Economics

Who is culpable of the greater error of judgement: Oxfam or Jeremy Hunt?

Published by Anonymous (not verified) on Fri, 16/02/2018 - 8:37pm in

I’m meant not to be blogging and to be concentrating on a few days off, but since stopping thinking is like stopping breathing, I noticed a truly excellent blog by Simon Wren-Lewis yesterday that compared Oxfam’s supposed failings with those of the government over the NHS.

Simon posted this chart:

Simon's argument is:

Contrast the behaviour of politicians and the media in relation to what is currently happening in the NHS. Quite simply people are dying because there are insufficient resources to cope with needs. Thousands have had operations postponed, leaving them in pain. Patients are lying in trolleys because there are not enough beds. Huge numbers, more than ever before, are having to wait for more than four hours in A&E.

The reason for all this is not mysterious. Health has been starved of resources by this and the previous coalition government like never before.

To which he adds:

This [chart] shows neglect on a scale that make the leadership of Oxfam’s misdeeds look trivial. Yet where is the media scandal? The man who has been in charge of the NHS while this has happened and is happening in front of our noses is still in his job. The government continues to fail to provide the resources the NHS needs, while promising to protect the NHS, and yet it has not been held to account for killing people and leaving them in pain by the same media that has been happy to pursue the leadership of Oxfam. The Minister for International Development told the leaders of Oxfam that “an organisation’s moral leadership comes from individuals taking responsibility for their actions”. Quite.

The rest is well worth reading, but I note this to theorise it in a way Simon doesn’t.

Simon is, I think, making a suggestion that both Oxfam and the management of NHS resources represent cases of negligence. But there is a difference.

Oxfam did not intend to be neglectful. And they certainly never condoned the actions of their staff. They have accepted responsibility. Long before publicity arose they were taking steps to improve matters.

Jeremy Hunt on the other hand has intended to deprive the NHS of resources. That is what the deliberately chosen and economically unnecessary policy of austerity means. He knew pain and suffering would be the consequence. He also knew it was within the government’s power to alleviate this situation, he has not argued that they should do so. He has sought to blame everyone but himself. He is still health secretary. And the neglect, pain and unnecessary deaths are continuing.

The difference in the situations is to be found in the legal concept of mens rea. This can be explained  as:

The intention or knowledge of wrongdoing that constitutes part of a crime, as opposed to the action or conduct of the accused.

Has a crime been committed? If crime is an affront to the accepted standards of society then, yes, that can be argued in both cases.

But to be found guilty of most crime mens rea has to be established; that is the intent to commit the act. This provides a simple but effective indicator of culpability here.

Did Oxfam have any intention to undertake wrongdoing? Clearly not. So they are not guilty of the crime. There worst misdemeanour is not being as candid as they might. They suffered an  excess of embarrassment that certainly clouded their judgement. That was an error, no doubt. But a crime? I still don't remotely think so.

In contrast, did, and does, Jeremy Hunt knowingly cause harm by his actions? The answer is unambiguously yes in my opinion. This is because there is amply evidence to suggest that alternatives are available; that he knows of them and does nothing to act on them. He is, then, guilty of causing pain and loss of life when both could be avoided. It is not just his judgement that has erred; his actions have been informed by that judgement despite knowing what would happen.

Sometimes a little theorising helps.

In this case it also makes clear who should not be standing in judgement.

Economics education — teaching cohorts after cohorts of students useless theories

Published by Anonymous (not verified) on Fri, 16/02/2018 - 6:17am in

Tags 

Economics

Nowadays there is almost no place whatsoever in economics education for courses in the history of economic thought and economic methodology. This is deeply worrying. A science that doesn’t self-reflect and asks important methodological and science-theoretical questions about the own activity, is a science in dire straits. How did we end up in this sad […]

Sri Lanka local elections: the return of Rajapaksa

Published by Anonymous (not verified) on Thu, 15/02/2018 - 10:49pm in

After his
recent win, Mahinda Rajapaksa urged his voters not to attack the losing side,
saying: “No matter what they did to us we must set an example”.        

lead Former president Mahinda Rajapaksa greets supporters after landslide victory in the Local Government Election, February 12, 2018. NurPhoto/Press Association. All rights reserved. Sri Lanka
celebrates its seventieth year of independence in 2018 in a country where
ethnicity has been a deadly factor, and local elections can turn violent. This
year’s election, held on 10 February, however, has been one of the most
peaceful
the country
has known. The turnout was over 75%, which shows that people are keen
on exercising their right to vote.

The current
government attributes the nonviolent character of the election to a new
election system. As Prime Minister Ranil
Wickremesinghe
, of the United National Party (UNP), explained:
"the reason is that the most competitive and conflicting preferential
voting system that was in the previous elections is not seen in the new system
we introduced.”  

Wickremesinghe
added that introducing the new election system would give the current administration
an
advantage
in the upcoming general election. Sri Lanka suffered from a
protracted civil war between 1983 and 2009, so a peaceful election is certainly
a welcome blessing to the fledgling democracy. However, there are signs that the
results of the local election will not turn out to favor the ruling power in
the end.

Rajapaksa’s comeback

Local
elections in Sri Lanka might not have the same impact as the parliamentary or
presidential elections, but the victory of former President Mahinda Rajapaksa means
that he is back in politics full speed ahead and poised to regain political
power.

Rajapaksa
lost the presidency in 2015 when the challenger Maithripala Sirisena won 51% of the
votes. Reportedly, minorities like the Tamil and Muslim communities
of Sri Lanka secured his victory. Sirisena, who now represents the Sri Lankan
Freedom Party (SLFP), joined forces with Wickremesinghe (UNP). Together since
2015 they have politically dominated Sri Lanka. Even though Rajapaksa’s
presidency was filled with allegations of corruption and nepotism, he has never
lost his popularity among the Sinhala community.

