerned.
Some months back the World Bank issued a report titled “Global Economic Prospects 1998/1999”. The report’s foreword, written by Joseph Stiglitz, World Bank Chief Economist, is demonstration of how statists blame capitalism and free-markets for the disatrous effects of the policies.
Stiglitz maintains that most of the world’s emerging market problems can be blamed on “international capital market imperfections”. Secondary villains, he asserts, are “excessive deregulation” and inadequate “social safety nets”. So, the World Bank would have us all believe that the cause of this world crisis is: capitalism, insufficient government regulation, and poor welfare programs.
As “proof” Stiglitz offers this metaphor: “When a single car has an accident on a bend in the highway, one might infer something about the driver or his car. But when, at the same bend, there are accidents day in and day out, the presumption changes — there is probably something wrong with the road. The fact that such a large number of countries have been affected by this crisis and required large official bailouts suggests some fundamental systemic weaknesses.” Oh Please! I prefer: “When a driver visits the World Bank rest stop for directions & an economic road map they are escorted to the tavern for a nip of moonshine policy. After which they tend to run off the road.”
Open capital markets are a friend to countries pursuing pro-capitalist policies; equally, they punish countries pursuing anti-capitalist policies. Perhaps this is why Stiglitz seems to dislike the markets — the markets dislike his policies. They make him, and those who implement his policies look bad. When markets are closed, few notice the failure of World Bank airports, roads and other such projects in third world nations. But when markets are free, they can decline dramatically highlighting any policy weakness.
The report itself is not as bad as Stiglitz’ forward. Not to say that I like it, but it does include some interesting facts and historical information. Predictably, the World Bank interprets recent history in a most self-serving manner. Of course it concludes that it and the IMF are not to blame for the recent crises; rather, that global financial markets overreacted negatively to certain policies they favored.
The World Bank makes some predictions (the poor will suffer most in the next few years) but states six developments which they believe are “moving the world economy back to a safer direction”. I think it is intended to be reassuring. But somehow I find myself even more concerned.
#1: The United States and other industrial countries are easing monetary policies. (This is the truest and most important development. Better late than never. Note that the World Bank has absolutely no involvement in this policy.)
#2: Japan’s legislature has passed a financial revitalization scheme and additional fiscal stimulus measures. (“Scheme” is right. As reported in an earlier “Outrage!”, the “scheme” does little to solve Japan’s fundamental institutional financial problems.)
#3: U.S. Congress has allocated funding for international financial institutions, leading the way for similar steps in other countries. (Whoops! Wasn’t that supposed to go in the internal memo titled “Things good for the World Bank but bad for the world’s taxpayers”?)
#4: The Brazilian government has adopted a program to reduce its fiscal deficit, which has received strong financial support from multilateral institutions, and governments. (Do they mean those big pension reforms that just got squashed by the Brazilian congress on Thursday? Just wait until they see how far under-budget tax receipts are next year. That’s what’s so great about “strong financial support from multilateral institutions, and governments”! They are so easy to fool unlike those unmentioned capitalistic “private investors”.)
#5: G-7 leaders have proposed a set of measures to strengthen the global economy. (I have no idea what they’re talking about, unless they’re simply repeating that the G-7 is cutting rates. I can only hope they’re not counting on Keynesian-style “pump-priming”.)
#6: More financial support has been announced for the East Asian crisis countries from Japan and others. (Get real. The main reason Japan is sending money to Asia is so that Japanese banks won’t have to admit to Asian loan-loss write-offs. Meanwhile, Japan is teaching other Asian countries the paper-shuffling secret to keeping bankrupt banks in business.)
And the World Bank’s recommendation (drumroll — ): wealthy countries need to place more regulations on capital markets, engage in stimulatory Keynesian policies, and give much more money to the IMF and the World Bank to create a big global welfare safety net. In other words, countries need to become less capitalistic.
