COMMENT - Excellent article. Even more, it is already known that if there is this level of economic violence, pushed to a head by austerity measures, there are going to be what the
former World Bank Vice Chairman Joseph Stiglitz has called the IMF Riots.
(LUSAKA TIMES) IMF Bailout: A Strangulation of Zambia’s Future
October 23, 2016
Fellow countrymen and women, comrades and friends, allow me to first echo the wise words of the revolutionary icon Thomas Sankara. “Debt is a cleverly managed reconquest of Africa.” “He who feeds you, controls you.”
Once again, our leaders today have failed to think. They were employed by the Zambian people to think wisely on behalf of the nation. They were voted to improve and safeguard the welfare of the Zambian people. They were not employed to contract gigantic loans from the International Monetary Fund (IMF) or any other lending institution. Even at gun point, I refuse to accept that borrowing money from the IMF at the detriment of Zambia’s future is part of their mandate. Their mandate is to think of alternative sustainable ways to resuscitate the economy, as opposed to rushing to the IMF for a bailout that strangles the country’s future especially the poorest citizens. A government that cannot think of alternative ways to regrow the economy apart from borrowing from these money-lending institutions is not fit to hold public office. It is now clear, our ministers are appointed, not to think on behalf of the ministries they lead, but to ceremonially occupy such positions while shamelessly enjoying free housing, transport, electricity, airtime, state security and gallivanting around the globe at the expense of taxpayer’s money.
the IMF promotes a fertile ground for breeding poverty, making it impossible for poor countries to eradicate poverty and realize food security
.
I am struggling to understand why our politicians have failed to comprehend that the so called bailout package from the IMF has never been a viable and sustainable option to resuscitate an ailing economy. You do not need a PhD, bachelor’s degree, diploma, or certificate to understand the ramifications of an IMF bailout package. A simple perusal through the conditionalities attached to such a bailout package should enable even a rural dweller, who has never been to school, to understand that the IMF bailout is a well-calculated scheme to keep the poor poorer.
There is no rocket science involved in understanding that the IMF discourages you from subsidizing your own farmers. In this regard, the IMF promotes a fertile ground for breeding poverty, making it impossible for poor countries to eradicate poverty and realize food security. The IMF further emphasises reduction of government funding to health and education, a condition that goes counter to the campaign championing access to education and healthcare for all. Such a condition further strangles the country’s efforts to build a productive human resource pool. It is simple. If you don’t fund your education system, then the country’s capacity to produce its own skilled manpower – teachers, nurses, medical doctors, lawyers et cetera is substantially curtailed. In the long term, such skills will have to be sourced externally at an astronomical cost on the country’s treasury. Moreover, privatization and liberalization, which are a hallmark of the IMF, have the potential to completely decimate domestic industries. Fellow Zambians, you will agree with me that we have been yearning for a Zambia with the capacity to produce its own goods and services. The IMF is here to shatter this dream. Surely, with all these real-life practical examples, it is shocking to see our ministers, some of them very educated, failing to understand that the IMF is here to perpetuate poverty. Our dream to become a politically and economically independent country will remain an illusion as long as we embrace institutions like the IMF and the World Bank.
Fellow patriots, allow me to conclude by stating one logical fact. Should Zambia accept this IMF bailout, it is the elite politicians that should bear the burden of austerity measures. Ordinary Zambians have suffered enough already. As part of austerity, the republican president should be relocated to another modesty housing. This may sound crazy to most of you because you are accustomed to seeing a republican president living a lavish lifestyle in state house. It cannot be disputed that the country spends astronomical sums of money in trying to sustain state house.
Moreover, it is immoral to continue enjoying a lavish life in state house while your citizens are dying of hunger induced by austerity measures from the IMF. Unless an international trip will add value to the country’s well-being, the republican president and his ministers should not gallivant around the world. It is important to note that most of the international trips are totally irrelevant to the suffering common man. Additionally, the use of a private jet aircraft on international trips should be abolished. We should also scrape off free entitlements such as housing, fuel, electricity, transport et cetera from our ministers. Most importantly, the ridiculously big and expensive ministerial cars which guzzle unreasonable litres of fuel should be auctioned and cheaper cars purchased in their place. There are many other ridiculous entitlements that we need to scrap off from our public office bearers. Politicians too, need to share in the burden of austerity.
