CFG: “Unsustainable Patterns of World Economic Growth” 1998

October 12, 2008 at 4:30 am | Posted in Economics, Financial, Globalization, History, Research | Leave a comment

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CAMBRIDGE FORECAST GROUP

Unsustainable Patterns of World Economic Growth

http://www.geocities.com/lance_feiner/

GLOBALIZATION AND THE CURRENT CRISIS 1998

A Handbook for Progressive Policy Makers

(By the Green Policy Group of The Other Economic Summit)

More precisely, from 1985 to the present, the US has been imposing a series of unsustainable economic and financial bubbles on various regions of the world successively (first Japan and Europe, then Asia, then Latin America, then China, etc.) in order to satisfy its insatiable demand for exports. Countries and regions have been overwhelmed by floods of outside capital, which they had neither the social nor economic institutions to deal with. A more viable policy would be the promotion of economic growth in more areas of the world simultaneously, but at a slower and more sustainable pace. Africa and the Arab world should not be written off as “basket cases” to be left to the dictates of a fickle global financial market.

As of this writing, policy makers are urging Japan to become the “locomotive” for Asia. Poor people in Asia are being asked to reduce their consumption, even as rich people in Japan are being asked to increase theirs. It seems that we’re back to ”Western-led growth” again. However, the only real “locomotive” for global and American economic growth, the only “locomotive” that doesn’t turn out to be a “bubble” is the alleviation of Third World poverty and the promotion of Third World sustainable development.

CONTENTS:

Introduction

●         A Brief, Long-Term History of Globalization

●         Globalization Since 1945

●         Neoliberalism

●         The Third World

●         The American Economy, What Went Wrong Since 1965

●         The Role of The Transnational Corporations

●         Cuts in U.S. Social Entitlements And Globalization

●         Economic Growth And Sustainable Development

●         Anti-Third World Populism in The West

●         Circumventing Anti-Third World Populism, How Not To Do It

●         A Twenty Six Year History of Global “Quick Fixes”

●         Advice for Policy Makers

●         Conclusions

GLOBALIZATION AND SUSTAINABLE ECONOMIC GROWTH

Introduction

This handbook presents a brief geographical and historical overview of the various financial/ political crises, which have been taking place in the world lately. If you’ve been feeling confused by them, the following material might be helpful.

A Brief, Long-Term History of Globalization

“Globalization” is not an entirely new phenomenon. Defined broadly, globalization, for better or worse, is simply the recurrence (this time on a global scale) of a process of political /cultural/economic consolidation, that has occurred many times in the past, on a very large regional scale. (i.e. the sinification of the Chinese subcontinent, the Aryanization of the Indian subcontinent, and the Hellenization of the Near East and the Mediterranean world.) “Globalization” is simply the 500-year period of Europeanization (and later Americanization) of the rest of the world.

European civilization’s five hundred year period of technological progress and geographical expansion has often been called unique, unparalleled in human history, completely different from anything in pre-European or non-European societies. This is not quite true however. Chinese civilization did undergo a similar process some 2000 years earlier, during its so-called “period of warring states” (500-250 B.C.). Competition between the “warring states” led to rapid technological and economic advance. It also led to massive geographical expansion via colonization (because of an outflow of refugees from the wars). Europe’s period of state formation, on the other hand, occurred 2,000 years later than China’s. Europe was thus heir to an additional 2,000 years of global technological and social advance. Because of advances in naval technology, and because of global linkages created by Arab and Mongol conquests, Europe’s expansion took place on a global rather than on a regional scale. Thus, whereas China’s “late start” (its iron age began in 500 B.C.) enabled it to develop a particularly successful and durable form of the “tributary mode”, Europe’s “late start”, 2,000 years later, enabled it to transcend the “tributary mode” altogether, and progress to industrial capitalism.

In other words, “Globalization” is nothing more than the five hundred year period of “Europeanization” (and, more recently, ”Americanization”) that the world has been subject to.

The globalization process was accelerated dramatically during the industrial revolution. By the beginning of this century, it had evolved into a system of global capitalism, linking together armed, mutually hostile industrial states and moribund empires (which were themselves rapidly industrializing even as they disintegrated). The globalization process collapsed temporarily during the catastrophes of the 1914 – 1945 period. It resumed again in 1945, under American hegemony, and was again dramatically accelerated by the post-war “technological revolution” (computers, transistors, containerization, the “green revolution”, communications satellites and the integrated circuit).

Globalization Since 1945

Contemporary critics of globalization usually do not begin with a 500-year history of the West’s rise to global dominance. Wolfgang Sachs, for example, (The Dictionary of Sustainable Development, Zed Books, 1992) concentrates his attention on the consequences of the ideology of “developmentalism” promulgated by Truman in the 1940′s and adopted by the Third World elites. David C. Korten, on the other hand, (When Corporations Rule The World, Kumarian Publishers, 1995) discusses the derangements brought about by the last twenty years of globalization.

Neoliberalism

When most people use the term “globalization”, they really mean “neoliberalism”. Neoliberalism (or “globalization” if you will) has attracted widespread criticism in recent years from such diverse sources as Pope John Paul, Ralph Nader, and (believe it or not) financier George Soros. The thrust of this criticism is that neoliberalism puts all of global society and all of global ecology onto a roulette wheel known as the “global capital markets”, and spins this roulette wheel, with God knows what consequences to the human future.

However, the point here is not to criticize neoliberalism, whose failings by now should be apparent to everyone, but rather to describe what it is, how it came about, and how it is likely to change.

First of all, the “liberalism” in neoliberalism does not mean “New Deal/Great Society” liberalism. It means “19th century British liberalism”; the policy of laissez-faire economics within nations, and the free, unfettered flow of commodities and capital between nations. “Neo”-”liberalism”, thus, means the late 20th century version of 19th century British liberalism; the privatization of the economies within nations, and the free, unfettered flow of commodities and capital between nations. Neoliberalism is usually portrayed as an inevitable consequence of changes in communications technology, the inevitable yielding of governments to the unstoppable “global marketplace”. Neoliberalism, however, is actually a global political construct, whose purpose was to regulate the process of globalization to (short term) U.S. advantage. It has far more to do with the U.S. political process, than with some Svengali-like takeover of national governments by multinational corporations.

Here is how it came about. At the 1979 economic summit in Belgrade, an elaborate scheme of Western/OPEC financial coordination was worked out to end global inflation and refinance Third World debt, without at the same time, collapsing global economic demand. Although this scheme involved a certain loss of US financial hegemony, it was reluctantly accepted by the Carter administration in the summer of 1980. There was much discussion of this plan in the mainstream business press. For example, a New York Times article (June 23, 1980) discussed how European heads of state voiced support for Western/OPEC cooperation to address world economic problems and in light of that, also for a timely resolution of the Israeli-Palestinian crisis. By the end of 1980, however, this scheme was increasingly thrown into doubt by the outbreak of the Iraq/Iran war. In 1982, it was finished off entirely by Israel’s invasion of Lebanon.

After two years of blundering, the Reagan administration patched together an alternative to Western/OPEC financial coordination. Interest rates were kept very high, but were no longer increasing exponentially. A massive tax cut was accompanied by a massive increase in military spending, keeping U.S. consumer demand high. The American market was thrown open to all comers. In addition, foreign exporters were given a competitive advantage by the high dollar.

America, thus, became the world’s “lender and importer of last resort”. Third World debt continued to grow, but was increasingly being dwarfed by U.S. debt. In essence, Reagan “bribed” large parts of the American middle class and large parts of the Third World bourgeoisie, and did so “on tick” (by borrowing from countries with trade surpluses). In this way, he established a sort of “global consensus” for his policies.

The Reagan administration set to work on a long term approach to North/South economic relations, an approach that was later to become known as “neoliberalism”, or the “NAFTA/GATT” approach to North/South economic relations. Under neoliberalism, the rich countries agree to open their markets to labor intensive Third World manufactured exports, in return for which Third World countries agree to remove restrictions on private outside capital placements. Markets are also opened for high-tech products and services. (The winners the U.S., the losers potentially everyone else ).

Neoliberalism was conceived by the Reagan administration, pushed forward by the Bush administration, and brought to completion by the Clinton administration, by the passage of NAFTA and then the Uruguay Round of GATT. Neither Reagan nor Bush were terribly anxious to talk about neoliberalism while it was still a “work in progress”. Reagan relied heavily on theatrics and distractions (i.e. blowing out of proportion issues such as abortion and church-state relations). Bush, on the other hand, relied on secrecy (the stealth presidency) and later on military triumphalism (the Gulf War and the glorification of the U.S. army). It was left to Clinton, to openly and directly adopt neoliberalism as one the leading policies of his administration.

Was it the Reagan administration then that established the atmosphere of “free market fundamentalism”, that so pervades (and obstructs) discussion of global economic and social problems? The answer is “not entirely”. Part of this atmosphere was created by the collapse of the Communist block in the early 90′s. For example, in 1985, Grosvenor International Publishers, published a three volume set of books on North/South commercial relations called Third World Development “edited” by Ronald Reagan. In it, several members of the Reagan cabinet wrote articles stressing the importance of agrarian reform. In 1991, in contrast, the World Bank Development Report devoted one sentence to agrarian reform, saying that it might be helpful to economic development in some instances.

The Third World

The Third World today is a different universe from the Third World in 1950. Most of the increase in human population has occurred since 1950, and most of that in the Third World.

In addition:

“From 1950 to 1985, the overall GDP of the Third World has increased some six times and per capital GDP 2.5 times..It’s industrial output is now 11 times higher than in 1950…Annual real gross capital formation is now 15 times higher. …Enrollment in higher education has risen nearly 25 fold. …Infant mortality rates fell from 200 per thousand to between 30 and 70… Life expectancy rose from below 40 years to about 65…The share of agricultural output in GDP has fallen from about 1/3 to 1/6 and the share of industry has risen from about 1/6 to 1/3. …Annual rates of the growth in the Third World sustained from 1950…were 5.5. percent for GDP, 7.5 percent for industrial output, 8.4 percent for capital formation and 10 percent for third level education.” (From Technological Transformation in The Third World, by Surendra J. Patel, Avebury Press, 1991).

