Economic Inequality

I thought this was an interesting and relevant video, so I thought I’d share it with the class. In it, Richard Wilkinson presents data detailing how income inequality in industrialized countries affect their societies.

Chile’s Economic “Miracle”

http://dollarsandsense.org/archives/2004/0904cypher.html

In this article, James M. Cypher begins by describing that in 1983, the revolution of Chile’s economy to embrace the free market with greater abandon was a modern day miracle. However what Cypher fails to mention is the tremendous upheaval that occurred in the period of time between the coup d’etat, staged by General Augusto Pinochet, and the dramatic changes that occurred within the economy, largely due to influence of Milton Friedman, who preached that Chile needed to embrace the free market, instead of slowly trying to mold Chile into a free market economy, Friedman proposed a sort of neoliberal shock therapy. The result was a recession, that was intentionally induced, before a huge boom in Chile’s economy, that has been referred to as “Chile’s Economic Miracle.”

However, As is mentioned in both the article and the reading, the miracle was short-lived. The shock therapy had built in limits, and the article by James Cypher goes into great detail about the stagnation that occurred within the Chilean economy, after so many years of large amounts of growth. He also goes on to critique the attitude of economists within the country, who instead of attempting to create new ways for the economy to grow and evolve, still cling to the free market/ free trade style of running the economy. An attitude leftover after so many years of living in fear of a government that ruled through fear.

Johan Norberg vs. Klein

This video is of Johan Norberg arguing in defense of Milton Friedman against Naomi Klein’s Shock Doctrine.  Norberg is a Swedish historian, and the author of In Defense of Global Capitalism.  Klein asserts that free-market economists, most notably Friedman,  advocate using disasters (such as natural disaster, war, and coup d’etat) to advance their free-market fundamentalissm, as a form of “shock therapy.”  Norberg attempts to refute this interpretation of Friedman in this interview.

 

Shock Therapy for the World, free of Charge?

In Naomi Klein’s article “blank is beautiful” speaks upon the economic world’s shock doctrine that uses a type of economic shock therapy used in a metaphorical way that when natural disasters, war, terrorist attacks as a time to push economic policies.  This Shock doctrine is what has been taking place within the world since the seventies, originally formed by the late economics professor from Chicago University Milton Friedman. Naomi speaks of this Shock Doctrine as disaster capitalism, where many frankly used ideas of “making it better” creates a worse situation for the localized population. She firstly shows how the public school system in New Orleans had turned into a privatized system from the recent natural disaster from hurricane Katrina; also the 2004 tsunami in Sri Lanka that allowed the building of resorts in replace of fishing villages. She dives into the past how this idea of economic shock therapy has been used throughout the world to advance the profits for corporations and adding to the global decline of many disaster stricken economies.  As well as the current situations in Iraq that has acquired this shock therapy and by military force being a capitalist dream of epic profiting. The main idea portrayed is that “this fundamentalist form of capitalism has always needed disasters to advance it”.

Incarceration and Unemployment in the United States

Referring to our discussion in class yesterday, here are two graphs that show changes in unemployment and incarceration rates in the United States.  Pay attention to the years, since the incarceration graph goes way back to the 1920s while the unemployment graph starts in 1950.  Pay particular attention in both graphs to changes in the late 1970s, early 1980s, when economic restructuring (neoliberalism) begins to take hold in America.

What connections, if any, can you infer between the data contained in these graphs and neoliberalism more generally?

If government’s major political role consists of managing a territory and its population, and if neoliberalism entailed a systematic restructuring of labor-employer relations (making labor more “flexible” and less secure/permanent), then could it be the case that the rise in incarceration was but one of many strategies employed by governments to deal with an excess “floating” population of now “redundant” labor, particularly in economically degraded cities?

Or could it be the case that criminal activity (such as selling and using drugs) itself rose as a result of economic insecurity and greater inequality introduced through neoliberal restructuring?

Stiglitz speaking at Occupy Wall Street

Joseph Stiglitz, the nobel prize winning economist who we read last week, recently spoke at ‘Occupy Wall Street’ in NYC.  Here is a video:

Do you find any similar themes between what Stiglitz is saying in this video and what he wrote about in his book “Globalization and its Discontents”?

Life and Debt

http://search.japantimes.co.jp/member/member.html?ff20050713a5.htm

 

http://www.buzzflash.com/interviews/05/07/int05030.html

 

The links above are a couple of interviews with “Life and Debt” documentary Stephanie Black. I found them interesting mainly because she explains more how little the schools in the U.S. educate students on what is really happening in developing countries, and the other side of the story is never told. She speaks of the portrait the tourists in the film have, and the same can be seen locally – what a person sees walking down the Waikiki strip is not the same this person would see walking down Waianae, or Waipahu. Foreigners don’t see illiterate youth, and even adults struggling for food at a Hawaiian Food Bank; they only see Mai Tais and leis. They do not understand why Hawaiian locals would be so upset at the opening of such a “Fantasy Land” as the Disney Resort. The same factor occurs in Peru, where tourists explore Machu Picchu and love to take home a bottle of Pisco as a souvenir, when in reality, babies are sleeping on the streets. As the reading mentions, the riots occurring in these developing countries are seldom heard of in the West. It is eerie to me that, with what globalization is capable of, somehow poverty increases unstoppably, and seeing how big of contribution the IMF is to this, is quite dismal.

 

 

 

IMF-ing the World

The above video is a short news report by the US-based extension of Russia Today. It was filmed earlier this year when the IMF and World Bank met in April. The news report illustrates some of the criticisms of the IMF and World Bank posed by Joseph Stiglitz.

The IMF was originally created to ensure global economic stability through Keynesian economic principles. However, this changed in the 1980s with the arrival of new IMF leadership, which adhered to neoliberal principles. These neoliberal principles are what are mentioned in the video: “reliance on the free market and not on the role of the state.” These policies partly came as a result of the “Washington Consensus”–a set of ideas created to deal with Latin American economic problems but were mistakenly applied to other countries with different situations. Unfortunately, these neoliberal policies have exacerbated problems rather than solving them.

Additionally, Joseph Stiglitz and Simon Johnson from the video both point out these policies have been perpetuated by a Western-dominated leadership in the IMF and World Bank. This Western leadership either formulates solutions from a Western lens, as Gerald Epstein from the video mentions, or worse, as Stiglitz discusses, creates policies favorable to Western business communities and financial institutions, rather than policies that assist under-developed countries.

Here are additional videos by Russia Today regarding the IMF and its policies:

IMF: Disease or Cure?

IMF policies destabilize the developing world