PHA-Exchange> Fwd: [globalization] The One-Size-Fits-All Globalization Model Just Didn't Work

[David Legge]

Sorry about the cross posting if you have already seen this but I think the 
contents justifies it.
dl


>Globalization (globalization at iatp.org)    Posted: 
>12/31/2001  By  mritchie at iatp.org
>============================================================
>
>Published on Sunday, December 30, 2001 in the Los Angeles Times
>
>Argentina
>Blame the IMF Crowd
>The One-Size-Fits-All Globalization Model Just Didn't Work
>
>by Marc Cooper
>
>  A businessman trafficking in women in the red-light district of Buenos
>Aires refers to his most sought-after prostitute as la mina--the gold mine
>that produces his wealth. That's precisely the unfortunate role Argentina
>played in world markets over the last decade--it has been a gold mine for
>overseas investors.
>
>Throughout the 1990s, Argentina dutifully carried out the orders of the men
>who run the international financial markets. It privatized state-owned
>industries, selling them off to foreigners. It embraced free trade and
>pegged its national currency, the peso, to the U.S. dollar. That Argentina
>was ruled by a gangster regime for most of the decade--former President
>Carlos Menem was only recently released from house arrest for his role in
>an international gun-running scheme--seemed to matter little to world
>bankers. As long as it remained a lucrative investment for mobile
>international capital, as long as it churned out double-digit profits for
>wealthy overseas bondholders, Argentina was the darling of globalization.
>But after bloody civil unrest drove President Fernando de la Rua from power
>earlier this month and Argentina suspended payments on its international
>debts, the global money managers acted as if they had nothing to do with
>the country's economic collapse. It was Argentine mismanagement and
>corruption that were to blame. True, they were contributing factors. Yet
>the men who run the International Monetary Fund, the World Bank and other
>multilateral financial agencies have some explaining to do, too. Argentina
>obeyed to the letter the nostrums the IMF routinely prescribes for the
>poorer half of the world: It cut social spending, reduced wages, raised
>prices and balanced the budget to attract foreign investment. Even as
>default loomed, the IMF pumped billions of dollars more into Argentina in
>return for its obedience--and the economy still collapsed.
>
>That experience should be enough to throw into question the free-market
>globalization model that has increasingly been forced on Latin America
>countries as the only way to grow economically. A study released last
>summer by the Center for Economic and Policy Research in Washington
>provides further support for such a break. Of the world's 116 poorest
>countries, most are worse off after the last 20 years of global economic
>integration.
>
>The IMF also pursued a money-for-austerity strategy in Russia in 1998 and
>in Brazil a year later, to similar disastrous effect. But the outcome in
>Argentina has been catastrophic. Pegging the peso to the dollar resulted in
>a vastly overvalued national currency. Argentine exports ceased to be
>competitive. Cheap imports smothered national production. As the value of
>the dollar rose 35% over the last five years, Argentine wages were
>depressed an equal amount. Interest rates soared. The foreign debt
>mushroomed to more than $130 billion. Unemployment floats near 20%.
>Argentina's four-year recession pushes an estimated 2,000 people a day
>below the poverty line. Even as the country simmered near political revolt,
>the IMF continued to insist that Argentina run no spending deficits and
>slash social spending.
>
>Argentines are a proud people. Their country was among the world's richest.
>Until recently, its large middle class rivaled European counterparts in
>comfort and opportunity. Unionized factory workers could afford a house, a
>car and hope to put their children through college. All that has been lost
>in the name of "global economic integration." The surprise is that the
>political explosion was so long delayed.
>
>Caretaker President Adolfo Rodriguez Saa must now try to restore financial
>stability while not provoking more social unrest. He's off to a good start
>by ignoring the prevailing financial orthodoxy. Rodriguez has temporarily
>suspended interest payments on the foreign debt, a figure now greater than
>Argentina's annual export income. More important, he has adopted a "third
>currency" to finance urgently needed social spending and promised to create
>100,000 public-works jobs immediately, and a million total in the near
>future.
>
>These are only remedial measures. To ensure authentic and sustainable
>economic development, Argentina and its neighbors should cast off the
>one-size-fits-all economic prescription beloved by the international money
>managers. The United States and other economically powerful nations, and
>the international financial organizations they finance, should allow for
>alternative models of development. Selling off privatized industries,
>exporting nonrenewable natural resources and buying cheap TVs on credit
>generate short-term prosperity but offer little of a national economic
>future.
>
>Underneath the ledger numbers that world bankers hold up as the measure of
>success or failure are the lives, aspirations and dreams of real people.
>Those people flooded the streets of Argentina this month to say, simply if
>dramatically, that they had had enough.
>
>Marc Cooper is a contributing editor to The Nation and a columnist for LA
>Weekly. His latest book is "Pinochet and Me: A Chilean Anti-Memoir."
>
>Copyright 2001 Los Angeles Times
>
>
>
>
>
>
>
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David Legge
School of Public Health
La Trobe University, Victoria, 3086, Australia
http://www.latrobe.edu.au/publichealth/references/profiles/dgl4sph.htm
+61/(03) 9489 1934 (hm/ph); +61/(03) 9479 5849 (wk/ph)
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Mobile phone: 0408 991417
email: d.legge at latrobe.edu.au