Re: ECONOMICS: Globalization and corporate power

From: Robert J. Bradbury (
Date: Thu Aug 23 2001 - 08:40:40 MDT

Mike wrote (responding to my post):

> It does seem that way, especially if you base your opinions
> only on the arguments of one side.

Mike, as I thought my letter indicated, I started out thinking
the piece was completely slanted, but in trying to extract
the data underlying the arguments there appeared to be some
merit to the case.

> US farm subsidies are actually quite low at the moment, only a few
> billion for a multi-hundred billion dollar industry.

You have to resist making these claims unless you happen
to have the data to back them up. I just happened to have
downloaded a spreadsheet about farm income from
a few days ago (I'm trying to calculate the eventual market
sizes for products Robiobotics might allow the development of)
and so I can calculate the numbers for you.

In 1999 (the last year available), total "Farm marketings" were $188.6B.
"Government payments" were $20.6B or almost 11% of the "marketings" value.
Now I realize that that isn't a *huge* number but it isn't a "few billion"
either. I'll simply point out that I'm fairly sure it is larger than the
entire NIH budget and very sure that it is much larger than the NASA budget.
Them there ain't chicken feed son. The payments were lower through most
of the '90s ranging from $7-9 billion -- amounts that could certainly
buy a lot more medical research or space missions.

> Yes, this does seem inequitable, unless of course you consider the
> record of third world countries in defaulting on loans, late in
> payments, etc.

I'm no expert on the history here, but if the premise I laid out is
true, then we (or the IMF + world bankers) have created the sitution.
And I recall at least one period back in the '80s where the bankers
went running to the government and had to be bailed out. I believe
I posted something recently about the article involving U.S. CIA
involvement in the current mess in the Congo -- if we contribute to
setting up western oriented "dictators" then they get toppled later,
the country goes belly up and the loans don't get repaid -- can you
really blame those countries? Haven't we made our own stew?

> Keep in mind also that native jamaicans don't own the banana plantations
> in Jamaica either, they are owned by Brits.

Granted that this "might" be true, the issue is jobs here. No
banana market translates to no jobs translates to idle people
with nothing to do but resort to criminal activities to support
themselves. Probably contributes to greater availability of
marijuana (not that I object to this) but that leads to greater
evidence of a "problem" that must be "controlled" leading to
outcries for and support for "The Drug War".

The other points I mainly agreed with.

The Lee commented:

> But someone in Jamaica still has money to buy the foreign goods.

Ah, but this is where you have to get into the "fine print"
of the IMF contracts. The IMF says "no you can't loan money
to your farmers (at reasonable interest rates) to allow them
to develop industrial agribusiness infrastructure". Presumably
you can use the money to build things like schools, hospitals,
roads, etc. But that doesn't make the country more productive
(in the short term). As a result you don't have the national
income that would allow you to repay the loan. What happens?
When your loans don't get repaid you go *back* to the IMF
and request an even bigger loan (or argue for debt relief).
These countries don't have enough global awareness to say
something like we are going to take $1B and develop a world-class
biotechnology industry or something equivalent that could
potentially provide real long term opportunities for their

> Why can't the farmers do whatever those people are doing?

Well, I suspect some of the people do get employed for things
like building the schools, roads, etc. But once the loan
money runs out -- then what do they do? The TV show pointed
out that a lot of them get employed in the tourist business.
Thats great but its seasonal. The show also pointed out
that the investment isn't being made in things like sewar
plants that will protect the "beautiful environment" from
those hordes of tourists. So eventually the country will
be depleated of its "natural resource".

Fundamentally I think the system is messed up because I don't
think the bankers would really want to lift up foreign countries
so they really effectively compete against the U.S. and the
foreign countries don't have sufficient awareness and experience
in development to know how they should expend the borrowed
funds to develop the infrastructure to provide sustainable
revenue to repay the loans.

In another note, Lee said that I said:

> Extending credit to [third world] countries [which have for some
> reason or another little potential to create wealth] is like giving a
> platinum card to a recovering shopaholic who lives on welfare: i.e. a
> really really dumb idea.

Actually, that was Mike Lorrey's rhetoric, *not* mine.

Then Lee suggested having profit-minded bankers figure out how
to develop a country by confining their investment to it but
require they try to make the largest possible profit.

My response is that it has been done by the Grameen Bank and it
works very well. The trick is to *not* target the money for
large infrastructure projects (the things that prop up political
figures that bring home loans from the IMF) but instead to target
micro-loans ($100-$500) to individual entrepreneurs *AND* put them
into support groups where they can learn from each others business
experience, develop accounting skills, etc. Strategies like
that have proved very successful at uplifting people. But
that isn't how the IMF operates.

It looks to me like the deck has really been stacked and
that the anti-globalization folks do have some arguments
worth listening to. As Anders points out, you want to
do this but you don't want to do it all at once. The
trick is to use the finds wisely enough and to implement
the tariff changes gradually enough that the people have
time to change their behaivor, learn new skills, develop
other sources of income, etc.


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