The Asian model of development, which is based on a free flow of capital and of dependence on exports, was something that was taught to us by the United States and by institutions like the World Bank and IMF. And now this model is suffering a major setback.
The food crisis that we had, last year, the shooting up of prices, the shortages of food and so on, were caused partly by speculation, as now you see that the prices are now shooting down. So we had the financial markets that actually led to this crisis in housing and in joblessness also affecting food through the mechanism of financial speculation. So we have to really regulate and stop this financial speculation.
But secondly, the food crisis in many parts of Africa, for example, or even in Latin America, was also partly caused by the wrong advice given by the International Monetary Fund and the World Bank. They went to Africa and told the African governments to stop investing in agriculture and to reduce their subsidies in agriculture, to stop buying products from the farmers on the ground, that subsidies are bad for the Africans. And what happened was that the tariffs were also reduced. The tariffs for food products was also reduced in many African countries, and as a result of which cheap rice, which was subsidized in the United States, or cheap chicken that is subsidized in Europe, flooded the markets in Ghana, in many parts of West Africa, and so on, decimating the agricultural sector.
So this is the period where we have to review the entire way in which we view food. President Clinton in the United Nations last month actually said—he admitted that “we blew it,” including himself, that we gave the wrong policies to Africa, we imposed on them, and we have to rethink all our policies.
When you’re a poor country, you know, and you don’t have efficient industries, then you have to protect your domestic industries from cheap imports coming in, especially the cheap imports that are subsidized. Now we are finding in the financial crisis a big hypocrisy, in that the rich governments, like the United States, are telling the rest of the world to continue to open up their economies when the US is pumping trillions of dollars of subsidies to their companies which would otherwise have failed.
So if our developing countries are to open up our markets, we will find failed motor car companies, as in Detroit, being able to sell their cars more cheaply abroad because of the subsidies given to them; failed banks like Citibank will be able to invade developing countries, where our banks, our local banks, are also going to fail, but we don’t have trillions of dollars to prop up our failed banks, and we don’t want the failed banks of the United States or Europe or Japan to come and invade our territory.
So this “Buy American” clause in the stimulus package, you know, you are going to spend an extra $800 billion through public expenditure, much of it will be in public works and so on, but if the products, the steel and the manufactured products that go into these projects, have to be sourced from the United States itself, then this will block out products coming from Asia or from Africa or from Latin America, and therefore add onto the gloom that we are already facing with the collapse of our exports.
If we are able to find $4 trillion to subsidize banks and motor car companies in the space of five to six months, surely we can come up with $100 billion for a start to launch a fund within the United Nations to help the developing countries to tackle climate change. If we do not have such a fund, then we will—I believe we will find it very difficult to have a global deal to deal with climate change, and we are going to face an environmental devastation.
So, in a way, the economic crisis has been positive, in that it has shown us that if there is a political will, that trillions of dollars will be possible. And what greater cause can we devote than to come up with helping the developing countries to deal with climate change and poverty at the same time?
when people are economically insecure, when they don’t have jobs, when they are in poverty and there is no hope in the system, then, of course, they will have to turn to whatever means they think they need to do out of sheer frustration and hopelessness. So we need to tackle the problem of jobs and poverty in the developing countries. And unfortunately, with the recession that began in the United States, the economy is going to plunge in the developing world. So we need to rethink the way the global economy is run, and we have to give the freedom to developing countries to have the policy options that they require to rebuild their economies with the help of finance and technology and with—at the same time, they need to tackle climate change side by side.
Gordon Brown, the UK prime minister’s chief economic adviser, Ed Balls, saying last week that this depression is going to be worse than the Great Depression, it will be the worst depression in more than a hundred years, and that the effects are going to last for fifteen years.
We have already seen 20 million jobs lost in China in the last few months. And this is only the beginning. I know the trade unions are very worried about China. And you have lost three million jobs in the United States, but in China they have already lost 20 million jobs because of the loss of exports to the United States and the rest of the world. And this is only China. What about Africa? What about so many other countries? We could have one billion more people in the developing world plunging into new poverty because of this crisis.
Martin Khor at DN
Martin Khor, economist, journalist and director of the Third World Network, based in Penang, Malaysia, that advocates on behalf of citizen groups across the global south on environmental sustainability and the impact of corporate-led globalization. He is also an adviser and consultant to a number of United Nations agencies and the author of several books on WTO reform, international trade and the global economy.
– from democracynow