Rajapaksa is
back under a new political banner after leaving his former party, the Sri
Lankan Freedom Party (SLFP). Now, with the support of his brothers and former
members of the SLFP, he leads Sri
Lanka Podujana Peramuna
. It seems that Rajapaksa has taken his revenge on
both the UNP and SLFP by winning the recent election. After the election, he
stated that the current government should dissolve parliament
and call for re-elections.  

Given this
background, there is no question that Rajapaksa has little intention of giving
up his desire to become a prominent figure in the country’s political affairs
once again. Knowing that there are potential clashes between supporters, Rajapaksa
has urged
his voters
not to attack the losing side. He says: “No matter what they did
to us we must set an example”.                 

Tamil and Muslim distress

The local
election clearly
shows
that the Tamil community in the North and East do not vote for the
Sinhala major parties. The Tamil nationalist party, the Illankai Tamil Arasu
Kachchi (ITAK), earned major victories in the councils in the north and to some
extent in the east where the majority of the Tamil population resides. During
the civil war, the Tamil guerilla movement Liberation Army of Tamil Eelam
(LTTE) and its allies, operated in these areas. LTTE does not exist any more
but its spirit lives
on
in the north.

The Tamil community
is reportedly under stress: reports of torture still
keep coming in. Another big issue for the Tamil minority is land grabbing and
resettlement. The Sinhala-dominated army is taking land from displaced Tamils and
using it to
expand
their own estates. So old problems have persisted under the current
presidency, with the result that the Tamil community does not place much trust
in Sinhalese leadership in general.  

Another
minority community that has been affected by land-grabbing is the Muslim
community. This was confirmed to me when I talked to the Sri Lanka Muslim
Congress leader Rauff Hakeem back in 2013. Hakeem told me that land-grabbing
was the most important question for his community:

“An important issue is land : land distribution
(…) is a very crucial factor which dominates our political tension as well. (…)
in particular because livelihoods depend on land as far as every community is
concerned”.

Another
thing that might worry Muslims in Sri Lanka after Rajapaksa’s success is that Sinhala-Buddhist
nationalist movements might receive a boost. Under the last Rajapaksa rule,
Mahinda’s brother, Gotabhaya Rajapaksa, was associated with the hardline
Buddhist organization Bodu
Bala Sena
(BBS) – an organization that has an anti-Islamic agenda and sees
Sri Lanka as a holy land for Buddhism.  

2020

2020, when
the next presidential election will be held, is the year to look out for. Due
to tenure regulations, Mahinda Rajapaksa will be unable to contest the current
presidency. But in this year’s election Rajapaksa has showed that he is still
popular. Perhaps one of his brothers will become a presidential candidate. The
UNP might drop their support for President Sirisena and present their own
candidate.

So President
Sirisena is likely to face problems no matter who he faces in 2020. While the
major Sinhalese parties are competing for power, the two minorities will be struggling
with their own concerns.

Country or region: 

Sri Lanka

Topics: 

Civil society

Conflict

Democracy and government

Economics

Equality

International politics

Rights: 

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We have to look much deeper to find the real cause for the malaise in our charities

Published by Anonymous (not verified) on Thu, 15/02/2018 - 9:30pm in

Tags 

Economics

More sober voices than those at The Times are now suggesting that charities need to reform in the wake of what happened at Oxfam and, it is believed, elsewhere.

Larry Elliott is one such voice. His criticism is that since the mid-noughties and the Make Poverty History era charities have effectively become outsourcing agents for governments intent on delivering a simplistic goal of aid being 0.7% of GDP with all parties failing to ask why this appropriate. In effect, his argument is that charities have bought into a ‘volume of aid’ model without asking whether this really achieves their goals. In the process he suggests two things have happened. One is that aid charities have been silenced, in effect by contract. I have certainly seen evidence of this. Second, and related, is the fact that they have lost their campaigning zeal.

Right wingers would no doubt not agree with the latter observation: it is the fact that aid charities continue to question that is at the core of The Times’ chagrin. But read only a touch more into that and you will see that the issues are, as far as the right is concerned, related. The silence of charities has been bought, they think, but those charities are not abiding by the contract, is the argument.

I side with Larry. But actually, that’s not my point, which is instead that the malaise within charities (and there is one) has another, much more significant, cause. It arises from the adoption of the corporate model of organisation by charities. The same, of course, could also be said of many government organisations as well.

The corporate form exists in its current guise to support an ethos. That is the cult of maximisation. I deliberately omit the word profit from that last sentence. What most managers realise is that they have no idea what profit is. And they also realise that they have no idea how to maximise it, even if they really understand profit. That is because those with any insight realise that doing so requires a knowledge of the future with a degree of certainty that is actually beyond us all. So what they instead do is suggest that other, easier to identify (and fulfil) goals be used as proxies for profit maximisation. Almost invariable that proxy is income growth. The maxim is simple. It is ‘if it’s bigger, it’s better’. And so from the false microeconomic idea of profit maximisation was the cult of growth born.

Let’s leave aside the impact of this cult on the environment at present.

And let’s also leave aside the harm this cult can cause to a business, where the single word Carillion makes the case.

Let’s instead reflect on the fact that the outcome has been an almost universal, or isomorphic, corporate form for much of human activity now. Although corporate structuring was adopted to minimise risk for shareholders, and although the idea that a small, and distinct group isolated from the owners of an enterprise should manage it was adopted as a means of ensuring the appropriate stewardship of collective assets, the resulting perverted form of this structure that is now prevalent around the world is now used to organise almost any activity.

That structure is frequently inappropriate.