In fact, the Third World is where post-1950 world history was made, the de-colonization, the demographic explosion, the violent Western crusade against “Red revolution”, including death squads, napalm, cluster bombs, the mass deaths and upheavals, the military capitalist defeats and the overwhelming technological, economic and cultural capitalist triumphs (the green revolution, the spread of “neoliberal” democratization and privatizations)

What about the changes in the “first” world since 1950? Well, the advances in basic science, particularly in biology and astronomy have been spectacular, unimaginable even in the science fiction of 1950. And yet none of these advances has had the growth inducing impact of a steam engine, an internal combustion engine, electricity, etc. The really significant commercial technological advances in the post war era have been the digital computer (1944), the transistor (1948) and the integrated circuit (1971). In the financial and service sectors of the economy these technologies have indeed produced economic growth (just ask Newt Gingrich). However, their primary impact has been to facilitate the spread of industrialism from the first to the Third World by means of better communication and the use of robotization in the “de-skilling” of industrial production. They have been technologies of “globalization” rather than technologies of post-war “American dream” style economic growth.

So we are now in a position to state the basic problem afflicting the American economy. The problem, in short, is, despite the spectacular advances in basic science and digital technology, the growth inducing technologies that propelled America’s “Golden Age” post-war growth have played themselves out (and have, in many cases, been too environmentally destructive). This (and not some nefarious alliance between “first” world plutocrats and “Third World elites”) is the problem, a problem which began in 1965…..

America’s Economic Problems, What Went Wrong Since 1965

In his article, “Soviet Economic Growth: 1928 – 1985″, in The Journal of Economic Literature, (Vol XXV, 1987) the economist Gur Ofer made a very interesting series of observations. From 1945 to 1965, both the Western and Soviet economies grew rapidly. In fact, prior to 1965, the Soviet economy outperformed the Western countries (and was looked upon by many Third World countries as the model to follow). Clearly, 1965 was a pivotal year both for the West and the Soviet Union. It was the year in which both blocs began to experience a “crisis of stagnation”. Could it be, asked Prof. Ofer, that some common factor was operating both in the West and in the Soviet Union, something that had nothing to do with capitalism, nothing to do with socialism, and nothing to do with globalization? In his article “What We Can Learn From The Soviet Collapse”, in Finance and Development (IMF, November, 1995) , the economist Stanley Fischer offered a guess. He postulated that, by the mid-sixties, the growth inducing technologies that been developed prior to and during World War II (automobilization, capital intensive agriculture, petrochemicals, civilian air transport, etc.) had partially played themselves out both in the West and in the Soviet Union. Prior to 1965, the Soviet Union grew more rapidly than the West because it had a greater number of primitive areas in its economy to which it could apply the range of technologies mentioned above. After 1965, on the other hand, the West grew more rapidly,. because it had a greater range of growth inducing technologies (particularly in the areas of digitalization, computerization and communication), and also because it had more commercial links to the developing countries, which were beginning to reap the effects of the green revolution, containerization and robotization (which allowed “industrialization without infrastructure”). This growth, while environmentally destructive and detrimental to many of the world’s poor, nonetheless stimulated Western economic growth, and made the Western “crisis of stagnation” much less severe than it otherwise would have been. Thus, while the West went on to slower growth (very unevenly distributed across sectors), greater income inequality, and all the headaches of globalization, the Soviet Union went on to complete economic collapse.

To explain the above in more detail, let us examine the standard theory of economic growth devised by Robert Solow in 1954. (See Growth Theory, An Exposition, by Robert Solow, Oxford University Press, 1969). According to this theory of growth (barring a massive population increase in the developed world), there are two sources of economic growth: (1) The spread of investment capital to areas of the world which don’t have it (globalization), (2) Technological innovations which allow the same amount of capital and labor to produce more output and a rising standard of living (“the American Dream”). It is the second type of economic growth which burgeoned from 1945 to 1965, and the first type which has become more and more prevalent since then. However, and this is a very important point, (2) did not slow down because (1) speeded up. In fact, (2) slowed down less than it would have, had (1) not speeded up.

Looking toward the future, there is always the possibility, of course, that some radically new technology will materialize which could produce rapid economic growth and a rising standard of living in the West, even in the absence of a massive population growth in the West. Everybody could see, for example, how “cold fusion” in 1989 could have achieved such a result. (This is why so many Americans wanted to believe it, and why it was accepted by so many people on the flimsiest of evidence). Barring such a development, however, what is “on the agenda” for the world economy is the spread of industrialization from the developed world to the underdeveloped world. Such a spread is not the cause of America’s problems. It is, if properly managed, the only solution to them.

In other words, given that the world economy is shifting from a phase of Western-led growth to a phase of Third World-led growth, the solution to America’s economic problems is the promotion of environmentally friendly, sustainable growth in the Third World, which, in turn, will generate widespread, long-term growth and employment in the West, which, in turn, will provide the tax base to solve America’s budget and social problems. Make no mistake about it, the growth patterns which have taken place in the Third World recently, environmentally destructive, unsustainable, inequitable and misguided as they have been, have, nonetheless, produced seven years of non-inflationary growth in the U.S., a growth which benefitted the vast majority of Americans (however unequally) Conversely, looking toward the future, if the Third World economies were to go into a deep, protracted slump, they would inevitably drag down the U.S. economy with them.

The Third World economist, Samir Amin, in his 1989 book, Maldevelopment, A Study of A Global Failure, Zed Press, gives the solution to this dilemma.

“For more than 15 years the world economic system has been in an enduring structural crisis. This is a world crisis marked by the collapse of growth in productive investment, a notable fall in profitability (very unequally distributed in sectors and companies) and persistent disorder in international relations…. The current crisis is therefore most apparent in the field of world relations. North/South relations and the conflicts around them constitute the central axis of the current crisis…… In..circumstances (such as the 1930′s) the Keynesian policies of redistribution of income might have been a solution to the crisis. By contrast, (the present crisis) comes after a long period of full employment, the rule of the welfare state, etc. Today’s deficient demand is essentially deficient demand in the periphery ……. In other words, only a redistribution at the international level in favor of the South would permit a fresh start for the world. The obvious question is ‘under whose aegis’ will …this be carried out?”

The recent NAFTA and GATT agreements answer this question. Under the aegis of private capital and under the aegis of the United States and its “instruments”, the IMF and the World Bank. (Wrong answer!) The NAFTA/GATT approach to global development is known as “neoliberalism”.

To over simplify enormously, the rationale behind the neoliberal model of development is as follows: the scale of economic production has grown so large that it has transcended national boundaries, it has even transcended the boundaries of large countries such as the United States and Japan. To subject such an economy to national restrictions on the flow of commodities and capital is like trying to raise cattle in one’s living room. There’s not enough room. Therefore, countries should not restrict the flow of commodities and capital across their borders. Moreover, if nations agree to reduce interference with the flow of commodity and capital to a minimum, capital will flow from capital surplus countries to capital deficient countries in the same way that water flows from a higher level to a lower level, and economic development will spread across the globe. Samir Amin has called this approach to global development “reactionary utopianism”.

This “reactionary utopianism” came into being partly as a result of the last 25 years of deliberate U.S. government policy, partly as a result as a result of the collapse of the socialist bloc, partly as a result of changes in technology, and partly as a result of the horrors of Cambodia’s and North Korea’s attempt to promote total economic self-sufficiency

The Role of The Transnational Corporations.

It has become the conventional wisdom among many environmentalists that there has been some takeover of Western national governments by multinationals following the dictates of the World Trade Organization. In fact, many of the top executives of multinationals are far more progressive in their personal views than are national politicians, and far more aware of the difficulties in basing everything on free markets and private capital placements.

The 1996 cuts in U.S. social entitlements and global economics

MIT economist Paul Krugman points out that “economic globalization” (neoliberalism) does not require the U.S. to cut the social safety net, in order to remain competitive internationally. It is important to stress this point. Yet, the cutbacks in social entitlements such as Medicaid and welfare are not entirely unrelated to neoliberalism. Here is what happened. After the passage of NAFTA, in 1993, Mexico with U.S. connivance, kept the Peso artificially high to suck in U.S. exports and to enable Clinton to show how beneficial NAFTA-type agreements were to the U.S. trade deficit. After GATT was passed, Mexico attempted to lower the Peso, a policy which started a massive flight of capital from Mexico. The Clinton administration responded with an emergency bailout in early 1995. At this point, global investors became aware that much of the world’s economy had become “dollarized”, that many of the private capital placements were being made in dollars. There was a perception that the Federal Reserve could not possibly act to reduce the supply of dollars in global circulation (in order to raise the value of the dollar relative to the yen), without, at the same time, risking a massive capital flight from the Third World. Thus, there was a “flight from the dollar” into the Japanese yen. The dollar dropped precipitously. Such a drop did not hurt the U.S. economy, because a large part of the Fed’s huge output of dollars was being used to finance Third World manufacturing capacity, which, in turn, was flooding the U.S. market with cheap products and keeping inflation in check.

Meanwhile, the low dollar was benefitting U.S. exports. Japan, on the other hand, was being pushed to the brink of a financial “meltdown”. Japan had trillions of dollars in outstanding yen debt. The drop in the dollar was increasing the “real value” of Japan’s debt daily and pushing Japan into a deflation. The U.S. obviously could not let the Japanese financial system go into a tailspin. The dollar had to be brought up, but not by monetary tightening. The only way to accomplish this was by implementing Republican-style budget cuts, but avoiding Republican style tax cuts. Clinton simply had to reach budget agreements with the Republicans in Congress, many of whom were determined to “wage class warfare from the top down”, and many of whom were simply ignorant about global financial problems, and, thus, in a far better position to “play chicken”. The upshot? Republicans lost their massive tax cuts, but got their welfare cuts. Clinton, whatever his feelings on entitlements and welfare, simply had no choice. A different Congress would have reached a different resolution to the budget crisis, globalization or no globalization. Thus, globalization is not an excuse for supporters of the social safety net to “throw in the towel”.

