Reparations to be paid to the Third World

Overheal

Why is this suddenly about America's foreign policy and not the First World's foreign policy?

DadaKopf wrote:

The Manifest Destiny is still frequently cited and daily referenced indirectly. It is the animus of America's imperialist politics.

Which no longer reflects the will of the people.

Kama wrote: »

Or, for brevity...
Compound Interest + Inherited Debt = the Financialization of Slavery?


Would anyone object to such a scheme, and if so, why?

Its not slavery as we once knew it then. Financial Slavery: sure. We aren't having them pick cotton fields or anything, but by placing mass amounts of unpayable debt on them (shackles) the only way they can seemingly pay back is to export cheap materials, which get taxed the hell out of. in that way we profit more from the taxes on the goods than we do the goods themselves. Might this be the reason behind the EU's spoiled food stockpiles?

Would I object to such a scheme? Its already happened.

DadaKopf

Why is this suddenly about America's foreign policy and not the First World's foreign policy? [...] Which no longer reflects the will of the people.

Someone asked, I answered.

Kama: I think it's an interesting idea. However, I'm not so sure about it. First of all, the idea that many/most of these debts are illegitimate is gaining legal weight. 'Odious debt' can be described as follows:

“If a despotic power incurs a debt not for the needs or in the interest of the State, but to strengthen its despotic regime, this debt is odious for the population of all the State. This debt is not an obligation for the nation.”

It seems unfair that the people who ousted despotic dictators and corrupt regimes should be expected to pay the debts they incurred, and siphoned off into foreign bank accounts. These debts should be written off, and public money also siphoned off through corruption should be repatriated. Some ill-gotten gains have been repatriated - on condition that the money be spent on development works benefiting the poorest in those countries. [Remember, too, that the West has facilitated (and paid) these corrupt transfers.)

Now, the conditions attached to these loans are also to blame for the state of African countries (and developing countries across the world). So it can also be argued that the loans given by rich countries to poor countries have contributed to their further impoverishment. This returns us to the issue of cancelling all debt, quite apart from any issue of reparations.

If there were to be reparations, I would say it would have to be political rather than financial.

Fratton Fred

DadaKopf wrote: »

If there were to be reparations, I would say it would have to be political rather than financial.

Yep. Financial reperations just wont work.

Reperations for what? who pays what to whom and for what.

For legal financial reperations to happen I am guessing there needs to be a demonstration of loss and what is the loss to an individual? is their life better or worse for european intervention? it would be impossible to say surely.

fly_agaric

Overheal wrote: »

Might this be the reason behind the EU's spoiled food stockpiles?

The food mountains are gone.
The farmers' EU subsidies used to be linked to how much milk, meat etc they produced (not sure, maybe the policy was a holdover to food shortages in the years after Europe was devestated by WW2).

As a result they produced far too much of some things...I don't think it had much to do with enslaving Africa or odious debt?
I think the subsidy is based on the size of their farm or something now so no more waste production.

Zambia

Reparations are not a good idea unfortunatly there is a massive skills shortage in africa which it will not address. In short every country in africa does not have the skills in enough numbers to run itself correctly.

Here is a classic example
http://news.bbc.co.uk/1/hi/business/1672792.stm

However african countries would rather deal in a global market without addressing the issue. Hence permanently crippling themselves with bad deals and inadequate leadership any company that ran itself the same way would go to the wall.

To address the issue would mean bringing in a load of white(non black) people in goverment which lets face it is not going to happen.

Gaining independance means just that you are out in the world on your own you have to think and act for yourself and take the consequences. In fact I would find the idea of reparations insulting for that very reason at this stage. If reparations are due they where due at the time of independance.

Its like saying Im an idiot but its all your fault for concieving me dad when you where a horny naive teenager so pay my bills.

jmayo

Reparations, yeah sure why not :rolleyes:
Lets give the dictators even more money to invest with those nice friendly Swiss bankers.

Some people seem to believe that the colonial powers left the countries destitude and asset stripped everything on the way out.
Yes the colonial powers left a continent that has some country's borders based on geographical features rather than tribal boundaries, but does that mean that one tribe or race should machette their neighbours ?

Examples of countries that were left in good fettle that have since gone down hill.
Ghana was better off, financially and educationally, than South Korea in the mid fifiies. Compare the two today.
Look at Zimbabwe in 1980 and look at it today and they can't blame the Brits for that.

Someone suggested a Marshall Plan for Africa.
Again most of the money will be siphoned off by the corrupt despotic regimes that run a hell of a lot of the countries.