By Peter Mubanga Cheuka
Labels: AUSTERITY, IMF, JOSEPH STIGLITZ, NEOLIBERALISM, World Bank
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Climate change can be an 'opportunity', says Stiglitz
FARANAAZ PARKER | JOHANNESBURG, SOUTH AFRICA - Jan 17 2011 19:46
South Africa has the capacity to put itself at the forefront of emerging countries when it comes to adapting to climate change, but the country will need leadership and buy-in from the business sector.
This is according to professor and renowned economist Joseph Stiglitz, Nobel prize winner for economics and former chief economist for the World Bank, who was speaking at a public lecture on climate change and economic development in Pretoria on Monday.
M&G analysis on Stiglitz lecture
World renowned economist and winner of the Nobel prize for economics Professor Joseph Stiglitz shared his thoughts on climate change, its effects on the global economy and South Africa in a lecture on Monday January 17 2011. Editor-in-chief of the Mail and Guardian Nic Dawes takes us through some of Stilglitz's key points.
"It’s not just a question of leadership, it's a question of business opportunity," he said.
Stiglitz is one of the key members on a ministerial advisory panel constituted by Economic Development Minister Ebrahim Patel. His comments could help spark much-needed discussion on the topic of climate change and development as South Africa prepares to host a United Nations climate change conference later this year.
The global summit, to be held in Durban this November, consists of a series of high-level political negotiations at which nations will attempt to thrash out a legally binding climate treaty.
Stiglitz pointed out that in terms of an agreement reached at the last UN climate change conference -- held in Copenhagen last year -- advanced economies such as the United States would need to cut carbon emissions by 80%. This in turn would lead to a change in the way business is done globally.
Moving to low carbon
As a fast developing country with high carbon emissions, South Africa will soon need to begin making the switch to a low carbon economy. Stiglitz said the government would have an important role to play in this and warned that a lack of clear policy could see the country lagging behind its contemporaries, as the US is now lagging behind China when it comes to green technology.
Stiglitz said that a set of broad macroeconomic policies, with the government making decisions in a way that supports green economics, may be necessary. He said that some of the most successful industries in the US -- including the advent of the internet -- have been supported by the government. "People sometimes forget that innovations are part of important government policy," he said.
He said it was important for the country to embrace green sectors and green technology, as it was to eliminate barriers that impede growth in green technology.
Although the world is still suffering from the effects of the global economic crisis, addressing the problems of climate change can be an important part of the recovery, he said, adding: "The two are complementary."
"Climate change is an opportunity. It isn't necessarily a burden if looked at the right way ... Focusing on the cost [of switching to a low carbon economy] and not other opportunities has contributed to getting us bogged down."
Labels: CARBON EMISSIONS, JOSEPH STIGLITZ
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Can the euro be saved?
By Joseph E. Stiglitz
Tue 11 May 2010, 04:00 CAT
The Greek financial crisis has put the very survival of the euro at stake. At the euro’s creation, many worried about its long-run viability. When everything went well, these worries were forgotten. But the question of how adjustments would be made if part of the eurozone were hit by a strong adverse shock lingered. Fixing the exchange rate and delegating monetary policy to the European Central Bank eliminated two primary means by which national governments stimulate their economies to avoid recession. What could replace them?
The Nobel Laureate Robert Mundell laid out the conditions under which a single currency could work. Europe didn’t meet those conditions at the time; it still doesn’t. The removal of legal barriers to the movement of workers created a single labor market, but linguistic and cultural differences make American-style labor mobility unachievable.
Moreover, Europe has no way of helping those countries facing severe problems. Consider Spain, which has an unemployment rate of 20 per cent – and more than 40 per cent among young people. It had a fiscal surplus before the crisis; after the crisis, its deficit increased to more than 11 per cent of GDP. But, under European Union rules, Spain must now cut its spending, which will likely exacerbate unemployment. As its economy slows, the improvement in its fiscal position may be minimal.