Four fifths of the world’s population lives in the Third World. Thus, sustainable (ecological) economic growth to address basic and mounting social needs simply cannot be avoided. It is imperative to develop a global alternative to neoliberalism. In a paper presented at the alternative summit “T.O.E.S. 1990,” we outlined some elements of this alternative. Working alternatives at the local level are very good, but some discussion must be devoted to how well these alternatives will “scale up”.

Economic growth is simply an increase in the volume and/ or size of economic transactions, as measured in monetary terms adjusted for inflation. There are billions of people in the world. Their educational and psychological problems cannot be addressed without first addressing their basic material needs (i.e. access to clean water, health care, adequate diet, shelter, etc.). Neoliberalism is only a stop-gap measure to the recent dilemmas of the world economic system — primarily Third World debt which in the 1980′s threatened the world financial system, and the lack of growth in Western capitalist countries). However, many corporate leaders, World Bank officials and the U.S. administrations, from Reagan to Clinton, know that it ultimately cannot work as a long-term global development strategy..

On the other hand, the no-growth” perspective of environmentalists will only continue to marginalize and isolate them from public economic debates, preventing them from addressing social issues such as “corporate downsizing” and “unemployment” — the results of economic stagnation in the U.S. and other advanced industrialized nations. Addressing the material and social needs of people North and South is inevitably going to involve an i ncrease in the number and/ or size of economic transactions, i.e. economic growth. Thus, “steady state economics” is a term borrowed from natural systems, and doesn’t, in our opinion, really apply to human historical and social development.

Economic Growth and Sustainable Development

The definition of “sustainable development”, by its very nature, has to be open-ended. The current mode of global economic growth (neoliberalism) shows us what sustainable development is not. Neoliberalism has clearly led to the rapid growth in industrial capacity and the rapid expansions of the middle class populations in many parts of the Third World, particularly in Asia. It has led to a considerable amount of environmental investment, albeit of the “clean up after the fact’ nature, in many parts of the Third World. However, it is still “economic growth for the hundreds of millions”, whereas the world’s population numbers in the billions. Environmentally and economically sustainable development requires a basic change in production methods and not simply “cleaning up after the fact.”

Several things, in our view, can be said about sustainable development. First of all, it has to involve the material betterment of the majority of the world’s population, not simply a numerically large minority. It has to involve non-market means to eliminate global poverty directly and not simply “global trickle down economics” . It has to involve production technologies which are themselves nonpolluting and not simply clean-up after the fact. It has to involve, reforestation, non-polluting solar energy, environmentally viable modernization of subsistence agriculture, rural and urban land reform, and large scale recycling of effluent and waste products. In our opinion, it will turn out to be most economically viable, precisely in those areas of the world that are now the least developed and, thus, not locked into the infrastructures of non-sustainable development. It will have to involve non-private global monetary/fiscal institutions which are accountable and globally democratic.

Anti-Third World Populist Hostility in The West

The problems of global development will not be resolved simply by having rich countries impose environmental, social and human rights conditions on the exports of poor countries. There is simply too much populist anti-Third World hostility in the rich countries. Many Americans, in particular, see the populations of the Third World as a mass of starving wretches who want to “take what we have”, either by violence, such as terrorism, or by unfair, predatory trade practices. To take an example, in early 1993, the historian Paul Kennedy published a book entitled Preparing for the 21th Century. The major premise of the book was that if the West did not help the Third World achieve sustainable development, the West itself would be overwhelmed by the Third World’s problems. In response to this appeal, Robert Kaplan wrote an article in the Atlantic Monthly entitled “The Coming Anarchy”, in which he predicted the social, economic and environmental collapse of the Third World, but asserted that the West could protect itself from this collapse by adopting the “fortress strategy” suggested by the right-wing Israeli military analyst, Martin Van Creveldt. .

Unfortunately, Mr. Kaplan’s scenarios of collapse and chaos in large parts of the non-Western world cannot entirely be ruled out. However, his predictions that such catastrophes will not endanger the West are, not only crazy, but actually dangerous. Why? Because there are all too many Americans who, equally threatened by Third World poverty and Third World prosperity (non-whites with money), would love to see the entire Third World collapse into Rwandan-style chaos. Mr. Kaplan ( like the American isolationists in the 30′s) assures them that they will not be personally endangered by such a catastrophe…

Therefore, decisions which put environmental, human and labor rights into trade agreements cannot possibly be left to the dictates of the populations of the developed world. International, democratic, and globally democratic, economic and financial institutions are an absolute necessity to any rational discussion of human rights, labor rights, social rights, environmental issues and economic justice

Misguided Attempts to Circumvent Anti-Third World Populism.

Early in 1983, Reagan’s secretary of agriculture, Bill Brock, said, “There’s a lot of Third World out there, and we are just beginning to discover how important it is to our own well being.” The Reagan administration, while it agreed privately with this insight, was not terribly anxious to share it with the American public, ( which was still in a Third World bashing mood after the oil price hikes and Iranian hostage taking of the late 70′s.)

During the Reagan and Bush period, therefore, Americans were given the impression that, aside from oil, the developing world was sort of “marginal” to American well being. It was assumed that the “rich man’s club” (America, Europe and Japan) was the global “engine of growth”, which could, in turn, “pull up” the non-Western world. The non-Western world, for its part, had to “behave itself”, open its markets, privatize its economy, welcome Western capital investments, tone down its “Third World rhetoric” and make nice with Israel. And, if it didn’t, well then, who cared, “we” didn’t need “them” anyway.

In 1990, however (fearful of competition from a newly capitalist Eastern-bloc), the Third World began to “behave itself”. At that point, the official American line on the Third World, did a complete about-face. The Third World went from being a “problem”, a “mess”, a “threat”, a “side issue”, to being “the future”, to being an unstoppable locomotive of economic growth that the U.S. had to board or be left behind. Clinton “talked up” Third World growth and played down problems and barriers to Third World development. An officially sanctioned “love affair” began between international capital and large sectors of the developing world, a love affair between the strong and the weak, fraught with anxiety and abuse. As an Argentinian director of tourism, Hector Sabato, put it. “The old theme of the invading Yankees gave way to the wonderful Yankees driving the global train that you’d better board immediately or your finished.” (NYT 2/7/98). Or as William Greider (author of One World Ready or Not) put it, even many of the exploited in the developing world were “seduced’ by the “faustian bargain” of capitalist development through globalization.

In any case, the “child” of this love affair is the current international political and economic crisis, in which much of the world economy is turned into a giant “global distress sale”, the proceeds of which go to finance America’s own rapid economic growth.

A Twenty Six Year History of Global “Quick Fixes”

To review the above history in more detail, American global economic policy from 1982 to the present can be divided into three periods; (1) a period of debt-led growth from 1982 to 1985, in which the U.S. deliberately ran large trade and budget deficits in order to stabilize the world economy by becoming what David Hale of Kemper Financial Services called “a consumer and borrower of last resort”; (2) a period from 1985 to 1990, in which the U.S. pressured other industrialized countries to liberalize their financial systems and stimulate their economies in order to help the U.S. work off the trade deficit caused by the first period above. This period ended with a Japanese financial collapse and a deep European recession. (3)The period from 1991 characterized by the US promotion of the neoliberal model of growth in which the developing world underwent a rapid process of financial liberalization and economic privatization, attracting large amounts of private capital, enabling it to become a growing market for American exports even as it kept American inflation down by low-wage exports to the American economy. This period produced seven years of non-inflationary growth for the US economy which allowed it to work down its trade and budget deficits (at everyone else’s expense).

More precisely, from 1985 to the present, the US has been imposing a series of unsustainable economic and financial bubbles on various regions of the world successively (first Japan and Europe, then Asia, then Latin America, then China, etc.) in order to satisfy its insatiable demand for exports. Countries and regions have been overwhelmed by floods of outside capital, which they had neither the social nor economic institutions to deal with. A more viable policy would be the promotion of economic growth in more areas of the world simultaneously, but at a slower and more sustainable pace. Africa and the Arab world should not be written off as “basket cases” to be left to the dictates of a fickle global financial market.

As of this writing, policy makers are urging Japan to become the “locomotive” for Asia. Poor people in Asia are being asked to reduce their consumption, even as rich people in Japan are being asked to increase theirs. It seems that we’re back to ”Western-led growth” again. However, the only real “locomotive” for global and American economic growth, the only “locomotive” that doesn’t turn out to be a “bubble” is the alleviation of Third World poverty and the promotion of Third World sustainable development.

Advice to Policy Makers

Therefore, it is extremely important for progressives, such as yourself, whose “heart is in the right place”, to articulate the following points loudly and clearly:

●          Successful Third World development is vital not only to the economic well being, but also to the national security of America;

●          Insertion of environmental, labor and human rights conditions into trade agreements has to be accompanied by direct, massive Western assistance to eliminate global poverty. A transfer of wealth from “Third World elites” to “Third World masses” (however necessary) is, by itself, not going to do the job;

●          Western assistance is a necessity, but is, by no means, sufficient. It also has to be accompanied by Third World reforms at both the national and local levels. Thus, the future well being of the Western populations is not entirely in the hands of the West;

●          The “right to development and subsistence” is also a basic human right, in addition to the rights of free speech, gender equality, etc.;

Conclusions

An American egalitarianism, which stops at the water’s edge, is as meaningless as it is regressive. Statements such as “we must solve our problems, before we solve their problems”, or “we must solve problems here, before solving them there” are childish nonsense. In today’s world, everyone is “we”, and everywhere is ‘here”.

The belief that “de-globalization” and return to “national economies” will solve our economic problems, and be “good for the Third World too”, is pious wishful thinking.

Here are some of the arguments supporting this “pious wishful thinking”: The nearer production decisions are made to local communities, the more the needs of local consumers, workers and natural environment are taken into account. Decisions taken by investors in distant capitals cannot possibly serve the needs of the people in local communities.. Local production and investment mean local accountability, “local capital is good, global capital is bad” and, so on and so forth.

