Corruption is by far not the main factor behind persisting poverty in the Global South.
Dr Jason Hickel lectures at the London School of Economics and serves as an adviser to /The Rules
Transparency International recently published their latest annual Corruption Perceptions Index (CPI), laid out in an eye-catching map of the world with the least corrupt nations coded in happy yellow and the most corrupt nations smeared in stigmatising red. The CPI defines corruption as "the misuse of public power for private benefit", and draws its data from 12 different institutions including the World Bank, Freedom House, and the World Economic Forum.
When I first saw this map I was struck by the fact that most of the yellow areas happen to be rich Western countries, including the United States and the United Kingdom, whereas red covers almost the entirety of the global South, with countries like South Sudan, Afghanistan, and Somalia daubed especially dark.
This geographical division fits squarely with mainstream views, which see corruption as the scourge of the developing world (cue cliche images of dictators in Africa and bribery in India). But is this storyline accurate?
Many international development organisations hold that persistent poverty in the Global South is caused largely by corruption among local public officials. In 2003 these concerns led to the United Nations Convention against Corruption, which asserts that, while corruption exists in all countries, this "evil phenomenon" is "most destructive" in the global South, where it is a "key element in economic underperformance and a major obstacle to poverty alleviation and development".
There's only one problem with this theory: It's just not true.
Corruption, superpower style
According to the World Bank, corruption in the form of bribery and theft by government officials, the main target of the UN Convention, costs developing countries between $20bn and $40bn each year. That's a lot of money. But it's an extremely small proportion - only about 3 percent - of the total illicit flows that leak out of public coffers. Tax avoidance, on the other hand, accounts for more than $900bn each year, money that multinational corporations steal from developing countries through practices such as trade mispricing.
This enormous outflow of wealth is facilitated by a shadowy financial system that includes tax havens, paper companies, anonymous accounts, and fake foundations, with the City of London at the very heart of it. Over 30 percent of global foreign direct investment is booked through tax havens, which now collectively hide one-sixth of the world's total private wealth.
This is a massive - indeed, fundamental - cause of poverty in the developing world, yet it does not register in the mainstream definition of corruption, absent from the UN Convention, and rarely, if ever, appears on the agenda of international development organisations.
With the City of London at the centre of the global tax haven web, how does the UK end up with a clean CPI?
The question is all the more baffling given that the City is immune from many of the nation's democratic laws and free of all parliamentary oversight. As a result of this special status, London has maintained a number of quaint plutocratic traditions. Take its electoral process, for instance: More than 70 percent of the votes cast during council elections are cast not by residents, but by corporations - mostly banks and financial firms. And the bigger the corporation, the more votes they get, with the largest firms getting 79 votes each. This takes US-style corporate personhood to another level.
To be fair, this kind of corruption is not entirely out of place in a country where a feudalistic royal family owns 120,000 hectares of the nation's land and sucks up around £40m ($65.7m) of public funds each year. Then there's the parliament, where the House of Lords is filled not by election but by appointment, with 92 seats inherited by aristocratic families, 26 set aside for the leaders of the country's largest religious sect, and dozens of others divvied up for sale to multi-millionaires.
Corruption in US is only slightly less blatant. Whereas congressional seats are not yet available for outright purchase, the Citizens United vs FEC ruling allows corporations to spend unlimited amounts of money on political campaigns to ensure that their preferred candidates get elected, a practice justified under the Orwellian banner of "free speech".
The poverty factor
The UN Convention is correct to say that poverty in developing countries is caused by corruption. But the corruption we ought to be most concerned about has its root in the countries that are coloured yellow on the CPI map, not red.
The tax haven system is not the only culprit. We know that the global financial crisis of 2008 was precipitated by systemic corruption among public officials in the US who were intimately tied to the interests of Wall Street firms. In addition to shifting trillions of dollars from public coffers into private pockets through bailouts, the crisis wiped out a huge chunk of the global economy and had a devastating effect on developing countries when demand for exports dried up, causing massive waves of unemployment.
A similar story can be told about the Libor scandal in the UK, when major London banks colluded to rig interest rates so as to suck around $100bn of free money from people even well beyond Britain's shores. How could either of these scandals be defined as anything but the misuse of public power for private benefit? The global reach of this kind of corruption makes petty bribery and theft in the developing world seem parochial by comparison.
With the City of London at the centre of the global tax haven web, how does the UK end up with a clean CPI?
The question is all the more baffling given that the City is immune from many of the nation's democratic laws and free of all parliamentary oversight. As a result of this special status, London has maintained a number of quaint plutocratic traditions. Take its electoral process, for instance: More than 70 percent of the votes cast during council elections are cast not by residents, but by corporations - mostly banks and financial firms. And the bigger the corporation, the more votes they get, with the largest firms getting 79 votes each. This takes US-style corporate personhood to another level.
To be fair, this kind of corruption is not entirely out of place in a country where a feudalistic royal family owns 120,000 hectares of the nation's land and sucks up around £40m ($65.7m) of public funds each year. Then there's the parliament, where the House of Lords is filled not by election but by appointment, with 92 seats inherited by aristocratic families, 26 set aside for the leaders of the country's largest religious sect, and dozens of others divvied up for sale to multi-millionaires.
Corruption in US is only slightly less blatant. Whereas congressional seats are not yet available for outright purchase, the Citizens United vs FEC ruling allows corporations to spend unlimited amounts of money on political campaigns to ensure that their preferred candidates get elected, a practice justified under the Orwellian banner of "free speech".
The poverty factor
The UN Convention is correct to say that poverty in developing countries is caused by corruption. But the corruption we ought to be most concerned about has its root in the countries that are coloured yellow on the CPI map, not red.
The tax haven system is not the only culprit. We know that the global financial crisis of 2008 was precipitated by systemic corruption among public officials in the US who were intimately tied to the interests of Wall Street firms. In addition to shifting trillions of dollars from public coffers into private pockets through bailouts, the crisis wiped out a huge chunk of the global economy and had a devastating effect on developing countries when demand for exports dried up, causing massive waves of unemployment.
A similar story can be told about the Libor scandal in the UK, when major London banks colluded to rig interest rates so as to suck around $100bn of free money from people even well beyond Britain's shores. How could either of these scandals be defined as anything but the misuse of public power for private benefit? The global reach of this kind of corruption makes petty bribery and theft in the developing world seem parochial by comparison.
But this is just the tip of the iceberg. If we really want to understand how corruption drives poverty in developing countries, we need to start by looking at the institutions that control the global economy, such as the IMF, the World Bank and the World Trade Organisation.
During the 1980s and 1990s, the policies that these institutions foisted on the Global South, following the Washington Consensus, caused per capita income growth rates to collapse by almost 50 percent. Economist Robert Pollin has estimated that during this period developing countries lost around $480bn per year in potential GDP. It would be difficult to overstate the human devastation that these numbers represent. Yet Western corporations have benefitted tremendously from this process, gaining access to new markets, cheaper labour and raw materials, and fresh avenues for capital flight.
These international institutions masquerade as mechanisms for public governance, but they are deeply anti-democratic; this is why they can get away with imposing policies that so directly violate public interest. Voting power in the IMF and World Bank is apportioned so that developing countries - the vast majority of the world's population - together hold less than 50 percent of the vote, while the US Treasury wields de facto veto power. The leaders of these institutions are not elected, but appointed by the US and Europe, with not a few military bosses and Wall Street executives among them.
Joseph Stiglitz, former chief economist of the World Bank, has publicly denounced these institutions as among the least transparent he has ever encountered. They also suffer from a shocking lack of accountability, as they enjoy special "sovereign immunity" status that protects them against public lawsuit when their policies fail, regardless of how much harm they cause.
Shifting the blame
If these patterns of governance were true of any given nation in the global South, the West would cry corruption. Yet such corruption is normalised in the command centres of the global economy, perpetuating poverty in the developing world while Transparency International directs our attention elsewhere.
Even if we do decide to focus on localised corruption in developing countries, we have to accept that it does not exist in a geopolitical vacuum. Many of history's most famous dictators - like Augusto Pinochet, Mobutu Sese Seko, and Hosni Mubarak - were supported by a steady flow of Western aid. Today, not a few of the world's most corrupt regimes have been installed or bolstered by the US, among them Afghanistan, South Sudan, and the warlords of Somalia - three of the darkest states on the CPI map.
This raises an interesting question: Which is more corrupt, the petty dictatorship or the superpower that installs it? Unfortunately, the UN Convention conveniently ignores these dynamics, and the CPI map leads us to believe, incorrectly, that each country's corruption is neatly bounded by national borders.
Corruption is a major driver of poverty, to be sure. But if we are to be serious about tackling this problem, the CPI map will not be much help. The biggest cause of poverty in developing countries is not localised bribery and theft, but the corruption that is endemic to the global governance system, the tax haven network, and the banking sectors of New York and London. It's time to flip the corruption myth on its head and start demanding transparency where it counts.
Dr Jason Hickel lectures at the London School of Economics and serves as an adviser to /The Rules.
Follow him on Twitter: @jasonhickel
The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy.
Source: Al Jazeera
Showing posts with label World Bank. Show all posts
Showing posts with label World Bank. Show all posts
Saturday, February 1, 2014
Wednesday, July 25, 2012
World Bank warns on inequality threat to SA
INEQUALITY had become a "corrosive" reality threatening growth in South Africa, and without social grants, 40% of the population would have seen incomes decline in the first decade after apartheid, the World Bank said yesterday.
The Washington-based lender revised its growth forecast for South Africa this year down to 2,5% from a 3,1% estimate in November — well below the latest estimates from the Reserve Bank, which sees the economy expanding by 2,7% this year and 3,8% next year. The pace was expected to quicken to 3,2% next year and 3,5% in 2014, the World Bank said yesterday, but it warned that the economy would not be able to achieve a faster pace of growth unless it became more inclusive.
Sandeep Mahajan, the World Bank’s lead economist on South Africa, said the economy would have to grow faster than 3,5% in order to tackle the country’s unemployment rate of 25,2% — one of the highest in the world. "Growth has been mediocre … and it’s been inequitably distributed. In South Africa’s case, high growth can only come from inclusive growth," he said at the launch of the report, titled Focus on Inequality of Opportunity. "South Africa is a complete global outlier in terms of inequality … it has been persistent over time and that has been a very corrosive reality."
Global rating agencies have repeatedly highlighted the risks to social and political stability in South Africa posed by high unemployment, huge income disparities and widespread poverty. These issues have constrained its credit ratings, which determine a country’s cost of borrowing and investor appetite for local assets.
South Africa is one of the most unequal countries in the world, with the top 10% of the population accounting for 58% of its income and the bottom half less than 8%, the World Bank said in its report. Poverty reduction had been modest since the late 1990s and would have been "untenable" without the growing level of social grants, it noted.
The Treasury allocated R105bn this year to social grants for the elderly, disabled and poor children, which will reach more than 16-million people, up from 2,5-million in 1998. "Even after accounting for the equalising role of social assistance, income inequality remains extraordinarily high," the World Bank said in the report. "To reduce it to more reasonable levels over the long run, social assistance is clearly not enough and needs to be complemented by other initiatives."
Nomura economist Peter Attard Montalto said it was important to distinguish between equality and poverty. "There is plenty of evidence that South Africa has done a lot to meaningfully increase the standards of living of its poorest. But the development payoffs have been directed more towards the rich and a certain segment of the population," he said yesterday. "You need to have a larger amount of social stability for a proper investment climate."
