Cautious welcome to the World Bank's rejection of old orthodoxies

The one-size-fits-all development strategy is dead, says Robert Zoellick. But will the World Bank therefore be run differently? - asks The Guardian newspaper in its PovertyMatters Blog [link]:

The World Bank provided one of the three pillars of the Washington consensus. Along with the International Monetary Fund (IMF) and the US Treasury, it was the source of an economic orthodoxy exported, often ruthlessly, from America to the rest of the world.

Put simply, the Washington consensus provided a one-size-fits-all solution to the problems of development. Countries were told to privatise and to liberalise, to slim down the size of the state, bear down on inflation, reduce their budget deficits and concentrate on exports. "We know what works", the advocates of the consensus said. "Free markets work."

So it was fascinating yesterday to find the World Bank's president, Robert Zoellick (pictured), acting as the gravedigger for the once-all powerful dogma. Urging a rethink of development economics, Zoellick said in a speech in Georgetown: "This is no longer about the Washington consensus. One cannot have a consensus about political economy from one city applying to all. This is about experience regarding what is working – in New Delhi, in Sao Paolo, in Beijing, in Cairo, and Accra. Out of experience may come consensus. But only if it is firmly grounded – and broadly owned."

Some might say this is simply bowing to the inevitable, since one big casualty of the crisis has been the economics profession, with its over-elaborate mathematical models and its messianic belief in the invisible hand of the price mechanism. But, as Zoellick rightly noted, even before the crisis broke there was a questioning of the orthodoxy and a sense that development economics needed to be rethought.

Critics such as the Cambridge economist Ha-Joon Chang said that no country in history had ever based a successful development strategy on the free-trade model: all protected their fledgling industries. It was also noted that the countries most successful in riding out the economic storm, India and China, were those that had defied the Washington consensus and kept controls on capital flows in place.

There is, though, a bit more to it than that. The rapid growth of the bigger emerging nations – China, India and Brazil in particular – has given them added clout on the world stage. The first manifestation of this was at the World Trade Organisation, where it is no longer possible for the US and the European Union to cook up a private deal and then present it to the rest of the world on a take-it-or-leave-it basis.

Now the developing world wants a bigger say in the running of the World Bank and the IMF. Change to the anachronistic governing structure – which reflects the world as it was in 1944 rather than as it is in 2010 – is happening, even if at a somewhat glacial pace. Developing countries are also reluctant to see the World Bank take charge of a new fund that will help poorer nations adapt to climate change, and want it to be run out of the United Nations instead. So when Zoellick says, as he did yesterday, that a multi-polar economy requires multi-polar knowledge, a cynic might say he was trying to ingratiate himself with the policy makers in Beijing and New Delhi.

There was a sense of genuine humility in Zoellick's speech. "We need to democratise and demystify development economics, recognising that we do not have a monopoly on the answers. 

"We need to throw open the doors, recognising that others can find and create their own solutions. And this open research revolution is underway. We need to recognise that development knowledge is no longer the sole province of the researcher, the scholar, or the ivory tower."

All absolutely true, and very welcome. Talk, of course, is cheap. The real test is whether Zoellick's openness to new ideas makes a difference to how the World Bank is run and how it acts.

Important news for our current understanding of how the World Bank operates in the present-day world—vital insights for World Economic Governance in Unit 3D, particularly in regard to criticisms that have been made of the past approach to economic development and governance by the World Bank!

Economist - Reform in Saudi Arabia: At a snail's pace

Saudis have gained a bit more freedom but still await fundamental change


http://www.economist.com/node/17149062

A recent report on political reform in Saudi Arabia by Human Rights Watch, a New York-based lobby group, argues that although gradual changes are welcome, unless they are properly institutionalised the kingdom risks sliding backwards again, as it has done many times before. “Newly gained freedoms are, for the most part, neither extensive nor firmly grounded,” the report concludes. “The limited reform that has taken place suggests the elite is still floating trial balloons, undecided about the type of government and society it wants to steer towards.”

On some specific human-rights issues, the report praises the kingdom’s progress: reform of the justice system, women’s rights and freedom of expression. Yet it notes with concern that, whereas legal reform is one of the areas where changes are under way, new courts have yet to materialise, and new, transparent procedures have yet to be put into practice. Greater freedom of speech is not codified, and so remains subject to arbitrary intervention by the state. Earlier this year, a newspaper editor made the mistake of printing a blunt critique of puritan religious beliefs, and was summarily fired. As for women’s rights, an official loosening of the ban against the mixing of the sexes in public places has not been widely implemented. The same goes for an ostensible liberalisation of rules that require women to have a male “guardian”. Women are still forbidden to drive.