The problem with these arguments is this: It would take the power of a “global government” to turn “global capital” into “local capital”. Why? Because cross border flows of capital and goods would have to be continuously and minutely monitored and suppressed, and such activities could only be carried out by a global government .

Now, observe how difficult it is to do such things with illegal drugs and illegal drug capital. Imagine how difficult it would be to do them with all goods and all capital. It would take the powers of an immensely powerful world government. Peoples lives would no longer be determined by distant global corporations, but by distant global bureaucracies, and the problems of globalization would remain. And if global capital were to be abolished by a massive breakdown in the global capitalist system, as in the 1914-1945 period, well then look at what happened in the 1914 – 1945 period, and imagine what would happen now.

All too much of the debate about trade policy on the part of liberals and labor seems to reflect a desire to “make the rest of the world go away”. However, the problems of the rest of the world have to be solved, if America’s problems are to be solved, and this is going to require (among other things) global markets, global business, and (yes) global regulation and governance (including global fiscal stimulus and global North-South redistribution). To be sure, global solutions risk global screw-ups, markets can crash, markets can breach global environmental limits, markets are unfair. Governments, on the other hand, can oppress, they can ossify, they can make mistakes (and global governments can make them on a global scale), they can become ineffectual, they lack “feed back” mechanisms, and so on.

But the fact is that human beings, who are, after all, not social insects and thus have no instinct for collective organization, have nonetheless organized themselves into ever more complex, and ever more populous societies, at an ever increasing rate. The nature of this organization, the way it takes place, is very complicated, very convoluted, and ultimately very mysterious. It is certainly not any of that “elaborate, self-adaptive complexity arising from simple market laws” nonsense you might read about in some business magazine or other. It is, in fact, the central dilemma of human existence, a dilemma which is not about to go away now. And the world’s problems, if they are solved at all, are not going to be solved by making them out to be simpler than they are.

It is imperative that progressives and labor frame global alternatives to neoliberalism, global alternatives which stress the needs of the world’s poor. Otherwise, when neoliberalism really gets into trouble, as it will, the field will be left open to right wing extremists of all types; paramilitary groups, white separatists, right wing religious zealots, neo-fascists, hate-mongers like David Duke and chaos-mongers like Robert Kaplan. At that point, the stability of the United States itself might be thrown into question.

It might seem paradoxical that those Americans who are themselves struggling to make a living should be called upon to advance the cause of global North-South equity, sustainable development, and global poverty alleviation. But if they don’t do it, then who will? Rich business executives? Academics with cushy tenured positions? Employees of prestigious well-heeled foundations? Such people, no matter how knowledgeable they are, are too comfortable and complacent to understand the main problem with the world economy (global poverty). People on top can rarely diagnose adequately the flaws of a system which put them on top. As economist Albert Fishlow says, “the old rules (of the global capitalist system) don’t work and the new ones haven’t been written yet.” (New York Times, 1/15/98). It’s up to progressives in all countries to write those rules after the ball is taken away from the blind and destructive neoliberals and neoconservatives.. .

L. Feiner and R. Melson

NOTES

MORE:

CAMBRIDGE FORECAST GROUP: WORLD ECONOMY BIG PREDICTION BOOK ...

Feb 7, 2008 … CAMBRIDGE FORECAST GROUP.

BOOK: ‘World Economy/Big Prediction’.

(Kappa Publishing. Kobunsha, Tokyo, from 1984)

cambridgeforecast.wordpress.com/2008/02/07/cambridge-forecast-group-book-world-economy/

CAMBRIDGE FORECAST GROUP: OVERVIEW

September 22, 2008 at 5:21 pm | Posted in Books, Economics, Financial, Globalization, History, Middle East, Research, Science & Technology, Third World, USA, World-system | Leave a comment

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CAMBRIDGE FORECAST GROUP

Analyzing globalization, the Middle East & the world-system

CFG Intro

About CFG

CFG Today

CFG Tomorrow

Home

Middle East

Globalization

Economic Data

Background Essays

Blogs

The West & the Third World

Muslims & Jews in the World-System

Economic & Corporate Data

CAMBRIDGE FORECAST GROUP: WORLD ECONOMY BIG

PREDICTION BOOK

Unsustainable Patterns of World Economic Growth

FINANCIAL BUBBLES AND UNSUSTAINABLE PATTERNS OF WORLD ECONOMIC GROWTH

Globalization The Middle East and The World-System:

GLOBALIZATION AS A TRAFFIC JAM OF THREE

SUBWORLDS

GLOBALIZATION DEEP STRUCTURE

GLOBALIZATION AS THREE GEARS

CAMBRIDGE FORECAST GROUP

Analyzing globalization, the Middle East & the world-system

CFG LAWRENCE FEINER TV INTERVIEW OCTOBER 2013: GLOBAL BLOCKAGES AND OUTLOOK

October 6, 2013 at 4:33 am | Posted in Asia, Books, CFG, Development, Economics, Financial, Globalization, History, Third World, USA, World-system | Leave a comment

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NEW LAWRENCE FEINER TV INTERVIEW WITH HAROLD CHANNER IN NEW YORK CITY OCTOBER 2013:

CFG LAWRENCE FEINER OCTOBER 2013 INTERVIEW

Also: Lawrence Feiner Ph D Original air date 10 08 13

Lawrence Feiner

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RELATED CFG ANALYSES:

CAMBRIDGE FORECAST GROUP UPDATE: CLIMATE AND DEVELOPMENT ADDITIONAL PERSPECTIVE JULY 2013

CAMBRIDGE FORECAST GROUP UPDATE: ADDITIONAL PERSPECTIVE JULY 2013

Some More Lawrence Feiner Interviews:

Lawrence Feiner Ph.D Original air date: 03-20-13

Lawrence Feiner Ph.D Original air date 04 24 12

Lawrence Feiner 03 06 12 – Original air date

Lawrence Feiner

Lawrence Feiner Ph.D – 12-27-11 Original air date

Lawrence Feiner Ph D Original air date 10 08 13

Lawrence Feiner 05-12-12

VID00008.AVILawrence Feiner 07-04-12

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CAMBRIDGE FORECAST GROUP UPDATE: CLIMATE AND DEVELOPMENT ADDITIONAL PERSPECTIVE JULY 2013

July 31, 2013 at 3:40 pm | Posted in Africa, Books, CFG, Development, Earth, Ecology, Economics, Financial, Globalization, Science & Technology, Third World, World-system | 2 Comments

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A Remark on Climate Change and Third World Development

Let’s suppose that scientific evidence clearly shows at some point that carbon emissions into the atmosphere have to be severely curtailed. The developed economies are now “locked into” into various physical, infrastructural and economic patterns, which are “CO2 emission intensive”, centralized power grids, automobileization, chemical and energy intensive agriculture, fossil fuel generation of electricity. For example, the gains in CO2 emission reduction that could be realized from the use of biofuels is limited by the fact that the production of the crops to be used for biomass energy is itself energy intensive and thus creates greenhouse gas emissions. In the underdeveloped countries, on the other hand, there are large sectors of agriculture, both subsistence and commercial, which have not, as yet, modernized. The use of crops from such sectors affords a much greater reduction of greenhouse gas emissions. For example, according to the Center for Energy and Environmental Studies at Princeton University, the percentage of total electricity generated by utility companies that could have been produced from sugar cane alone using advanced gas turbines is 14.9% in Asia, 19.2% in Africa, 45.1% in Latin America and 200% in Oceania.

To take another example, the lack of centralized power grids in many areas of the Third World has the potential of rendering profitable many forms of energy that would not be as profitable in a developed economy, photo-voltaics, wind, geothermal and others. According to J. C. Hourcade (1981, see footnote below), in many parts of the developing world, the new forms of renewable energy, specifically biogas, photovoltaics, solar, ponds, and geothermy, would already be competitive, for such uses as:

- cooking, especially in rural areas;

- agricultural irrigation;

- hot water heating in temperate and cold regions;

- pumping water;

- agricultural machinery and commercial vehicles.

He maintains that, “on the whole modern sources of renewable energy have a market potential covering 40% of final demand” and, therefore, “new renewable energy energies no longer appear as the energy of the distant future, but as the more appropriate to solve the present crisis in rural areas.”

In fact, from the point of view of climate change, the less developed a country is, the more advantages it has in terms of environmentally sustainable development. For example, given the exigencies of climate change, and the law of comparative advantage, Central America and Africa should specialize in energy-intensive heavy industry. This is because Central America has geothermal power and Africa has local hydropower (see Samir Amin, Accumulation on a World Scale, 1974).

Footnote:

Jean-Charles HOURCADE:

 Hourcade, J.C., 1981, Prospect of Third World countries energy demand: a comparative analysis of CIRED’s and IIASA’s results, International Institute for Applied Systems Analysis (IIASA), Laxenburg, Austria.

 HOURCADE, (J.C.), 1981, “Energy development styles and capital requirements in Third World countries”, Development, Journal of the Society for International Development, n° 2.

CFG Comment on this footnote:

World Climate Bank

A “world climate bank” would allow industrialized countries to purchase emission rights from less-developed nations. The revenues would enable poor countries to finance environmentally friendly economic development.

Industrialized countries could buy “emission rights” from less-developed countries if they want to continue emitting higher levels of CO2.

A “world climate bank” would allow industrialized nations to buy emissions quotas from countries with lower levels of CO2 output. Estimates show that the global trade in emissions quotas could generate annual revenues of between €30 billion and €90 billion ($45 billion and $129 billion). That money could then be used to help the world’s poorest countries to finance environmentally friendly economic development.

Methane hydrate

METHANE HYDRATE

Methane traps heat up to 20 times more effectively than carbon dioxide, though it remains in the atmosphere for a shorter time.  Scientists warn a leak of methane could be catastrophic to the environment.

Methane hydrate is already a threat, regardless of whether energy companies begin drilling for it. A paper published earlier this month in the journal Nature said a release of a 50-gigatonne reservoir of methane under the East Siberian Sea could accelerate climate change and cost the global economy up to $60 trillion. And that could happen solely due to warming temperatures in the Arctic.