Of course I will quiet openly admit that the US and the Soviets used Africa as a playground where they fought proxy wars throughout the cold war.
They flooded the continent with arms. Today it is the Chinese that are screwing the continent.

But the Africans themselves have to shoulder a fair chunk of the blame along the way.
Africa and Africans need to start sorting out some of their own problems and need to start to learn to stand on their own feet and stop always using the whiteman as an excuse.
They had a chance to start that process in Sharem el Sheik and they blew it.

Kama

jmayo wrote:

Yes the colonial powers left a continent that has some country's borders based on geographical features rather than tribal boundaries, but does that mean that one tribe or race should machette their neighbours ?

Hehe yes, African physical geography is full of peculiarly straight rivers, and no one in this country ever died over an arbitrary tribalist boundary imposed by a former imperialist state

But the difference between South Korea and Ghana is an interesting one. I'm currently reading Bad Samaritans by Ha-Joon Chang, who does into detail on just this, noting Koreas strong protectionist trade barrriers, infant industry promotion, and strict capital controls as central to Korea's success during this period, contra to the conventional free trade mythos.

Dadakopf wrote:

I think it's an interesting idea. However, I'm not so sure about it.

I thought so too, I'm wondering what you would see as the drawbacks?

Political reparations are highly subjective, and impossible to quantify. Debt recalculation is practicable, neutral with regard to blame, and very difficult to argue against. I view it as a better approach than how debt forgiveness usually has rolled, not just as a transfer payment, but because it puts into question the legitimacy of the debt in the first place, which is a significant political move toward a more just global order.

jmayo

Kama wrote: »

Hehe yes, African physical geography is full of peculiarly straight rivers, and no one in this country ever died over an arbitrary tribalist boundary imposed by a former imperialist state

Ok a line of latitude or longitude is probably more a geographical descriptor than a geographical feature ?

Kama wrote: »

But the difference between South Korea and Ghana is an interesting one. I'm currently reading Bad Samaritans by Ha-Joon Chang, who does into detail on just this, noting Koreas strong protectionist trade barrriers, infant industry promotion, and strict capital controls as central to Korea's success during this period, contra to the conventional free trade mythos.

The reason I raised Ghana as example was I recently came across comparison between the two in mid 1950s.
When Ghana got independence it was in better shape than South Korea which was a basket case after the Korean war.
Of course the Koreans probably got US and Japanese aid to progress, but Ghana just went backwards.

In no way would I ever say that the good old free trade open borders and WTO is what poor nations need.
I believe it is a myth propogated to get people on side or feel guilty in developed countries.
All it really does is allow Western companies to take over resources (water/power, etc) in poorer countries and then screw the locals for all they can get.
It allows easy movement of capital and access to cheap labour.
We are constantly being told EU farmers should allow cheaper agricultural imports into Europe to help the poor subsitence farmers in Africa or South America etc.
Funny all I see in our major supermarkets are onions or apples from NZ and strawberries or pears from South Africa.

As has probably being said how would reparations be calculated?
Would governments have to pay out, would companies have to pay out, or in the case of Congo/Zaire would the Belgian royal family have to cough up ?

Sadly until African leaders and Africans themselves start sorting out the despotic little dictators and so called democrats that rule the continent then it does matter how much money the developed world pumps in.

Kama

jmayo wrote:

The reason I raised Ghana as example was I recently came across comparison between the two in mid 1950s.

Yep, its the divergence between development in Africa and Asia 1950-80 and 1980-now which is the issue. Ghana and Korea seem good examples of this general trend, whether we look at them as strictly country-based or regional examples. Huntingdon in Clash of Civilizations thought that the difference was primarily of cultural origins, hard-working Asians versus lazy Africans: Personality > Policy. Chang in Bad Samaritans thinks the difference is more to do with institutions and policy.

When Ghana got independence it was in better shape than South Korea which was a basket case after the Korean war.

Yup, South Korea circa 1960 had an economy based on exporting human hair for wigs and raw fish; hardly a promising beginning for a now-rich country. Average yearly income was $82, less than half the Ghanaian $179

Of course the Koreans probably got US and Japanese aid to progress, but Ghana just went backwards.

Chang tells the story a little differently. President Park, a national dictator, raised per capita income from $82 to over $1000 by 1977. How? The country was effectively mobilised for economic development, for example people found smoking foreign cigarettes were reported as unpatriotic, as all foreign currency was needed for the development effort. Heavy and chemical industry was mandated and developed with strong government involvement and protection, classic Infant Industry policies. The government owned all banks, and directed credit flows as it saw fit.
Park was assassinated around 1980, by which point the country was moving into the high-tech model we know know it for.

Or, in short:

Less US and Japanese aid, more economic mobilization by a dictator?

