Stella, Stiglitz understanding grew and so should yours - Rajendra Bisessar

From today's Kaieteur News:

by Rajendra Bisessar

Stella, I would welcome your input as to the flaws of capitalism. Just remember that I mentioned a structural contradiction accounted for by objective economic laws.

It's ok for Freddie to say both are bad. However, the problem is that one of them is here, capitalism and it is dominant.

In one of his columns, Freddie stated that a number of persons have ceased to be Rodneyites. I would like to include Freddie in this list.

Stella mentioned having money and being capitalist and that it is easy to be socialist when you do not have. I am assuming that you are one that does not have, as you have called yourself a socialist. Or is it that one's intellect can transcend one's interest. I believe the latter is correct. On the other hand, we have seen many workers and those who do not have rooting for capitalism.

With regards to Stiglitz, “this brilliant economist”, it would definitely be stupid to suggest that he would “encourage a communist approach to trade entrenched with tight governmental control - as you are alluding and which the PPP has implemented.”

I have not alluded this and the PPP has not and in fact cannot practice this.

And remember Stella, a country cannot be classified communist simply because of some levels or even high levels of autocratic rule. I explained this earlier. Singapore had a dictatorship, as it strove to become your economic model and it was not communist.

Stella refers to Stiglitz's book “Fair Trade For All,” and says that he cites trade liberalisation as the primary driving factor for the significant progress and economic growth enjoyed in Britain during the 19th century, in Meiji Japan during the early 20th century, and in North America, Australia and the East Asian “Tiger economies” (India and China) at various points during the second half of the 20th century.

Stiglitz stated clearly in his book “Globalisation and its Discontent” (page 5), “To many in the developing world, Globalization has not brought the promised benefits.” He continued stating that there is a growing divide which “left increasing numbers in the third world in dire poverty living on less than a dollar a day” with poverty increasing by “100 million.”

Stella, open your eyes; let's look at the statistics. From 1950 to 1973, the spread between the richest and the poorest of the seven regions increased from 10:1 to 11:1, but between 1973 to 1992 it increased from 11:1 to 16:1. The spread between the richest and poorest of the 56 countries mentioned in the table increased from 35:1 to 40:1 during the first period, but for the period 1973 to 1992 it increased from 40:1 to 72:1 (“GLOBAL ECONOMIC CRISIS”, Robin Hahnel).

On the question of Russia and globalization, Stiglitz stated that it had “not produced the promised result in Russia and most of the other economies making the transmission from communism to the market.” Almost all except two had declined, ranging from -1.4 to -20% with the Russian Federation at – 9.8 (World Bank, 1997). And there is a need to contrast Russia 's transaction as engineered by the international economic institution and that of China design by itself could not be greater.

According to Stiglitz, “The western countries have pushed poor countries to eliminate trade barriers by keeping up their own barriers, preventing developing countries from exporting their agriculture products and so depriving them of desperately needed export income. The United States was of course one of the prime culprits.”

He pointed out the difference between the impositions of the IMF and the World Bank and the position taken by the Asian Development Bank, which argued for ‘competetive pluralism' where “developing countries will be provided with alternative views with development strategies, including the Asian model - in which Governments, while relying on markets, have taken an active role in creating, shaping and guiding markets, including promoting new technologies and in which forms take considerable responsibilities of the social welfare of their employees”.

Stella, there is nothing inefficient about making little profits and giving more of the income from productive activities to the workers.

And Stella, it's important to understand the market question. According to Stiglitz, the IMF was founded “on the belief that markets often work badly” but it now “champions market supremacy with ideological fervor (page 12). Stiglitz states that the IMF was supposed to pressure countries to have “expansionary economic policies - such as increase expenditure, reducing taxes or lowering interest rates to stimulate the economy. Today the IMF does the opposite, which leads to a contraction to the economy.

Stella, I have written calling for a reduction of the amount of money being steralised, against high interest rates and against opposing reasonable rates of inflation and increased budgetary deficit to facilitate development.

I have also criticised the government with regards to capital market liberalization. This is being pushed although according to Stiglitz, “there is no evidence showing it spurs economic growth.” He further stated that the “European countries banned the free flow of capitol until the 70's. Some might say it's not fair to insist that developing countries with a barely functioning bank system risk opening their markets… The advanced industrial countries – including the United States and Japan – had built up their economies by wisely and selectively protecting some of their industries, until they were strong enough to compete with foreign companies”.

Stella stated that I am right, “those bringing in the big profits do not freely want to hand over their money to help the less fortunate, which is why taxes are imposed to collect the money”.

The reality is, according to Robin Hahnel the author of “In the USA,” the top 5% of households benefited from increased income -16.6% in 1973 to 21.2% in 1994. The top 20% obtained increased income from 43.6% to 49.1%. At the same time the share of the poorest 20% fell from 4.2% to 3.5%.

Between 1976 and 1992, the share of the wealth owned by the top 1% doubled. This is explained by the fact that the top 1% received 62% of the gain in wealth between 1983 and 1989, while the bottom 80% obtained only 1% of the increased wealth.

Interestingly while labour productivity increased, the average real wage in the USA fell by 11 percent.

Stella, if the Government only opens its mouth with regards to these suggestions from Stiglitz, a host of writers would jump up and call it communist. What needs to happen is all need to be educated so they can commence opposing the IMF conditionalities and push the government with their support to renegotiate.

Stella should understand that socialization and indoctrination are not just words but concepts that we are subjected to.