November 06, 2005

Anti-globalization = Pro-poverty

Predictably, the riots in Paris and Brazil have been greeted with gleeful hand-rubbing in moonbat quarters ("I never thought I'd live to see it! The worldwide conflagration has finally arrived!). The familiar suspects are trotted out, lumped together and dealt blunderbuss blasts: the rich, Global Capital, free markets, racism, fascism, neoliberalism, etc.

Chirac and Sarkozy are thoroughly obnoxious – granted. Most sane people would also agree that the economic situation is a primary factor in the Paris riots, though there might be disagreement on what constitutes ‘poverty’ and ‘slums’. However, the suggestion that the ‘poverty’ in the Paris suburbs is largely a result of France’s long-term economic nationalism and determined anti-liberalism might be a bit harder to take on board.

Excerpts from here and here.

“The economic integration of the Continent's 450 million consumers into a prosperous single market—the EU's raison d'etre since its creation after World War II—has come to a virtual standstill. At the same time, growing numbers of Europeans have awakened to the threat of globalization, with little agreement on how to cope. On one side are the core economies of the continent: Germany, Italy and France, all stagnating yet determined to preserve their vision of a "social Europe" that protects citizens from too much change. On the other side: Britain and the Scandinavians, who want to meet the challenges of globalization by staying competitive, flexible and attuned to the fast-changing demands of the market.

If this means a re-emergence of economic nationalism, Europe's economy can only suffer. When France and Italy led a drive to impose EU-wide quotas on Chinese textile imports earlier this year, they may have temporarily saved a few jobs in a handful of factories. But they hurt many other companies, especially retailers, not to mention consumers who depend on cheap Chinese imports. This spring, Germany and France cut down the EU's landmark effort to create a Europewide market in services, which make up 70 percent of the continent's economy. That means they'll forgo an estimated 600,000 extra jobs, according to the European Commission. At best, further integration is now stalled. At worst, the EU could see protective walls between its members re-emerge, putting much more at risk than strategic French casinos.”

“… despite the spectacular rise in living standards that has occurred as barriers between nations have fallen, and despite the resulting escape from poverty by hundreds of millions of people in those places that have joined the world economy, it is still hard to convince publics and politicians of the merits of openness. Now, once again, a queue is forming to denounce openness—ie, globalisation. It is putting at risk the next big advance in trade liberalisation and the next big reduction in poverty in the developing countries.

In Washington, DC, … Charles Schumer threatens a 27.5% tariff on imports from China if that country does not revalue its currency by an equivalent amount. In Mr. Schumer's view, presumably, far too many Chinese peasants are escaping poverty.

And ministers from Bastiat's own country, France, have vied with one another to denounce all talk of further reform to the EU's common agricultural policy. Europe must, they say, remain an “agricultural power” even at the expense of the taxpayer and the poor, and, according to President Jacques Chirac, must fight back “liberalism”. Whatever happened to Liberté, Egalité, Fraternité?

The risk is that failure to agree on a new wave of openness during a period (the past two years) in which the world economy has been growing at its fastest for three decades, with more countries sharing in that growth than ever before, will set a sour political note for what may well be tougher times ahead. A turn away from trade liberalisation just ahead of an American recession, say, or a Chinese economic slowdown, could open up a chance not just for a slowdown in progress but for a rollback. Currently, for example, the Schumer bill to put a penal tariff on Chinese goods looks unlikely to pass. If American unemployment were rising and world trade talks had turned acrimonious, that might change. So might the political wind in many developing countries.

If so, that would be a tragedy for the whole world. Although the case for reducing poverty by sending more aid to the poorest countries has some merit, the experience of China, South Korea, Chile and India shows that the much better and more powerful way to deal with poverty is to use the solution that worked in the past in America, western Europe and Japan: open, trading economies, exploiting the full infrastructure of capitalism amid a rule of law provided by government. In other words, globalisation.”

Posted by sd at November 6, 2005 09:08 PM | TrackBack




Pedictably enough, utterly obsessed by this topic at the moment. European Intifada? There are interesting arguments both ways - but no need to get too excited, because this is empiricism in action (at last). Near-future history will decide.
Worth remembering that the tactics of deliberately holding provocations below the level seen as media-worthy of extreme response, especially using children (as young as possible) is taken straight from the Palestianians (I've stolen this from a web comment somewhere, but brain so feverish there's no chance of recalling where).
My predication: As far as rotting Old Europe ripped apart by maniac jihad is concerned - You ain't seen nothing yet.