Sand

Most third world/developing economies are export based - advocating protectionism and the restriction of free trade to help them? Might as well nuke them from orbit, just to be sure.

Its protectionism that basically hangs a big "**** You" sign on the trade walls around the US and EU, distorting market outcomes that would see African and other third world farmers getting access to the the highest consumption markets in the world, leading to investment in agriculture to allow them to meet standards set, and once theyre getting past subsistence level farming, invest in education.

Its protectionism that means that even if a third world entrepreneur comes up with a good business idea, invests in a factory, hires the best and brightest to prevent the brain drain to the EU and US hes royally ****ed over by the trade walls built around the EU and US. So instead the entreprenuers and their brightest move emigrate to the EU and US, set up there and the only thing the the developing world sees is maybe a low value manufacturing plant.

Everyone - EU, US, and the Third World - are told we need protectionism, like trade is some zero sum game where somebody loses. If I buy a paper from a newsagent, someones getting ****ed over obviously - me or the shopkeeper. We clearly cant both benefit from the trade. Can we? Someone has to set quotas, someone has to set a price otherwise the end of the world will come.

When the reality is we need more free trade so everyone can win. Special deals where market outcomes are distorted are just putting off the day when youve got to get out into the world and compete with the best. The developing world doesnt need special advantages - it already has an immense cost base advantage. The reason why the trade barriers are up against the developing world is that the fat, lazy, inefficient corporations and producers in the EU and US are terrified of the possibility of competion from the developing world.

On another point regarding the failure of the third world economies, one interesting book I read regarding the economic development was "The Mystery of Capital - Why Capitalism triumphs in the west and fails everywhere else" by Hernando De Soto. It basically put forward the reason as being property rights and laws are extremely well developed and protected in the west, but property ownership is often not legally established or recorded, let alone protected in many developing economies. Vast portions of the population are living in houses, working in jobs that are outside the legal system - invisible to the regime. So a massive lack of information - and capital needs collateral, and collateral needs information and legal record of ownership. Boom, there goes one plank of capitalism with a lot of dead assets and capital that people cannot borrow against.

Given their lack of status, theres often an understandable unwillingness to invest in these extra-legal dwellings or industries that can be literally bulldozed the next day by the powers that be. There goes another major plank of capitalism right there. And so on.

He also takes time to point out the situation isnt unique and was known in Western societies too - namely, the massive, illegal settler land grab in the American West by European migrants. Most settlers were illegals, and not recognised by the U.S. government as having any claim to the lands they lived on which often technically the U.S. had recognised as belonging to various Native American nations and tribes. The expansion west was often a much delayed legal normalisation of "facts on the ground" for most of the early 19th century.

Its an excellent book, and I have only extremely briefly covered the main argument of the book so Id really reccomend it.

Kama

Agree with much of what you said, Sand. Our protectionism is a complete F*** You, pure hypocrisy tbh.
Especially since according to our own theory, unilateral trade liberalization is its own reward.

Similarly property rights are a necessary basis for development, as I remember de Soto did a lot of his work on slums. Once the dwellers had rights to it, they improved their houses more (since they weren't as vulnerable to being evicted tomorrow), had equity to borrow against (from the recognition of their property) and so forth.

I'm not as convinced by the pure market narrative for development: that's why I offered the case study of Korea's development (ripped straight from Ha-Joon Chang).

Korea: ISI + High Tariffs = Successful Development.
Counter-example plx! It's fine to talk about markets in theory; practice is what intrigues me.

Sand wrote:

Everyone - EU, US, and the Third World - are told we need protectionism, like trade is some zero sum game where somebody loses....
When the reality is we need more free trade so everyone can win

As far as I remember it, free trade does not claim that everybody can win. Perhaps you mean a Kaldor-Hicks efficiency, where the winners can, in theory compensate the losers? Trade can, and does, have losers. In theory, they can be compensated from the larger cake.
In practice, they tend not to be: There are uncompensated losers.

Most third world/developing economies are export based - advocating protectionism and the restriction of free trade to help them?

In development policy, following Chang, I would say that yes, there is an optimal level of protectionism, and that if you want to develop higher-level value-added industries, as opposed to an raw-material export-based cash-crop economy, protectionism is near obligate. Even if it goes against comparative advantage in the short-term, the benefits in the medium term can outweigh the costs. Chang uses Nokia as an example: supported at a loss for 17 years by its lumber and mining business before it made a profit.

I'm not against trade; but I think countries should trade as they wish, on their own terms. As he points out, if the market will punish the inefficient anyway, there's no need for extensive trade legislation forbidding protectionism etc, is there?