By copying the distance that shareholders wished to put between themselves and liability the majority in an organisation are silenced, and effectively disenfranchised, as are shareholders in most modern companies.

By over-emphasising the significance of management the cult of supposedly enlightened leadership from a core elite developed.

By letting that core group set their own goals simple, but not necessarily appropriate, objectives that ensured that they could claim success on their own terms were guaranteed.

By allowing a tiny part of the organisation to control a vast and extended array of people and assets the ability of an elite to skim off reward in the form of enhanced financial remuneration was created. Now prevalent to the point of being systemically toxic within corporations, the spillover is seen in government funded activity, the health service, universities and some charities.

By letting the elite control the message the idea that their goals were the correct ones to follow has been relentlessly driven home.

And because the whole philosophy of the modern multinational corporation is built on greed and the maxim that more is better, growth was an easy line to sell. From the corporation it’s spread into the goal for macroeconomic growth. And aid delivered. And health care interventions. And student numbers. And so much more.

And through it all the idea that a person - usually male, often white - is the source of all wisdom and power has taken shape. And it is taking a great deal to shake.

But is this how a charity, university, health services, local authority, or other non-commercial organisation should be structured? I am not convinced. The argument for greater diversification of power - including to members, voters and users of the service has real appeal.

And is this how decision making should happen? In many organisations clearly not, and not only because of the waste seen time after time as one boss’ fad is replaced by another’s.

Is this how accountability is created? Very obviously not.

And is this a structure likely to permit or curtail abuse? Isn’t the answer obvious?

But what we still get is the repetition of the belief that more is better.

And let me make a simple suggestion: maybe it isn’t.

That belief would, however, threaten the whole power base of those who use the corporate form to sustain themselves in their own interests, and not in the interests of others.

As I tell my students, the whole of political economy is about the influence of power over the allocation of resources in society. The isomorphic model of corporate form is designed to deliver unaccountable power to a few at cost to many. As it has spread the consequences have become more obvious. But so too has the need for the consideration of alternatives, to which far too little attention has been paid. That’s because if the modern cult of microeconomics is good at anything it is good at crushing alternative thought. We’re all paying the price for that.

With Tillerson in Latin America, Monroe is back

Published by Anonymous (not verified) on Wed, 14/02/2018 - 8:38pm in

According to the
Monroe Doctrine, “any attempt by a foreign power to extend its system to any
nation in the hemisphere must be considered as dangerous” by the United States. Español

Colombia's President Juan Manuel Santos, left, listens to U.S. Secretary of State Rex Tillerson during a press conference after a meeting in Bogota, Colombia, Tuesday, Feb. 6, 2018. Photo by Daniel Garzon Herazo/NurPhoto/Sipa USA. PA Images. All rights reserved.

Paradoxically,
the most relevant feature about the recent journey of the US Secretary of
State, Rex Tillerson, to Latin America did not happen in the region, but in the
United States.

When his visit to Mexico, Argentina, Peru, Colombia and Jamaica
was announced, the prominent points in his political agenda were already known:
the very grave socio-economic and political-institutional situation in
Venezuela and the search for a treatment combining stronger diplomatic pressure
on Caracas from several countries of the region and the threat of US sanctions.

Also, as is often the case with the trips of US presidents and secretaries of
State, his aim was to seek more open markets for US exports to the region and to
soften the claims arising from the
difficulties that products from Latin America experience in accessing the
United States.

As history shows, all great powers promote outward openness and
inward protectionism. In times of hegemonic decline, superpowers raise the
level of internal protection, while powers on the rise - such as, currently, China
- promote free trade. Besides some specific issues, such as the question of
drugs in Colombia, Peru and Mexico, apparently nothing new or promising was worthy
of note during Tillerson's tour.

In my view,
the really interesting novelty happened before he embarked on his trip, in
Austin, where the Secretary of State gave an address on Latin America at the
University of Texas. One would be hard-pressed to find a piece of oratory on
contemporary inter-American relations in which a sitting US Secretary of State would
rely more heavily and candidly on the Monroe Doctrine and its deployment in
Latin America.

In his
original message to the US Congress in 1823 and when mentioning inter-American
affairs, President James Monroe had fundamentally Europe in mind. Monroe said
that the United States would "consider any attempt on its part (Europe) to
extend its system to any portion in this hemisphere, as dangerous to our (the
United States’) peace and security". Tillerson, in Austin, identified two
counter-parts threatening US interests in Latin America.

On the one hand, he
referred to Russia, whose "growing presence in the region is
alarming." On the other, he spotlighted China, the projection of which in
the region "offers the appearance of an attractive path", but leads in
fact to "long-term dependency." Consequently, according to him,
"our region must be diligent to guard against faraway powers that do not
reflect the fundamental values shared in the region."

In addition, Tillerson
tried to provide an overview of the historical links between the United States
and Latin America. For this he used some typical examples of Monroism. On the
one hand, he evoked the first inter-American conference in Washington, in 1889,
where Pan-American conclaves to affirm the influence of the United States on
the continent and to avoid interference in the area by other extra-regional
actors got started.

It is obvious that, from a Latin American perspective, several
political expressions have sought, in different circumstances, to limit and
even reverse Pan-Americanism.

President Donald Trump's "America First" strategy is probably, concerning Latin America, the last attempt to restore an obsolete doctrine for the 21st century.

On the other
hand, he recalled that Teddy Roosevelt was the first sitting US President to
travel abroad: he went to Panama in November 1906. The memory of the region about
Teddy Roosevelt is, of course, quite different: he is remembered for his role
in the separation of Panama from Colombia in November 1903, and for the
so-called "Roosevelt Corollary" - a variant of the Monroe Doctrine –
which he formulated in 1904 and became the rationale for American
interventionism in the region to protect US economic interests and ensure its
political dominance (Dominican Republic and Panama in 1904, Cuba in 1906,
Honduras in 1907, Nicaragua in 1910, Honduras in 1911, Honduras, Panama,
Nicaragua and Cuba in 1912, Haiti and the Dominican Republic in 1914, and so on).