Some hoped that the Greek tragedy would convince policymakers that the euro cannot succeed without greater cooperation (including fiscal assistance). But Germany (and its Constitutional Court), partly following popular opinion, has opposed giving Greece the help that it needs.
To many, both in and outside of Greece, this stance was peculiar: billions had been spent saving big banks, but evidently saving a country of eleven million people was taboo! It was not even clear that the help Greece needed should be labeled a bailout: while the funds given to financial institutions like AIG were unlikely to be recouped, a loan to Greece at a reasonable interest rate would likely be repaid.
A series of half-offers and vague promises, intended to calm the market, failed. Just as the United States had cobbled together assistance for Mexico 15 years ago by combining help from the International Monetary Fund and the G-7, so, too, the EU put together an assistance program with the IMF. The question was, what conditions would be imposed on Greece? How big would be the adverse impact?
For the EU’s smaller countries, the lesson is clear: if they do not reduce their budget deficits, there is a high risk of a speculative attack, with little hope for adequate assistance from their neighbors, at least not without painful and counterproductive pro-cyclical budgetary restraints. As European countries take these measures, their economies are likely to weaken – with unhappy consequences for the global recovery.
It may be useful to see the euro’s problems from a global perspective. The US has complained about China’s current-account (trade) surpluses; but, as a percentage of GDP, Germany’s surplus is even greater. Assume that the euro was set so that trade in the eurozone as a whole was roughly in balance. In that case, Germany’s surplus means that the rest of Europe is in deficit. And the fact that these countries are importing more than they are exporting contributes to their weak economies.
The US has been complaining about China’s refusal to allow its exchange rate to appreciate relative to the dollar. But the euro system means that Germany’s exchange rate cannot increase relative to other eurozone members. If the exchange rate did increase, Germany would find it more difficult to export, and its economic model, based on strong exports, would face a challenge. At the same time, the rest of Europe would export more, GDP would increase, and unemployment would decrease.
Germany (like China) views its high savings and export prowess as virtues, not vices. But John Maynard Keynes pointed out that surpluses lead to weak global aggregate demand – countries running surpluses exert a “negative externality” on their trading partners. Indeed, Keynes believed that it was surplus countries, far more than deficit countries, that posed a threat to global prosperity; he went so far as to recommend a tax on surplus countries.
The social and economic consequences of the current arrangements should be unacceptable. Those countries whose deficits have soared as a result of the global recession should not be forced into a death spiral – as Argentina was a decade ago.
One proposed solution is for these countries to engineer the equivalent of a devaluation – a uniform decrease in wages. This, I believe, is unachievable, and its distributive consequences are unacceptable. The social tensions would be enormous. It is a fantasy. - Project Syndicate
Labels: EURO, JOSEPH STIGLITZ
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World Bank creating poverty (BBC Newsnight)Greg Palast interviews Joseph Stiglitz on the World Bank and IMF, and it's agenda. According to Joseph Stiglitz, the IMF turns a blind eye to big corruption, for political purposes. Sort of puts the West's and IMF's policies on Zimbabwe in context. Watch this program. :)
Also interesting:
Joseph Stiglitz, American economist, on resolving the global financial crisis3 februari 2009
Joseph Stiglitz, American economist and a professor at Columbia University, on resolving the global financial crisis.
The World Bank (WB) & The International Monetary Fund (IMF)
Labels: FDI, IMF, JOSEPH STIGLITZ, NEOLIBERALISM, World Bank
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Turn left for growth
In contrast to the right, the left has a coherent agenda. It's one that offers not only higher growth, but also social justice
Joseph Stiglitz
Wednesday August 06 2008 21:00 BST
Both the left and the right say they stand for economic growth. So should voters trying to decide between the two simply look at it as a matter of choosing alternative management teams?
If only matters were so easy! Part of the problem concerns the role of luck. America's economy was blessed in the 1990s with low energy prices, a high pace of innovation, and a China increasingly offering high-quality goods at decreasing prices, all of which combined to produce low inflation and rapid growth.