Sand

I'm not as convinced by the pure market narrative for development: that's why I offered the case study of Korea's development (ripped straight from Ha-Joon Chang).

Korea: ISI + High Tariffs = Successful Development.
Counter-example plx! It's fine to talk about markets in theory; practice is what intrigues me.

If I remember correctly - there was a similar thread a year or more ago -, Koreas auto industry was a complete joke until protectionism was loosened and foreign investment in the Korean auto industry was allowed. Theres also the assumption governments can "pick winners" in which to bet vast amounts of public finances to support - and again, if i recall correctly the Korean government backed a whole lot of losers.

But the basic fallacy of "Well go with protectionism while everyone else goes with free trade models" comes down to everyone else saying ...."woah, woah, woah.....why the **** should we do that"? If you have some people engaging in protectionism, whilst others arent then the people who arent engaged in protectionism are losing out. Realistically, those EU/US trade walls arent going to come down out of charity alone - Peter Mandelson will need something to bring back to EU producers as a tradeoff.

The concept of protectionism for a export economy work fine until you consider persuading everyone else to allow you free access to their markets whilst youre not allowing them access to yours.

As far as I remember it, free trade does not claim that everybody can win. Perhaps you mean a Kaldor-Hicks efficiency, where the winners can, in theory compensate the losers? Trade can, and does, have losers. In theory, they can be compensated from the larger cake.
In practice, they tend not to be: There are uncompensated losers.

"Everyone" might be better expressed as "Everyone overall" - inefficient domestic producer obviously lose out if they dont have tariffs and market distortions to protect them from free trade. The choice for them is to either continue in their losing industry or invest into an industry in which they have an advantage or can otherwise compete.

I mean that whilst Wayne Rooney might be better at everything than anyone in the world, everyone is better off overall [Wayne might be slightly worse off as he has to pay someone to mow his lawn] if he concentrates on playing football and pays someone else to mow his lawn. The "developed" world has a huge advantage in terms of technology, infrastructure and branding over the developing world - everyone is better off overall if the developed world concentrates on those advantages as opposed to subsidising inefficient industries it is not good at - like the EU CAP and food production, a protectionist measure which simply distorts an otherwise natural market outcome where the EU would import its food from the developing world.

All free trade does is to remove those market distortions that practically invariably lead to consumers getting ****ed over, to appease domestic producers who fund the political campaigns of elected representitives who create those market distortions.

Under such an outcome - inefficient food manufacturers in the EU will be worse off unless they can leverage a "home grown" branding campaign to convince consumers to pay more for basically the same product, but the vast majority of people in the EU will be better off as they will be getting cheaper food and wont have to pay taxes to subsidise the inefficient manufactuers.

In development policy, following Chang, I would say that yes, there is an optimal level of protectionism, and that if you want to develop higher-level value-added industries, as opposed to an raw-material export-based cash-crop economy, protectionism is near obligate.

That assumes that higher-value added industries/technological innovation are a result of protectionism, as opposed to free societies. And a strong legal protection of patents/intellectual property of courses. I dont think China or India will ever rival the US/EU higher-value added industries because the best and brightest of China and India move to the US/EU due to the freer society and greater. Protectionism basically failed for Ireland, badly. Our economy only turned around when we experimented with free trade and economic liberalisation.

edanto

Interesting discussion between Kama & Sand, I've learnt a lot from it. Just wanted to throw in a little something...

Sand wrote: »

Our economy only turned around when we experimented with free trade and economic liberalisation.

Not to mention the €55bn (minimum) in cash handouts that the EU gave us from 1973-2008

So, if we wanted to apply the same Ireland/EU recipe of success from the developed world to Africa.

As well as a free market, functioning economic and legal system, the EU gave Ireland ( 55,000,000,000/4,000,000,000 people/35 years ) roughly €400 per person per year.

So, for the next year, the west could give Africa €400 x 1,000,000,000 people = €400bn in aid instead of the €100bn they were planning to, free access to our markets on just terms and then let's see how the African countries get on then.

I believe the reparations solution is flawed because of practical problems of agreement, collection, & disbursement and if you were going to go to that much trouble, then a more permanent solution would be a reform of the international economic system so that:

<> Corporations pay an equitable rate of tax {Death and taxes: the true toll of tax dodging, which looks at the impact of tax dodging, both legal and illegal, on the developing world - http://christianaid.org.uk/images/deathandtaxes.pdf }

<> Introduce the Tobin Tax http://en.wikipedia.org/wiki/Tobin_tax

<> Regulate secret banks so that corrupt dictators have nowhere to hide their money - corruption in developing countries is facilitated by our banking system, why does no-one ever mention that?!

