How the neoliberal priesthood of the West has used China's progress to build the myth that globalization is a great success
Speaking
to Sharmini Peries and The
Real News,
Co-Director of the Center for Economic and Policy Research in
Washington D.C., Mark Weisbrot, gave a characteristic example of how
the tools of the global neoliberal priesthood, like IMF, are using
highly disputable data to persuade that globalization is a success
story.
Using
generalizations and oversimplifications, the World Bank, the IMF and
other bank-occupied Western institutions, support that, for example,
extreme poverty has been cut from nearly 40% of the world to under
10%, implying that neoliberal policies have been successful. In
reality, two-thirds of that extreme poverty reduction concerns China,
which, furthermore, did exactly the opposite of what these neoliberal
policies dictate!
As
Weisbrot explained:
A
lot of people defend the globalization that's designed here in
Washington as something that really helps the poor, the majority of
people in the world. And so here's the IMF and the World Bank.
They're the main ones that have this influence. They have real power
too, because in a lot of countries if you don't get agreement with
the IMF, you won't get loans from the World Bank or from regional
banks, or sometimes even the private sector.
So
this is real power. It's very concentrated here in Washington. And
it's part of a neo-colonial system where the rich countries, which
control these institutions, really, even though the IMF has 189
members, it's really just the US and its rich country allies that
make the decisions. And they don't necessarily make them in the
interest of developing countries.
President
Obama in his last speech at the United Nations said that over the
last 25 years, the number of people living in extreme poverty has
been cut from nearly 40% of the world to under 10%. Now that's World
Bank statistic and there's a lot of dispute over that. But even
taking it at face value, if you actually look at what happened
since 1990, two-thirds of that extreme poverty reduction was in
China. And if you go back a little further from 1981 to 2010, 94% of
that net reduction in people living below the extreme poverty line
was in China. And even the part that wasn't in China, a lot of that
was the result of China's growth and importing. Increased imports
from developing countries and increased investment as China became
the largest economy in the world.
Chinese
globalization's done very well. China's income per person has
multiplied 21 times since 1980. The fastest economic growth in
history. But if you look at what they did, most of it is
the opposite of what these Washington institutions and what even
President Obama was describing as globalization in his speech. They
had foreign investment, but they controlled it. And they still have
it. They control it to fit with their own development plans. They
have technology transfer as much as they can get. They have
performance requirement. Require foreign investing firms to do
certain things that promote local management skills and things like
that. Export promotion. They have a mostly state controlled financial
system for most of this period, and still quite a bit today. Their
central bank isn't independent, which is one of the main thing
Washington pushes.
This
is the kind of globalization they had, and the rest of the developing
world is very different. You have this indiscriminate opening to
international trade and capital flows. You have the central bank
being independent of the government so it's not really a subject of
public control. It's more the response of the financial sector. They
got rid of these industrial and developing policies that used to be
successful, and were successful in China. And all this other
financial deregulation and other deregulation. And if you look at
what happened in these last 25 years in the vast majority of
developing countries outside of China, the ones that did the kind of
globalization that President Obama and all these officials at the IMF
and the World Bank are talking about and calling a success, and the
media usually calls a success, they did very badly overall.
In
the '80s and '90s they had a terrible economic failure and they
really didn't recover until the 21st Century when a lot of what had
happened was China helped pull them out. And then their policy's also
changed as the IMF lost most of its influence in the middle income
countries. There really isn't much evidence that globalization has
been a success for the vast majority of developing countries.
Indeed,
after September 11, and given the great speculative bubble that was
created during the previous decade, it seemed that the American
economy was about to collapse. Then Greenspan took action by cutting
down the interest rates several times. The goal was simple: to
encourage American consumers to borrow and spend. The consumers’
desires would become the engine that would stabilize the system. It
was a huge risk, because cutting the interest rates to almost zero,
Greenspan released a flood of cheap money into the economy, which in
the past led always to inflation and dangerous instability. But this
time it didn’t happen. A huge consuming boom began, bigger than any
other in history, without inflation. Everything seemed to remain
stable and the system seemed that it could manage itself without any
direct political control.
But
ultimately, the reason for this unusual booming was the exact
opposite. It happened due to the massive exercise of political power,
from an elite thousand miles away. The Chinese government kept the
exchange rate of the country at a low level. Therefore, the Chinese
products became cheap and flooded America. And to pay for them, the
US dollars flooded China. But rather than spend this money for the
population, the Chinese leaders loaned them immediately back to
America by buying government bonds. It was a perfect system of cheap
goods and cheap money inflow in the US, all controlled by the Chinese
political power. And that’s what created stability.
Chinese
protectionism is what saved even the West, but the tools of the
neoliberal priesthood present a fake story of how the deregulated
free-market supposedly brings prosperity for all. Lately, we've seen
the devastating effects of the IMF imposed policies to eurozone and
especially to Greece. The last seven years, public debt,
unemployment, poverty reached unprecedented levels, with zero
prospect seen in the horizon. The bankers have been saved again with
billions and Greece is looted by the vulture-'investors'
who come to take whatever they can from public property, almost for
free.
After
all these dramatic failures, the IMF, the World Bank and other tools
of the neoliberal regime insist to present a reversed reality. There
is, as always, only one explanation: their mission is to help global
plutocrats to maintain power, not to save nations from poverty.
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