The World Bank said nearly 70% of the poorest 20% of South Africans were jobless in 2008 — a warning bell for social cohesion. The causes of inequality in labour markets had changed over the past four years, with the contribution of education increasing and the effect of circumstances of gender and race falling slightly, the report said. "Where a person seeking employment lives, however, matters more now than it did four years ago," it noted.
Employment was "particularly challenging" for young workers and residents of townships, rural areas and informal settlements. This is not out of step with the global trend, as the jobless rates for young people in countries such as Greece and Spain are similar to the levels in South Africa — about 50%. But the World Bank said that age was an "unusually large" contributor to inequality in employment in South Africa compared with other middle-income countries, with the "odds extremely stacked" against the youngest workers.
In analysing the reasons for high inequality in South Africa, the World Bank said it would be useful to focus on equity — a reference to access to opportunities — rather than equality. Basic opportunities included access to education, health insurance, safe water, sanitation and electricity. "Except for electricity, where South Africa’s average annual progress has been exceptional, the progress on the other four dimensions puts it in the bottom half of international comparators," the bank said.
Location was particularly important, while the level of education of a household head contributed most to finishing primary school.
Source: Business Day
The Washington-based lender revised its growth forecast for South Africa this year down to 2,5% from a 3,1% estimate in November — well below the latest estimates from the Reserve Bank, which sees the economy expanding by 2,7% this year and 3,8% next year. The pace was expected to quicken to 3,2% next year and 3,5% in 2014, the World Bank said yesterday, but it warned that the economy would not be able to achieve a faster pace of growth unless it became more inclusive.
Sandeep Mahajan, the World Bank’s lead economist on South Africa, said the economy would have to grow faster than 3,5% in order to tackle the country’s unemployment rate of 25,2% — one of the highest in the world. "Growth has been mediocre … and it’s been inequitably distributed. In South Africa’s case, high growth can only come from inclusive growth," he said at the launch of the report, titled Focus on Inequality of Opportunity. "South Africa is a complete global outlier in terms of inequality … it has been persistent over time and that has been a very corrosive reality."
Global rating agencies have repeatedly highlighted the risks to social and political stability in South Africa posed by high unemployment, huge income disparities and widespread poverty. These issues have constrained its credit ratings, which determine a country’s cost of borrowing and investor appetite for local assets.
South Africa is one of the most unequal countries in the world, with the top 10% of the population accounting for 58% of its income and the bottom half less than 8%, the World Bank said in its report. Poverty reduction had been modest since the late 1990s and would have been "untenable" without the growing level of social grants, it noted.
The Treasury allocated R105bn this year to social grants for the elderly, disabled and poor children, which will reach more than 16-million people, up from 2,5-million in 1998. "Even after accounting for the equalising role of social assistance, income inequality remains extraordinarily high," the World Bank said in the report. "To reduce it to more reasonable levels over the long run, social assistance is clearly not enough and needs to be complemented by other initiatives."
Nomura economist Peter Attard Montalto said it was important to distinguish between equality and poverty. "There is plenty of evidence that South Africa has done a lot to meaningfully increase the standards of living of its poorest. But the development payoffs have been directed more towards the rich and a certain segment of the population," he said yesterday. "You need to have a larger amount of social stability for a proper investment climate."
The World Bank said nearly 70% of the poorest 20% of South Africans were jobless in 2008 — a warning bell for social cohesion. The causes of inequality in labour markets had changed over the past four years, with the contribution of education increasing and the effect of circumstances of gender and race falling slightly, the report said. "Where a person seeking employment lives, however, matters more now than it did four years ago," it noted.
Employment was "particularly challenging" for young workers and residents of townships, rural areas and informal settlements. This is not out of step with the global trend, as the jobless rates for young people in countries such as Greece and Spain are similar to the levels in South Africa — about 50%. But the World Bank said that age was an "unusually large" contributor to inequality in employment in South Africa compared with other middle-income countries, with the "odds extremely stacked" against the youngest workers.
In analysing the reasons for high inequality in South Africa, the World Bank said it would be useful to focus on equity — a reference to access to opportunities — rather than equality. Basic opportunities included access to education, health insurance, safe water, sanitation and electricity. "Except for electricity, where South Africa’s average annual progress has been exceptional, the progress on the other four dimensions puts it in the bottom half of international comparators," the bank said.
Location was particularly important, while the level of education of a household head contributed most to finishing primary school.
Source: Business Day
Sunday, September 13, 2009
Our house is on fire
Dr Mamphela Ramphele is a former vice-chancellor of the University of Cape Town and managing director of the World Bank. She is now chairperson of Circle Capital as well as of the government's new Technology and Innovation Agency. This is an edited version of her address on August 31 at the University of the Western Cape, which was the second of the Education Conversations series. This is a comment written by her.
We as South Africans recognise that when our house is on fire, we all have to pull together to put out the flames. No one should imagine we are going to have a comfortable conversation, certainly not with me.
I am going to talk about excellence and equity in education. I had thought I was done with it because when I was appointed vice-chancellor of the University of Cape Town in 1995, I had to bring the message that excellence and equity are interrelated and complementary: you cannot have one without the other.
UCT had a great track record of excellence in many areas, but it had yet to embrace equity -- an essential part of sustaining and enhancing excellence. So I never thought I was going to have to talk about excellence and equity to progressives -- but we've lost it, we've just lost it.
You cannot have excellence and equity in education without a national vision of excellence and equity. Such a vision would very clearly and unambiguously articulate our values, which would then find expression in our practices and our social relationships.
Let me give you an example of a country that you may not think too highly of -- Rwanda. When we were voting and being very smug about our freedom, they were bleeding, literally and figuratively. But Rwanda has pulled itself from that genocide and has a "Vision 2020". It's a tiny little country, landlocked, and called "the land of a 1000 hills". But it's a feisty country.
Its Vision 2020 is not just articulated in a document, it's lived by President Paul Kagame. Its vision is to be a country that wins, because it is a centre of excellence and knowledge. It's saying: we have the people, we have the commitment to become a knowledge-based society.
They have set up a school for girls because one of the horrors of that genocide was rape of women and deliberate spreading of HIV/Aids. You go into any of the classrooms in that school and ask any of those girls where they want to be. They say: I want to be an astronaut, I want to be a civil engineer. Their dreams are not small. How does a small country like Rwanda do it? They've literally made ploughshares out of swords, turning a military base -- which they don't need -- into an educational centre, the Kigali Institute of Technology, where East African countries send their best students.
We don't have a vision as a nation, and a people without a vision perish. We have developed an education roadmap -- a milestone in what should be an education recovery process. But where should that road lead and how do we get there?
We need a vision so we can paint for ourselves what greatness can look like, and to use the gaps between that vision and our present reality to measure the depth of our crisis. Any other country would realise they had a crisis if only 7% of the 20% of students who get university exemptions have proficiency in maths. But not us.
We have failed our children. The cumulative impact of what we have done to our education system post-1994 is just shocking. Since then, on average only 29% of pupils who start school end up with a matric certificate. Think about the 71% who go through school without getting a piece of paper that attests to their achievement.
We have had university exemption numbers hovering around the mid-teens -- until of course we did some miracle and it became 20% in 2008. I don't know of any country in the world spending as much as we are spending that has 50% of its 20- to 24-year-olds -- the crème de la crème of the population -- not in school, not in training, not employed.
I think that what's happened since 1994 is that most of us said: well, now it's me, myself and I. We wouldn't have done the arms deal if it wasn't for me, myself, I. We wouldn't be continuing the legacy of underperformance in the school system: "I don't care what happens here because my children go to private school and they speak English." Me, myself, I. "I can buy private security, I can buy private healthcare." Me, myself, I.
There's failure of leadership at every level. We have all been to a lesser or greater extent in denial about the impact of the legacy of the past on us -- the unresolved issues of superiority complexes in the white community, inferiority complexes in the black community. How do you explain politicians going to Soweto and speaking English -- who are they trying to impress? Unless we want to prove we can quote Shakespeare?
And we are also in denial about the culture of mediocrity we have inherited from the past. Add to that the fact that the struggle for freedom had with it the terrible approach of "freedom now, education tomorrow". We had teachers paid for five years, seven years without doing a stitch of work. And now we expect them to teach? They got away with it for all those years, so why would they teach now?
We don't take that into account when we talk about what is happening in our education system. We also mismanaged the downsizing of our teaching corps. And that was on our very own icon Madiba's watch.
We have the highest level of teacher unionisation in the world -- but their focus is on rights, not responsibilities. It's on employment, not professionalism. And the rights only pertain to the teachers, not the pupils. A member of the South African Democratic Teachers' Union (Sadtu), a former teacher, confessed that when her daughter came home and said: "Mom, I'm not going back to that school, the teacher doesn't know the difference between history and geography", she protected the teacher instead of standing up for her daughter's right to be taught properly.
I was in the Eastern Cape last weekend, where I was told about countless principals who have been promoted who are Sadtu members and who are known to have misrepresented their qualifications and their experience. When the inspectors say no, Sadtu simply goes to the education department in the Eastern Cape and says: "We have deployed you to this position, you shall promote this person." That's me, myself, I.
We have the unresolved issue of how do you teach, what medium of instruction do you use in a multilingual society? We even fight with Afrikaners who are trying to hold on to their Afrikaans language. People don't even know there is a language called Sepedi -- that's my mother tongue. If you do not teach children from grade one to at least grade four in their mother tongues, you are separating them from their parents -- there is no storytelling that can happen.
You should not be surprised that parents cannot participate in the school system -- you are alienating them from it. And the teachers who are meant to be teaching these children in English don't read, don't write, don't comprehend the very language. So are you surprised by the scorecards?
Think of the curriculum in two ways -- the hidden curriculum and the articulated curriculum. We have neglected the hidden curriculum in the same way that we messed up the articulated curriculum.
The hidden curriculum is really about the home, the nation, the classroom environment and what lets children come out and ask: "Who am I?" Children who really are proud about who they are -- who are comfortable with their gender, with their relationships -- are such a joy to watch.
But our children are being given signals that everything they value is not valued. That starts with the language, but it's also going everywhere else.
The inferiority complex instilled by living in marginalised communities prompts children to ask: "When am I ever going to get out of this community?"
We are still speaking about "minorities" and "majorities" in 2009! We need a conversation about what it means to be a citizen of a free, democratic, non-racist, non-sexist South Africa. We have written it in the Constitution, but we don't know what it means, we don't know how to live it.
Can we please have that conversation? Because then the classroom conversation will reflect the conversation of citizens.
I really believe that we have an opportunity to go back to basics. We've made a mistake with outcomes-based education (OBE) -- and we're stuck with this OBE like a dog that's become rabid and can't let go of its bone. Tinkering with it and renaming it the National Curriculum Statement does not deal with fundamental gaps between what teachers know and what they are to teach.
We need to let go of OBE and focus on the basics in education. Because I promise you, when Zimbabwe gets its act together, they are going to go back to basics. It doesn't take much to let go of this bone -- it's got an odour around it.
So let's commit to working together and walking together, to make our education excellent. There's no other way: we have to articulate that vision of excellence. We must have leaders who commit to promoting excellence in everything they do. And all of us have to walk together because, as the African saying says: if you want to walk fast, walk alone; but if you want to walk far, walk together.
Source: Mail & Guardian
We as South Africans recognise that when our house is on fire, we all have to pull together to put out the flames. No one should imagine we are going to have a comfortable conversation, certainly not with me.
I am going to talk about excellence and equity in education. I had thought I was done with it because when I was appointed vice-chancellor of the University of Cape Town in 1995, I had to bring the message that excellence and equity are interrelated and complementary: you cannot have one without the other.