<> Costs externalised in traditional corporate activity such as environmental degradation, health and educational damage to the population are levied as invoices to the corporations involved by the government of the developing country.

jmayo

edanto wrote: »

Not to mention the €55bn (minimum) in cash handouts that the EU gave us from 1973-2008

As well as a free market, functioning economic and legal system, the EU gave Ireland ( 55,000,000,000/4,000,000,000 people/35 years ) roughly €400 per person per year.

<> Regulate secret banks so that corrupt dictators have nowhere to hide their money - corruption in developing countries is facilitated by our banking system, why does no-one ever mention that?!
....

Edanto I take issue with the fact you seem to believe that the EU gave us a functioning legal system.
Our legal system grew out of the British legal system and all we have gotten from EU are laws relating to worker rights, anti-discrimination etc.
Now nowhere have I said that the system functioned well before or after accession to EU, but it did function.
If anything we now live in a more legalistic and less just society but that is another debate.

I agree the Western World Banks be they based in Switzerland, Liechenstien or the Caymans have gotten away with or rather condoned murder by readily accepting the ill gotten gains from not alone African dictators but western criminals and right back to the Nazis.

jmayo

edanto wrote: »

Not to mention the €55bn (minimum) in cash handouts that the EU gave us from 1973-2008

As well as a free market, functioning economic and legal system, the EU gave Ireland ( 55,000,000,000/4,000,000,000 people/35 years ) roughly €400 per person per year.

<> Regulate secret banks so that corrupt dictators have nowhere to hide their money - corruption in developing countries is facilitated by our banking system, why does no-one ever mention that?!
....

Edanto I take issue with the fact you seem to believe that the EU gave us a functioning legal system.
Our legal system grew out of the British legal system and all we have gotten from EU are laws relating to worker rights, anti-discrimination etc.
Now nowhere have I said that the system functioned well before or after accession to EU, but it did function.
If anything we now live in a more legalistic and less just society but that is another debate.

I agree the Western World Banks be they based in Switzerland, Liechenstien or the Caymans have gotten away with or rather condoned murder by readily accepting the ill gotten gains from not alone African dictators but western criminals and right back to the Nazis.

edanto

Apologies for my implication that the EU introduced a legal system to us, what I meant was more of a legal forum for trade rules, agreements and dispute resolution which was the basis of the EEC.

jmayo

edanto wrote: »

Apologies for my implication that the EU introduced a legal system to us, what I meant was more of a legal forum for trade rules, agreements and dispute resolution which was the basis of the EEC.

No worries.
It is just I believe we give the EU too much credit for some things and not enough for others. I was big fan of EU and how it managed to unite the major players in Europe, thus preventing the habit of going to war and it also included the little guys like ourselves and helped us along.

Anyway I digress from the subject.
I don't think pumping money into Africa in a similar fashion as done with Ireland will ever work until there are stable institutions, democratically elected governments and accountability in place.
Otherwise the funds will just end up with a banker in Switzerland or an arms dealer operating out of some ex Soviet republic.

How many European style democracies (lets not get into arguemnet about how US hasn't true democracy) exist in Africa ?
They usually have either a one party state, a dictator, a military regime or some guy whose family took over when the country got independence.

Sand

Not to mention the €55bn (minimum) in cash handouts that the EU gave us from 1973-2008

So, if we wanted to apply the same Ireland/EU recipe of success from the developed world to Africa.

As well as a free market, functioning economic and legal system, the EU gave Ireland ( 55,000,000,000/4,000,000,000 people/35 years ) roughly €400 per person per year.

So, for the next year, the west could give Africa €400 x 1,000,000,000 people = €400bn in aid instead of the €100bn they were planning to, free access to our markets on just terms and then let's see how the African countries get on then.

Whilst the effect of cash handouts cant be completely discounted, if we were recieving these handouts in the 70s why werent the 80s an era of unbridled prosperity? Instead the country was an economic basket case with anyone with a qualification and a small bit of ambition heading to the US or UK. Similar to the brain drain 3rd world economies suffer.

If aid is a significant factor in development, why isnt Africa [ for example] giving us aid as of the top of my head, I believe the amount of aid to Africa over the decades amounts to hundreds of billions if not trillions. If throwing money at Africa worked, it should have worked by now. There are countries in Africa where every citizen should practically be a millionaire with the oil resources an other natural resources possessed. But Africas share of global gdp and trade is 1-2% of the total. For a continent of Africas resources, thats frankly shocking.

Essentially giving aid to Africa with their current government/regime structures and civil society is like trying to fill a bucket with a hole in it. Just not going to work unless the holes are plugged. But it makes us feel better about the whole thing.