As for other issues, the report discerns no real progress either in ending religious discrimination against the Shia minority or in improving the position of Saudi Arabia’s estimated 8m immigrant labourers. Gestures of tolerance to the Shia by the king himself have not been matched by a relaxation of restrictions on Shia worship. Shia dissidents still face harsh, systematic repression. Most foreign workers lack basic rights and, unlike other Gulf countries, Saudi Arabia has taken no steps to abolish the onerous kafala or sponsorship system, whereby Saudi employers take possession of expatriates’ passports, and can deny them the right to travel.

And there remains one big subject that the report leaves aside. Saudis have heard barely a whisper of one day setting the pace of change themselves, by winning the right to vote in elections.

CFR Backgrounder: NAFTA

The US think tank Council on Foreign Relations features a useful 'backgrounder' article on its website summarising their take on "The Economic Impact of NAFTA" (the North American Free Trade Agreement). Last updated on 7 July last year (2009), the article is highly informative and gives equal time to Canadian and Mexican perspectives.... Not just the American viewpoint!

http://www.cfr.org/publication/15790/naftas_economic_impact.html

More importantly, the article finishes with a brief discussion of the future of NAFTA, imporatnt for our understanding of future regionalisation worldwide.... Take a look! All in all, a very useful resource for your research on world economic governance and background knowledge of key institutions.

China's one-child policy - success or failure?

BBC News Online has published a useful article regarding the success - or otherwise - of China's "one-child only" policy:

http://www.bbc.co.uk/news/world-asia-pacific-11404623

Interestingly, the article cites evidence that China's population growth had actually started to slow well before the implementation of the controversial approach to multiple births in the early 1980s.

Overall, the estimate is that the one-child policy might have prevented 400 million births—not insignificant when it is considered that even now China has a population of 1.3 billion. But at what cost to the country as a whole? One trend that could damage China's future aspirations to rival America as an economic superpower now lies in its rapidly aging population, with too few young people to 'look after' the old.

An earlier BBC article points out that the preference for male children engendered by the policy is rapidly leading to a major demographic imbalance, with up to 24 million Chinese men unable to find a spouse by 2020:

http://news.bbc.co.uk/1/hi/world/asia-pacific/8451289.stm

Tea with the Economist: Richard Branson on Climate Change

The latest in a series of video interviews, Tea With The Economist presents Richard Branson, the UK entrepreneur, discussing the carbon war room, how to battle climate change and the clean-energy revolution ahead:

Economist: Meeting Targets - Millennium Development Goals

From The Economist Daily Chart today:

September 22nd and world leaders wrap up a three-day UN-sponsored summit in New York to discuss progress towards the Millennium Development Goals. These are broad development targets that were set at a similar meeting ten years ago. Most of the goals involved reductions by 2015 from 1990 levels, and there has indeed been progress towards them, at least on a global scale. But what happens globally can be dominated by what happens in one or two countries. For example, in 1990, 62% of the world’s poor people lived in just two countries, China and India. A dramatic fall in China’s poverty rate, from 60% to 16%, has therefore had a big impact on global poverty, which seems set to meet its 2015 target. But that is small comfort to the poor in many other countries where poverty has barely budged. Goals such as those involving primary enrolment and reductions in child mortality are unlikely to be met, though some, such as access to clean drinking water, are likely to be exceeded.

China embraces environment challenge, US ignores it...

... or at least that's the opinion of respected commentator and regular New York Times Op-Ed contributor, Thomas L. Friedman:

Aren't We Clever? ("while America’s Republicans turned “climate change” into a four-letter word — J-O-K-E — China’s Communists also turned it into a four-letter word — J-O-B-S").

In his usual concise style, Friedman outlines China's practical approach to environmental challenges and warns America of the dangers of complacency:

... because runaway pollution in China means wasted lives, air, water, ecosystems and money — and wasted money means fewer jobs and more political instability — China’s leaders would never go a year (like we will) without energy legislation mandating new ways to do more with less. It’s a three-for-one shot for them. By becoming more energy efficient per unit of G.D.P., China saves money, takes the lead in the next great global industry and earns credit with the world for mitigating climate change.