Fracking

Hydraulic fracturing is the fracturing of rock by a pressurized liquid. Some hydraulic fractures form naturally—certain veins or dikes are examples. Induced hydraulic fracturing or hydrofracturing, commonly known as fracking, is a technique in which typically water is mixed with sand and chemicals, and the mixture is injected at high pressure into a wellbore to create small fractures (typically less than 1mm), along which fluids such as gas, petroleum and brine water may migrate to the well.

Some analysts have portrayed fracking as a technology (a la “cold fusion”) that can generate environmentally sustainable growth in the developed countries independent of Third World growth.

We disagree for three reasons.

Fracking can contaminate drinking water with toxic chemicals. (2) The methane released by fracking, has a far more potent greenhouse effect than CO2. (3) Even if fracking makes the West energy independent, Western growth ultimately needs markets in the developing countries.

Comment:

Fracking thus represents a “misplaced autarky” dream. The world economy is a certain kind of  “traffic jam” which needs a new global growth pathway to exit the gridlock. This means global systemic change. Obama in 2009 made his Cairo Speech, attended the G20 Pittsburgh Economic Conference and the Copenhagen  Climate Conference in December. He was groping towards such inclusive global systemic change in these three places but failed to deliver.

More Background:

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CAMBRIDGE FORECAST GROUP GLOBAL PERSPECTIVE

CFG LAWRENCE FEINER YOUTUBE INTERVIEW

LOW-CARBON ECONOMIC GROWTH

GLOBALIZATION AND THE ENVIRONMENT

CARBON CAPTURE REPORT

CLIMATE CHANGE

OLD GLOBAL LOCOMOTIVE VERSUS NEW: CURRENT TRAFFIC JAM

INDIA AFRICA BUSINESS

Joint Statement on the Japan and India LNG joint study on pricing in the Asia Pacific Market in Tokyo

Global crude oil price of Indian Basket increases to US$ 111.59/bbl on 03.09.2013

National Conference on Environment Friendly Insulating Liquids- EFIL 2013, November 28- 29, 2013 || New Delhi. INDIA

TAR SANDS OIL SPILLS

Effects of Diluted Bitumen on Crude Oil Transmission Pipelines

BIOFUEL POLICY AND PALM OIL 2013

GAS TO POWER FORUM

NEWEST DIESEL ENGINES CLIMATE

CO-GENERATION STRATEGIES AND GHG

CHINA ENERGY ANALYSES

CLIMATE AND ENERGY ECONOMICS

CHINA ENERGY AND ENVIRONMENT

GLOBAL BIOLOGY

FRACKING SHALE GAS U.K.

CLIMATE RISK ANALYSIS

CLIMATE MITIGATION POLICIES

CLIMATE AND DEVELOPMENT KNOWLEDGE

CLIMATE CHANGE GLOBAL WARMING

CLIMATE FINANCE

CLIMATE ECONOMICS

CARBON BALANCE AND MANAGEMENT

CARBON MECHANISMS

CARBON-DIOXIDE EMISSIONS: U.S. ENERGY-RELATED

CLIMATE AND SHIPPING

CLIMATE MODELS

ISLAMIC FINANCE AND LOW-CARBON DEVELOPMENT:

ISLAMIC FINANCE FOR AFRICA

Islamic finance nears its big breakthrough in Africa

Islamic banking has grown rapidly around the world but the industry remains in its infancy in Africa; however that might be set to change, presenting the African banking market with a huge opportunity for growth, according to Wasim Saifi, Global Head of Islamic Banking, Consumer Banking, Standard Chartered Saadiq.

Dubai to launch global Islamic economy summit

The Dubai Chamber of Commerce and Industry will launch the first Global Islamic Economy Summit in Dubai in November. The conference is aimed at bringing together leading thinkers and policy makers from around the world.

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WORLD ISLAMIC BANKING CONFERENCE

ISLAMIC FINANCE “SUKUK”

FINANCIAL TIMES OCT 16: AFRICA SUKUK FINANCE

ISLAMIC BANKING CONFERENCE

ISLAMIC TAKAFUL: GLOBAL GROWTH POTENTIAL

CFG COMMENT: Islamic Finance is roughly speaking a kind of Muslim venture capital for Third World development based on profit-sharing. Low-carbon development is integrable.

Muhammad bin Ibrahim: Role of the Islamic financial system in supporting green technology

by lawrence feiner, richard melson

CAMBRIDGE FORECAST GROUP

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CAMBRIDGE FORECAST GROUP UPDATE: ADDITIONAL PERSPECTIVE JULY 2013

July 3, 2013 at 11:26 am | Posted in Books, CFG, Development, Economics, Financial, Globalization, History, Third World, World-system | 2 Comments

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CFG Update:

The Limits of Global Reaganomics and the Need for Global Pro-Third World Economic Institutions.

In our 1984 book “World Economy/Big Prediction” we predicted that barring some really revolutionary new technology of physical production (a la “cold fusion”), the future long-term engine of growth for the world economy would have to be modernization of the less developed countries. In making this prediction we used our observations on technology and the Solow economic growth model. The problem is that, despite the impressive growth in some Third World countries, the global institutions to facilitate this growth have not developed.

(For Cambridge Forecast Group book “World Economy/Big Prediction” from 1984 as mentioned above)

See:

http://cambridgeforecast.wordpress.com/2008/02/07/cambridge-forecast-group-book-world-economy/

Basically, the current problems with the world economy, trade tensions, bubbles, cash crises, debt crises, etc. are caused by two global failures, (1) the failure to create a pro-Third World global fiscality that can stimulate Third World economies directly, (2) the failure of global urban and rural land reform in the developing world and the subsequent failure to expand the South’s internal market enough forcing them to rely on exports to the West.

To flesh out this point, let’s look at an updated history of the last 40 years.

(the original CFG book, “The Reagan Revolution and the Developing Countries”  was written in 1992/1993. This updates that book.)

In the 1970’s, after the ’73 oil price rise by OPEC, the patterns of world growth were as follows: OPEC‘s enormous petrodollar surpluses were deposited in the money-center banks and they loaned out short-term to Third World countries on the theory that sovereign governments wouldn‘t default. This together with the commodity price boom kept Third World markets opened. The developed countries had recovered from the recession of the early 70’s and America’s budget deficit was small compared with what it was later to become. The problem was dollar inflation which had cooled down considerably, rose dramatically after the second oil price rise.

US policy now faced a dilemma. If it slammed on the monetary breaks it would make Third World debt unpayable and endanger the money-center banks. If it let the dollar inflation soar into double digit levels it would endanger the world economy. At the IMF meeting in Belgrade in the autumn of 1979, a solution was proposed. OPEC would use its petrodollar surpluses to convert short term Third World debt into long-term (lower payment) debt. This would sop up excess petrodollars and keep inflation down and also would keep Third World markets for Western products open. The hangup was the Saudi insistence that the PLO be given observer status at the IMF and that the US recognize the PLO. This was too politically controversial, so then Sec’y of the Treasury Paul Volcker flew back from Belgrade and slammed on the monetary breaks causing the Third World debt crisis to worsen.

Discussion of Western/OPEC cooperation continued until finally the Israeli invasion of Lebanon put the kibosh on it. The Reagan administration adopted a policy of drastic tax cuts, vastly increased military spending , running a huge budget deficit and trade deficit. In other words, the US became the borrower, consumer and importer of last resort (in the words of David Hale of Kemper Financial Securities) hopefully giving the Third World countries, while undergoing austerity, someplace to export to. By the mid-eighties this policy ran into the roadblock of rising protectionist sentiment in the US.

It was at this point that the “Reagan revolution” came up with the concept that was to dominate global development strategy. In order to explain this concept, it is important to observe that the “Reagan revolution” was not so much a revolution as it was a continuation and intensification of long-standing U.S. policy towards global economic growth. Since 1945, the US had historically run budget and trade deficits in order to act as “an engine of growth” for the rest of the world economy. The Reagan debt-led model of growth simply put this strategy into “full throttle” by an “order of magnitude” increase in the U.S. budget and trade deficits, and, in order to ward off inflation, financed the deficits by debt creation rather than by monetary creation.

The Reagan debt-led model of global growth, however unpalatable it might have seemed from a bookkeeping point of view, was in fact a bold and decisive strategy. For several years, it put the U.S. squarely back in charge of the world economy. and allowed the U.S. to break the international OPEC/West/LDC “gridlock” on global economic strategy. The world’s most important commodity was now, not oil, but the U.S. dollar. Commodity prices plunged. Large parts of the global economy were turned into a “global distress sale” and U.S. growth was financed from the “proceeds”. A significant portion of the Third World’s consumer markets were shut down and replaced by the U.S. consumer market. The world’s financial power and “market” power which had been dispersed between the U.S., Europe, Japan and OPEC was now pulled firmly back into the hands of the U.S. In short, Reagan’s response in 1982 to ten years of Western, OPEC and Third World bickering was: “You’ll do it my way. Even if I’m not quite sure what my way is yet.”

In other words, the U.S. was now able to set the agenda for discussions of global development strategy for the next decade.

The strategy towards North/South development that ultimately emerged from this U.S. dominance was the so-called neoliberal strategy. It’s most important feature was the initiation, in 1986, of a new round of global trade negotiations, the Uruguay Round, of the General Agreement on Trade and Tariffs (GATT). To give some background, the origins of the General Agreement on Tariffs and Trade (and of its stillborn predecessor, the International Trade Organization (ITO)) go back to American-British wartime discussions concerning the shape of the post-war world economy. Despite vigorous efforts by developing countries (in the Havana negotiations of 1947) the draft ITO Charter only “paid lip service to development concerns”. The GATT, a separate temporary agreement negotiated by 23 countries (which became permanent when ITO was never ratified), was even less receptive to the needs of the developing countries. Tariffs on trade in manufactures between developed countries were reduced substantially under the auspices of GATT, but products in which the developing world had a comparative advantage (such as textiles or agricultural products) received much less favorable treatment. In addition, when the developing countries diversified into industrial exports, they faced a proliferation of new discriminatory non-tariff trade restrictions directed specifically at them (such as the Multifibre Agreement which discriminated against Third World textile exports).