The third world needs free trade, but it also needs a tolerable administration of justice - accountable governments, legal protections for individuals and property etc etc.

Instead, the situation in Africa is so desperate that the leadership of South Africa, the great hope of the continent, practically assist Mugabe and Co. in raping their countries of wealth and civic society.

Quite simply, there is no hope of significant development in Africa [ or any third world country] unless the very basic problems of how Africa is run are resolved. Reparations would simply go the way of the existing aid payments - into the regimes pockets to be spent on weapons & secret police to suppress the population, villas in Spain and deposits in Swiss banks.

edanto

Sand wrote: »

I believe the amount of aid to Africa over the decades amounts to hundreds of billions if not trillions. If throwing money at Africa worked, it should have worked by now.

Do the maths man.

Our current economic system replete with things like Bretton Woods, massive corporate control of the world and corrupt deals with dodgy leaders of poor countries contributes to an efficient mechanism for pumping wealth OUT of Africa and into our hands.

Kama

Possibly we are going a bit off topic from the reparations issue itself into general development economics, but anyways, tis relevant neh?

Sand wrote:

auto industry was a complete joke until protectionism was loosened and foreign investment in the Korean auto industry was allowed.

Again, we can read this differently. Chang's argument is that in the medium to long term it is worthwhile to develop a (at that time-point) inefficient industry, and to lower tariff barriers later once it is in a position to compete. The co-incidence of economic success and trade liberalization can plausibly be read causally eitherway, as an end to Bad Protectionsism, or as Good Protectionism creating the conditions for later success. Moar Research Needed.

The principle argument, following on from his earlier books, is that these policies are the ones the 'core' industrial nations used (Britain, United States, Japan, etc) at various historical points, and that its a curious coincidence that 'we' now tell developing nations not to use these policies; the conventional rejoinder is that they succeeded in spite of, rather than because of, protectionist policy. My love for Chang stems a lot fropm his use of historical example, something often absent in economics, which tends imo to theoretical-mathematical narratives with less actual concrete examples.

Susan Strange said that this obsession with econometrics and general theory over evidence is a luxury often absent in sectoral analysis, such as development or industry-specific, Milton Friedman that 'economics has become increasingly an arcane branch of mathematics rather than dealing with real economic problems', while Coase said that "economics is a theoretical system which floats in the air and which bears little relation to what happens in the real world". Free trade theory is one thing; development economics is a more practical discipline. What works, works.

Sand wrote:

"Everyone" might be better expressed as "Everyone overall" - inefficient domestic producer obviously lose out if they dont have tariffs and market distortions to protect them from free trade.

I agree, this is what Kaldor-Hicks, as opposed to say, Pareto efficiency is about. An issue with this is 'everyone overall' can have some distributional-equity issues...Reductio ad absurdum, if everyone but Bill Gates has 10 apples, and Bill has 100 apples, an efficient scenario would be Bill having 200 Apples and everyone else having none. Obviously I'm oversimplifying; but there are similar scenarios on a global level, which while they might be an efficient 'market outcome' are abhorrent socially, and have associated costs the market may not internalise.

(Note the liberal model always assumes a 'Night-Watchman' state...externalising security costs. A philosophically 'minimal' state can end up footing a huge bill...the US prison system come to mind as an example)

Sand wrote:

The "developed" world has a huge advantage in terms of technology, infrastructure and branding over the developing world - everyone is better off overall if the developed world concentrates on those advantages

So...the developed world should try and maintain its position with high-value added industries, and the less-developed should stick to the lower-value industries? Yes, that is their current comparative advantage; its also conveniently neocolonialist...on strict market principles, of course.
Resource producers stay making our coffee, while we stick a label on it and gain most of the value-added...Many African nations got similar advice decades ago, grew coffee as a cash crop as a loan condition essentially, and caused a coffee glut which wiped out their earnings. Our trade barriers are also to blame here, I think we all agree that asymmetric protectionism under the guise of 'free trade' is an abomination?

Sand wrote:

That assumes that higher-value added industries/technological innovation are a result of protectionism, as opposed to free societies.

So you are assuming that the causality runs the other way?
*points finger at China*
No technical or scientific progress there, honest...All those giant, well-funded research labs come up with diddly-squat due to their lack of political freedom.

I'm not saying free societies don't spur innovation, I think they do, but the stonger argument (value-added/innovation results from primarily) brings the the Scottish verdict of 'Not Proven' comes to mind.

Sand wrote:

And a strong legal protection of patents/intellectual property of courses.