UCT had a great track record of excellence in many areas, but it had yet to embrace equity -- an essential part of sustaining and enhancing excellence. So I never thought I was going to have to talk about excellence and equity to progressives -- but we've lost it, we've just lost it.
You cannot have excellence and equity in education without a national vision of excellence and equity. Such a vision would very clearly and unambiguously articulate our values, which would then find expression in our practices and our social relationships.
Let me give you an example of a country that you may not think too highly of -- Rwanda. When we were voting and being very smug about our freedom, they were bleeding, literally and figuratively. But Rwanda has pulled itself from that genocide and has a "Vision 2020". It's a tiny little country, landlocked, and called "the land of a 1000 hills". But it's a feisty country.
Its Vision 2020 is not just articulated in a document, it's lived by President Paul Kagame. Its vision is to be a country that wins, because it is a centre of excellence and knowledge. It's saying: we have the people, we have the commitment to become a knowledge-based society.
They have set up a school for girls because one of the horrors of that genocide was rape of women and deliberate spreading of HIV/Aids. You go into any of the classrooms in that school and ask any of those girls where they want to be. They say: I want to be an astronaut, I want to be a civil engineer. Their dreams are not small. How does a small country like Rwanda do it? They've literally made ploughshares out of swords, turning a military base -- which they don't need -- into an educational centre, the Kigali Institute of Technology, where East African countries send their best students.
We don't have a vision as a nation, and a people without a vision perish. We have developed an education roadmap -- a milestone in what should be an education recovery process. But where should that road lead and how do we get there?
We need a vision so we can paint for ourselves what greatness can look like, and to use the gaps between that vision and our present reality to measure the depth of our crisis. Any other country would realise they had a crisis if only 7% of the 20% of students who get university exemptions have proficiency in maths. But not us.
We have failed our children. The cumulative impact of what we have done to our education system post-1994 is just shocking. Since then, on average only 29% of pupils who start school end up with a matric certificate. Think about the 71% who go through school without getting a piece of paper that attests to their achievement.
We have had university exemption numbers hovering around the mid-teens -- until of course we did some miracle and it became 20% in 2008. I don't know of any country in the world spending as much as we are spending that has 50% of its 20- to 24-year-olds -- the crème de la crème of the population -- not in school, not in training, not employed.
I think that what's happened since 1994 is that most of us said: well, now it's me, myself and I. We wouldn't have done the arms deal if it wasn't for me, myself, I. We wouldn't be continuing the legacy of underperformance in the school system: "I don't care what happens here because my children go to private school and they speak English." Me, myself, I. "I can buy private security, I can buy private healthcare." Me, myself, I.
There's failure of leadership at every level. We have all been to a lesser or greater extent in denial about the impact of the legacy of the past on us -- the unresolved issues of superiority complexes in the white community, inferiority complexes in the black community. How do you explain politicians going to Soweto and speaking English -- who are they trying to impress? Unless we want to prove we can quote Shakespeare?
And we are also in denial about the culture of mediocrity we have inherited from the past. Add to that the fact that the struggle for freedom had with it the terrible approach of "freedom now, education tomorrow". We had teachers paid for five years, seven years without doing a stitch of work. And now we expect them to teach? They got away with it for all those years, so why would they teach now?
We don't take that into account when we talk about what is happening in our education system. We also mismanaged the downsizing of our teaching corps. And that was on our very own icon Madiba's watch.
We have the highest level of teacher unionisation in the world -- but their focus is on rights, not responsibilities. It's on employment, not professionalism. And the rights only pertain to the teachers, not the pupils. A member of the South African Democratic Teachers' Union (Sadtu), a former teacher, confessed that when her daughter came home and said: "Mom, I'm not going back to that school, the teacher doesn't know the difference between history and geography", she protected the teacher instead of standing up for her daughter's right to be taught properly.
I was in the Eastern Cape last weekend, where I was told about countless principals who have been promoted who are Sadtu members and who are known to have misrepresented their qualifications and their experience. When the inspectors say no, Sadtu simply goes to the education department in the Eastern Cape and says: "We have deployed you to this position, you shall promote this person." That's me, myself, I.
We have the unresolved issue of how do you teach, what medium of instruction do you use in a multilingual society? We even fight with Afrikaners who are trying to hold on to their Afrikaans language. People don't even know there is a language called Sepedi -- that's my mother tongue. If you do not teach children from grade one to at least grade four in their mother tongues, you are separating them from their parents -- there is no storytelling that can happen.
You should not be surprised that parents cannot participate in the school system -- you are alienating them from it. And the teachers who are meant to be teaching these children in English don't read, don't write, don't comprehend the very language. So are you surprised by the scorecards?
Think of the curriculum in two ways -- the hidden curriculum and the articulated curriculum. We have neglected the hidden curriculum in the same way that we messed up the articulated curriculum.
The hidden curriculum is really about the home, the nation, the classroom environment and what lets children come out and ask: "Who am I?" Children who really are proud about who they are -- who are comfortable with their gender, with their relationships -- are such a joy to watch.
But our children are being given signals that everything they value is not valued. That starts with the language, but it's also going everywhere else.
The inferiority complex instilled by living in marginalised communities prompts children to ask: "When am I ever going to get out of this community?"
We are still speaking about "minorities" and "majorities" in 2009! We need a conversation about what it means to be a citizen of a free, democratic, non-racist, non-sexist South Africa. We have written it in the Constitution, but we don't know what it means, we don't know how to live it.
Can we please have that conversation? Because then the classroom conversation will reflect the conversation of citizens.
I really believe that we have an opportunity to go back to basics. We've made a mistake with outcomes-based education (OBE) -- and we're stuck with this OBE like a dog that's become rabid and can't let go of its bone. Tinkering with it and renaming it the National Curriculum Statement does not deal with fundamental gaps between what teachers know and what they are to teach.
We need to let go of OBE and focus on the basics in education. Because I promise you, when Zimbabwe gets its act together, they are going to go back to basics. It doesn't take much to let go of this bone -- it's got an odour around it.
So let's commit to working together and walking together, to make our education excellent. There's no other way: we have to articulate that vision of excellence. We must have leaders who commit to promoting excellence in everything they do. And all of us have to walk together because, as the African saying says: if you want to walk fast, walk alone; but if you want to walk far, walk together.
Source: Mail & Guardian
Wednesday, July 1, 2009
Ramphele warns of chaos
Director of the World Bank and convenor of the so-called Dinokeng group, Mamphela Ramphele, has said the first of various ticking time bombs in South Africa have begun to explode. She was a guest speaker in Pretoria at a future conference of the Solidarity union on Tuesday.
Dinokeng is a diverse group of 35 esteemed South Africans who met last year with the aim of trying to determine how the country could look by 2020. The group says South Africa finds itself at a crossroads of three scenarios: walk apart, walk behind or walk together.
Ramphele said the government was responsible for the various time bombs, because it failed on education, health, crime, poverty and unemployment. "We are seeing increasing agitation because people are tired of hearing the empty promises municipalities make. This is one of the time bombs which is set to explode." She said South Africans should start reclaiming their ownership, "since the country does, after all, belong to us. It will require a mind shift in perspective and a step out of our comfort zones. The striking doctors are doing this now and this is another time bomb starting to explode. The strike is causing utter chaos, but it is necessary in order for government to get the message.
According to Ramphele, the strike will force the government to contemplate the health sector, "which has become a gravy train going nowhere". She said it was of utmost importance that citizens and leaders from all sectors become involved and start demanding better service delivery. Ramphele said the onus was on South Africans to choose the walk-together scenario.
The Dinokeng group sketches South Africa in a walking alone scenario by 2018 up to 2020, as a country where the separation between the government and citizens increases, budgeted deficits increase, service delivery deteriorates day by day, and "gangs, self-appointed mayors and taxi organisations reign in local areas".
Source: News 24
Dinokeng is a diverse group of 35 esteemed South Africans who met last year with the aim of trying to determine how the country could look by 2020. The group says South Africa finds itself at a crossroads of three scenarios: walk apart, walk behind or walk together.
Ramphele said the government was responsible for the various time bombs, because it failed on education, health, crime, poverty and unemployment. "We are seeing increasing agitation because people are tired of hearing the empty promises municipalities make. This is one of the time bombs which is set to explode." She said South Africans should start reclaiming their ownership, "since the country does, after all, belong to us. It will require a mind shift in perspective and a step out of our comfort zones. The striking doctors are doing this now and this is another time bomb starting to explode. The strike is causing utter chaos, but it is necessary in order for government to get the message.
According to Ramphele, the strike will force the government to contemplate the health sector, "which has become a gravy train going nowhere". She said it was of utmost importance that citizens and leaders from all sectors become involved and start demanding better service delivery. Ramphele said the onus was on South Africans to choose the walk-together scenario.
The Dinokeng group sketches South Africa in a walking alone scenario by 2018 up to 2020, as a country where the separation between the government and citizens increases, budgeted deficits increase, service delivery deteriorates day by day, and "gangs, self-appointed mayors and taxi organisations reign in local areas".
Source: News 24
Thursday, April 2, 2009
IMF and World Bank reports predict bleak future for Africa
The IMF predicts the global economic crisis will have a huge and disproportionate impact on sub-Saharan Africa. The effect will be to widen global inequality and plunge more of the African population into poverty.
The IMF's prediction of Africa's economic growth has been slashed by half, from 6.7 percent to 3.25 percent. IMF Managing Director Dominique Strauss-Kahn warned that even this figure may be "too optimistic". Growth at this level would mean declining GDP per capita (because of population growth) and therefore rising poverty.
Less than a year ago, the IMF was forecasting economic growth of 6.7 percent in 2009, an increase on the 5 percent growth in 2008. While the recent IMF report, "Impact of the Global Financial Crisis on Sub-Saharan Africa", says that "Unlike in developed economies, there has been no systemic banking crisis in sub-Saharan Africa", and makes the point that its financial institutions "so far remain largely sound", this will cause only a delay in the world crisis making itself felt in Africa rather than mitigating its effects.
According to the report, "In some countries banking systems may be increasingly exposed to market volatility. Countries where high equity returns had led to borrowing for investment in the stock market (e.g., Kenya, Nigeria, and Uganda) are at greatest risk".
It points out the danger "of contagion from distressed foreign parent banks [spreading] to local subsidiaries". A downturn in productive industries such as timber and cotton "could quickly affect the banking sector".
While the IMF talks about "dangers" of the banking crisis spreading to Africa, other sources regard it as all but inevitable. Heavily dependent on exports, often of a small number of basic commodities, 15 of the 21 countries in the world most vulnerable to the crisis are in Africa. The IMF states, "Oil and metal exporters have been hardest hit: oil prices have fallen over 60 percent from their mid-2008 peak". Zambia will be severely hit with the fall by two-thirds in the price of copper.
In previous recessions each one percent decline in global growth led to a half percent slowdown in the sub-Saharan African countries, but the IMF concludes that the effect will be greater this time because it will be compounded by the "tightening of global credit".
Strauss-Kahn warned that millions of African people will be thrown into poverty due to the crisis, and political systems put to the test. "This is not only about protecting economic growth and household incomes—it is also about containing the threat of civil unrest, perhaps even war".
The World Bank has also predicted that the global economic crisis will drag 46 million people in Africa down into absolute poverty.
In 1960, sub-Saharan Africa's per capita income was around a ninth of that in high-income OECD countries. By 1998, it had fallen to around an eighteenth. This gap is set to widen.
Antoinette Sayeh, director of the IMF's Africa department, stressed that the crisis that began in developed economies and then the emerging markets was now hitting the world's poorest continent through low global commodity prices, depressed demand for their exports and the effects of the credit crunch.