The basic thrust of the Uruguay Round was as follows: It had been estimated that the above restrictions on LDC exports to the West cost the Third World 500 billion dollars each year. The West would agree to abolish those restrictions, thus providing 500 billion dollars worth of economic benefit to the Third World. In return, the Third World would agree to:

- open up their service economies to imports;

- give wide autonomy to outside investment;

- agree to strengthen their patent protection of Western technologies, (thus, according to some critics, “locking in” Western advantage in these technologies).

According to the neoliberal strategy, such an agreement, and even the promise of such an agreement, would bring about a massive North/South capital transfer. This capital would be lured by the promise of access to Western markets, by cheap labor, and by a favorable climate for Western investment brought about by deregulation in the LDC’s. This flood of capital investment would, in turn, “jump start” the Third World economies, lead to a rising standard of living and open up markets for Western exports. The Third World would follow the path of the dynamic Asian LDC’s and would simultaneously break the cycle of slow growth, trade imbalances and fiscal deficits in the West. In the meantime, the West’s increased access to LDC service sector and high-tech markets, brought about by the GATT agreement, would reduce protectionist sentiment in the West.

“Cheap labor is drawing investment and production away from the industrial countries. Plentiful goods and materials are crowding the world markets, and annual exports from developing to industrialized nations have risen by $100 billion since 1989. A new economic order is being born. Eventually, the entire world should share the bounty of this new order. As nations develop, their need for imported goods rises, and worldwide demand grows. Multinationals expect the developing countries to become vast new markets by the end of the decade (for Western high tech, capital equipment and services, a la GATT) as productivity and incomes climb worldwide. History is on the side of the optimists.” (Editorial from Business Week, 8/2/93.)

To look at another aspect of this, the economist Robert Lucas maintains that the reason why underdeveloped countries are underdeveloped is that they have a small amount of “human capital” (individual and social labor productivity). And the economist Elhanan Helpman says that a developing country can increase its human capital by exporting to the markets of the developed countries. Going up against first world competition increases the developing countries “learning by doing” (increases human capital) However, Lucas counters by saying that the Third World as a whole cannot do this, because “there is a zero sum aspect, with inevitable mercantilist overtones, to productivity growth fueled by ‘learning by doing’’. What this means is that the vast majority of the human race cannot grow economically indefinitely simply by exporting to a small minority of the human race. In other words, (following  Samir Amin) the internal market of the developing countries has to be expanded directly by urban and rural land reform and by a pro-Third World global fiscality that funds sustainable development projects in the Third World.

(Although Lucas underestimated the growth potential of the Third World and the willingness of the developed countries to absorb imports from the developing countries).

To continue with our history, the nativist backlash to the proposed GATT agreement was the Perot candidacy. When Perot turned out to be a nutcase, it was Clinton that benefitted from this sentiment.

And it was Clinton that passed the GATT legislation and the smaller but similar NAFTA (North American Free Trade Agreement). The problems began immediately. After the NAFTA agreement Mexico, under pressure from the Clinton administration, kept the Peso artificially high so that the US could have a trade surplus with Mexico in order to generate support for the GATT agreement. After the GATT agreement passed in 1994, Mexican debt built up attempting to keep its currency up but became unpayable and Mexico had to be bailed out by a special US fund, the Exchange Stabilization Fund.

After the passage of GATT, Clinton, to avoid wage nativism (fear of trade with low wage countries), talked up the Asian economies, saying that they were the “wave of the future”. In addition, the Southeast Asian countries pegged their currencies to the dollar which was weakening against the yen. Money surged into the Southeast Asian countries. As one investor put it “investing in Asia became a religion”

Meanwhile the Japanese yen was rising dangerously against the dollar endangering Japan’s exports to the US. In 1995, Japan took action to lift the dollar up (by buying US bonds) As the dollar rose, the Southeast Asian countries became less and less competitive and their economies collapsed in a wave of currency devaluations and their debt became unpayable. The IMF raised hundreds of billions of dollars to bail them out. Money flowed out of the Southeast Asian economies into the US, causing the internet bubble, and causing (a temporary) surge of US growth which (together with a tax rise) wiped out the deficit.

Under the Bush junior and Obama administrations, the US ran huge budget and trade deficits and printed an enormous amount of dollars. This kept US interest rates low and money flowed into the stock markets of the developing countries which had a higher rate of return. As a result, in the early 21st century, the developing countries were growing rapidly even as the developed countries stagnated. (And 500 million people were lifted out of poverty in the developing world).

However, in the spring of 2013, Fed Chief Bernanke said that the US was reconsidering its monetary policy and would stop its bond buying program (for fear of another real estate bubble like the one under Bush junior). The surge of money into Third World markets stopped on a dime. In fact, in June of 2013, the amount of money going into Third World markets dropped by over 90% from the month earlier. It remains to be seen whether the concerns about the health of the developing countries’ economies will cause the Fed to back off.

Lawrence Feiner and Richard Melson July 2013 Cambridge Forecast Group

CFG Comment on this Update, July/August, 2013:

“It looks like the Fed has backed off of its proposed monetary tightening, as we predicted (sort of) in the Blog update. In other words it has to overstimulate the American economy (and real estate market) in order to safeguard Third World solvency. By overstimulating U.S. asset prices–stocks and houses–the American consumer starts to spend as his 401k looks better and America absorbs more imports worldwide….going back to the American consumer as locomotive, absent a new locomotive. Also lower interest rates sends money to emerging markets.”

The proposed U.S. monetary tightening and actual Chinese monetary tightening have severely impacted emerging market currencies particularly in India and Southeast Asia, causing a currency crisis, forcing some of Asia backwards to a rehash of the 1997-8 “baht crisis,” only this is a worse and more widespread crisis.

See: G20 MEETING MOSCOW JULY 19 2013

OLD GLOBAL LOCOMOTIVE VERSUS NEW: CURRENT TRAFFIC JAM

BRICS EMERGING MARKETS

CENTRAL BANKS AND FRAGMENTATION

AFRICA AND GLOBAL GROWTH

EMERGING MARKETS AND DOW JANUARY 24 2014

More Background:

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CAMBRIDGE FORECAST GROUP INTRO

CFG ON CLIMATE DIMENSION

LOW-CARBON ECONOMIC GROWTH

ECONOMICS OF CLIMATE CHANGE

INDIA AFRICA BUSINESS

ISLAMIC FINANCE FOR AFRICA

Islamic finance nears its big breakthrough in Africa

Islamic banking has grown rapidly around the world but the industry remains in its infancy in Africa; however that might be set to change, presenting the African banking market with a huge opportunity for growth, according to Wasim Saifi, Global Head of Islamic Banking, Consumer Banking, Standard Chartered Saadiq.

Dubai to launch global Islamic economy summit

The Dubai Chamber of Commerce and Industry will launch the first Global Islamic Economy Summit in Dubai in November. The conference is aimed at bringing together leading thinkers and policy makers from around the world.

relatedlink.gif

GLOBAL ISLAMIC ECONOMY SUMMIT

WORLD ISLAMIC BANKING CONFERENCE

ISLAMIC TRADE FINANCE

FINANCIAL TIMES OCT 16: AFRICA SUKUK FINANCE

ISLAMIC TAKAFUL: GLOBAL GROWTH POTENTIAL

 LONDON AND ISLAMIC FINANCE

CFG COMMENT: Islamic Finance is roughly speaking a kind of Muslim venture capital for Third World development based on profit-sharing.

World Climate Bank:

One example of a global fiscality, discussed above, would be a “world climate bank”:

a World Climate Bank would allow industrialized nations to buy emissions quotas from countries with lower levels of CO2 output. Estimates show that the global trade in emissions quotas could generate annual revenues of between €30 billion and €90 billion ($45 billion and $129 billion). That money could then be used to help the world’s poorest countries to finance environmentally friendly economic development.

Fracking

Hydraulic fracturing is the fracturing of rock by a pressurized liquid. Some hydraulic fractures form naturally—certain veins or dikes are examples. Induced hydraulic fracturing or hydrofracturing, commonly known as fracking, is a technique in which typically water is mixed with sand and chemicals, and the mixture is injected at high pressure into a wellbore to create small fractures (typically less than 1mm), along which fluids such as gas, petroleum and brine water may migrate to the well.

Some analysts have portrayed fracking as a technology (a la “cold fusion”) that can generate environmentally sustainable growth in the developed countries independent of Third World growth.

We disagree for three reasons.

Fracking can contaminate drinking water with toxic chemicals. (2) The methane released by fracking, has a far more potent greenhouse effect than CO2. (3) Even if fracking makes the West energy independent, Western growth ultimately needs markets in the developing countries.

Comment:

Fracking thus represents a “misplaced autarky” dream. The world economy is a certain kind of  “traffic jam” which needs a new global growth pathway to exit the gridlock. This means global systemic change. Obama in 2009 made his Cairo Speech, attended the G20 Pittsburgh Economic Conference and the Copenhagen  Climate Conference in December. He was groping towards such inclusive global systemic change in these three places but failed to deliver.

Beyond Fracking: Methane hydrate

METHANE HYDRATE

Methane traps heat up to 20 times more effectively than carbon dioxide, though it remains in the atmosphere for a shorter time. And it’s highly volatile — oil companies, when installing rigs, usually try to avoid tapping methane hydrate deposits.

Methane hydrate is already a threat, regardless of whether energy companies begin drilling for it. A paper published earlier this month in the journal Nature said a release of a 50-gigatonne reservoir of methane under the East Siberian Sea could accelerate climate change and cost the global economy up to $60 trillion. And that could happen solely due to warming temperatures in the Arctic.

