Search Salon

- - - - - - - - - - - -

Recently in Salon News

Prepping for the protests
Washington's mayor and police force get ready to rumble, though they hope they won't have to.
By Harry Jaffe
[04/15/00]

Not just a Seattle sequel
The protests surrounding this weekend's meetings of the IMF and World Bank are the next step in the backlash to globalization.
By Bruce Shapiro
[04/15/00]

On the verge
Tensions escalate in Dupont Circle and cops put on riot gear. But savvy protesters wonder where the badges are.
By Jake Tapper
[04/14/00]

Decaffeinated protests
Would-be anti-corporate crusaders encounter the unexpected as they take on Starbucks, Gap and the Washington police.
By Alicia Montgomery
[04/14/00]

Celeste takes it to The Man
Meet one blond, bright-eyed, dreadlocked anarchist ready to take it to the streets.
By Jake Tapper
[04/14/00]

Complete archives for News

- - - - - - - - - - - -

- - - - - - - - - - - -

Wysham: As the Meltzer Report submitted to Congress recently pointed out, the Word Bank cherry-picks the countries it provides loans to, targeting those countries that are already awash in private capital. Furthermore, the bank is fixated on adjusting national economies -- some 63 percent of World Bank loans last year went to structural adjustment -- while failing to look at the social or environmental impacts of these loans.

A good percentage of the remaining loans from the World Bank went to industries like telecommunications, oil and mining -- sectors that are hardly in need of government-backed, low-interest loans. Investment in these sectors -- particularly the natural resource extraction -- tends to result in dislocation of the poorest, resettlement under far worse conditions and greater impoverishment. Our own Treasury secretary, Larry Summers, suggests it is time for the World Bank to get out of these sectors.

The Meltzer Report pointed out the fact that middle-income countries get the lion's share of lending, and recommended that the bank phase out loans to countries where the per-capita income was above $4,000 in the next five years, and limit loans to countries where the per capita income was above $2,500.

Were these two recommendations to be enacted, and were there to be a drastic curtailment in strategic adjustment loans, coupled with a clear emphasis on education, health care and other basic services desperately needed by the poor, and were we to see a reformed World Trade Organization process that placed environmental, labor and social protections in the same league as economic growth, we might see the income gap shrink rather than widen as it is, rapidly, now.

Meier: Free-market based policies also mean uniformity of treatment and not special and differential treatment for less-developed countries. Those who want preferential treatment and special discrimination in favor of the LDCs are really criticizing the free market. But the IMF was originally based on non-discrimination and uniformity so as to avoid discrimination against LDCs. It's not free markets, but other causes that can explain the so-called widening gap or lack of convergence among more-developed countries and LDCs. Moreover, it can be noted that it is free market ideologues who want the IMF and World Bank abolished, not those who believe in government policies and public policy to correct market failures.

Leyden: I agree that maintaining and expanding the presence of global institutions is more in the interests of the protesters than abolishing or severely limiting those organizations. Globalization is making transnational transactions increasingly the norm. We're migrating many previously national functions to the global level. However, there are very few government or political institutions that operate on that plane.

Frankly, I think the IMF and World Bank, and even the WTO, are not particularly well-suited for this new brand of 21st century capitalism. After all, the first two were created in the much more placid world of the middle of the 20th century.

That said, the new 21st century global institutions have not emerged, and we're not even sure how they might look at this point. They probably will be more like the networks of organizations that are characteristic of the New Economy. However, we're a long way from inaugurating brand new institutions. That means that morphing or evolving the current global institutions will have to suffice at this point. The last thing you want to do is wipe them out.

Goozner: Is Indonesia poorer today than it was 30 years ago, when it embarked on an oil-and-gas exploitation and export-oriented strategy for economic development? Absolutely not. Is it poorer today than it was three years ago, when its economy crashed and burned because of Western demands for capital mobility? Absolutely. Based on my direct experience of LDC economic development, which is drawn for the most part from Asia, I would say that "free trade" has generally benefited the LDCs, including their poorer residents. But it is important to point out that "free trade" generally entailed their access to developed world markets and free flow of capital into the LDCs. The losers in this game are the poorest and least-skilled workers of the developed world, who are the ones who are forced to compete with their counterparts in the LDCs.

Hertsgaard: I think it is a fair assessment [to say the World Bank and IMF are widening the poverty gap]. Think back to the Chad project. The benefits of that project are not going to be felt by the impoverished majority in Chad and Cameroon but rather by their kleptocratic leaders and the officers and shareholders of Exxon-Mobil and Chevron. Multiply that example by all the individual projects the bank has financed over the years and it's not hard to see why inequality is likely to be increased, not decreased, by bank activities.

Also, a response to the notion that Indonesia is "absolutely not" poorer today than it was 30 years ago: Well, it depends how you measure these things. Average income levels may be higher, but the nation's "natural capital" -- that is, the amount of forest cover, clean air and water and other natural resources that are the necessary precondition for any functioning society -- has surely been depleted in shocking amounts. Clear-cutting the forests of Indonesia, or any other country, may boost income in the short run but as a long-term economic strategy, it is bankrupt.

Next page | Limousine gridlock, champagne and caviar