At the London G20 summit of world leaders in April, the IMF is likely to ask for a substantial increase in its funding. It is expected that such pleading for additional funds will fall on deaf ears. African leaders met British Prime Minister Gordon Brown to present their requests for more funds in the run up to the summit. South African Finance Minister Trevor Manuel told reporters that overseas development aid could "dry up or diminish", and that some western donor countries "have indicated they are not capable of meeting these commitments." Egyptian Finance Minister Youssef Boutros-Ghali told Reuters, "In the case of Africa, people are going to die. We are talking about lives, not just somebody who will have to drive a smaller car".
Foreign Direct Investment (FDI) flows into sub-Saharan Africa fell by 21 percent in 2008, and the IMF predicts that this trend will continue. The World Bank also expects that developing countries will face a shortfall of $270 billion to $700 billion on their finances this year due to private sector creditors turning away from emerging markets.
The IMF report calls on the richer nations to maintain their aid commitments, but in fact all the Western countries are turning towards protectionism. Since they committed to increasing core development aid at the Gleneagles summit in 2005, they actually cut aid by 4 percent. France and Ireland are weighing up whether to make big cuts in their aid budgets as a response to the recession.
It is hardly surprising that nothing is said by the IMF about its own role in creating the conditions for a human catastrophe on the African continent. Some African leaders, including Tanzanian President Jakaya Kikwete, have accused the IMF of unfairness in its treatment of its members, being hard on poor countries whose populations were already on the brink while allowing richer countries to do as they pleased, even when this undermined their finances.
The IMF also calls on African countries to "seize the opportunity to advance their structural reform agendas in order to boost prospects for growth"—that is to continue with the IMF-imposed policies that have been responsible for squeezing huge amounts of wealth out of the poorest region of the world.
A report by the charity ActionAid has given a bleaker picture of Africa's future than the IMF. Claire Melamed, head of policy for ActionAid commented, "We've calculated that just by the end of this year, Africa's income stands to fall by $50 billion. And that's equivalent to a pay cut of more than 10 percent for the continent".
Melamed argues against those who hope "globalization hasn't really gone as far as we thought it had and that will protect developing countries from the recession". She says, "What this crisis does is that it just shows the depth of global integration and the way in which we're all interconnected now whether we like it or not".
In particular, Melamed describes the layoff of tens of thousands of miners in South Africa. Although it is the major economic power house on the continent, South Africa is one of the worst affected countries.
Another factor that will affect most African countries is the big downturn in remittances sent back by those who work abroad. According to the BBC, $19 billion was sent home by Africans in 2007, more than double the amount three years earlier. But three-quarters of these remittances come from Western Europe or the United States, already mired in recession.
Source: World Socialist Web Site
The IMF's prediction of Africa's economic growth has been slashed by half, from 6.7 percent to 3.25 percent. IMF Managing Director Dominique Strauss-Kahn warned that even this figure may be "too optimistic". Growth at this level would mean declining GDP per capita (because of population growth) and therefore rising poverty.
Less than a year ago, the IMF was forecasting economic growth of 6.7 percent in 2009, an increase on the 5 percent growth in 2008. While the recent IMF report, "Impact of the Global Financial Crisis on Sub-Saharan Africa", says that "Unlike in developed economies, there has been no systemic banking crisis in sub-Saharan Africa", and makes the point that its financial institutions "so far remain largely sound", this will cause only a delay in the world crisis making itself felt in Africa rather than mitigating its effects.
According to the report, "In some countries banking systems may be increasingly exposed to market volatility. Countries where high equity returns had led to borrowing for investment in the stock market (e.g., Kenya, Nigeria, and Uganda) are at greatest risk".
It points out the danger "of contagion from distressed foreign parent banks [spreading] to local subsidiaries". A downturn in productive industries such as timber and cotton "could quickly affect the banking sector".
While the IMF talks about "dangers" of the banking crisis spreading to Africa, other sources regard it as all but inevitable. Heavily dependent on exports, often of a small number of basic commodities, 15 of the 21 countries in the world most vulnerable to the crisis are in Africa. The IMF states, "Oil and metal exporters have been hardest hit: oil prices have fallen over 60 percent from their mid-2008 peak". Zambia will be severely hit with the fall by two-thirds in the price of copper.
In previous recessions each one percent decline in global growth led to a half percent slowdown in the sub-Saharan African countries, but the IMF concludes that the effect will be greater this time because it will be compounded by the "tightening of global credit".
Strauss-Kahn warned that millions of African people will be thrown into poverty due to the crisis, and political systems put to the test. "This is not only about protecting economic growth and household incomes—it is also about containing the threat of civil unrest, perhaps even war".
The World Bank has also predicted that the global economic crisis will drag 46 million people in Africa down into absolute poverty.
In 1960, sub-Saharan Africa's per capita income was around a ninth of that in high-income OECD countries. By 1998, it had fallen to around an eighteenth. This gap is set to widen.
Antoinette Sayeh, director of the IMF's Africa department, stressed that the crisis that began in developed economies and then the emerging markets was now hitting the world's poorest continent through low global commodity prices, depressed demand for their exports and the effects of the credit crunch.
At the London G20 summit of world leaders in April, the IMF is likely to ask for a substantial increase in its funding. It is expected that such pleading for additional funds will fall on deaf ears. African leaders met British Prime Minister Gordon Brown to present their requests for more funds in the run up to the summit. South African Finance Minister Trevor Manuel told reporters that overseas development aid could "dry up or diminish", and that some western donor countries "have indicated they are not capable of meeting these commitments." Egyptian Finance Minister Youssef Boutros-Ghali told Reuters, "In the case of Africa, people are going to die. We are talking about lives, not just somebody who will have to drive a smaller car".
Foreign Direct Investment (FDI) flows into sub-Saharan Africa fell by 21 percent in 2008, and the IMF predicts that this trend will continue. The World Bank also expects that developing countries will face a shortfall of $270 billion to $700 billion on their finances this year due to private sector creditors turning away from emerging markets.
The IMF report calls on the richer nations to maintain their aid commitments, but in fact all the Western countries are turning towards protectionism. Since they committed to increasing core development aid at the Gleneagles summit in 2005, they actually cut aid by 4 percent. France and Ireland are weighing up whether to make big cuts in their aid budgets as a response to the recession.
It is hardly surprising that nothing is said by the IMF about its own role in creating the conditions for a human catastrophe on the African continent. Some African leaders, including Tanzanian President Jakaya Kikwete, have accused the IMF of unfairness in its treatment of its members, being hard on poor countries whose populations were already on the brink while allowing richer countries to do as they pleased, even when this undermined their finances.
The IMF also calls on African countries to "seize the opportunity to advance their structural reform agendas in order to boost prospects for growth"—that is to continue with the IMF-imposed policies that have been responsible for squeezing huge amounts of wealth out of the poorest region of the world.
A report by the charity ActionAid has given a bleaker picture of Africa's future than the IMF. Claire Melamed, head of policy for ActionAid commented, "We've calculated that just by the end of this year, Africa's income stands to fall by $50 billion. And that's equivalent to a pay cut of more than 10 percent for the continent".
Melamed argues against those who hope "globalization hasn't really gone as far as we thought it had and that will protect developing countries from the recession". She says, "What this crisis does is that it just shows the depth of global integration and the way in which we're all interconnected now whether we like it or not".
In particular, Melamed describes the layoff of tens of thousands of miners in South Africa. Although it is the major economic power house on the continent, South Africa is one of the worst affected countries.
Another factor that will affect most African countries is the big downturn in remittances sent back by those who work abroad. According to the BBC, $19 billion was sent home by Africans in 2007, more than double the amount three years earlier. But three-quarters of these remittances come from Western Europe or the United States, already mired in recession.
Source: World Socialist Web Site
Monday, November 3, 2008
Statement of the Socialist International Commission on Global Financial Issues, meeting in Vienna, Austria
It is today beyond dispute that the current global financial crisis is the worst in the last twenty-five years and may well be the worst since the Great Depression.
A first response to the crisis was to bail out financial institutions in the developed economies, at an enormous cost for tax payers, with stark differences of opinion on the best way to proceed. Progressive forces and governments moved for accountability, transparency and guarantees for the average citizen, so they would not become the victim of the reckless acts and irresponsibility of those who provoked the crisis.
From the very beginning, at the centre of our concerns have been people’s jobs, housing, pensions, access to health and education services, in short the livelihood and social protection of citizens severely threatened by this crisis.
The social democratic vision of the economy and financial markets is that they should serve the citizens of our society. Financial markets are a means to an end, not an end in themselves. It is not necessarily the case that what is good for Wall Street or other financial centres is good for the rest of the economy. Moreover, trickle down economics - the notion that helping those at the top will benefit all - has been repeatedly rejected.
Four principles continue to guide the social democratic response: solutions to the crisis must be consistent with basic values of social justice and social solidarity as well as basic notions of fairness. The bonds of social solidarity must go across national boundaries; we cannot take actions which help ourselves at the expense of those in the developing world. They must reflect an understanding of the necessary balance between government and markets. Fourthly, any response must respect basic principles of democratic due process, including full transparency.
These principles take on a greater sense of urgency today, as what started as a financial crisis has become very quickly one of the real economy, with the threat of recession a reality around the world, and as we enter a new phase where emerging and developing economies are suffering the consequences of this crisis as well.
Lack of financial regulation triggered the crisis, while fiscal weakness and large public debts have hindered many governments’ ability to formulate policies to tackle it. At the same time, serious deficiencies in the global financial system have also been exposed, such as the limitations of the Bretton Woods institutions to guard against macroeconomic imbalances and provide liquidity to those economies in need; inadequate supervision of financial markets in developed economies and under-representation of emerging economies in the governance of the main multilateral lending institutions.
We will not be able to restore confidence in our financial markets unless we change their behaviour, through regulation. And regulation must be comprehensive. Too often, the regulatory process has been captured by those who were supposed to be regulated. The voice of those injured as a result of inadequate regulation—pensioners who lose their life savings, homeowners who lose their homes, workers who lose their jobs—has to be paramount. Such regulation could encourage real innovation, not the kind that has marked financial markets in recent years, like the derivatives that were supposed to manage risk but instead created it; but innovations that might allow average citizens to remain in their homes in the face of the economic vicissitudes which they face. Banks were allowed to become too big to fail and that was dangerous for all of us.
Given that the restructuring of global finance will take time, the Commission on Global Financial Issues proposes five immediate programmes to protect people today in countries most directly affected by the crisis:
The creation of a Social Protection Fund to assist developing countries that have inadequate or underfunded social protection schemes to set up social security systems to provide minimum social protections, including provisions for the unemployed, for health, and for retirees;
The creation of a Small Enterprises Development Fund to facilitate credit and capital flows to small businesses, as a sector which provides the major source of employment and a large contribution to the GDP, and assisting their technological development and expanding decent work;
The creation of a Financing Infrastructure Fund to help stimulate the economy. Such a fund would simultaneously stimulate the economy in the short run and help our societies meet the long run challenges they face; some funds might be directed, for instance, towards helping meet the challenges posed by global warming; others might be directed at the informal economy from which so many poor earn their living, for example with local programmes for small power plants, rural roads and markets, and technology parks.
The Commission equally supports the immediate and urgent establishment by the International Monetary Fund of a short-term liquidity line for emerging and developing economies which face a liquidity crisis caused not by deficient domestic policies but by sources of financing being severed due to the systemic crisis, as internationally active banks hoard liquidity, capital is repatriated to financial centres and rich countries’ GDP contract. This liquidity facility must allow access to countries by broadening the eligibility criteria in a fair way, so giving support to hundreds of millions of people who are now unwitting victims of this crisis; and it should be provided without the severe conditionalities often imposed in the past.