Tillerson’s nostalgia
for Monroe was such that answering the question put by the moderator of the
event, historian William Inboden, about his assessment of the Monroe Doctrine -
which will be 200 years old in 2023 -, the Secretary of State said: "I
think it clearly has been a success ... It was an important commitment at the
time and I believe that, over the years that has continued to frame the
relationship (between the United States and Latin America)."

Inadvertently,
the Secretary of State was quite candid: President Donald Trump's "America
First" strategy is probably, concerning Latin America, the last attempt to
restore an obsolete doctrine for the 21st century. 

Sideboxes
Related stories: 

Trump's only interests in Latin America are migration, drugs, energy and technology

Mexico: when Trump only makes things worse

Donald Trump: the wrong man

Country or region: 

United States

Mexico

Argentina

Colombia

Peru

Topics: 

Democracy and government

Economics

International politics

Rights: 

CC by NC 4.0

With Tillerson in Latin America, Monroe is back

Published by Anonymous (not verified) on Wed, 14/02/2018 - 8:38pm in

According to the
Monroe Doctrine, “any attempt by a foreign power to extend its system to any
nation in the hemisphere must be considered as dangerous” by the United States. Español

Colombia's President Juan Manuel Santos, left, listens to U.S. Secretary of State Rex Tillerson during a press conference after a meeting in Bogota, Colombia, Tuesday, Feb. 6, 2018. Photo by Daniel Garzon Herazo/NurPhoto/Sipa USA. PA Images. All rights reserved.

Paradoxically,
the most relevant feature about the recent journey of the US Secretary of
State, Rex Tillerson, to Latin America did not happen in the region, but in the
United States.

When his visit to Mexico, Argentina, Peru, Colombia and Jamaica
was announced, the prominent points in his political agenda were already known:
the very grave socio-economic and political-institutional situation in
Venezuela and the search for a treatment combining stronger diplomatic pressure
on Caracas from several countries of the region and the threat of US sanctions.

Also, as is often the case with the trips of US presidents and secretaries of
State, his aim was to seek more open markets for US exports to the region and to
soften the claims arising from the
difficulties that products from Latin America experience in accessing the
United States.

As history shows, all great powers promote outward openness and
inward protectionism. In times of hegemonic decline, superpowers raise the
level of internal protection, while powers on the rise - such as, currently, China
- promote free trade. Besides some specific issues, such as the question of
drugs in Colombia, Peru and Mexico, apparently nothing new or promising was worthy
of note during Tillerson's tour.

In my view,
the really interesting novelty happened before he embarked on his trip, in
Austin, where the Secretary of State gave an address on Latin America at the
University of Texas. One would be hard-pressed to find a piece of oratory on
contemporary inter-American relations in which a sitting US Secretary of State would
rely more heavily and candidly on the Monroe Doctrine and its deployment in
Latin America.

In his
original message to the US Congress in 1823 and when mentioning inter-American
affairs, President James Monroe had fundamentally Europe in mind. Monroe said
that the United States would "consider any attempt on its part (Europe) to
extend its system to any portion in this hemisphere, as dangerous to our (the
United States’) peace and security". Tillerson, in Austin, identified two
counter-parts threatening US interests in Latin America.

On the one hand, he
referred to Russia, whose "growing presence in the region is
alarming." On the other, he spotlighted China, the projection of which in
the region "offers the appearance of an attractive path", but leads in
fact to "long-term dependency." Consequently, according to him,
"our region must be diligent to guard against faraway powers that do not
reflect the fundamental values shared in the region."

In addition, Tillerson
tried to provide an overview of the historical links between the United States
and Latin America. For this he used some typical examples of Monroism. On the
one hand, he evoked the first inter-American conference in Washington, in 1889,
where Pan-American conclaves to affirm the influence of the United States on
the continent and to avoid interference in the area by other extra-regional
actors got started.

It is obvious that, from a Latin American perspective, several
political expressions have sought, in different circumstances, to limit and
even reverse Pan-Americanism.

President Donald Trump's "America First" strategy is probably, concerning Latin America, the last attempt to restore an obsolete doctrine for the 21st century.

On the other
hand, he recalled that Teddy Roosevelt was the first sitting US President to
travel abroad: he went to Panama in November 1906. The memory of the region about
Teddy Roosevelt is, of course, quite different: he is remembered for his role
in the separation of Panama from Colombia in November 1903, and for the
so-called "Roosevelt Corollary" - a variant of the Monroe Doctrine –
which he formulated in 1904 and became the rationale for American
interventionism in the region to protect US economic interests and ensure its
political dominance (Dominican Republic and Panama in 1904, Cuba in 1906,
Honduras in 1907, Nicaragua in 1910, Honduras in 1911, Honduras, Panama,
Nicaragua and Cuba in 1912, Haiti and the Dominican Republic in 1914, and so on).

Tillerson’s nostalgia
for Monroe was such that answering the question put by the moderator of the
event, historian William Inboden, about his assessment of the Monroe Doctrine -
which will be 200 years old in 2023 -, the Secretary of State said: "I
think it clearly has been a success ... It was an important commitment at the
time and I believe that, over the years that has continued to frame the
relationship (between the United States and Latin America)."

Inadvertently,
the Secretary of State was quite candid: President Donald Trump's "America
First" strategy is probably, concerning Latin America, the last attempt to
restore an obsolete doctrine for the 21st century. 

