Friday, November 14, 2014

Am I naive? (2)

Notwithstanding my observation or belief that we are all small capitalists or want to become small capitalists, or rather, just because I think we all are, or almost all, I believe that we need to look beyond our own small interest and think about the fate of the others, of the larger community, the local and the world community, and about the fate of nature.

Only then we will be able to understand how change can be brought about and how, in the past, change has been brought about. Because that is exactly what our parents, grandparents,  greatgrandparents, and we have done: creating public utilities, creating a social welfare system, adopting measures to preserve nature, adopting measures to reduce CO2...

And rather than privatising public utilities and reducing the role of the state, we have to maintain or increase the role of the state.

If the world would only consist of small capitalists, or even worse, if it were dominated by big capitalist corporations, there is little hope that we can maintain or create a just and responsible world in which equality and the conservation of nature prevails.

Am I naive? (1)

A friend of mine, an economist working at one of the international financial institutions and commenting on a previous post, asked me how I could be so naive to think that social scientists would do their work "regardless of the interests of individuals and institutions"???
The three questionmarks were his.

He then continued (refering to my earlier proposal to form a G24 or G25 to change the world) saying that most parliamentarians know exactly what needs to be done to improve the world and that, if problems are not solved in the direction we want, it is not because of a lack of ideas of how to improve the global economic system but because a few own the economic wealth, a few more share in the distribution of income and both defend tooth and nail (vigorously) that wealth and income.

I am less naive than my friend thinks, because in my view it is not only the so-called 1 percent who defends their interests and the global economic system, opposite to the other 99 percent of the population, but it is a majority who defends it!!! In my view, the system is maintained by a large group (a majority?) of what I would call 'small capitalists' and those who would like to become small capitalists. 

Yes, I am one of those small capitalists and I suppose you are too. And even though we may wish to change the system, reality is that we support it and benefit from it, in various ways (even though we may also suffer from it.)

Do you disagree?

My economist friend said something else worth quoting, "The distribution of world income is much worse than the distribution of income in the most unequal country of the world and, in its turn, wealth is much worse distributed than income."

Finally, my friend said that the message in my previous post that we, the experts, should be nice and explain to people how to improve the world seems to underestimate their capacity.

Thursday, November 13, 2014

The power of the 'experts' - El poder de los 'expertos'

Pretenden que la política económica, y sobre todo la política financiera y monetaria, es una cosa para expertos. Pretenden también que el manejo del sistema financiero y monetario global es una cosa para expertos. Los que dicen y piensan eso son pretensiosos.

Sin embargo, el experto que no intenta explicar las posibles opciones en el manejo de la política económica y del sistema financiero global a 'un niño curioso,' no es un experto a quien podemos confiar el rumbo de la política económica. El verdadero experto entiende que debe buscar y explicar las opciones, porque no puede ser que el o ella determina la política económica. Es el pueblo, por medio de un proceso verdaderamente democrático, que debe determinarla. 

Una de las maneras en que un grupo (una casta?) de expertos, trabajando en las instituciones económicas nacionales e internacionalse, mantiene su poder es pretender que 'los que no saben' no deben interferir en el diseño y la aplicación de 'sound economic policies'.

Hasta cuando les damos ese poder?

Ahora digo lo mismo en inglés:

They claim that economic policy, especially financial and monetary policy, is a thing for experts. Also they claim that the management of the global financial and monetary system is a thing for experts. Those who say and think this are pretentious.

However, the expert who does not attempt to explain the options in the management of economic policy and the global financial system to 'a curious child,' is not an expert whom we can trust the direction of economic policy. The true expert understands that he or she should look for and explain the options, because it can not be that he or she determines economic policy. It is the people, through a truly democratic process, that should determine.

One of the ways in which a group (caste?) of experts working in national and internacional economic institutions maintains its power is by claiming that 'those who do not know' should not interfere in the design and implementation of 'sound economic policies'.

Until when do we give them that power?

Wednesday, November 12, 2014

How to achieve truly international cooperation?

Too many social scientists are busy with maintaining or improving their position and/or of that of the organisation they are working for. This prevents truly international cooperation and stimulates work that is geared towards defending certain 'scientific' positions or postures or stances and often results in analyses that come close to propaganda or whitewashing existing policies -- without making explicit that they serve that interest.

Maybe this unfortunate state of affairs is in particular present in economic policy analyses and is less present in fundamental economic research that makes explicit the assumptions of the research.

To apply my thought on the need for a better world economic system: how could we stimulate social scientists to work jointly -- regardless of the interests of individuals and institutions -- on a plan that suggests how the world economic system could be improved?

Obviously, such a plan needs to be discussed democratically, by all nations. And obviously, this should be done in a truly democratic way and not in the current way in which people are degradated and used as a flock of animals who, by voting in elections, serve to legitimise current unequality, poverty and economic and social injustice.

Thursday, November 6, 2014

Cornel Ban on doctrine shift in the IMF

In a new Working Paper, GEGI's co-director Cornel Ban discusses recent shifts in IMF doctrinal policy as a result of the financial crisis. He argues that well-informed countries now have more ability to negotiate their fiscal policies and dictate their own terms while utilizing IMF funding. 

These policy shifts are of critical importance to emerging economies that seek to maintain their autonomy while engaging with international 
institutes of finance.


Executive Summary

During the 1980s the IMF emerged as a global "bad cop," demanding harsh austerity measures in countries faced with debt problems. Has the Great Recession changed all that? Is there more room to negotiate with the Fund on fiscal policy?

The answer is yes. If we take a close look at what the IMF researchers say and what its most influential official reports proclaim, then we can see that there has been a more "Keynesian" turn at the Fund. This means that today one can find arguments for less austerity, more growth measures and a fairer social distribution of the burden of fiscal sustainability. The IMF has experienced a major thaw of its fiscal policy doctrine and well-informed member states can use this to their advantage.

These changes do not amount to a paradigm shift, a la Paul Krugman's ideas. Yet crisis-ridden countries that are keen to avoid punishing austerity packages can exploit this doctrinal shift by exploring the policy implications of the IMF's own official fiscal doctrine and staff research.  They can cut less spending, shelter the most disadvantaged, tax more at the top of income distribution and think twice before rushing into a fast austerity package.

This much is clear in all of the Fund's World Economic Outlooks and Global Fiscal Monitors published between 2009 and 2013 with regard to four themes: the main goals of fiscal policy, the basic options for countries with fiscal/without fiscal space, the pace of fiscal consolidation, and the composition of fiscal stimulus and consolidation.