President Clinton and then-chairman of the US Federal Reserve, Alan Greenspan, deserve little credit for this – though, to be sure, bad policies could have messed things up. By contrast, the problems faced today – high energy and food prices and a crumbling financial system – have, to a large extent, been brought about by bad policies.
There are, indeed, big differences in growth strategies, which make different outcomes highly likely. The first difference concerns how growth itself is conceived. Growth is not just a matter of increasing GDP. It must be sustainable: growth based on environmental degradation, a debt-financed consumption binge, or the exploitation of scarce natural resources, without reinvesting the proceeds, is not sustainable.
Growth also must be inclusive; at least a majority of citizens must benefit. Trickle-down economics does not work: an increase in GDP can actually leave most citizens worse off. America's recent growth was neither economically sustainable nor inclusive. Most Americans are worse off today than they were seven years ago.
But there need not be a trade-off between inequality and growth. Governments can enhance growth by increasing inclusiveness. A country's most valuable resource is its people. So it is essential to ensure that everyone can live up to their potential, which requires educational opportunities for all.
A modern economy also requires risk-taking. Individuals are more willing to take risks if there is a good safety net. If not, citizens may demand protection from foreign competition. Social protection is more efficient than protectionism.
Failures to promote social solidarity can have other costs, not the least of which are the social and private expenditures required to protect property and incarcerate criminals. It is estimated that within a few years, America will have more people working in the security business than in education. A year in prison can cost more than a year at Harvard. The cost of incarcerating two million Americans – one of the highest per capita rates (pdf) in the world – should be viewed as a subtraction from GDP, yet it is added on.
A second major difference between left and right concerns the role of the state in promoting development. The left understands that the government's role in providing infrastructure and education, developing technology, and even acting as an entrepreneur is vital. Government laid the foundations of the internet and the modern biotechnology revolutions. In the 19th century, research at America's government-supported universities provided the basis for the agricultural revolution. Government then brought these advances to millions of American farmers. Small business loans have been pivotal in creating not only new businesses, but whole new industries.
The final difference may seem odd: the left now understands markets, and the role that they can and should play in the economy. The right, especially in America, does not. The new right, typified by the Bush-Cheney administration, is really old corporatism in a new guise.
These are not libertarians. They believe in a strong state with robust executive powers, but one used in defense of established interests, with little attention to market principles. The list of examples is long, but it includes subsidies to large corporate farms, tariffs to protect the steel industry, and, most recently, the mega-bailouts of Bear Stearns, Fannie Mae, and Freddie Mac. But the inconsistency between rhetoric and reality is long-standing: protectionism expanded under Reagan, including through the imposition of so-called voluntary export restraints on Japanese cars.
By contrast, the new left is trying to make markets work. Unfettered markets do not operate well on their own – a conclusion reinforced by the current financial debacle. Defenders of markets sometimes admit that they do fail, even disastrously, but they claim that markets are "self-correcting." During the Great Depression, similar arguments were heard: the government need not do anything, because markets would restore the economy to full employment in the long run. But, as John Maynard Keynes famously put it, in the long run we are all dead.
Markets are not self-correcting in the relevant time frame. No government can sit idly by as a country goes into recession or depression, even when caused by the excessive greed of bankers or misjudgment of risks by security markets and rating agencies. But if governments are going to pay the economy's hospital bills, they must act to make it less likely that hospitalisation will be needed. The right's deregulation mantra was simply wrong, and we are now paying the price. And the price tag – in terms of lost output – will be high, perhaps more than $1.5trn in the US alone.
The right often traces its intellectual parentage to Adam Smith, but while Smith recognised the power of markets, he also recognised their limits. Even in his era, businesses found that they could increase profits more easily by conspiring to raise prices than by producing innovative products more efficiently. There is a need for strong anti-trust laws.
It is easy to host a party. For the moment, everyone can feel good. Promoting sustainable growth is much harder. Today, in contrast to the right, the left has a coherent agenda, one that offers not only higher growth, but also social justice. For voters, the choice should be easy.
Labels: EDUCATION, FDI, JOSEPH STIGLITZ, NEOLIBERALISM
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