New sources of funding, and new lending facilities, have to be given urgent consideration. There is a growing consensus that there are insufficient financial resources in multilateral institutions and regional development banks to provide adequate support for the many economies that may face difficulties. Since the sources of liquid funds in the world today are in countries that have inadequate representation within the IMF, the World Bank, and other existing multilateral institutions, it will be imperative to create new governance structures for these lending facilities that are more representative. These new governance structures should be thought of as a precursor to the more fundamental reforms in the global economic governance that have long been demanded, and may entail more active involvement of other international institutions with wider and more diverse representation, including the various agencies of the UN family, such as UNDP and the International Labour Organisation.
Transparent and sustainable financial governance requires robust regulation of the world of finances which, as stated by the Presidium of the Socialist International, should include the establishment of a World Financial Organisation. The nature and extent of such regulation should itself emerge from global, democratic processes. Well designed regulation should focus on financial institutions and products whose failure puts the entire economy at risk. Elements will include, but not be limited to, demands for more transparency, restrictions on compensation schemes, especially those that encourage short sighted and excessively risky behaviour, restrictions on conflicts of interest, oversight of credit rating agencies, and control of other aspects of the behaviour of financial institutions that have imposed large social costs, without commensurate social benefits. Deficiencies in corporate governance that have given rise to compensation schemes that have benefited corporate managers at the expense of other stakeholders, including even shareholders, need to be given urgent consideration. Tax havens should be ended; and, a tax on short-term transactions considered.
There are other reforms to the international financial system that must be addressed if we are to have a more stable, prosperous, and equitable global economy. These include a reform of the global reserve system, better macro-economic coordination, with more attention paid to the consequences of policies for unemployment, and better ways of dealing with cross border bankruptcies and defaults, including those of sovereigns. The system in which countercyclical monetary and fiscal policies were pursued in the advanced industrial countries while pro-cyclical policies were imposed on developing countries has contributed to global volatility and imposed huge costs on developing countries. The current crisis has given new urgency to these long delayed reforms.
The reform process itself must be open, transparent, inclusive, and democratic; this means that the reform of the global regulatory framework or the way in which financial markets are regulated and supervised must take into account opinions and views of all. For this reason, we propose that discussion about reforms to the regulatory and financial framework for private markets be broadened to include the emerging economies, while at the same time providing a role for contributions from existing institutions that are less representative, such as the Financial Stability Forum.
Social democrats have always stood for markets with social responsibility. Markets that put citizens first. For a role for government in the economy with rules and regulation in the market. 75 years ago John Maynard Keynes explained how government action could help the economy recover from the Great Depression. Today his ideas have become part of conventional wisdom. Social democratic policies and their proposals for preventing another such calamity, as the one we are living through today, will in time also be accepted as conventional wisdom. But time is of the essence: the quicker governments can act, the shorter will be our downturn, and the fewer the number of innocent bystanders whose lives and dreams will be dashed in this tragic episode. We are living in a man-made crisis that should never be allowed to happen again. Our Commission is committed to contributing to that end, by constructing a roadmap, in which democracy, inclusion, fairness and green development will find a place in a new political, social and economic vision required for these times.
Source: Socialist International
A first response to the crisis was to bail out financial institutions in the developed economies, at an enormous cost for tax payers, with stark differences of opinion on the best way to proceed. Progressive forces and governments moved for accountability, transparency and guarantees for the average citizen, so they would not become the victim of the reckless acts and irresponsibility of those who provoked the crisis.
From the very beginning, at the centre of our concerns have been people’s jobs, housing, pensions, access to health and education services, in short the livelihood and social protection of citizens severely threatened by this crisis.
The social democratic vision of the economy and financial markets is that they should serve the citizens of our society. Financial markets are a means to an end, not an end in themselves. It is not necessarily the case that what is good for Wall Street or other financial centres is good for the rest of the economy. Moreover, trickle down economics - the notion that helping those at the top will benefit all - has been repeatedly rejected.
Four principles continue to guide the social democratic response: solutions to the crisis must be consistent with basic values of social justice and social solidarity as well as basic notions of fairness. The bonds of social solidarity must go across national boundaries; we cannot take actions which help ourselves at the expense of those in the developing world. They must reflect an understanding of the necessary balance between government and markets. Fourthly, any response must respect basic principles of democratic due process, including full transparency.
These principles take on a greater sense of urgency today, as what started as a financial crisis has become very quickly one of the real economy, with the threat of recession a reality around the world, and as we enter a new phase where emerging and developing economies are suffering the consequences of this crisis as well.
Lack of financial regulation triggered the crisis, while fiscal weakness and large public debts have hindered many governments’ ability to formulate policies to tackle it. At the same time, serious deficiencies in the global financial system have also been exposed, such as the limitations of the Bretton Woods institutions to guard against macroeconomic imbalances and provide liquidity to those economies in need; inadequate supervision of financial markets in developed economies and under-representation of emerging economies in the governance of the main multilateral lending institutions.
We will not be able to restore confidence in our financial markets unless we change their behaviour, through regulation. And regulation must be comprehensive. Too often, the regulatory process has been captured by those who were supposed to be regulated. The voice of those injured as a result of inadequate regulation—pensioners who lose their life savings, homeowners who lose their homes, workers who lose their jobs—has to be paramount. Such regulation could encourage real innovation, not the kind that has marked financial markets in recent years, like the derivatives that were supposed to manage risk but instead created it; but innovations that might allow average citizens to remain in their homes in the face of the economic vicissitudes which they face. Banks were allowed to become too big to fail and that was dangerous for all of us.
Given that the restructuring of global finance will take time, the Commission on Global Financial Issues proposes five immediate programmes to protect people today in countries most directly affected by the crisis:
The creation of a Social Protection Fund to assist developing countries that have inadequate or underfunded social protection schemes to set up social security systems to provide minimum social protections, including provisions for the unemployed, for health, and for retirees;
The creation of a Small Enterprises Development Fund to facilitate credit and capital flows to small businesses, as a sector which provides the major source of employment and a large contribution to the GDP, and assisting their technological development and expanding decent work;
The creation of a Financing Infrastructure Fund to help stimulate the economy. Such a fund would simultaneously stimulate the economy in the short run and help our societies meet the long run challenges they face; some funds might be directed, for instance, towards helping meet the challenges posed by global warming; others might be directed at the informal economy from which so many poor earn their living, for example with local programmes for small power plants, rural roads and markets, and technology parks.
The Commission equally supports the immediate and urgent establishment by the International Monetary Fund of a short-term liquidity line for emerging and developing economies which face a liquidity crisis caused not by deficient domestic policies but by sources of financing being severed due to the systemic crisis, as internationally active banks hoard liquidity, capital is repatriated to financial centres and rich countries’ GDP contract. This liquidity facility must allow access to countries by broadening the eligibility criteria in a fair way, so giving support to hundreds of millions of people who are now unwitting victims of this crisis; and it should be provided without the severe conditionalities often imposed in the past.
New sources of funding, and new lending facilities, have to be given urgent consideration. There is a growing consensus that there are insufficient financial resources in multilateral institutions and regional development banks to provide adequate support for the many economies that may face difficulties. Since the sources of liquid funds in the world today are in countries that have inadequate representation within the IMF, the World Bank, and other existing multilateral institutions, it will be imperative to create new governance structures for these lending facilities that are more representative. These new governance structures should be thought of as a precursor to the more fundamental reforms in the global economic governance that have long been demanded, and may entail more active involvement of other international institutions with wider and more diverse representation, including the various agencies of the UN family, such as UNDP and the International Labour Organisation.
Transparent and sustainable financial governance requires robust regulation of the world of finances which, as stated by the Presidium of the Socialist International, should include the establishment of a World Financial Organisation. The nature and extent of such regulation should itself emerge from global, democratic processes. Well designed regulation should focus on financial institutions and products whose failure puts the entire economy at risk. Elements will include, but not be limited to, demands for more transparency, restrictions on compensation schemes, especially those that encourage short sighted and excessively risky behaviour, restrictions on conflicts of interest, oversight of credit rating agencies, and control of other aspects of the behaviour of financial institutions that have imposed large social costs, without commensurate social benefits. Deficiencies in corporate governance that have given rise to compensation schemes that have benefited corporate managers at the expense of other stakeholders, including even shareholders, need to be given urgent consideration. Tax havens should be ended; and, a tax on short-term transactions considered.
There are other reforms to the international financial system that must be addressed if we are to have a more stable, prosperous, and equitable global economy. These include a reform of the global reserve system, better macro-economic coordination, with more attention paid to the consequences of policies for unemployment, and better ways of dealing with cross border bankruptcies and defaults, including those of sovereigns. The system in which countercyclical monetary and fiscal policies were pursued in the advanced industrial countries while pro-cyclical policies were imposed on developing countries has contributed to global volatility and imposed huge costs on developing countries. The current crisis has given new urgency to these long delayed reforms.
The reform process itself must be open, transparent, inclusive, and democratic; this means that the reform of the global regulatory framework or the way in which financial markets are regulated and supervised must take into account opinions and views of all. For this reason, we propose that discussion about reforms to the regulatory and financial framework for private markets be broadened to include the emerging economies, while at the same time providing a role for contributions from existing institutions that are less representative, such as the Financial Stability Forum.
Social democrats have always stood for markets with social responsibility. Markets that put citizens first. For a role for government in the economy with rules and regulation in the market. 75 years ago John Maynard Keynes explained how government action could help the economy recover from the Great Depression. Today his ideas have become part of conventional wisdom. Social democratic policies and their proposals for preventing another such calamity, as the one we are living through today, will in time also be accepted as conventional wisdom. But time is of the essence: the quicker governments can act, the shorter will be our downturn, and the fewer the number of innocent bystanders whose lives and dreams will be dashed in this tragic episode. We are living in a man-made crisis that should never be allowed to happen again. Our Commission is committed to contributing to that end, by constructing a roadmap, in which democracy, inclusion, fairness and green development will find a place in a new political, social and economic vision required for these times.
Source: Socialist International
Monday, April 16, 2007
Scandal, political tensions spur demands for Wolfowitz’s ouster at World Bank
Pressure for the resignation of Paul Wolfowitz as president of the World Bank escalated over the weekend in the wake of a Group of Seven (G7) finance ministers meeting in Washington, where several participants suggested his position was untenable.
French Finance Minister Thierry Breton, for example, declined to say whether he believed Wolfowitz should be ousted but declared that the World Bank should be “ethically irreproachable,” an obvious reference to the seedy scandal involving a hefty pay raise and promotion for Wolfowitz’s girlfriend, Shaha Riza, a Libyan-born British citizen who was a career bureaucrat at the World Bank before US President George W. Bush appointed him to head the agency a little over two years ago.
“I fully trust the governing board to draw the consequences it must draw,” added Breton.
Germany’s development minister, Heidemarie Wieczorek-Zeul, stated that Wolfowitz must decide “whether he still has the credibility to represent the position of the World Bank.”
Swiss Economics Minister Doris Leuthard declared, “It is not the World Bank’s credibility, but Mr. Wolfowitz’s credibility that is on the line.”
Brazil’s minister, Guido Mantega, echoed these sentiments, adding, “We’ll have to see if Wolfowitz will be able to retain the moral authority necessary to fulfill his duties.”