Posted by: Nick at November 7, 2005 11:01 AM



What evidence is there for strong jihad involvement? From what I've read it seems to be pretty much teenage-rage, torch-a-car, kill-a-cop kids stuff.

Muslim radicalism has doubtlessly stoked the fires, but it's a fact that the communities have been discriminated against.

For the moment I'm more interested in the raw economics at work. The Chirac anti-globalisation/ protectionist stance and policies, coupled with EU stagnation-soci*lism, have attempted to insulate French society from both world markets and the immigrant communities which it got in payback for its colonies. An open and fully liberalised economy would tap into the competitive potential of these communities rather than ignore and discriminate against them. Chirac's economic nationalism is a form of civil war which pits the nostalgic meme of Republican France as an agricultural power against the potential of a modern, nomadic-migratory, knowledge-based economy. France's determination to protect unfeasible agriculture in the form of taxes and subsidies has a direct link to the absence of wealth in other sections of the population. The borders of France are economic and mental, rather than geographical.

Posted by: sd at November 7, 2005 10:55 PM



I'm also interested in how the hard left are tied into hoping for greater chaos, poverty and social catastrophe:

"Ironically, the interests of 'the cause' sometimes meant that the people's conditions had to deteriorate even further, to bring about the final cataclysm. 'The worse, the better,' as Chernyshevsky often said (meaning the worse things became, the better it was for the revolution). He had advocated, for example, the emancipation of the serfs without land in 1861 on the grounds that this would have resulted 'in an immediate catastrophe.'... It was a doctrine that Lenin was to follow. During the famine of 1891 he opposed the idea of humanitarian relief on the grounds that the famine would force millions of destitute peasants to flee to the cities and join the ranks of the proletariat: this would bring the revolution one step closer." Orlando Figes 'A People's Tragedy' p129.

A point worth making here is that yearning for the Singularity couldn't be more opposed to yearning for soci*list revolution. The Singularity's emergence requires the economy to keep growing at the exponential rate that it has been on for the past few centuries. The Singularity demands that there be stacks more money circulating in the economy, more wireless Internet connections, more literacy, more trade, more migration. If the Singularity will be catastrophic, the question is: who for?

Posted by: sd at November 7, 2005 11:01 PM



Of course, Chavez is the current darling of the left's anti-globalisation foaming. But the markets seem to be too firmly in place for his petrodollar-soci*list spending spree and his commie-military chic to pose a protracted threat to the region.

"For all his talk about 21st-century soci*lism, Chavez has stopped well short of calling for the abolition of the Venezuelan private sector. Apart from hiking the taxes that international oil companies must pay and forcing changes in the contractual terms that govern their operations, Chavez has largely allowed these pillars of international capitalism to go about their business. That has prompted criticism and second-guessing from supporters on the president's left flank. "If we have an anti-imperialist discourse here," retired university professor Elie Habalian wondered aloud during a recent meeting at the Venezuelan Foreign Ministry, "why are we welcoming the chairman of ChevronTexaco?"

Chavez's real influence may be rhetorical. He is not about to alter economic policy in Latin American giants like Argentina and Brazil, where Presidents Nestor Kirchner and Luiz Inacio Lula da Silva have revived their economies in part with market-friendly fiscal policies. But the Venezuelan leader's demonstrated ability to defy Washington and get away with it will only encourage fellow leftists like Morales and Ortega to step up their bashing of the Bush administration on the campaign trail."

Newsweek (Victor: Hugo

Posted by: sd at November 7, 2005 11:15 PM



France-in-flames map (via Instapundit):

Jihad investment probably more an anticipated cascade effect that an efficient cause, but Captain's Quarters has something interesting: discussion (multiple threads) is excellent, with commenter thibaud expressing scepticism as to relevance of Jihad narrative.

My take: these events will require a guiding narrative to sustain themselves, does anyone really think the poor-unemployed-saps story is going to put as much fire in their bellies as warriors-of-global-jihad?