CFG BOOK AS OVERVIEW:

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http://cambridgeforecast.wordpress.com/2011/11/29/the-reagan-revolution-and-the-developing-countries-new-cambridge-forecast-group-book/

the reagan revolution and the developing countries (1980-1990) a seminal decade for predicting the world economic future

Book Review:

The Reagan Revolution and the Developing Countries (1980-1990):

A Seminal Decade for Predicting the World Economic Future

by Lawrence Feiner and Richard Melson:

“Both former principals of the Cambridge Forecast Group, the authors have written a sharp challenge to prevailing economic thought, arguing that despite the chaos that seems to have enveloped the world economy since the end of the Cold War, the direction and development of world economic history is, in fact, quite predictable. Professors of economics and professional economists will find this book both appealing and important.” Read review.

http://publishingperspectives.com/2012/07/julys-top-self-publishing-reviews-from-blueink/

See earlier books:

http://cambridgeforecast.wordpress.com/2008/02/07/cambridge-forecast-group-book-world-economy/

CFG LAWRENCE FEINER YOUTUBE INTERVIEW

by lawrence feiner, richard melson

CAMBRIDGE FORECAST GROUP

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CFG LAWRENCE FEINER INTERVIEW ON ISRAELI ELECTIONS: MARCH 2013 TV SHOW

March 17, 2013 at 2:48 pm | Posted in Books, CFG, Globalization, History, Israel, Middle East, Palestine | Leave a comment

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CFG’s Lawrence Feiner discusses current Israeli elections  in a global as well as local context  for TV show hosted by Harold Channer

GO TO:

http://www.youtube.com/watch?v=3wf3sOpybYA&list=UUtIQil-e9wzT_fxySy1y3nw&index=1

Lawrence Feiner Ph.D Original air date: 03-20-13

by Harold Channer

AUGUST 2013 FOOTNOTE  TO THIS VIDEO BY CFG’S LAWRENCE FEINER:

The Israeli Election and the Two State Solution

For some reason, my video on the Israeli election and the two-state solution was truncated. This update is a brief description of what was in the video.

Even though the newly elected Israeli government is more moderate (61 rightist Knesset members, 59 centrist and leftist Knesset members) than the previous Israeli government, there are three major impediments to a two-state solution.  (1) West Bank Jewish settlers, (2) Jerusalem, (3) The right of the Palestinian refugees of the ’48 war to return to their homes in Israel.

There are currently 513,000 Jewish settlers in the West Bank. It is difficult to imagine Israel withdrawing them or allowing them to live under Palestinian control. In 1989,  when there were far fewer settlers than there are today, the noted Israeli political scientist, Meron Benvenisti, maintained that there were too many settlers to make a Palestinian state viable, and that, therefore, the only solution to the conflict, which wasn’t an apartheid Bantustan,  was a binational, democratic state where Jews and Arabs had equal rights.

In 1983, the PLO rep to Lebanon, Shafiq Al-Hout gave a Q and A at the UN Church Center. He was asked whether a viable Palestinian state was possible. He answered “Well you know. It’s a dream I share with my dog at the fireplace”.

As far as Jerusalem is concerned, during the Camp David negotiations in 2000, even a leftist like Shimon Peres would not agree to a divided Jerusalem.

During the Camp David negotiations, the main obstacle to a settlement, was the Palestinian inability to drop the right of return. The Israelis wanted the Palestinians to drop the right of return as a precondition for a settlement, and the Israelis also a wanted to postpone Jerusalem to a later date. The Palestinians, on the other hand, wanted to postpone the right of return, (the Arabs was getting tired of supporting the right of return) and negotiate Jerusalem (for which the Palestinians had the support of the entire Muslim world).

It must be pointed out that the right of return (which the Israeli agreed to in order to get UN membership) is an individual right which Arafat maintained could not be negotiated away. Also, the refugee issue is a regional issue, involving all the states where the refugees reside, and a two-sided negotiation is not really the appropriate venue.

Given all this, it is hard to imagine a two-state solution which isn’t a Bantustan in disguise.

To sum up my video was rather pessimistic about the prospects for a viable two-state solution.

However, there are some hopeful signs as regards American Jewish attitudes towards Israeli intransigence. Recently the New York Post had an editorial debunking the peace negotiations. All the letters to the editor regarding the editorial were from Jewish people who supported a two-state solution and blasted the Post editorial. Also, on the 22 of August a right-wing orthodox synagogue in New York invited the noted critic of Israel, Peter Beinart, to give a talk.

So maybe there is some hope.

addendum: the Israeli election video is no longer truncated

ALSO SEE:

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BLUE INK BOOK REVIEW

http://www.blueinkreview.com/reviews

http://www.blueinkreview.com/reviews/view/752/category:4/subcategory:/newest:1/notable:0/sales:0/platform:0/format:/region

http://www.bookwhirl.com/Emailer/Production/4749/TheReaganRevolutionandtheDevelopingCountries.html

Published on Mar 15, 2013

profile1

Lawrence Feiner CFG Co-Founder

I was born in 1942 in the Bronx. I graduated from ps95 in 1956. I graduated from the Bronx H.S. of Science in 1960.

I got my b.s. in math in 1964 from MIT. I got my Phd in math in 1967 from MIT. The title of my thesis was “the strong homogeneity conjecture”.  It was about math problems that can be generated by a computer but cannot be solved by computer. From 1967 to 1974 I taught math at Stony Brook and Brooklyn College.

From 1974 to 1979 I worked in computers.

From 1979 to 2003 I worked as an economic consultant specializing in economic forecasts.

After 2003 I retired and am now retired.

Published on Mar. 2, 2012 by Harold Channer TV Show NYC

Recent Book:

The Reagan Revolution and the Developing Countries (1980-1990) A Seminal Decade For Predicting The World Economic Future: together with a long term … for predicting the world economic future
by Lawrence Feiner and Richard Melson
Publisher: iUniverse (November 28, 2011)

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LETTER TO CFG: REAGAN LIBRARY

July 26, 2012 at 11:58 am | Posted in Books, CFG, Globalization, History, USA | Leave a comment

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BLUE INK BOOK REVIEW

http://www.blueinkreview.com/reviews

http://www.blueinkreview.com/reviews/view/752/category:4/subcategory:/newest:1/notable:0/sales:0/platform:0/format:/region

http://www.bookwhirl.com/Emailer/Production/4749/TheReaganRevolutionandtheDevelopingCountries.html
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GLOBAL ECONOMY: BIS JULY 2012

July 21, 2012 at 2:27 pm | Posted in Asia, Development, Economics, Financial, Globalization, History, India, Research, World-system | Leave a comment

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Central bankers’ speeches for 19 and 20 July now available‏

Press, Service (press@bis.org)

Fri 7/20/12

Central bankers’ speeches for 20 July 2012
now available on the BIS website

Már Guðmundsson: Fragmentation in the international financial system – can the global economy become one again?

Duvvuri Subbarao: Of economics, policy and development

Anand Sinha: Small is still beautiful and competitive – reflections on the growth of Micro, Small and Medium Enterprises (MSMEs) in India

Ignazio Visco: Brief overview of the Italian economy and its banks

Central bankers’ speeches for 19 July 2012
now available on the BIS website

Prasarn Trairatvorakul: Financial crises and the future of global and Asian banking

G Padmanabhan: Issues in IT governance

Mark Carney: Summary of the latest Monetary Policy Report

All speeches from 1997 onwards are available from the BIS website at http://www.bis.org/list/cbspeeches/index.htm.

Communications

Bank for International Settlements

E-mail: press@bis.org

Website: www.bis.org

Phone: +41 61 280 8188

Bank for International Settlements (BIS)

Central bankers’ speeches for 18 July 2012
now available on the BIS website

Jens Weidmann: The financial assistance can only buy time but does not address the root causes of the crisis

Ben S Bernanke: Semiannual Monetary Policy Report to the Congress

G Padmanabhan: Global convergence of banking regulations and its impact on the Indian banking system

G Padmanabhan: Getting “IT” right

Duvvuri Subbarao: Statistics and statistical analysis in Reserve Bank of India’s work

Deepak Mohanty: Statistics in the Reserve Bank of India

V S Das: Leadership, performance and transformation through personnel management

Njuguna Ndung’u: Ongoing developments in the Kenyan financial sector

Njuguna Ndung’u: Financal services sector – steering the economy to the next level

Yaseen Anwar: Monetary policy framework in the SAARC region

Anselmo Teng: Development opportunity arising from cross-border RMB business and internationalization of enterprises

Gane Simbe: The role coins play in the Solomon Islands’ payment system

Prasarn Trairatvorakul: Economic and financial cooperation between China and Thailand

Ebson Uanguta: The impact of the euro area debt crisis on southern Africa

Ebson Uanguta: Towards a financially literate Namibian society

Zeti Akhtar Aziz: Participation of Japanese financial institutions in Malaysia

Jörg Asmussen: Building deeper economic union: what to do and what to avoid

Luis M Linde: Assessment of Spain’s economic situation

Yaseen Anwar: Developments of the microfinance sector in Pakistan

Central bankers’ speeches for 17 July 2012
now available on the BIS website

Már Guðmundsson: Iceland’s crisis and recovery and the crisis in the eurozone

Arde Hansen: Overview of Bank of Estonia’s first year of the euro

Zeljko Rohatinski: Restoring the luster of the European economic model report

All speeches from 1997 onwards are available from the BIS website at http://www.bis.org/list/cbspeeches/index.htm.

Communications

Bank for International Settlements

E-mail: press@bis.org

Website: www.bis.org

Phone: +41 61 280 8188

Bank for International Settlements (BIS)

Central bankers’ speeches for 13 July 2012
now available on the BIS website

Duvvuri Subbarao: Agricultural credit – accomplishments and challenges

Central bankers’ speeches for 12 July 2012
now available on the BIS website

Ivan Iskrov: Association of Banks in Bulgaria – 20 years

Dimiter Kostov: The world of finance is becoming more IT

Ivan Iskrov: Global and regional challenges to the economy and the financial system. Do we have working solutions?

Ivan Iskrov: Conflicts and complementarities between monetary and macroprudential policies

Subir Gokarn: Launch of the OTC derivatives trade repository

Philip Lowe: Bank regulation and the future of banking

All speeches from 1997 onwards are available from the BIS website at http://www.bis.org/list/cbspeeches/index.htm.