Meanwhile, the World Bank’s Development Committee, made up of 24 finance or development ministers representing the member countries on the bank’s board, issued a statement declaring, “We have to ensure that the bank can effectively carry out its mandate and maintain its credibility and reputation as well as motivation of staff. The current situation is of great concern to all of us.”
A day earlier, Wolfowitz was booed at a meeting with staff of the international lending agency, who overwhelmingly support his removal. The World Bank Group Staff Association issued a statement Thursday declaring that it “seems impossible for the institution to move forward with any sense of purpose under the present leadership, especially in our endeavor to assist governments and their people in improving their own governance.”
The association added, “The President must acknowledge that his conduct has compromised the integrity and effectiveness of the World Bank Group and has destroyed the staff’s trust in his leadership. He must act honorably and resign.”
It is widely believed that the board, which in practice votes according to the dictates of the world governments that its members represent, will stall in making any decision on Wolfowitz’s fate, in hopes that he will resign.
For its part, the Bush administration issued statements of strong support and confidence in its former second in command at the Pentagon continuing at the helm of the World Bank, an institution that employs some 13,000 people worldwide and lends approximately $25 billion annually.
It is becoming increasingly apparent that underlying this sharp difference over the personal and professional fate of Wolfowitz are profound and deepening tensions between US and European capitalism, not only over the role of the World Bank but a host of economic and political issues.
The appointment of the former US assistant defense secretary and key architect of the US war of aggression against Iraq had been opposed from the outset by the majority of the World Bank’s professional staff—an April 2005 poll showed 90 percent of staffers against it—as well as the bulk of the world’s governments that participate in its deliberations.
Wolfowitz was and remains irrevocably identified with the lies about “weapons of mass destruction” and terrorist ties employed by the Bush administration to justify launching the 2003 US invasion of Iraq—a war that Wolfowitz had supported well before the September 11, 2001 attacks and before the election of Bush himself.
The appointment was widely perceived as another gesture of the right-wing US administration’s contempt toward the rest of the world, as well as its determination to subordinate every international institution to its own militarist campaign to assert US global hegemony.
In two years, Wolfowitz has managed to fully live up to these expectations.
The scandal involving preferential treatment for someone with whom he was romantically involved is only the latest—and most personally embarrassing—of a series of controversies that have surrounded Wolfowitz’s tenure at the World Bank.
Nonetheless, this affair has its own unmistakable significance, both in what it says about the personal mores of those who make up the top echelons of capitalist politics in America and about the broader cynicism and hypocrisy that pervades US foreign policy.
Wolfowitz disclosed his relationship with Riza in the spring of 2005, during his negotiation of a lucrative five-year contract to serve as the board’s president. The bank’s ethics committee determined that maintaining her on staff in a position over which Wolfowitz would effectively exercise managerial control would violate the bank’s conflict-of-interest rules.
As the Washington Post revealed in an article by Karen DeYoung Sunday, the deal that Wolfowitz cut for his girlfriend was part of an aggressive and avaricious campaign to reap unprecedented compensation and perks for himself and his cronies. In his own case, this involved the negotiation of clauses allowing him to earn a substantial second income through lecture and book deals.
In the case of Riza, Wolfowitz issued a personal order to the bank’s director of personnel to increase her annual salary to $193,590—a $60,000 hike—while she was reassigned from the World Bank’s Middle East press office to the US State Department. She worked—making more than Secretary of State Condoleezza Rice herself—under the supervision of Vice President Dick Cheney’s daughter Elizabeth, who had been given her own nepotistic appointment to the number two position in the State Department’s Bureau of Near Eastern Affairs only two months earlier. There Cheney’s daughter—who left the post last year—was reportedly a leading proponent of US aggression against Syria and Iran.
No doubt, the awarding of a salary increase that amounts to more than the total annual income earned by 75 percent of American households seemed like no big deal to Wolfowitz at the time. At the Pentagon, he had presided over multi-million-dollar corruption involving his Iraqi ally Ahmed Chalabi and the principal military contractor in Iraq—formerly headed by Dick Cheney—Halliburton.
Dictated unprecedented compensation for girlfriend, cronies
With the release of the details of his girlfriend’s pay deal—described by the staff association as “grossly out of line” with personnel policy—his office circulated a false claim that the arrangement had been approved by the World Bank’s relevant boards. In fact, as is now documented, Wolfowitz—together with Riza’s lawyer—dictated the terms, overriding the recommendations of the institution’s ethics committee and barring relevant personnel from any negotiations on the contract.
Riza, incredibly, has issued a statement claiming that she was “victimized” by this lucrative arrangement, and has demanded “an end the unwarranted and malicious public and private attacks.”
Similarly, Wolfowitz brought with him to the World Bank two right-wing Republican White House operatives—Robin Cleveland and Kevin Kellems—whom, the Post reports, he “installed in senior positions and rewarded with open-ended contracts and quarter-million-dollar, tax-free salaries, despite their lack of development experience.”
Significantly, just months after his installation at the World Bank, Wolfowitz named Suzanne Rich Folsom—an attorney and Republican activist—to head the agency’s Department of Institutional Integrity, which conducts internal corruption investigations. The appointment was made in the wake of the bank’s own search committee’s selection of nine suitable candidates, all of whom were rejected in favor of the Bush administration loyalist.
Wolfowitz’s arrogance and apparent personal corruption were all the more striking given his attempt to make a campaign against government corruption internationally the signature issue of his tenure at the World Bank. Like the “war on terror” and the crusade for “democracy,” this campaign became more and more obviously a cover for the pursuit of US global interests.
Corruption was invoked as a pretext for cutting off loans to countries under conditions in which it served Washington’s foreign policy purposes, while ignoring corruption whenever it would have cut across American interests.
Thus, Uzbekistan, which had received half a billion dollars in loans from the World Bank since 1992, had an aid package suddenly revoked on Wolfowitz’s orders in September 2005, just two months after the country’s dictator, Islam A. Karimov, terminated a US basing agreement, ordering American troops and warplanes out of the country.
When it came to Iraq, Afghanistan, Pakistan and other regimes of strategic importance to US military operations, however, the concern for corruption went out the window.
According to the Washington Post, “Both [World Bank] staff and management also have raised concerns over what several described as Wolfowitz’s insistence that the bank accelerate its lending to Iraq and open an office there.” The Iraqi government is universally acknowledged to be among the most corrupt on earth, and in the end, the World Bank proved unable to recruit qualified personnel to staff any such office, because of justified concern over the civil war conditions prevailing in the country.
Wolfowitz’s international critics have ample cause to press for his removal from the World Bank. However, underlying the firestorm over the unethical and reactionary policies pursued by a man who is by the strictest definition a war criminal are powerful international economic and political tensions that are increasingly coming to the surface.
The crisis confronting Wolfowitz at the World Bank is inseparable from the debacle created by the criminal enterprise with which his name will always be associated: the US war in Iraq. The turn against him by the ministers of one government after another is a further indication of the political isolation of the Bush administration both at home and abroad.
More fundamentally, the ex-Pentagon official’s predicament is a manifestation of the changed position of US capitalism in global economic and political affairs.
The World Bank—together with the International Monetary Fund—was one of the key institutions set up under US hegemony in the aftermath of the Second World War for the purpose of reconstructing European capitalism and creating the conditions for the further expansion of American capitalism itself.
Given Washington’s preeminent role in the institution’s creation, as well as the predominance of US finance capital in world economic affairs during the postwar period, the US government was given the right to appoint the president of the World Bank, as well as a share of the votes on its board of directors that amounted to effective veto power.
This share, however, has been reduced because of the relative decline of US economic preeminence and the rise of powerful capitalist rivals in Europe and Asia. While Washington held just over 37 percent of the voting rights at the foundation of the World Bank, today its share has been reduced to a little more than 16 percent. The four next most powerful shareholders in the bank—Japan, Germany, France and the United Kingdom—can now outvote the US. China, which still is allocated less than 3 percent of the votes, is making a strong case for strengthening its position at American expense.
Nonetheless, the bank remains headquartered in Washington, and the US government continues to exert decisive influence over its decisions.
But to the extent that American imperialism remains the dominant global power today, it is not on the basis of its economic might or productive capacity. Rather, it is attempting to compensate for its relative economic decline by military means. This inevitably generates immense inter-imperialist conflicts and tensions.
While for the most part, Washington’s rivals in Europe and Asia have bowed to US militarism, they have not done so without bitter resentment of Washington’s dominance and a determination to pursue their own interests as capitalist powers. In the ugly scandal surrounding Paul Wolfowitz, they have found a means of furthering these aims.
Source: World Socialist Web Site
French Finance Minister Thierry Breton, for example, declined to say whether he believed Wolfowitz should be ousted but declared that the World Bank should be “ethically irreproachable,” an obvious reference to the seedy scandal involving a hefty pay raise and promotion for Wolfowitz’s girlfriend, Shaha Riza, a Libyan-born British citizen who was a career bureaucrat at the World Bank before US President George W. Bush appointed him to head the agency a little over two years ago.
“I fully trust the governing board to draw the consequences it must draw,” added Breton.
Germany’s development minister, Heidemarie Wieczorek-Zeul, stated that Wolfowitz must decide “whether he still has the credibility to represent the position of the World Bank.”
Swiss Economics Minister Doris Leuthard declared, “It is not the World Bank’s credibility, but Mr. Wolfowitz’s credibility that is on the line.”
Brazil’s minister, Guido Mantega, echoed these sentiments, adding, “We’ll have to see if Wolfowitz will be able to retain the moral authority necessary to fulfill his duties.”
Meanwhile, the World Bank’s Development Committee, made up of 24 finance or development ministers representing the member countries on the bank’s board, issued a statement declaring, “We have to ensure that the bank can effectively carry out its mandate and maintain its credibility and reputation as well as motivation of staff. The current situation is of great concern to all of us.”
A day earlier, Wolfowitz was booed at a meeting with staff of the international lending agency, who overwhelmingly support his removal. The World Bank Group Staff Association issued a statement Thursday declaring that it “seems impossible for the institution to move forward with any sense of purpose under the present leadership, especially in our endeavor to assist governments and their people in improving their own governance.”
The association added, “The President must acknowledge that his conduct has compromised the integrity and effectiveness of the World Bank Group and has destroyed the staff’s trust in his leadership. He must act honorably and resign.”
It is widely believed that the board, which in practice votes according to the dictates of the world governments that its members represent, will stall in making any decision on Wolfowitz’s fate, in hopes that he will resign.
For its part, the Bush administration issued statements of strong support and confidence in its former second in command at the Pentagon continuing at the helm of the World Bank, an institution that employs some 13,000 people worldwide and lends approximately $25 billion annually.
It is becoming increasingly apparent that underlying this sharp difference over the personal and professional fate of Wolfowitz are profound and deepening tensions between US and European capitalism, not only over the role of the World Bank but a host of economic and political issues.
The appointment of the former US assistant defense secretary and key architect of the US war of aggression against Iraq had been opposed from the outset by the majority of the World Bank’s professional staff—an April 2005 poll showed 90 percent of staffers against it—as well as the bulk of the world’s governments that participate in its deliberations.
Wolfowitz was and remains irrevocably identified with the lies about “weapons of mass destruction” and terrorist ties employed by the Bush administration to justify launching the 2003 US invasion of Iraq—a war that Wolfowitz had supported well before the September 11, 2001 attacks and before the election of Bush himself.
The appointment was widely perceived as another gesture of the right-wing US administration’s contempt toward the rest of the world, as well as its determination to subordinate every international institution to its own militarist campaign to assert US global hegemony.
In two years, Wolfowitz has managed to fully live up to these expectations.