Sideboxes
Related stories: 

Trump's only interests in Latin America are migration, drugs, energy and technology

Mexico: when Trump only makes things worse

Donald Trump: the wrong man

Country or region: 

United States

Mexico

Argentina

Colombia

Peru

Topics: 

Democracy and government

Economics

International politics

Rights: 

CC by NC 4.0

The Middle East’s new donors: rogues or team players?

Published by Anonymous (not verified) on Wed, 14/02/2018 - 7:50pm in

Turkey and the Gulf monarchies in their savvy, if reactionary, use of aid have become important players in the international donors club.

Participants pose for a group photo during the extraordinary summit of the Organization of Islamic Cooperation (OIC) in Istanbul, Turkey, on Dec. 13, 2017. Picture by Anadolu Agency/Xinhua News Agency/PA Images. All rights reserved.With
his bullet-proof limousines at hand, and an entourage of 1500
conveyed from Riyadh in six jumbo jets, Saudi Arabia’s King Salman
bin Abdulaziz visited Indonesia in March 2017. A pledge of a billion
dollars for “various development projects” was among the
mega-deals signed. The monarch’s other promise of aid, probably of
higher priority, was for education centers to promote Islamic
teachings consistent with Saudi preferences. At the same moment, in
Pakistan, Turkish President Recep Tayyip Erdogan was calling
attention to Turkey’s aid during a summit of Economic
Cooperation Organisation, a group of Muslim-majority states (several
with Turkish cultural affinities) jointly committed to building a
Central Asian common market like that of the European Union.

Such
events highlight concerns, voiced for many years In western
chancelleries and think-tanks, about ‘rogue’ aid wielded by
autocrats. Overtly developmental and humanitarian, such aid is
regarded as covertly political. Where aid is supposed to adhere to
technocratic ‘good practices’ such aid is patently ‘bad
practice’, and poses geo-political risks. ‘Rogue’ donors
include the usual suspects: China, Venezuela and Iran. But some of
them lurk in the west’s own camp, notably Saudi Arabia and others
in the Gulf Cooperation Council (GCC): Kuwait, Oman, Qatar,
and the United Arab Emirates. In addition, Turkey, where a
faith-based political party has steered foreign aid for nearly 20
years, is by no means above suspicion.

The
Gulf monarchies and Turkey are increasingly welcome in the
western-led aid congregation

Especially
awkward for the United States – whose military and diplomatic
protection of the Gulf monarchies and of Turkey has never wavered –
was those states’ covert promotion of Islamic fundamentalism, the
ground from which so many troubles for the US and its allies have
sprung since 9/11. Beyond politico-cultural hazards, their aid also
carried economic risks for western interests. Apprehensions have
grown that new donors are using their aid to gain
lucrative footholds in markets hitherto the exclusive preserves of
western exporters and investors. In command-posts of the aid system
(IMF, World Bank, OECD) there are further concerns that their
worldwide project of diffusing market fundamentalism may be put in
jeopardy. In that scenario, cheap and unconditional loans from ‘rogue
donors’ may weaken recipients’ acceptance of ‘improved’
policies (that is, austerity and other neoliberal measures) that
western donors demand in exchange for their aid.

On
the aid stage, Arab and Turkish donors aren’t big
players. Aid from the GCC monarchies (at least $14 billion in 2016,
up from $1.2 billion in 2000), and from Turkey ($6.5 billion in 2016,
up from $0.1 billion in 2000) attest to their rising importance. In
2016, aid outlays by GCC donors combined ranked fourth (behind the
US, UK and Germany) while outlays by Turkey ranked seventh (after
those of Japan, France, and Italy). Total spending is even larger,
since many transfers go unrecorded, especially those from the Gulf
monarchies, where elites make few distinctions between public and
private money and
where public finance is almost totally opaque.

But
have western fears been borne out? Do Gulf monarchies and Turkey use
aid in ways that violate OECD aid norms, and fuel business
competition and political tendencies unwelcome to western powers?

Over
the past two decades western donors have worked to gain the adherence
of Turkey and the Gulf monarchies to norms and rules of the aid
mainstream, and ultimately to recruit them into their old ‘club’,
the OECD Development Assistance Committee (DAC). Aid system idioms
and policy formulas are transmitted routinely through publications
and gatherings, such as the annual ‘Arab-DAC Dialogue on
Development’. Turkey, Saudi Arabia and Kuwait together with several
Arab development banks are signatories to the OECD-driven Paris
Declaration on Aid Effectiveness (2005) and numerous other statements
of resolve, which focus chiefly on technocratic matters of aid
management. Performance according to these standards seems to be
rising (OECD/UNDP
2016). When selecting recipients
and apportioning them aid, GCC
and Turkish donors behave like western donors
in weakly favouring
recipient ‘good behaviour’ (especially the vaguely-defined ‘good
governance’) and in showing little regard for social and economic
rights.

Today,
having begun to sing from the same policy song-sheets, and having put
some money in UN
and other global collection boxes, the Gulf monarchies and Turkey are
increasingly welcome in the western-led aid congregation. Yet a deep
and genuine interest in management performance, and in recipient
‘good behaviour’ as defined by established donors, is not
self-evident. Of far greater interest to the Gulf monarchies and
Turkey are religious affinities, political allegiance and export
markets. Their aid goes chiefly to states, multilateral development
banks and non-state actors in the Muslim world or Ummah,
preferably of Sunni Islamic persuasions. With exceptions like
Pakistan and Somalia, countries in the ‘near abroad’ of the
Middle East and North Africa have priority.