Posted by: Nick at November 7, 2005 11:26 PM



(Also via Instapundit) - Wide range of French Insurgency links:

Latin America seems to be among the world's great exemplars of the effects of getting politics-economics sequencing wrong. Once democracy infested with populist demagogues is in place, economic sanity seems almost impossible. Reform process in India is suffering from the same problem.
Best solution? Federal fragmentation and other forms of geographical competition - optimally using Special Economic Zones - in order for historical learning to take place through comparison of neoliberal growth with soci*list stagnation. Slow painful and inefficient, but given human stupidity probably the only way forward.
Latin America is quite depressing taken as a whole, but Chile, Colombia and perhaps Peru are doing OK. If Mexico got its act together, things would really begin to look up. Chavez, of course, is a catastrophe, and the Argentinian regime is completely delinquent. Lula's not been anything like as disastrous as many had feared, but given Brazil's potential the dithering and waste there is beyond tragic.

Posted by: nick at November 8, 2005 01:37 AM



Osama’s Dream by Lucio Caracciolo @ Heartland

Posted by: northanger at November 8, 2005 01:52 AM



'Intifadist' picture of the riots:

Not sure 'the economics' is analytically extricable from the overall situation anymore. Jihadism has replaced marxism as the basic matrix of antimarket reaction, so the obstacles faced by liberalizing trends inevitably tip-over into WWIV issues (just as, during WWIII, economic policy was inextricable from Cold War politics).

Posted by: nick at November 8, 2005 02:02 AM



Two very different takes on the Euro mayhem at TCS from
Stephen Schwartz:
Nidra Poller:
(I suspect both contain much truth)

Posted by: nick at November 8, 2005 03:02 AM



Original missed reference (on Intifada tactics), Jonathan Gewirtz at Chicagoboyz:
(exemplary article of its kind - begins with a puzzling empirical problem and sets out to answer it)

Posted by: nick at November 8, 2005 04:32 AM



God help them, and us, if they give in and grant the [fill in blank] some kind of formal autonomy within .... the anglosphere.

Posted by: northanger at November 8, 2005 05:14 AM



northanger - ???

Popped in to Kevin Drum's Washington Monthly to see what the lefties are saying about the (France in flames) situation, and guess what? There's actually a sane an engaging conversation taking place ... weird (maybe it's because Bush isn't involved).

Posted by: nick at November 8, 2005 05:24 AM



?? = rephrasing a comment from your last link.

Posted by: northanger at November 8, 2005 05:40 AM



Holy cow northanger, am I supposed to rote learn every link now? The point you're trying so subtly to make is [fill in blank].

Posted by: nick at November 8, 2005 06:04 AM



[fill in blank] = smart boy.

Posted by: northanger at November 8, 2005 06:18 AM



Nick - thanks for the links, Tech Central particularly interesting.

Wondering how specific to France the situation is. On one hand there's unabashed Le Pen bigotry and nostaligic economic protectionism/nationalsim, on the other you've got the appeasing, Palestine-pandering left and migration of Islamic extremism from North Africa. This recipe for disaster is not replicated in other European countries such as Germany, where bigotry is not expressed so publicly, where there is less discrimination, and with migrants from more secular countries like Turkey. France seems to have created a unique, complex hell for itself.

"Not sure 'the economics' is analytically extricable from the overall situation anymore."

However much memes might vandalise, block or steer the economy, the economy remains primary.In TS, Kurzweil has graphs of exponential growth from different angles of the economy. His comments:

"Most important, recessions, including depressions, represent only temporary deviations from the underlying curve. Even the Great Depression represents only a minor blip in the context of the underlying growth. In each case, the economy ends up exactly where it would have been had the recession/depression never occurred."

On a fundamental level, globalisation is oblivious to memes.

Posted by: sd at November 8, 2005 10:18 AM



sd - on last point I concur. The resilient sovereignty of the economy is a 'phenomenon' worthy of directed attention - plagues, wars, religious insanity: once the basic technocapitalist motor gets running everything else is epiphenomenon. It's not that the economic isn't at the heart of what's happening in France and elsewhere, rather: the Intifada narrative is itself ultimately based on the economic undercurrent which organizes it as a complex reaction.
Where I might peel off from Kurzweil (as cited) is the notion that economic growth is basically impervious to policy, or in other words that the degree of economic liberalization is irrelevant to long-term growth - this seems to me a definite overstatement. The sensitivity of economies to liberalization is both remarkable and ever more pronounced as techno-social complexity grows. For instance, Latin America is undoubtedly sacrificing giant chunks of its future to its stubborn antimarket behaviour. It won't ever get that back (the principle of increasing returns ensures it).