The scandal involving preferential treatment for someone with whom he was romantically involved is only the latest—and most personally embarrassing—of a series of controversies that have surrounded Wolfowitz’s tenure at the World Bank.
Nonetheless, this affair has its own unmistakable significance, both in what it says about the personal mores of those who make up the top echelons of capitalist politics in America and about the broader cynicism and hypocrisy that pervades US foreign policy.
Wolfowitz disclosed his relationship with Riza in the spring of 2005, during his negotiation of a lucrative five-year contract to serve as the board’s president. The bank’s ethics committee determined that maintaining her on staff in a position over which Wolfowitz would effectively exercise managerial control would violate the bank’s conflict-of-interest rules.
As the Washington Post revealed in an article by Karen DeYoung Sunday, the deal that Wolfowitz cut for his girlfriend was part of an aggressive and avaricious campaign to reap unprecedented compensation and perks for himself and his cronies. In his own case, this involved the negotiation of clauses allowing him to earn a substantial second income through lecture and book deals.
In the case of Riza, Wolfowitz issued a personal order to the bank’s director of personnel to increase her annual salary to $193,590—a $60,000 hike—while she was reassigned from the World Bank’s Middle East press office to the US State Department. She worked—making more than Secretary of State Condoleezza Rice herself—under the supervision of Vice President Dick Cheney’s daughter Elizabeth, who had been given her own nepotistic appointment to the number two position in the State Department’s Bureau of Near Eastern Affairs only two months earlier. There Cheney’s daughter—who left the post last year—was reportedly a leading proponent of US aggression against Syria and Iran.
No doubt, the awarding of a salary increase that amounts to more than the total annual income earned by 75 percent of American households seemed like no big deal to Wolfowitz at the time. At the Pentagon, he had presided over multi-million-dollar corruption involving his Iraqi ally Ahmed Chalabi and the principal military contractor in Iraq—formerly headed by Dick Cheney—Halliburton.
Dictated unprecedented compensation for girlfriend, cronies
With the release of the details of his girlfriend’s pay deal—described by the staff association as “grossly out of line” with personnel policy—his office circulated a false claim that the arrangement had been approved by the World Bank’s relevant boards. In fact, as is now documented, Wolfowitz—together with Riza’s lawyer—dictated the terms, overriding the recommendations of the institution’s ethics committee and barring relevant personnel from any negotiations on the contract.
Riza, incredibly, has issued a statement claiming that she was “victimized” by this lucrative arrangement, and has demanded “an end the unwarranted and malicious public and private attacks.”
Similarly, Wolfowitz brought with him to the World Bank two right-wing Republican White House operatives—Robin Cleveland and Kevin Kellems—whom, the Post reports, he “installed in senior positions and rewarded with open-ended contracts and quarter-million-dollar, tax-free salaries, despite their lack of development experience.”
Significantly, just months after his installation at the World Bank, Wolfowitz named Suzanne Rich Folsom—an attorney and Republican activist—to head the agency’s Department of Institutional Integrity, which conducts internal corruption investigations. The appointment was made in the wake of the bank’s own search committee’s selection of nine suitable candidates, all of whom were rejected in favor of the Bush administration loyalist.
Wolfowitz’s arrogance and apparent personal corruption were all the more striking given his attempt to make a campaign against government corruption internationally the signature issue of his tenure at the World Bank. Like the “war on terror” and the crusade for “democracy,” this campaign became more and more obviously a cover for the pursuit of US global interests.
Corruption was invoked as a pretext for cutting off loans to countries under conditions in which it served Washington’s foreign policy purposes, while ignoring corruption whenever it would have cut across American interests.
Thus, Uzbekistan, which had received half a billion dollars in loans from the World Bank since 1992, had an aid package suddenly revoked on Wolfowitz’s orders in September 2005, just two months after the country’s dictator, Islam A. Karimov, terminated a US basing agreement, ordering American troops and warplanes out of the country.
When it came to Iraq, Afghanistan, Pakistan and other regimes of strategic importance to US military operations, however, the concern for corruption went out the window.
According to the Washington Post, “Both [World Bank] staff and management also have raised concerns over what several described as Wolfowitz’s insistence that the bank accelerate its lending to Iraq and open an office there.” The Iraqi government is universally acknowledged to be among the most corrupt on earth, and in the end, the World Bank proved unable to recruit qualified personnel to staff any such office, because of justified concern over the civil war conditions prevailing in the country.
Wolfowitz’s international critics have ample cause to press for his removal from the World Bank. However, underlying the firestorm over the unethical and reactionary policies pursued by a man who is by the strictest definition a war criminal are powerful international economic and political tensions that are increasingly coming to the surface.
The crisis confronting Wolfowitz at the World Bank is inseparable from the debacle created by the criminal enterprise with which his name will always be associated: the US war in Iraq. The turn against him by the ministers of one government after another is a further indication of the political isolation of the Bush administration both at home and abroad.
More fundamentally, the ex-Pentagon official’s predicament is a manifestation of the changed position of US capitalism in global economic and political affairs.
The World Bank—together with the International Monetary Fund—was one of the key institutions set up under US hegemony in the aftermath of the Second World War for the purpose of reconstructing European capitalism and creating the conditions for the further expansion of American capitalism itself.
Given Washington’s preeminent role in the institution’s creation, as well as the predominance of US finance capital in world economic affairs during the postwar period, the US government was given the right to appoint the president of the World Bank, as well as a share of the votes on its board of directors that amounted to effective veto power.
This share, however, has been reduced because of the relative decline of US economic preeminence and the rise of powerful capitalist rivals in Europe and Asia. While Washington held just over 37 percent of the voting rights at the foundation of the World Bank, today its share has been reduced to a little more than 16 percent. The four next most powerful shareholders in the bank—Japan, Germany, France and the United Kingdom—can now outvote the US. China, which still is allocated less than 3 percent of the votes, is making a strong case for strengthening its position at American expense.
Nonetheless, the bank remains headquartered in Washington, and the US government continues to exert decisive influence over its decisions.
But to the extent that American imperialism remains the dominant global power today, it is not on the basis of its economic might or productive capacity. Rather, it is attempting to compensate for its relative economic decline by military means. This inevitably generates immense inter-imperialist conflicts and tensions.
While for the most part, Washington’s rivals in Europe and Asia have bowed to US militarism, they have not done so without bitter resentment of Washington’s dominance and a determination to pursue their own interests as capitalist powers. In the ugly scandal surrounding Paul Wolfowitz, they have found a means of furthering these aims.
Source: World Socialist Web Site
Monday, October 20, 2003
'I keep Mamphela's vision'
Titus Makgela does not have legs, only two short stumps that protrude through his shorts. This has not stopped the 59-year-old Limpopo man from running his own vegetable garden on the grounds of a disused clinic and selling the produce in Lenyenye near Tzaneen. His inspiration was none other than managing director responsible for human development at the World Bank, Dr Mamphela Ramphele.
When Ramphele was banished to Lenyenye in 1977 by the apartheid government because of her involvement with the Black Consciousness movement, she built the first clinic in the area.
Archbishop Desmond Tutu officially opened it in 1981 and Titus was one of Ramphele's first employees. "She was a wonderful woman," he says. "Even though I was a disabled man, she had faith in me and gave me a job. She taught me about self-reliance and to believe in myself and my ability to change my living conditions."
Today "Mamphela's clinic", as it is known in the township, has been closed because of a lack of donor funds but Titus refuses to abandon it. He is determined to carry on the vision Ramphele had. Every day he crawls to the disused clinic to tend to his vegetable garden and to keep the yard clean. "I'll never abandon the clinic. Dr. Ramphele's dream will never die," says Makgela.
Source: News 24
When Ramphele was banished to Lenyenye in 1977 by the apartheid government because of her involvement with the Black Consciousness movement, she built the first clinic in the area.
Archbishop Desmond Tutu officially opened it in 1981 and Titus was one of Ramphele's first employees. "She was a wonderful woman," he says. "Even though I was a disabled man, she had faith in me and gave me a job. She taught me about self-reliance and to believe in myself and my ability to change my living conditions."
Today "Mamphela's clinic", as it is known in the township, has been closed because of a lack of donor funds but Titus refuses to abandon it. He is determined to carry on the vision Ramphele had. Every day he crawls to the disused clinic to tend to his vegetable garden and to keep the yard clean. "I'll never abandon the clinic. Dr. Ramphele's dream will never die," says Makgela.
Source: News 24
Tuesday, December 22, 1998
Soros warns of "market fundamentalism"
The growing realization over the past 12 months that the so-called "Asian meltdown" is in fact a crisis of the world capitalist system has brought a series of warnings from within ruling circles about the dangers posed by the unrestricted operations of financial markets.
The World Bank, for example, has implicitly criticized the prescriptions of its sister organization the International Monetary Fund insisting that the primary role of fiscal and monetary policy must be to shore up aggregate demand and "expand the social safety net."
The London-based newspaper the Financial Times has published numerous articles and comment pieces over the past months warning that unless central banks take corrective action there is a danger that the world can plunge into a 1930s-type depression. Likewise, The Economist magazine has issued several warnings over the past 12 months that the rise in share values on Wall Street signifies the development of a "bubble economy" the collapse of which could have far-reaching consequences.
Some of the most strident warnings about the state of global financial markets have come from the international financier George Soros, who achieved international notoriety after his Quantum Fund made around $2 billion at the expense of the Bank of England during the sterling currency crisis of 1992.
Soros began the year with an article in the Financial Times warning that the Asian financial crisis--at that stage dismissed by US president Clinton as a "glitch" along the road--could set off a world deflation tendency unless action were taken to counter it.
When the financial crisis spread to Russia in August, Soros published a letter declaring that its banking system was on the point of collapse. The following month, during testimony to the US Congress, he pointed to wider implications of the Russian events, warning that the global capitalist system was "coming apart at the seams."
He told the Congress there was a need to "rethink and reform" the global capitalist system and that as the Russian experience had shown "the problems will become progressively more intractable the longer they are allowed to fester."
Rethinking the capitalist system, Soros insisted, had to begin with the recognition that financial markets are inherently unstable. The global capitalist system was based on the belief that markets, if left to their own devices, would tend to return to an equilibrium position. But this view was false and "instead of acting like a pendulum financial markets have recently acted more like a wrecking ball, knocking over one economy after another."
Now Soros has brought together his fears about the operations of the international financial markets in a new book entitled The Crisis of the Global Capitalism. The book itself does not contain any significant new insights into the operations of world capitalism, much less any solutions to the crisis. But it is not without interest that a major participant in the international financial markets should voice his concern that the entire world capitalist system is heading for a disaster.
Soros sets out his concerns in the opening paragraph: "We live in a global economy, but the political organization of our global society is woefully inadequate. We are bereft of the capacity to preserve peace and to counteract the excesses of the financial markets. Without these controls, the global economy, is liable to break down."
And on the next page Soros continues this theme: "The development of a global economy has not been matched by the development of a global society. The basic unit for political and social life remains the nation-state. International law and international institutions, insofar as they exist, are not strong enough to prevent war or the large-scale abuse of human rights in individual countries. Ecological threats are not adequately dealt with. Global financial markets are largely beyond the control of national or international authorities."
There is nothing particularly original in these thoughts. Soros has merely pointed to the central contradiction of world capitalism identified by Marxists throughout this century--that between the development of a global economy and the division of the world into rival competing nation-states.
According to Soros, the chief danger to stability is the emergence of what he calls "market fundamentalism"-- the belief that the common interest is best served by individual decision-making and that attempts to maintain the common interest by collective action distort the market mechanism. "It is market fundamentalism," he insists, "that has rendered the global capitalist system unsound and unsustainable."