Again, this wasn't how 'we' developed. The Swiss kept IP out of their chemical industry for a *long* time, while accepting mechanical patents. The US only came onboard with global copyright on books quite late, and so forth. My base argument against strong IP Is that it prevents knowledge transfer to developing countries, which is in my view a key base of economic development.

Accession to strong IP positions tends to come *after* you have developed a position to protect, unsurprisingly, and weak IP is hugely beneficial to developing countries. Plus a weak IP regime, by distributing at low-cost, creates a future market in a region where the current effective demand isn't sufficient to be a market for said product. The Indonesian who buys fake Raybans and a clone IPod will in the next generation but the 'real thing'...but IP is a huge area to get into, its an argument I'd love to have, mebbe in a diff thread...for starters, its a politically created monopoly hehe...and tbh its role in spurring innovation seems imo over-rated. I regard a lot of IP as essentially a rentier system rather than a productive incentive, needs an overhaul tbh.

Sand wrote:

Our economy only turned around when we experimented with free trade and economic liberalisation.

Plus: EU Funds
Plus: EU import point
Plus: World Boom

Corporate tax rate was key, to the annoyance of our EU brethren. But note, this isn't generalizable: not everyone can undercut on corporate taxation.

Sand wrote:

into the regimes pockets to be spent on weapons & secret police to suppress the population, villas in Spain and deposits in Swiss banks.

Agree 100%. But one solution to the, rather than 'Moar Trade!' is the regulation of tax havens, which goes against a lot of the financial liberalization argument: the role of financial liberalization in aiding terrorist/dictator/nasties in shuffling funds globally is a massive one.

Tobin tax, as mentioned, would be shweet, and makes sense on economic and other grounds. Trade systems that encouraged reductions in armanents/repression, human/worker rights in exchange for trade/debt annulment would be a practical mechanism.

Free Trade + Slave and Convict Labour = Something Wrong Somewhere IMO

Agree also Edanto, aid looked at without looking at the other flows in the opposite direction is a flawed picture.

SkepticOne

Kama wrote: »

I'm currently reading Bad Samaritans by Ha-Joon Chang, who does into detail on just this, noting Koreas strong protectionist trade barrriers, infant industry promotion, and strict capital controls as central to Korea's success during this period, contra to the conventional free trade mythos.

Does Ha-Joon Chang mention Japan's "Fifth Generation" computer project in his book? Here Japan thought it could leapfrog foreign competition by supporting advances in artificial intelligence and the like. Unfortunately it amounted to very little in the end and is generally regarded as a failure today despite huge amounts of money spent on it at the time.

The problem is that with this sort of state control the relatively small numbers of people involved in making the initial high level decisions don't have a personal stake in the success of the project beyond, perhaps, a small pay rise or promotion and a pat on the back. Better that governments are invoved in getting the environment right for business than backing specific business interests.

In developing countries governments have often been seduced by gradiose projects that turn out to be unsuitable later leaving the country in debt.

Kama

Nope, that project isn't mentioned. Governments can sink money into uncompetitive projects and companies, no doubt. However I doubt on the whole that Japan would be in a better place without MITI; one swallow does not make a summer.

I don't consider state involvement as inevitably a Good Thing, but I don't think its necessarily a Bad Thing either; proof is in the pudding. There are costs to state intervention; equally there can be costs to premature liberalization, vide Russia. Pragmatism uber alles.

Given that every developed nation has significant intervention, either through direct or indirect subsidy, tariff or non-tariff, advising others to not do so is...a little problematic. Given that complete cessation of direct subsidy is politically unfeasible, and indirect subsidy (such as for instance technological development through the Pentagon system, or educational funding) is also A: massive and B: off the cards, a degree of 'distortion' from a market-theory ideal is here to stay. Economies are by force majeure mixed; perfectly competitive free markets exist nowhere but in theory. This appears a basic given.

Closest thing to a level playing field would be an equal level of protection.
Yet 'Do as I say, not as I do' appears the rule. Market-liberalisers get to keep saying it will be ok if we did away with out nasty habits of protectionism and lack of flexibility, but this utopia just doesn't seem possible on a practical level on our side. Less powerful countries have less voice and less input at trade negotiations (note the attempts to storm the Green Room), so these policies are often imposed asymmetrically. Equally conventional 'right for business' may have asymmetric benefits.