Posted by: Nick at November 8, 2005 10:55 AM



one ticket admits one to the derelict villages of southern france -- speedy AUTO nomy paraphernominicheans delivered upon arrivallavirra ad in fin itum

Posted by: admissionary at November 8, 2005 11:27 AM



Kurzweil has staked everything on apparent overstatement. From one perspective this involves peeling back the crude and confused meme layer to uncover the deeply counter-intuitive processes at work, from another it is part of the self-fulfilling prophecy of the Singularity: if there is a consensus that the economy is on an irreversible, explosive curve of exponential growth, then the economy gets a massive confidence boost and climbs further up the curve.

I think that at a certain point the degree of economic liberalisation does become irrevelant - as far as this liberalisation is implemented through conscious policy. The benefits that the technocapitalist motor brings are so relentless and patently obvious that 'opting' for soci*list stagnation (when, as you point out, neoliberal growth is a ready-to-hand empirical reference point)is not a realistic or sustainable option in the long run. For all his antimarket bravado and idiocy, Chavez is in thorough complicity with Capital and the private sector. Kurzweil points to the profound deflationary trends that are in motion: year by year, technology is getting both better and cheaper. This is unstoppable and will have an inevitable global impact - as soon wireless connects up the poorer countries then global trade will be a simple fact. Only a determined and ruthless totalitarian state would be able to stop it.

[maybe a post on deflation?]

Posted by: sd at November 8, 2005 11:44 AM



sd - just been reading Virginia Postrel's extremely excellent The Future and Its Enemies, among the most brilliant expositions of the the advantages of liberty ever composed, so I might be a little hypersensitized to the blundering oppression and gratuitous misery that illiberal (in her words 'stasist') policy produces.
Think your (+ Kurzweil's) key point here is true and important, nevertheless. Dynamic processes overwhelm and outmanoeuvre the structures and forces of reaction - perhaps they even learn more and toughen up by proceeding under difficult circumstances. Where white markets are suppressed, black markets will do. If soci*lists refuse to pack up and leave then we just have to learn to love the mafia.

Posted by: Nick at November 8, 2005 12:14 PM



PS. Post on Money should cover deflation, and that's definitely due soon.

Posted by: Nick at November 8, 2005 12:16 PM



PPS. Think your initial post perhaps a little hard on Sarkozy, for sure he's no hero of liberty if compared to Sabine Herold, but - very unfortunately - he's still outstanding for his liberalism in the French context. The true figure of almost incomprehensible ghastliness worthy of a place next to Chirac (if gargoyles like Le Pen are momentarily bracketed) is surely the repellent Dominique de Villepin, a character of almost comedic hideousness who could reasonably be considered a French Prince Charles - except as PM. If Villepin comes out of this looking good then France really deserves pretty much anything the most fiendish forces of malignant fatality could cook up between them.

Posted by: Nick at November 8, 2005 12:30 PM



PPPS. I'd feel more confident about my capacity to rise above schadenfreude if 'burn baby burn' stopped recycling through my head.

Posted by: Nick at November 8, 2005 12:53 PM



Yes, it has occurred to me - Sarkozy's foolish, insensitive and distinctly unhelpful comments were pinging around in my brain at the time.

Posted by: sd at November 8, 2005 12:58 PM



For sober factuality no one ever beats Dan Darling:

Posted by: Nick at November 8, 2005 01:30 PM



from The Economist - a survey into Microfinance:

"What makes microfinance such an appealing idea is that it offers “hope to many poor people of improving their own situations through their own efforts,” says Stanley Fischer, former chief economist of the World Bank and now governor of the Bank of Israel. That marks it out from other anti-poverty policies, such as international aid and debt forgiveness, which are essentially top-down rather than bottom-up and have a decidedly mixed record.

...Studies by Stuart Rutherford, who runs an experimental bank that provides loans and takes deposits in the slums of Bangladesh, show that the poor attach great value to having a safe place to keep money and some means of providing for life's risks, either through savings or, better still, through insurance. When financial services are available to them, the poor, just like the rich, snap them up.