A useful opinion piece: read it in full!

China Increases Its Global Reach

An interesting article from the Guardian newspaper, describing Chinese efforts to expand their global reach with regard to trade and access to resources:

Brazil's huge new port highlights China's drive into South America (15/09/2010)

The article outlines investments designed to guarantee Chinese access to soy, oil and other badly needed resources. Discussion is made of China's potential rise to rival the USA as an economic superpower.

Nine years ago today, Tuesday September 11th 2001, nineteen terrorists slammed three hijacked airliners into New York's World Trade Center and Washington DC's Pentagon building—a fourth hijacked airliner was brought down by its passengers before it reached the terrorists' target.

Produced in 2007, 102 Minutes That Changed America is a compelling documentary of the events that morning in New York, composed largely of eyewitness footage captured by the public and re-played virtually in 'real time'. Courtesy of one member, YouTube currently hosts the documentary (albeit in approx. 10 minute segments).

View with discretion—although not gratuitous, several scenes are of a disturbing nature—but definitely do view it, as witness to the largest act of terrorism perpetrated against the United States and as (one of) the defining events of the new century:



For ease of access, the remaining segments can be linked to via the following user page: http://www.youtube.com/user/zinkt#g/u

UN peacekeepers 'failed' DR Congo rape victims

BBC News Online has a report summarising the shocking findings that UN peacekeepers did little or nothing to prevent the mass rape of civilians by rebel troops in the Democratic Republic of the Congo:

http://www.bbc.co.uk/news/world-africa-11224656

The BBC's Thomas Hubert, in Goma, said the Congolese government was pleased to see the UN shoulder some of the responsibility for failing to stop human rights abuses, but disappointed that there was no stronger commitment to tackle rebel groups.

Government spokesman Lamert Mende called on the UN to support its national army more directly against the militias.

He urged peacekeepers to "do the dirty work" and "move to the front".

 An important and recent example of the difficult line UN peacekeepers have to tread...

Mexico's drug wars: interactive map (Guardian)

The Guardian has published a useful resource—an interactive map—for those interested in the Mexican Drug War:

Soon after taking office in December 2006, President Felipe Calderón launched a military offensive against Mexico's drug cartels. Between then and the end of July 2010, 28,353 people were killed in fighting between state forces and the traffickers, and in turf battles between rival criminal groups.

Assessing America's 'imperial adventure' in Iraq

As the last US combat units withdraw from Iraq, the BBC's World Affairs Editor has supplied a useful overview of America's experience in Iraq since 2003:

Assessing America's 'imperial adventure' in Iraq

Very interesting reading.

UPDATE: Simpson has also posted a video summary of his report.

The Big Picture: Afghanistan, August, 2010

The Big Picture, a series of photographic essays in large format published online by the Boston Globe newspaper, devotes its latest collection to looking at Afghanistan:

http://www.boston.com/bigpicture/2010/09/afghanistan_august_2010.html

This is not the first time The Big Picture has examined the war-torn country:

• 30 July 2010
• 1 April 2009

All most definitely worth a look, providing insights into the ongoing conflict and attempts to bring it to a halt. A picture speaks a thousand words!

USA Doomed?: What I Learned from Jared Diamond

Foreign Policy's Stephen M. Walt—"a realist in an ideological age"—presents a succinct summary of Jared Diamond's ideas as published in his book Collapse: How Societies Choose to Fail or Succeed and how they might be applied to the present-day USA:

Earlier this summer I mentioned that I was reading Jared Diamond's Collapse: How Societies Choose to Fail or Succeed, and I promised to sum up the insights that I had gleaned from it. The book is well-worth reading -- if not quite on a par with his earlier Guns, Germs, and Steel -- and you'll learn an enormous amount about a diverse set of past societies and the range of scientific knowledge (geology, botany, forensic archaeology, etc.) that is enabling us to understand why they prospered and/or declined.  

The core of the book is a series of detailed case studies of societies that collapsed and disappeared because they were unable to adapt to demanding and/or deteriorating environmental, economic, or political conditions. He examines the fate of the Easter Islanders, the Mayans, the Anasazi of the Pacific Southwest, the Norse colonies in Western Greenland (among others), and contrasts them with other societies (e.g., the New Guinea highlanders) who managed to develop enduring modes of life in demanding circumstances. He also considers modern phenomenon such as the Rwandan genocide and China and Australia's environmental problems in light of these earlier examples.