In short, protectionism in my view can have benefits; a government has a vested interest in the development of a country (a personal stake, if you will), which a multinational may not share, and longer time-horizons than a short-term market actor. In the short-term, the market result may appear optimal; but in the medium to long, perhaps less so.

rigumagoo

I always lol at the state the Zimbabweans have made of their country. Back in the horrible imperialist days of horrible imperialist British rule, Rhodesia, as it was known, was the most prosperous region on the continent, producing food enough to feed the entire southern half of the continent.
During the 60's, the country went down excrement creek when the populace revolted and overthrew the incumbant dictator, Ian Smith, and managed to replace him with the only man on Earth who was more brutal and corrupt than he was, one Mr. Robert Mugabe. This is a man who, despite holding seven university degrees, cannot grasp the basic concept of price inflation.
Thanks to the startling incompetancy of this man, the nation of Zimbabwe has achieved the notorious accolade of having the highest rate of inflation recorded in human history; with estimates varying between 150,000% and 1.5m%. (The average inflation rate in the Eurozone in April of this year was 3.5%, in comparison.)
This situation is almost comical (hence why I lol), and is getting worse with each passing day. They will need a new word to describe what is happening to the Zimbabwean economy; the term 'hyperinflation' doesn't do it justice!

charlie_says

Whilst not really a reparation, I think if the first world would stop selling arms to Africa the future of that continent would have many more options open to them in the future.

Also agree with the regulation of the secret banking system. Corruption is an integral part of life in many parts of Africa - it goes from the very top to the very bottom of society. The top level is facilitated by the secret banking system.

A change in the first worlds policies towards Africa is what we can give them. Oh yeah - we are too greedy on top of our moral high ground surrounded by our artillery.

Kama

Whilst not really a reparation, I think if the first world would stop selling arms to Africa the future of that continent would have many more options open to them in the future.

What? And let the Chino-Soviet industries reap all the profts?
(bad joke)

Agree fully on the facilitation by the banking system...the link between siphoned off corruption payments and the national debt of African countries, and our apprent complicity, seems clear, and puts a definite question-mark on the legitimacy of a significant proportion of the total debt.

edanto

A few weeks have passed since I last read this thread and I've come back to it to post what might be a clearer case of reparations.

Haiti.

A slave colony that overthrew their French rulers in 1803, and then under threat of invasion in 1825...

The French king agreed to recognise Haiti’s independence only if the new republic paid France an indemnity of 150 million francs and reduced its import and export taxes by half. The ‘debt’ that Haiti recognised was incurred by the slaves when they deprived the French owners not only of land and equipment but of their human ‘property’.

The impact of the debt repayments – which continued until after World War Two – was devastating.

(taken from a 4 yr old article in the LRB http://www.lrb.co.uk/v26/n08/farm01_.html )

Since then there has been a lot of meddling in Haiti affairs, including a 20 year occupation by the US, murderous structural adjustment policies in the 80s which destroyed Haitian food independence and then the call in 2003 for the money that France got from Haiti to be repaid.

You owe us $21,685,135,571.48

There is also the matter of the odious debt - which according to Farmer in the LRB ought not to be repaid under international law (which?) - and how a good chunk of it was repaid.

I think of all the countries in the world, there's a pretty clear case for Haiti to get some money back.

Bubs101

edanto wrote: »

I think of all the countries in the world, there's a pretty clear case for Haiti to get some money back.

Haiti agreed to pay effectively for it's independance, why would France give them the money back

turgon

rigumagoo wrote: »

I always lol at the state the Zimbabweans have made of their country.

Thats statement is more than a tad bit ignorant, imo. Just because comrade Robert was leader when he messed up the place doesnt make it everyone elses fault. We can be pretty confident that the mess of this state is not the cause of all of the "Zimbabweans", mainly a group of terrorist scumbags who expended other peoples quality of living for the benefit of their own.

ChocolateSauce

Instead of giving them handouts we should treat them fairly in trade matters. Besides, all the people who colonised them are long dead, why should we have to pay for what they did? It is long established in common law that a son cannot be held accountable for the crimes of his father.

edanto

Bubs101 wrote: »

Haiti agreed to pay effectively for it's independance,

So a group of slaves that overthrow their owners should rightfully have compensated the government of those owners ( with many of those owners in government).

Is that your opinion?

What use an apology for slavery (not that I've ever heard of a big fuss made in the same way that the Australian govt apologised to the Abos for terra nulis etc) if it's not backed up with an action with a cost?

It's imperative in law that a son is not responsible for his fathers actions and we have felt cruel internment here recently and know injustice. But that principle is separate to the ability to acknowledge wrongs of the past and attempt to right them before it all blows up in our faces.

Imagine if the poor of this world knew the big picture we know and had the means to respond collectively. We discuss this blithely on the web while more than half the people in the world have never made a phone call.

Though if anyone wants to join discussions like this in the real world - the charity I work with has something cool starting soon.