In one sense, microfinance has been around for a long time. What is now generating so much hope and excitement is less the discovery of some entirely new way to deliver financial services to the poor than the effect of the rapid innovation that has taken place in the past three decades.
..Nobody knows how many institutions are providing microfinance in some form, but the number is certainly huge. They are growing fast and serving a vast number of people in absolute terms, although still only a small proportion of the billions who earn only a few cents a day. Local banking giants that used to ignore the poor, such as Ecuador's Bank Pichincha and India's ICICI, are now entering the market. Even more strikingly, some of the world's biggest and wealthiest banks, including Citigroup, Deutsche Bank, Commerzbank, HSBC, ING and ABN Amro, are dipping their toes into the water.

The downsides

Not everyone has been pleased with the prospect of better financial services for the poor. Islamic fundamentalists have bombed branches of Grameen in Bangladesh and attacked loan officers of other institutions in India. Maoists have looted microfinance offices in Nepal. The head of a microfinance effort in Afghanistan was murdered, possibly by drug traders.

To drug lords in Afghanistan, the availability of credit is unwelcome because it gives a choice to farmers who were previously forced to grow poppies for want of other ways to finance their crops. For the elites in closed markets running inefficient monopolies, credit raises the prospect of future challenges from entrepreneurs. For radical Muslims, it means that women (who in many countries make up the bulk of microfinance borrowers) are able to run viable businesses and become independent. And for everyone in poor countries, credit can mean social upheaval as merit and enterprise replace inheritance, family ties and position."

Posted by: sd at November 9, 2005 01:45 AM



more on microfinance:

Posted by: sd at November 9, 2005 02:16 AM



Grameen Bank - a program that is making a difference:

Posted by: sd at November 9, 2005 02:22 AM



and stuff from the World Bank:

Posted by: sd at November 9, 2005 02:29 AM



If there weren't enough reasons to support microfinance schemes (which there are), the fact the Islamofascists hate them would suffice in itself.
Combined with mobile phones they provide an immense opportunity to release grassroots entrepreneurialism in poor countries - always eagerly seized.

Posted by: nick at November 9, 2005 03:18 AM



good article ( my guess is the anglosphere gets to keep all that monetary interest.

Posted by: northanger at November 9, 2005 07:21 AM



Joel Kotkin on the French problem:
(not to be missed)

Posted by: nick at November 9, 2005 10:12 AM



Nick - the pertinence of microfinance: it is a form of bootstrapping - credit pulls the poor from poverty and sets them off into self-organizing entrepreneurial feedback loops.

northanger - "my guess is the anglosphere gets to keep all that monetary interest." - it will certainly make a profit, but, more importantly, Latin Amerca receives billions of dollars form the US in the form of remittances every year - this is vastly more effective for development than aid. It also makes the US economy much more competitive. US/International banks are starting to get in on the actionn and, in the process, are radically cutting the transfer rate (the end of extortionate currency smuggling).

Remittances as a Development Tool

Posted by: sd at November 9, 2005 11:15 AM



this looks very useful, if you have the time...

Posted by: sd at November 9, 2005 11:23 AM



Nick - the Joel Kotkin piece is exactly what I've been looking for. Should be compulsory reading.

Posted by: sd at November 9, 2005 11:30 AM



sd - this will make you smile too:

Posted by: nick at November 9, 2005 11:57 AM



thanks - the media focus on Chavez and Maradona is maddening and baffling.

Posted by: sd at November 9, 2005 12:34 PM



sd - " the Joel Kotkin piece is exactly what I've been looking for. Should be compulsory reading."

True. But I feel the need for a little more detail on the way in which the 'ecomomic system' hinders capitalism / entrepreneurship.

I don't doubt that "short workweeks and early retirement are sacred, there is little emphasis on creating new jobs and even less on grass-roots entrepreneurial activity" ... and this fact particularly stunning: "Since the '70s, America has created 57 million new jobs, compared with just four million in Europe (with most of those jobs in government)". Huge welfare state spending and massive unemployment obviously linked, and that "economic and regulatory policy plays a central role in stifling enterprise" taken on board, I but would like some more concrete details of the nature of the legal and regulatory restrictions on trade, starting new businesses etc to really see how this dismal picture has come about.

Posted by: tachi at November 11, 2005 05:12 AM



Post a comment:

Remember personal info?