I read the book because I am working on a project exploring why states (and groups and individuals) often find it difficult to "cut their losses" and abandon policies that are clearly not working. This topic is a subset of the larger (and to me, endlessly fascinating) question of why smart and well-educated people can nonetheless make disastrous (and with hindsight, obviously boneheaded) decisions. Diamond's work is also potentially relevant to the perennial debate on American decline: Is it occurring, is it inevitable, and how should we respond?

So what lessons does Diamond draw from his case studies, and what insights might we glean for the conduct of foreign policy? Here are a few thoughts that occurred to me as I finished the book.

First, he argues that sometimes societies fail to anticipate an emerging problem because they lack adequate knowledge or prior experience with the phenomenon at hand. Primitive societies may not have recognized the danger of soil depletion, for example, because they lacked an adequate understanding of basic soil chemistry. A society may also fail to spot trouble if the main problem it is facing recurs only infrequently, because the knowledge of how to detect or deal with the problem may have been forgotten. As he emphasizes, this is especially problematic for primitive societies that lack written records, but historical amnesia can also occur even in highly literate societies like our own. 

By analogy, one could argue that some recent failures in U.S. foreign policy were of this sort. Hardly anybody anticipated that U.S. support for the anti-Soviet mujaheddin in Afghanistan would eventually lead to the formation of virulent anti-American terrorist groups, in part because the U.S. leaders didn't know very much about that part of the world and because public discourse about U.S. policy in the Middle East is filled with gaping holes. Similarly, the people who led us into Iraq in 2003 were remarkably ignorant about the history and basic character of Iraqi society (as well as the actual nature of Saddam's regime). To make matters worse, the U.S. military had forgotten many of the lessons of Vietnam and had to try to relearn them all over again, with only partial success.

Second, societies may fail to detect a growing problem if their leaders are too far removed from the source of the trouble. Diamond refers to this as the problem of "distant managers," and it may explain why U.S. policymakers often make decisions that seem foolish in hindsight. As I've noted here before, one problem facing U.S. foreign policymakers is the sheer number and scope of the problems they are trying to address, which inevitably forces them to rely on reports from distant subordinates and to address issues that they cannot be expected to understand very well. Barack Obama doesn't get to spend the next few years learning Pashto and immersing himself in the details of Afghan history and culture; instead, he has to make decisions based on what he is being told by people on the ground (who may or may not know more than he does). Unfortunately, the latter have obvious reasons to tell an upbeat story, if only to make their own efforts look good. If things are going badly, therefore, the people at the top back in Washington may be the last to know. 


Third, serious problems may go undetected when a long-term negative trend is masked by large short-term fluctuations. Climate change is the classic illustration here: there are lots of short-term fluctuations in atmospheric temperature (daily, seasonally, annually and over eons), which allows climate change skeptics to seize upon any unusual cold snap as "evidence" that greenhouse gases are of no concern. 

Similarly, it's easy to find short-term signs of American primacy that may be masking adverse long-term trends. Optimists can point to U.S. military predominance and the fact that the American economy is still the world's largest, or to the number of patents and Nobel Prizes that U.S. scientists continue to win. But just as the British Empire reached its greatest territorial expanse after World War I (when its actual power was decidedly on the wane), these positive features may be largely a product of past investments (and good fortune) and focusing on them could lead us to miss the eroding foundations of American power.

A fourth source of foolish decisions is the well-known tendency for individuals to act in ways that are in their own selfish interest but not in the interest of the society as a whole. The "tragedy of the commons" is a classic illustration of this problem, but one sees the same basic dynamic whenever a narrow interest group's preferences are allowed to trump the broader national interest. Tariffs to protect particular industries or foreign policies designed to appease a particular domestic constituency are obvious cases in point.

Ironically, these problems may be especially acute in today's market-oriented democracies. We like to think that open societies foster a well-functioning "marketplace of ideas," and that the clash of different views will weed out foolish notions and ensure that problems get identified and addressed in a timely fashion. Sometimes that's probably true, but when well-funded special interests can readily pollute the national mind, intellectual market failure is the more likely result. After all, it is often easier and cheaper to invent self-serving lies and distortions than it is to ferret out the truth, and there are plenty of people (and organizations) for whom truth-telling is anathema and self-serving political propaganda is the norm. When professional falsifiers are more numerous, better-funded, and louder than truth-tellers, society will get dumber over time and will end up repeating the same blunders.

