Asia
Japan and the Newly Industrialized Countries (NICs) nearby,
such as Korea, did not develop with neo policy. The
Far East Economic Review talks protectionism: "Japan has a
tight lock on agriculture, while Thailand
protects its cement industry, Malaysia shelters cars and the
Philippines has been reluctant to open up to foreign hypermarket
retailers."
Even though neoism has made itself felt, it is not entrenched: in a
poll conducted by management consultant AT Kearney, 80% of top Asian
business executives said IMF solutions for the Asian financial crisis
have failed.
The Asian financial crisis
In April 1997, barely two months before the beginning of the
Asian currency crisis, the Institute of International Finance (IIF), a
Washington based think-tank representing the interests of some 290
global banks had "urged authorities in emerging markets to counter
upward exchange rate pressures where needed...".
Institute of International Finance, Report of
the Multilateral Agencies Group, IIF Annual Report, Washington, 1997.
They had also written a formal letter to the IMF.
Letter addressed by the Managing director of
the Institute of International Finance Mr. Charles Dallara to Mr.
Philip Maystadt, Chairman of the IMF Interim Committee, April 1997,
quoted in Institute of International Finance, 1997 Annual Report,
Washington, 1997.
Indonesia was ordered by the IMF to unpeg its currency barely
three months before its currency collapsed. Even US billionaire Steve
Forbes had to ask: "Did the IMF help precipitate the crisis? This
agency advocates openness and transparency for national economies, yet
it rivals the CIA in cloaking its own operations. Did it, for instance,
have secret conversations with Thailand, advocating the devaluation
that instantly set off the catastrophic chain of events?" (...) Did IMF
prescriptions exacerbate the illness? These countries' moneys were
knocked down to absurdly low levels".
Japan
When the US military occupiers of Japan
introduced democracy, American investors opposed.
"You can imagine what would happen in a
family of children of ten years or less if they were suddenly
told...that they could run the house and their own lives as they
pleased" wrote business lobbyist James Lee Kauffman in 1947.
They also opposed raising labor standards:
"If you have ever seen an American Indian
spending his money shortly after oil has been discovered on his
property you will have some idea of how the Japanese worker is using
the Labor Law."
The US business community predicted that Japan
would be destroyed as workers went "hog wild" . In 1947
business did not have the power it has today, and they were ignored.
( John Roberts, "The `Japan Crowd'
and the Zaibatsu Restoration," The Japan Interpreter, 12, Summer 1979.)
In a major study, 24 leading Japanese
economists reviewed the Ministry of International Trade and Industry
(MITI) and their decision to choose "a system that is rather
similar to the organisation of the industrial bureaucracy in socialist
countries."
Heavy protection, subsidies and tax
concessions, financial controls, and other big government interventions
were used.
MITI determined that "long-term
self-reliance for Japan would be delayed or even undermined by
following its apparent comparative advantage into labour intensive
sectors." In short, they decided not to take advantage of low pay.
This is how Japan was turned from ashes and
bomb craters to a wealthy nation - literally rags to riches.
Fitzgerald, Between, citing
Ryutaro Komiya, et al., Industry Policy of Japan (Tokyo, 1984; Academic
press, 1988). Johnson, National Interest, Fall 1989.
According to economist Michael Hudson, the
destruction of Korea during the Asian economic crisis was a "dress
rehearsal" for the take over of Japan's financial sector by a few rich
Western banks. US politicians including Secretary of State Madeleine
Albright even pressured Japan to rewrite its constitution so that
Americans would be able to own Japanese banks and industries, just like
in Russia.
Secretary of State Madeleine K.
Albright and Japanese Foreign Minister Keizo Obuchi, Joint Press
Conference, Ikura House, Tokyo, July 4, 1998 contained in Official
Press Release, US Department of State, Washington, 7 July, l998.
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Indonesia
Percentage of the population living in
poverty increased from 11% to 40% in 1997 and 1998 during the
"austerity measures". The IMF even had Jakarta, one of the world's most
polluted cities, to suspend ALL environmental programs.
South
Korea
Alice Amsden pointed out that by
American standards land distribution and wages were very equal.
The government works to "get prices
`wrong' in order to stimulate investment and trade," and even uses "price
ceilings, controls on capital flight, and incentives that made
diversification into new industries contingent on performing well in
old ones."
Economist Stephen Smith showed that the
NICs used "activist trade and industrial policies" that distort
the market, prefering "long-run development goals over short-run
comparative advantage."
Now compare Brazil and the East Asian
NICs.
Until 1980, they both developed, both
using "active industrial and export policies" - government
intervention.
But when Brazil listened to the
IMF-World Bank, choosing "trade liberalization over domestic growth
objectives" and turning to the export of cheap goods and raw
materials, the result was disaster.