Soros notes that the present situation is not the first time that a global capitalist economy has developed. The first version of the global economy developed at the end of the nineteenth century. However, despite being sustained by major imperial powers, with a common ideological outlook and a stable monetary system based on gold, the system broke down.
"The nineteenth-century incarnation of the global capitalist system," he writes, "in spite of its relative stability, was destroyed by the First World War. After the end of the war, there was a feeble attempt to reconstruct it, which came to a bad end in the crash of 1929 and the subsequent Great Depression. How much more likely is it, then, that the current version of global capitalism will also come to a bad end, given that the elements of stability that were present in the nineteenth century are now missing?"
Soros is critical of the moves by the IMF, the US Treasury and the leaders of the G7 to improve the flow of information on financial markets to try to prevent the emergence of crises in the future. The prevailing doctrines about the operation of financial markets have not changed and the assumption is that with perfect information markets can take care of themselves. He insists that the "debate" must be broadened.
"It is time to recognize that financial markets are inherently unstable. Imposing market discipline means imposing instability, and how much instability can society take? ... To put it bluntly, the choice confronting us is whether we will regulate global financial markets internationally or leave it to each individual state to protect its interests as best it can. The latter course will surely lead to the breakdown of the gigantic circulatory system, which goes under the name of global capitalism."
Soros insists that to "stabilize and regulate" the global economy and prevent such a breakdown, a global system of political decision making is necessary. However in advancing this "solution" Soros runs up against the real contradictions and conflicts generated by the system of rival capitalist nation-states.
"A global society," he writes, "does not mean a global state. To abolish the existence of states is neither feasible nor desirable; but insofar as there are collective interests that transcend state boundaries, the sovereignty of states must be subordinated to international law and international institutions."
However, as Soros himself acknowledges, the greatest opposition to this idea is coming from the United States which is "unwilling to subordinate itself to any international authority." In other words, at the very point where the development of a truly global economy requires the creation of international institutions to prevent a breakdown of the whole system, the divisions between the most powerful nation-states are deepening, thereby rendering such collaboration increasingly difficult, if not impossible.
There are many examples of this process: the increasing inability of the major capitalist powers of the G-7 to reach agreement on economic policies, the conflicts within the IMF over funding and policy issues, the trade tensions between the US and Europe and between the US and Japan, the development of the euro as an international currency to challenge the dollar, and the recent breakdown of the APEC summit, to name but a few.
And in the two weeks since the publication of Soros' book, one of the most graphic examples of "unilateralism" has occurred with the US onslaught against Iraq aimed at securing its interests against its capitalist rivals in the resource-rich Middle East and central Asian regions.
Soros has pointed to some of the central contradictions of the world capitalist system. But the proposals he advances make clear that the representatives of the bourgeoisie, even where they are conscious of the disasters which the market system is producing, are unable to advance any program which can lead civilization out of the impasse in which it now finds itself.
Source: World Socialist Web
The World Bank, for example, has implicitly criticized the prescriptions of its sister organization the International Monetary Fund insisting that the primary role of fiscal and monetary policy must be to shore up aggregate demand and "expand the social safety net."
The London-based newspaper the Financial Times has published numerous articles and comment pieces over the past months warning that unless central banks take corrective action there is a danger that the world can plunge into a 1930s-type depression. Likewise, The Economist magazine has issued several warnings over the past 12 months that the rise in share values on Wall Street signifies the development of a "bubble economy" the collapse of which could have far-reaching consequences.
Some of the most strident warnings about the state of global financial markets have come from the international financier George Soros, who achieved international notoriety after his Quantum Fund made around $2 billion at the expense of the Bank of England during the sterling currency crisis of 1992.
Soros began the year with an article in the Financial Times warning that the Asian financial crisis--at that stage dismissed by US president Clinton as a "glitch" along the road--could set off a world deflation tendency unless action were taken to counter it.
When the financial crisis spread to Russia in August, Soros published a letter declaring that its banking system was on the point of collapse. The following month, during testimony to the US Congress, he pointed to wider implications of the Russian events, warning that the global capitalist system was "coming apart at the seams."
He told the Congress there was a need to "rethink and reform" the global capitalist system and that as the Russian experience had shown "the problems will become progressively more intractable the longer they are allowed to fester."
Rethinking the capitalist system, Soros insisted, had to begin with the recognition that financial markets are inherently unstable. The global capitalist system was based on the belief that markets, if left to their own devices, would tend to return to an equilibrium position. But this view was false and "instead of acting like a pendulum financial markets have recently acted more like a wrecking ball, knocking over one economy after another."
Now Soros has brought together his fears about the operations of the international financial markets in a new book entitled The Crisis of the Global Capitalism. The book itself does not contain any significant new insights into the operations of world capitalism, much less any solutions to the crisis. But it is not without interest that a major participant in the international financial markets should voice his concern that the entire world capitalist system is heading for a disaster.
Soros sets out his concerns in the opening paragraph: "We live in a global economy, but the political organization of our global society is woefully inadequate. We are bereft of the capacity to preserve peace and to counteract the excesses of the financial markets. Without these controls, the global economy, is liable to break down."
And on the next page Soros continues this theme: "The development of a global economy has not been matched by the development of a global society. The basic unit for political and social life remains the nation-state. International law and international institutions, insofar as they exist, are not strong enough to prevent war or the large-scale abuse of human rights in individual countries. Ecological threats are not adequately dealt with. Global financial markets are largely beyond the control of national or international authorities."
There is nothing particularly original in these thoughts. Soros has merely pointed to the central contradiction of world capitalism identified by Marxists throughout this century--that between the development of a global economy and the division of the world into rival competing nation-states.
According to Soros, the chief danger to stability is the emergence of what he calls "market fundamentalism"-- the belief that the common interest is best served by individual decision-making and that attempts to maintain the common interest by collective action distort the market mechanism. "It is market fundamentalism," he insists, "that has rendered the global capitalist system unsound and unsustainable."
Soros notes that the present situation is not the first time that a global capitalist economy has developed. The first version of the global economy developed at the end of the nineteenth century. However, despite being sustained by major imperial powers, with a common ideological outlook and a stable monetary system based on gold, the system broke down.
"The nineteenth-century incarnation of the global capitalist system," he writes, "in spite of its relative stability, was destroyed by the First World War. After the end of the war, there was a feeble attempt to reconstruct it, which came to a bad end in the crash of 1929 and the subsequent Great Depression. How much more likely is it, then, that the current version of global capitalism will also come to a bad end, given that the elements of stability that were present in the nineteenth century are now missing?"
Soros is critical of the moves by the IMF, the US Treasury and the leaders of the G7 to improve the flow of information on financial markets to try to prevent the emergence of crises in the future. The prevailing doctrines about the operation of financial markets have not changed and the assumption is that with perfect information markets can take care of themselves. He insists that the "debate" must be broadened.
"It is time to recognize that financial markets are inherently unstable. Imposing market discipline means imposing instability, and how much instability can society take? ... To put it bluntly, the choice confronting us is whether we will regulate global financial markets internationally or leave it to each individual state to protect its interests as best it can. The latter course will surely lead to the breakdown of the gigantic circulatory system, which goes under the name of global capitalism."
Soros insists that to "stabilize and regulate" the global economy and prevent such a breakdown, a global system of political decision making is necessary. However in advancing this "solution" Soros runs up against the real contradictions and conflicts generated by the system of rival capitalist nation-states.
"A global society," he writes, "does not mean a global state. To abolish the existence of states is neither feasible nor desirable; but insofar as there are collective interests that transcend state boundaries, the sovereignty of states must be subordinated to international law and international institutions."
However, as Soros himself acknowledges, the greatest opposition to this idea is coming from the United States which is "unwilling to subordinate itself to any international authority." In other words, at the very point where the development of a truly global economy requires the creation of international institutions to prevent a breakdown of the whole system, the divisions between the most powerful nation-states are deepening, thereby rendering such collaboration increasingly difficult, if not impossible.
There are many examples of this process: the increasing inability of the major capitalist powers of the G-7 to reach agreement on economic policies, the conflicts within the IMF over funding and policy issues, the trade tensions between the US and Europe and between the US and Japan, the development of the euro as an international currency to challenge the dollar, and the recent breakdown of the APEC summit, to name but a few.
And in the two weeks since the publication of Soros' book, one of the most graphic examples of "unilateralism" has occurred with the US onslaught against Iraq aimed at securing its interests against its capitalist rivals in the resource-rich Middle East and central Asian regions.
Soros has pointed to some of the central contradictions of the world capitalist system. But the proposals he advances make clear that the representatives of the bourgeoisie, even where they are conscious of the disasters which the market system is producing, are unable to advance any program which can lead civilization out of the impasse in which it now finds itself.
Source: World Socialist Web
Thursday, October 15, 1987
Burkina Faso President Thomas Sankara's 'Against debt' speech 1987
Thomas Isidore Noël Sankara (December 21, 1949 – October 15, 1987) was a Burkinabé military captain, Marxist revolutionary, Pan-Africanist theorist, and communist President of Burkina Faso from 1983 to 1987. Viewed as a charismatic, and iconic figure of revolution, he is commonly referred to as "...Africa's Che Guevara."
Sankara seized power in a 1983 popularly supported coup at the age of 33, with the goal of eliminating corruption and the dominance of the former French colonial power.He immediately launched "the most ambitious program for social and economic change ever attempted on the African continent." To symbolize this new autonomy and rebirth, he even renamed the country from the French colonial Upper Volta to Burkina Faso ("Land of Upright Men"). His foreign policies were centered around anti-imperialism, with his government eschewing all foreign aid, pushing for odious debt reduction, nationalizing all land and mineral wealth, and averting the power and influence of the IMF and World Bank. His domestic policies were focused on preventing famine with agrarian self-sufficiency and land reform, prioritizing education with a nation-wide literacy campaign, and promoting public health by vaccinating 2.5 million children against meningitis, yellow fever and measles. Other components of his national agenda included planting over ten million trees to halt the growing desertification of the Sahel, doubling wheat production by redistributing land from feudal landlords to peasants, suspending rural poll taxes and domestic rents, and establishing an ambitious road and rail construction program to "tie the nation together." Moreover, his commitment to women's rights led him to outlaw female genital mutilation, forced marriages and polygamy; while appointing females to high governmental positions and encouraging them to work outside the home and stay in school even if pregnant.
In order to achieve this radical transformation of society, he increasingly exerted authoritarian control over the nation, eventually banning unions and a free press, which he believed could stand in the way of his plans and be manipulated by powerful outside influences To counter his opposition in towns and workplaces around the country, he also tried corrupt officials, counter-revolutionaries (and) "lazy workers" in peoples revolutionary tribunals. Additionally, as an admirer of Fidel Castro's Cuban Revolution, Sankara set up Cuban-style Committees for the Defense of the Revolution (CDR's).
His revolutionary programs for African self-reliance as a defiant alternative to the neo-liberal development strategies imposed by the West, made him an icon to many of Africa's poor, and despite his excesses, Sankara remained popular with most of his country's impoverished citizens. However his policies alienated and antagonised the vested interests of an array of groups, which included the small but powerful Burkinabé middle class, the tribal leaders whom he stripped of the long-held traditional right to forced labour and tribute payments, and the foreign financial interests in France and their ally the Ivory Coast. As a result, he was overthrown and assassinated in a coup d'état led by the French-backed Blaise Compaoré on October 15, 1987. A week before his execution he declared that, "While revolutionaries as individuals can be murdered, you cannot kill ideas".
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