Communications

Bank for International Settlements

E-mail: press@bis.org

Website: www.bis.org

Phone: +41 61 280 8188

Bank for International Settlements (BIS)

Central bankers’ speeches for 11 July 2012
now available on the BIS website

Prasarn Trairatvorakul: Financing the Greater Mekong Subregion

Ardian Fullani: Building a sound and efficient Albanian banking system

Duvvuri Subbarao: Touching hearts and spreading smiles

Hirohide Yamaguchi: European debt problem and its impact on Asia

Central bankers’ speeches for 10 July 2012
now available on the BIS website

Mario Draghi: Hearing at the Committee on Economic and Monetary Affairs of the European Parliament

Prasarn Trairatvorakul: Financial crises and the future of global and Asian banking

Choongsoo Kim: Monetary and macroprudential policies in the aftermath of the crisis

All speeches from 1997 onwards are available from the BIS website at http://www.bis.org/list/cbspeeches/index.htm.

Communications

Bank for International Settlements

E-mail: press@bis.org

Website: www.bis.org

Phone: +41 61 280 8188

Bank for International Settlements (BIS)

Central bankers’ speeches for 5 July 2012
now available on the BIS website

Ardian Fullani: Overview of Albania’s recent economic and financial developments

Tharman Shanmugaratnam: Ensuring strong anchors in our banking system

Central bankers’ speeches for 4 July 2012
now available on the BIS website

YV Reddy: Society, economic policies, and the financial sector

José de Gregorio: What does society expect from the financial sector?

Ignazio Visco: What does society expect from the financial sector?

Jörg Asmussen: Can we restore confidence in Europe?

Miroslav Singer: The role of creditors and debtors in the world economy

Anand Sinha: IT and governance in banks – some thoughts

Mugur Isărescu: Monetary policy during transition. How to manage paradigm shifts

All speeches from 1997 onwards are available from the BIS website at http://www.bis.org/list/cbspeeches/index.htm.

Communications

Bank for International Settlements

E-mail: press@bis.org

Website: www.bis.org

Phone: +41 61 280 8188

Bank for International Settlements (BIS)

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NEW CFG YOUTUBE TALK JULY 2012: FEINER ON PAST AND FUTURE

July 5, 2012 at 12:51 am | Posted in CFG, Development, Economics, Financial, Globalization, History, USA, World-system | Leave a comment

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“long term global econo-history with implications for

the future”

(part 1)

Click On:

VID00008.AVILawrence Feiner 07-04-12

 Lawrence Feiner CFG

Play video

Added on 7/05/12

zoiladejesus27 uploaded

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CFG’S LAWRENCE FEINER ON YOUTUBE: THE WEST THE THIRD WORLD AND THE FUTURE

June 12, 2012 at 3:43 pm | Posted in CFG, Economics, Financial, Globalization, History, Research, World-system, Zionism | Leave a comment

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Click on these links:

Lawrence Feiner

by zoiladejesus27 | 2 months ago | 525 views

58:23

Lawrence Feiner 03 06 12 – Original air date

i was born in 1942 in the bronx. i graduated from ps95 in 1956. i graduated from the bronx hs of science in 1960 i got my bs in math in 1964 from …

by haroldchanner | 2 months ago | 821 views

1:00:07

Lawrence Feiner Ph.D – 12-27-11 Original air date

i was born in 1942 in the bronx. i graduated from ps95 in 1956. i graduated from the bronx hs of science in 1960 i got my bs in math in 1964 from …

by haroldchanner | 5 months ago | 1,668 views

58:10

Lawrence Feiner Ph.D Original air date 04 24 12

Description: i was born in 1942 in the bronx. i graduated from ps95 in 1956. i graduated from the bronx hs of science in 1960 i got my bs in math …

by haroldchanner | 1 month ago | 435 views

11:52

Lawrence Feiner 05-12-12

by zoiladejesus27 | 2 weeks ago | 158 views

Commentary

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BOOK REVIEW OF CFG BOOK: “REAGAN REVOLUTION…”

June 12, 2012 at 3:39 pm | Posted in Books, CFG, Development, Economics, Financial, Globalization, History, Research, Third World, USA, World-system | Leave a comment

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“The Reagan Revolution and the Developing Countries (1980-1990):

A Seminal Decade for Predicting the World Economic Future”

Lawrence Feiner and Richard Melson

iUniverse, 353 pages, (paperback) $23.94, 978-1-4620-6189-1

(Reviewed: May, 2012)

Lawrence Feiner and Richard Melson, both former principals of the Cambridge Forecast Group, have written a sharp challenge to prevailing economic thought.

The authors argue that despite the chaos that seems to have enveloped the world economy since the end of the Cold War (as typified in the writings of Francis Fukuyama, Zbigniew Brzezinski, and Daniel Patrick Moynihan), the direction and development of world economic history is, in fact, quite predictable.

Proponents of controversial “New Growth Theories,” Feiner and Melson argue that human capital and knowledge are quantifiable variables that, using mathematical formulae, can be both identified and extrapolated to the future. Once identified, an economic future can be reasonably predicted. Their work leads them to conclude that a post-Cold War economic world will revolve around a rapid shifting of economic priorities, emphasizing the needs and contributions of the developing world.

This is decidedly not a book for beginners in economics. It is a dense, detailed read, full of equations; readers should take the authors seriously with their oft-repeated asides that knowledge of basic calculus will enhance a person’s ability to understand the book. Specialists will, to be sure, find the book’s argument thought provoking. But they are likely to be frustrated by the authors’ use of several competing styles of citation and the absence of a list of the works cited or bibliography to help the reader translate the citations. Both specialist and generalist alike will also be distracted by the number of typographical errors. (One must pause when reading a book on economics that misspells the name of Milton Friedman.)

Decidedly not a book on the Reagan Revolution (which receives only a few pages here), this book does dare the economic specialist to think outside the box, and to consider a theory that might well explain where the world economy is heading. For that, this provocative book has merit.

BlueInk Heads Up: Despite the typographical flaws, professional economists and professors of economics will find this book both appealing and important.

The Reagan Revolution and the Developing Countries (1980-1990):

A Seminal Decade for Predicting the World Economic Future

Lawrence Feiner and Richard Melson

iUniverse, 353 pages, (paperback) $23.94, 978-1-4620-6189-1

(Reviewed: May, 2012)

CFG Comment on the review:

Irony of ironies:

The “Blue Ink Review” service completely misunderstood the book.

They read the first chapter and saw the “big prediction” of the centrality of the developing world to global growth. Then they read the next two economic chapters and thought that the new growth theories described therein were a validation of our prediction when in fact they were the opposite of our prediction…

They thought they had read enough and stopped.

Actually we did use mathematical growth theory to predict the centrality of LDC growth.

The Solow growth model, the most tested and accepted predicts that there are two sources of economic growth in the world, namely (1) increase in total factor productivity (technology) (2) increase in population.

We pointed out that the populations of the West are stable and that, aside from information technology, there is a stalemate in total factor productivity in the West and therefore additional growth has to come from the developing countries.

So the review was not altogether wrong (if you substitute the Solow growth theory for the new growth theories).

Unfortunately the Blue Ink review, although very good, has, with its emphasis on mathematics and equations, significantly reduced sales of our book. We had expected that, since the book was entitled ” The Reagan Revolution and the developing countries,” the reviewer would skip over the first four non-Reagan chapters and go right to the last chapter on Reagan.
instead the review actually plowed through the two difficult economics chapters and came up with a review based on them. In fact, aside from the mathematical second and third chapters, the book is very well written and highly readable, not a ”’dense read” as the Blue Ink review put it.

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CURRENT CRISIS: BIS JUNE 12 2012

June 12, 2012 at 3:33 pm | Posted in Development, Economics, Financial, Globalization, History, Research, World-system | Leave a comment

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Central bankers’ speeches for 12 June now available

(including 4 additional speeches)‏

Press, Service (press@bis.org)

Tue 6/12/12

Central bankers’ speeches for 12 June 2012
now available on the BIS website

Norman T L Chan: Hong Kong as a private banking hub – a regulator’s vision

Ignazio Visco: Economic and policy interconnections in the current crisis

Emmanuel Tumusiime-Mutebile: Bank of Uganda highlights its Board’s achievements

Lawrence Williams: Leveraging central banks’ IT investments for strategic advantage

Choongsoo Kim: Emerging Asia and global economic recovery

Choongsoo Kim: Asia’s role in reviving global growth and financial stability

Choongsoo Kim: Returning to sustainable growth – an EME’s perspective

Lars E O Svensson: Differing views on monetary policy

Erdem Başçi: Financial and macroeconomic stability

Emmanuel Tumusiime-Mutebile: Expanding financial access and financial inclusion in Uganda

All speeches from 1997 onwards are available from the BIS website at:

http://www.bis.org/list/cbspeeches/index.htm.

Communications

Bank for International Settlements

E-mail: press@bis.org

Website: www.bis.org

Phone: +41 61 280 8188

Bank for International Settlements (BIS)

Central bankers’ speeches for 12 June now available

(including 4 additional speeches)‏

http://www.bis.org/list/cbspeeches/index.htm

Press, Service (press@bis.org)

Tue 6/12/12

Central bankers’ speeches for 12 June now available‏

Press, Service (press@bis.org)

Tue 6/12/12

Central bankers’ speeches for 12 June 2012
now available on the BIS website

Choongsoo Kim: Emerging Asia and global economic recovery

Choongsoo Kim: Asia’s role in reviving global growth and financial stability

Choongsoo Kim: Returning to sustainable growth – an EME’s perspective

Lars E O Svensson: Differing views on monetary policy

Erdem Başçi: Financial and macroeconomic stability

Emmanuel Tumusiime-Mutebile: Expanding financial access and financial inclusion in Uganda

All speeches from 1997 onwards are available from the BIS website at

http://www.bis.org/list/cbspeeches/index.htm.

Communications

Bank for International Settlements

E-mail: press@bis.org

Website: www.bis.org

Phone: +41 61 280 8188

Bank for International Settlements (BIS)

Central bankers’ speeches for 12 June now available‏

http://www.bis.org/list/cbspeeches/index.htm

Press, Service (press@bis.org)

Tue 6/12/12
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