For
the private sector, aid can be a competitive contest with high
stakes. It helps open doors to new markets for donor economies, and
is often provided on condition that recipients accept goods and
services only from the donor land. Turkey (like the US, Austria and
others) overtly “ties” its aid in that way, but the Gulf
monarchies do not, at least formally. Yet boosting non-oil exports is
a GCC priority, and aid is supposed to play its part in promoting
them. Recipients, for their part, seek aid on the softest possible
terms, especially when money
is conditional on
wrenching and thus politically risky changes of policy, such as the
ending of subsidies for fuel and food. But China offers aid without
internal meddling. Faced with that competition, Washington’s hard
conditions tend to turn soft. Aid from the Gulf Monarchies had such
effects up to 2000, but
no longer
.

Today
the GCC and Turkey pose no challenges to mainstream aid’s leading
paradigms. In terms of developmental vision, they have gone along
with the UN’s Sustainable Development Goals (although Saudi Arabia
wished to see the target on ‘reproductive rights’ deleted). Yet
in practical terms their vision is probably better captured in
statements about their own development, drawn up by the management
consulting firm McKinsey – jokingly referred to as the Ministry
of McKinsey
, a sign of its powerful influence in the Gulf states.

Little
of this aid was invested for productive purposes

Western
powers’ indulgence of this aid is encouraged by the simple fact
that petrodollars are routinely recycled to western financial
interests, notably
on Wall Street
. The story of Arab aid fuelled by an oil rent
boom is illustrative. As revenues flooded into oil-producer
treasuries in the 1970s, Kuwait, Saudi Arabia and the UAE
began an aid-spending binge. Up to the mid-1980s they accounted for
as much as one-third of aid worldwide. It was a massive windfall for
state treasuries of Muslim-majority lands: Egypt, Syria, Jordan,
Yemen, Morocco, Pakistan etc. Subsequent research in pursuit of the
question ‘how is foreign aid spent?’ reveals that little of this
aid was invested for productive purposes. Instead, most went toward
consumption (mainly of imports) or departed rapidly as “huge
unaccounted capital outflows”, probably to offshore accounts in
OECD
jurisdictions
. Recipient
countries benefited only in part, and then only for short-term
purposes; a substantial but unknown number of those benefiting were
private firms and individuals elsewhere.

Risks
remain high that their aid will not yield a lot of development but
instead a lot of debt

Might
today’s aid produce the same results, boosting short-term
consumption and capital flight? Perhaps not to the same extent,
since today both donor and recipient capacities to use aid
productively and transparently are better than 30 years ago. Yet in
the face of continuing indulgence if not promotion of secrecy
jurisdictions, the rise of high-cost ‘public-private partnerships’
and of GCC donor preference to provide loans (notorious as sources of
capital flight) rather than grants, risks remain high that their aid
will not yield a lot of development but instead a lot of debt.

Under
banners of ‘security’ western donors welcome Turkish and Gulf aid
where it might stabilize conflict-prone situations such as Somalia,
where since 2011 Turkey has taken big risks in its aid efforts. Its
interventions have been intense and intentionally visible – so
visible that for one Somali
resident
“Turkey has become the McDonald’s of Mogadishu.
Their flags are everywhere, just like the yellow arches of McDonald’s
are everywhere in America.” Humanitarian action under a Turkish
flag is meant to demonstrate Islamic solidarity and virtue, to
enhance Turkey’s political and diplomatic standing, and not least
to raise revenues through public donations. In recent years, Syria –
that is, support of Syrian refugees in Turkey – accounted for well
over half of Turkish aid worldwide, which includes charitable
donations raised through government sponsored telethons. A
highly-publicised case of humanitarian action was the 2010 ‘Gaza
Freedom Flotilla’: six Turkish ships carrying hundreds of activists
and thousands of tons of relief goods attempted to breach the
blockade of Gaza, but were stopped, with deadly violence, by Israeli
commandos.

Gulf
monarchies have for many decades used their aid for political,
diplomatic and cultural ends, usually to the satisfaction of key
allies in the west.
In the 1970s, the demise of secular pan-Arab nationalism was at
least in part a result of Saudi Arabia’s skilful use of its money.
It routinely bolstered autocratic regimes in Egypt and Morocco and
bankrolled small anti-communist wars such as Siad Barre’s incursion
into Ethiopia and the Mujahidin’s campaign in Afghanistan. It
fortified Muslim inter-state relations pivoting on itself, notably in
the creation of the Organisation of Islamic Cooperation. And for the
time being it has helped contain popular upheavals from 2011 to 2013
across the Arab world.

Less
satisfactory for western allies is the powerful impact of aid used to
diffuse a particular brand of conservative,
yet militant, Islam
. Today, however, a kind of ‘buyer’s
remorse’ is detectable in the Gulf and beyond, since a nihilistic
militancy – the ‘blowback’ from decades of investment in
Salafist/Wahhabi missions, schools and media – has become a
nightmarish threat to the monarchies and their allies.

The
patterns noted here – aid as a seeding-mechanism for business
interests, and especially as a tool of statecraft to gain prestige,
build coalitions and inter-state institutions, and to promote a
transnational ideology – are also commonplace in the aid
mainstream. The spontaneous, rapid and fluid practices of the Gulf
monarchies and Turkey as donors, especially for political ends, would
normally meet disparagement from the donor mainstream. Yet some
established donors may be giving such practices a second look. In its
latest flagship
report

the World Bank encourages aid
strategists to move beyond technocratic approaches and to take
domestic and international politics seriously. In that new
perspective, Turkey
and Gulf monarchies
in their savvy, if reactionary, use of aid may have stolen a march on
western citadels of donor power.

