Stiglitz: abolish the IMF

Louis Proyect lnp3 at
Sun Aug 18 08:23:37 MDT 2002

(This is my response to a 8/14 Stiglitz op-ed piece in the NY Times that 
urged a more nuanced approach toward Brazil than the one being prepared 
by the Bush administration, which I originally posted to pen-l. The 
op-ed piece is at: At first I was 
impressed with Stiglitz's interview, but my old curmudgeonly friends and 
comrades Mark and Henry have lifted the scales from my eyes.)

Joseph Stiglitz:
 >In recent years, Brazil has created a vibrant democracy with a strong
 >economy. Differences of opinion exist, but on Brazil's key issues a broad
 >consensus prevails, one that includes all the major contenders in the
 >country's presidential election in October.

A reference to Lula's shift to the right.

 >There is agreement, for instance, on sound fiscal and monetary policies:
 >no one wants to return to the hyperinflation of earlier decades. Brazil's
 >monetary policy has been managed extraordinarily well by Arminio Fraga,
 >president of the central bank, and the analytic resources of his staff
 >match those of central banks in the highly developed countries.

Fraga ran hedge funds for George Soros. Both Soros (in yesterday's FT) and
Stiglitz here are offering a dubious alternative to the IMF. Soros proposes
that "the central banks of developed countries should open their discount
windows for Brazilian government debt." By doing this, "Commercial banks
would reinstate their credit lines and export-led growth could resume,
especially if the US completely rescinded its steel tariffs" and "the
crisis would dissolve into thin air." In fact, the crisis of Latin America
is rooted in export-led growth, but one would not expect somebody like
Stiglitz or Soros to admit that.

 >There is also agreement that, while markets are at the center of a
 >successful economy, there is an important role for the state. For 
 >Brazil's government managed one of the most successful privatizations of

This is complete horseshit. Brazilian telecommunications are going through
the same exact death-agony as the American companies and for obvious
reasons. The 4/17/2002 FT reported:

"Many have come to suspect that they bid too much during Brazilian
privatisations. They contracted large dollar-denominated debts shortly
before a crippling currency devaluation. Finally, initial market
projections proved far too optimistic: even though the number of telephone
users has increased dramatically, revenue has often not been sufficient to
cover costs.  As a result, more than 20 companies are now competing in the
Brazilian market, but few are healthy."

 >Brazil may be called an emerging market, but it has first-rate financial,
 >educational and research institutions. In São Paulo, discussions about
 >economics are as sophisticated as in New York. University seminars in Rio
 >are as lively as those in Cambridge, Mass., or Cambridge, England. Brazil
 >produces one of the finest airplanes in the world, so good that
 >competitors in more industrial countries have tried to raise trade
 >barriers against it.

The same thing happened in the 1960s when Brazil tried to jump-start a
computer industry. I wouldn't call it an 'emerging market'. I would call it
a semiperipheral country instead.

 >Brazil has one major weakness: a high level of income inequality. Yet 
 >here, and unlike in many other countries, the problem is recognized. 
 >is consensus across partisan lines that income inequality has to be
 >addressed. All agree education is the key, and the progress that has been
 >made is impressive: 10 years ago, 20 percent of Brazil's school-age
 >children were not attending classes; now only 3 percent don't attend.

I have no idea where Stiglitz gets his statistics. Well, maybe I do.
Probably from the "progressive" World Bank which feeds the annual UN Human
Development Report that also appears to err on the optimistic side. Does
Stiglitz take into account all the homeless children in Brazil, the
hemisphere's largest per capita?

 >>In a judgment which stunned Brazilian human-rights workers, a court
yesterday acquitted three men, including two police officers, of the 1993
massacre of eight children outside Rio de Janeiro's Candelaria cathedral.
The defendants were suspected of acting as "hit men" for shopkeepers who
accused the children of shoplifting and "sullying the neighbourhood".<<
(The Independent, December 11, 1996)

 >Similarly, landless farmers present a grave economic and social problem,
 >but there is agreement among the left and right about the need for land
 >reform. Already there is a reform program supported by the World Bank, 
 >it will surely continue. Brazil has likewise faced the AIDS epidemic with
 >resolve. What the government has already done puts it in the global
 >forefront; it has gotten drug companies to allow Brazilian firms to
 >manufacture the critical drugs and provide them to the suffering at
 >relatively low prices.

More horseshit from Stiglitz. There is a radical land reform in Brazil that
is led by Daniel Correia, who proposes that idle land be ceded to landless
farmers. According to the Washington Post, "His group claims to have
enabled 200,000 landless families to settle on 17.5 million acres of idle
land in Brazil through dramatic land grabs and standoffs with police and
landowners. Correia said that 132 farm workers have been killed in the past
three years by gunmen hired by land owners or by militias -- or sometimes
by the military police." (4/24/1998). To undercut this movement, the World
Bank proposed an alternative which would provide $150 million for the
purchase of land by the same target population. In contrast to the 200,000
families helped by the MST, the World Bank program only affected 3,000
families. Referring to the World Bank, Correia said, "What this does is
hide the real problem of agrarian reform behind a real estate system."

 >In short, Brazil has carved out a path for itself that is not based on
 >ideology or simplistic economics. Successfully charting its own course,
 >Brazil has created a broad consensus behind a balanced and democratic
 >market economy.

Not based on ideology? Gimme a fuckin' break. It is called neoliberalism.
The rest of the article consists of empty posturing against the IMF that
doesn't even deserve a reply.

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