Fifth, even when a state or society recognizes that it is in trouble, Diamond identifies a number of pathologies that make it harder for them to adapt and survive. Political divisions may make it impossible to take timely action even when everyone realizes that something ought to be done (think gridlock in Congress), and key leaders may be prone to either "groupthink" or various forms of psychological denial. And the bad news here is that no one has ever devised an effective and universally reliable antidote to these problems.

Moreover, if a group's identity is based on certain cherished values or beliefs, it may be hard to abandon them even when survival is at stake. Diamond suggests that the Norse colonies in Greenland may have disappeared because the Norse were unwilling to abandon certain traditional practices and imitate the local Inuits (e.g., by adopting seal hunting via kayaks), and it is easy to think of contemporary analogues to this sort of cultural rigidity. Military organizations often find it hard to abandon familiar doctrines and procedures, and states that are strongly committed to particular territorial objectives often find it nearly impossible to rethink these commitments. Look how long it took the French to leave Algeria, or consider the attachment to Kosovo that is central to Serbian nationalist thinking, and how it led them into a costly (and probably unnecessary) war in 1999.
To sum up (in Diamond's words):

Human societies and smaller groups make disastrous decisions for a whole sequence of reasons: failure to anticipate a problem, failure to perceive it once it has arisen, failure to attempt to solve it after it has been perceived, and failure to succeed in attempts to solve it."

That last point is worth highlighting too. Even when states do figure out that they're in trouble and get serious about trying to address the problem, they may still fail because a ready and affordable fix is not available. Given their remarkably fortunate history, Americans tend to think that any problem can be fixed if we just try hard enough. That was never true in the past and it isn't true today, and the real challenge remains learning how to distinguish between those situations where extra effort is likely to pay off and those where cutting one's losses makes a lot more sense.

Economist Videographic: Asia's Growing Economic Power

The Economist earlier this year published a videographic outlining Asia's growing economic power, with implications for rival regions and superpowers. A balanced view: "Asia is regaining the economic dominance it enjoyed a millennium ago - but it still has some way to go...":

Economist Videographic: China's Territorial Claims

The Economist today published a videographic exploration of China's territorial claims, a prime resource in understanding the larger ambitions of a rising superpower and apposite on the concept of sovereignty:

Extremism: the loser's revenge

Exploring the causes of political or religious extremism, many commentators have pinpointed psychological problems that recur with uncanny frequency amongst those recruited to terrorist organisations around the world.

Ian Buruma published an article in the Guardian several years ago examining the ways in which extremism may form the focus of "the loser's revenge":

http://www.guardian.co.uk/world/2006/feb/25/terrorism.comment

Much of this article was inspired by an earlier 2005 article by Hans Magnus Enzensberger, orginally published in Der Spiegel, entitled "The Radical Loser".

Economist: China and India - a Himalayan Rivalry

The Economist today published a key article detailing the rise of two potential rival superpowers in Asia: China and India. The article gives close attention to the accompanying rise in tension—not least over outstanding sovereign territory claims—but also gives some hope for the future.

The Leader in The Economist characterises India-China rivalry as the "Contest of the Century". Both articles well worth a read!

CFR - Slideshow: Environmental Disasters

The Council on Foreign Relations has today published an evocative slideshow (with rich textual annotation) of 'iconic' environmental disasters from around the globe:

http://www.cfr.org/publication/22744/slideshow.html

The website provides a convenient introduction to this useful resource:

The Gulf of Mexico oil spill involving Britain's BP marks the latest instance of an industrial disaster pitting companies from one country against citizens and governments of another. This slideshow provides a chronology of ten major instances in which multinational corporations were involved in industrial incidents, and their legal and regulatory aftermath.

Well worth reading as background to studies of the Environment as a Global Political Issue (Unit 4)...

Mapping US drone and Islamic militant attacks in Pakistan

BBC News Online has today published an excellent interactive feature on the American use of drones in the fight against Islamist militants in north-western Pakistan:

http://www.bbc.co.uk/news/world-south-asia-10648909

The feature also includes tabbed articles entitled "Fact File: Drones", "Secret War" and "Drone Pilot" (profiling a remote drone operator).

This interactive article should prove extremely useful in understanding one current aspect of the changing nature of warfare (part of the Unit 4 syllabus requirements!)