Sideboxes
Related stories: 

The inconvenient truth about foreign aid

When bully boys dictate the West’s agenda, Turkey invades Syria with impunity

Education, Islam and Criticality

How communication technology became a tool of repression: the case of the UAE

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Ask the mountains

Published by Anonymous (not verified) on Wed, 14/02/2018 - 6:47pm in

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Economics

 

Here is a new argument for the Remainers – should be a winner

Published by Anonymous (not verified) on Wed, 14/02/2018 - 12:02pm in

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Economics

Here are a couple of Wednesday snippets on my (alleged) no blog post day. I have a great tip for the Remainers in Britian who are struggling to make any sense in their quest to hang on to the European dream (nightmare!). It is not a new argument but it has resurfaced in the US recently. Apparently, “the top US intelligence official” (words have meaning and intelligence usually means having some brain power) has told the US Congress that “the ballooning national debt … posed a ‘dire threat’ to … national security”. He told the Congress that the “fiscal crisis … truly undermines our ability to ensure our national security”. Truly used to mean something also. So here’s the thing all you so-called British Remainers. This will top your claims that Brexit will increase the rate of cancer in the UK. Just start raving on about threats to national security. A sure winner. It is the argument you introduce when you have run out of any semblance of an argument. Meanwhile, we now know that the British government, while in the EU, helped the right-wing forces (including the CIA) to kill the democracy in Chile in 1973, in what should be considered one of the more disgusting historical episodes. But then Salvatore Allende was clearly a threat to national security. What with all those Chileans that were improving their material standards of living under Allende and all!

The filthy Chilean conspiracy becomes more obvious

On January 23, 2018, the British historian, Mark Curtis, who specialises in the analysis of declassified government documents to analyse British foreign policy, produced a new archive for our benefit – Chile: Declassified.

He collates public articles and also documents that were previously classified under Government rules.

His file (drawn from the National Archives) – Chile, 1971-3 – provides some stunning revelations that bear on this sordid period in World history.

See also the excellent report from Sputniknews (January 23, 2018) – UK’s Secret Support of Murderous Dictator Pinochet – which goes into more detail than I do here.

The democratically-elected government in Chile was overthrown by a military coup (planes, bombs, murders etc), which was instigated by the US CIA and global financial interests.

You can read the declassified CIA documents on their involvement – HERE.

I was always interested in Chile not only because I was deeply angered by the actions of the Right and the brutality that accompanied and followed the Coup.

It was also became a laboratory for Milton Friedman and his goons from the Chicago Economics Department to impose their ridiculous policies onto a nation wtih the help of the IMF, who around then was trying to reinvent itself (after the collapse of the Bretton Woods system).

The behaviour of the IMF in Chile in the early 1970s clearly demonstrated its growing neo-liberal credentials. Their role in the Chilean overthrow of democracy was an early manifestation of their willingness to add their name, authority and resources to the development of the neo-liberal attack on the Keynesian orthodoxy.

Chile was the first notable action by capital to attempt to arrest the falling profit rates in the 1960s, which had arisen as income distribution became less skewed towards to the top end and workers enjoyed increasing employment security and prosperity under the full employment framework.

David Harvey in his 2007 article – Neoliberalism as Creative Destruction – wrote that “the economic threat to the position of the ruling elites and classes was now becoming palpable”.

He recounts how:

The US had funded training of Chilean economists at the University of Chicago since the 1950s as part of a Cold War programme to counteract left-wing tendencies in Latin American. Chicago-trained economists came to dominate at the private Catholic University of Santiago. During the early 1970s, business elites organized their opposition to Allende through a group called ‘the Monday Club’ and developed a working relationship with these economists, funding their work through research institutes. After General Gustavo Leigh, Pinochet’s rival for power and a Keynesian, was sidelined in 1975, Pinochet brought these economists into the government, where their first job was to negotiate loans with the International Monetary Fund. Working alongside the IMF, they restructured the economy according to their theories.

Harvey notes that the Chilean coup demonstrated how profit rates could be restored if trade unions were smashed and public assets sold off to the private sector.

The Chicago Boys and their mentors accepted theories, which were, of course, at the extreme end of Monetarism and free market deregulation. They were Milton Friedman’s intellectual soldiers and together with the military soldiers of the Chilean army, co-opted by Pinochet, they destroyed the democratic movement in Chile and wrecked the economy.

There is no doubt that the IMF was keen to do the bidding of the US government, which was prosecuting the neo-liberal agenda with vehemence on behalf of the large Wall Street firms, which provided massive funding to the Congressional members.

Milton Friedman and his gang at Chicago, including the ‘boys’ that went back and put their ‘free market’ wrecking ball through Chile under the butcher Pinochet, have really left a mess of confusion and lies behind in the hallowed halls of the academy, which in the 1970s seeped out, like slime, into the central banks and the treasury departments of the world.

They forced governments to abandon so-called fiscal activism (the discretionary use of government spending and taxation policy to fine-tune total spending so as to achieve full employment), and, instead, empower central banks to disregard mass unemployment and fight inflation first.

Later, absurd notions such as rational expectations and real business cycles were added to the litany of Monetarist myths, which indoctrinated graduate students (who became policy makers) even further in the cause.

The term “shock policy” originated with Milton Friedman who used the term “shock policy”. It was first applied in Chile by the so-called – Chicago Boys (Friedman’s doctoral graduates).

Of course, they first required the help of the CIA and the Chilean military to overthrow the democratically-elected Allende government and then brutalise the population (torturing and murdering dissenters who wanted respect for the democratic voice of the people) into submission.

This approach was then taken up by others, including Jeffrey Sachs who coined the term “Shock Therapy” in the mid-1980s, when he was hired to turn these mad ideas loose on Bolivia (1985), who were unable to meet the harsh debt repayment schedules demanded by the IMF.

Sachs is now parading as a progressive. A rat is a rat.

But now we have more understanding of the role that Britain played in the Chilean coup courtesy of some declassified material that Mark Curtis has collated.

I won’t go through it in detail but among other things we learn that:

1. Britain was upset that its “major interest in Chile … copper” was under threat because Allende wanted to nationalise the sector.

2. The British Ambassador to Chile at the time wrote to the UK Foreign Office on September 3, 1973 about his “first impressions” on Chile.

He wrote just before the Coup was that “One option for Chile future is a coup”:

If this were followed by a military-guided regime, or subsequently by elections bringing in a moderate, democratic government, I suppose one could look to an eventual revival with the help of American credits and some kind of Marshall Aid. It is on this that the business community are pinning their hopes.

He acknowledges that the “business community” were pushing for a military dictatorship to get rid of Allende.

In the same Memo, he wrote:

… many people in the poorer and depressed sections of the community have, as a result of President Allende’s administration, attained a new status and at least tasted, during its early days, a better standard of living,

On September 14, 1973, three days after the Coup, the British Ambassador wrote:

The coup was carried out efficiently and with a cold-blooded, surgical approach untypical of the Chilean character … It is likely that casualties run into the thousands, certainly it has been far from a bloodless coup”.

But the British government already knew that.

On September 13, 1973, the British Foreign Secretary Alec Douglas-Hume wrote:

Circumstances of Allende’s overthrow and death render this case delicate… Accordingly we consider that it would not be in anyone’s interest to identify too closely with those responsible for the coup … But we still have enough at stake in economic relations with Chile to require good relations with the government in power.

So, never mind the murders and the slaughter. We adopt the ‘blind eye’ approach and get on with business as usual with the dictatorship.

Seven days after the Coup (September 18, 1973), the British Ambassador wrote:

I think I should make clear that, whatever the excesses of the military during the coup, the Allende administration was leading the country into economic ruin, social disorder and political chaos.

Yes, because the poverty was being reduced and the vast majority of people were starting to enjoy a “better standard of living”.

Can’t have that, can we?

And, next day (September 19, 1973), he showed his true colours:

Most British businessmen, whether they have investments here or are interested simply in exporting to Chile, will be overjoyed at the prospect of consolidation which the new military regime offers … Those British subsidiaries and investments which have emerged from the last three years relatively unscathed – [various including Shell] … – are all breathing deep sighs of relief … One thing does seem certain to me. Now is the time to get in. If we delay too long, while we may not miss the bus, we are likely to have difficulty in finding a comfortable seat”.

The correspondence continued and it was clear that the British government was seeing the new military dictatorship as a major source of export revenue via arms Deals.

The UK Ambassador wrote on October 1, 1973:

Circumstances also will push them into directions which British public opinion will deplore. But this regime suits British interests much better than its predecessor …

Various other exchanges between British officials confirms that the British export of arms (Hawker Hunter planes etc) would accelerate to the Dictatorship.

Never mind that:

1. During the Coup, “Chilean Air Force Hawker Hunters were putting on an impressive show of force… the Hawker Hunters dived down at the Moneda Palace and with remarkable accuracy released their aerial rockets. These did much damage and set the Palace on fire. The President’s residence on the outskirts of the city, where resistance was encountered, was similarly attacked”.

2. “There are lots of stories of deliberate killings and brutalities … There were reports of summary executions of some of those who resisted the Armed Forces, and the large-scale round-up of government supporters and sympathisers, particularly foreigners. Several thousand were held in the football stadium where some received very rough treatment.”

3. “As to the ruthlessness of the coup, the military would argue that half-measures or a ‘soft’ coup would not only have been ineffective but would have led to prolonged civil war.”

But “the current regime has infinitely more to offer British interests than the one which preceded it. The new leaders are unequivocally on our side and want to do business, in its widest sense, with us. I hope that Her Majesty’s Government will respond”.

And so it goes.

This was a case where a nation that was ‘reclaiming its state’ to enhance the lives of normal people was invaded by foreign capital using the military. It set a scary precedent.

Here is my band – Pressure Drop – recalling the event (I wrote this song in 1978, this version was recorded live in May 2011).

Play it loud and get angry.

This is what I am listening to while working today

Now, to calm us all down after thinking about Chile, here is something.

This is the complete CD – In the Mood for Love – by Japanese composer https://en.wikipedia.org/wiki/Shigeru_Umebayashis, which was released in 2000.

Conclusion

Relaxed now.

Upcoming fundraising event – Melbourne, Friday, February 16, 2018

I will be talking about our latest book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017) – in Melbourne on February 16, 2018.

This event is to help the Bookshop which has been one of the only places you can buy alternative literature in Australia. It has been around for decades and is my favourite bookshop. I receive nothing from the entry fee.

More details:

Here is the flyer. The Bookshop tells me that they are happy for this to be circulated widely.

MMT University Logo competition

I am launching a competition among budding graphical designers out there to design a logo and branding for the MMT University, which we hope will start offering courses in October 2018.

The prize for the best logo will be personal status only and the knowledge that you are helping a worthwhile (not-for-profit) endeavour.

The conditions are simple.

Submit your design to me via E-mail.

A small group of unnamed panelists will select the preferred logo. We might not select any of those submitted.

It should be predominantly blue in colour scheme. It should include a stand-alone logo and a banner to head the WWW presence.

By submitting it you forgo any commercial rights to the logo and branding. In turn, we will only use the work for the MMT University initiative. It will be a truly open source contribution.

The contest closes at the end of March 2018.

That is enough for today!

(c) Copyright 2018 William Mitchell. All Rights Reserved.

What we can expect from the US economy

Published by Anonymous (not verified) on Wed, 14/02/2018 - 9:07am in

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Economics

Future prospects for the US economy and US dollar following Trump corporate tax cuts

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