Amsden, "Diffusion of
Development: the Late-Industrializing Model and Greater East Asia," AEA
Papers and Proceedings, 81.2, May 1991. See particularly her Asia's
Next Giant. Smith, Industrial Policy; citing Hollis Chenery, Sherman
Robinson, and Moises Syrquin, Industrialization and Growth: A
Comparative Study (Oxford, 1986). Brazil, see ch. 7. Comparisons, see
DD, ch. 7.7.
In December 1997 the IMF introduced a
"rescue operation"- including having Korean banks "made more
attractive" with government handouts to western bankers - funded by
borrowing from the same westtern bankers
4,000 workers became unemployed every
day in this tiny country. Unemployment increased from 2.6% to 7.7% in
1998.
Resistence
Strikes and street battles have been
happening regularily. October 2000 has seen over 20,000 protest at an
Asia Europe meeting.
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Thailand
When 56 domestic banks and financial
institutions were closed down on orders of the IMF, unemployment
virtually doubled overnight. The Poverty rate rose from 11% to 15%
during neo 1998.
China
China is a mixed bag. On one hand it is a
goldmine for investors with its slave labor practises. On the other
hand, it completely ignores the neos - it does not even have a
convertible currency! Intellectual property was an alien idea, for
example China is infamous for software piracy. In China people are
"taxed to death" - that is, people are excecuted for tax evation.
While the Chinese government is not as
totalitarian as before, it still has far more government than anywhere
in the west - up to half of China's GDP is produced by state
enterprises, according to the World Bank. (In short, anyone who thinks
the west should follow China is for nationalizing half the economy.)
This half-communist economy has quadrupled its national income over the
last 20 years. Top On Sept 12th 2001,
China joined the WTO. As Radio Netherlands' Beijing correspondent Anne
Meijdam points out: "If you get a ship-full of [subsidized] grain
from America right now it's cheaper than growing your own grain in
China, and that means that approximately 40 million people in the next
couple of years will lose their jobs." Currently tens of millions of
Chinese are unemployed and on minimum-wage pensions while 7 million
have no income at all.
Hong Kong
Hong Kong has been used as an example of
neo success, but according to an expert in the Asian Tiger economies, "to
conclude . . . that Hong Kong is close to a free market economy is
misleading." [Robert Wade, Governing the Market, p. 332]
In Hong Kong the government owned all the
land - BEFORE it became part of communist China!
The government went into the economy many
times (for example, in the 1950s, one of the largest public housing
schemes in history was launched to house about 2 million people).
Can all of the world be like Hong Kong?
First of all, some interesting facts: Like
most of the nations used as examples of neoism, Hong Kong was never a
democracy. It is also a city-state, (Like Singapore) and all cities
grow faster than nations, which have slow-growing rural areas.
Wade notes that "its economic growth
is a function of its service role in a wider regional economy, as
entrepot trader, regional headquarters for multinational companies, and
refuge for nervous money." [Op. Cit., p. 331]. For example, it has
the second largest stock market in Asia.
Translation: Hong Kong has the corporate
bosses, banks and bureacrats - it is the headquarters of Asia. To say
that we can all be like Hong Kong is like saying you can have an
orcestra of conductors, or a movie filled with directors, or an army of
generals, or a lottery where everybody wins.
Even Hong Kong has been hit by the race to
the bottom. By the end of the 1970s, labor costs were rising - that is,
people were finally getting rewarded for their hard work. When China
was opened for investment by Deng Xiaoping in 1978 and investors moved
jobs to the brutal (and profitable) Communist Chinese dictatorship.
However, as soon as another nation can somehow make a worse
dictatorship where workers are pushed even harder, those jobs will
leave China!
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Taiwan
The first extensive study of the U.S. Aid
mission in Taiwan discovered that the U.S. advisers and Chinese
planners, "although versed in Anglo-American economics," ignored them.
The U.S. technical experts in Taiwan chose "to jettison free-market
nostrums from the start and collaborate with Chinese officials" in
developing a "state-centered strategy". Taiwan decided that growth
would "depend upon the active participation of the government in the
economic activities of the island through deliberate plans and its
supervision of their execution" (K.Y. Win, 1953). Meanwhile U.S.
officials were "advertising Taiwan as a private enterprise success
story".
Komiya, R. et al., (1988)
Industry Policy of Japan Tokyo, 1984; Academic press, Cullaher, N.
(1996) "The U.S. and Taiwanese Industrial Policy," Diplomatic History
20.1, Wei-ching Wang, V. (1995-96) "Developing the Information Industry
in Taiwan," Pacific Affairs 68.4, Winter.
As late as 1987 most imports of steel into
Taiwan had to be approved by the nation's big steel maker, China Steel.
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Singapore
For those who describe Singapore as
"economic freedom", I suggest you visit and see for yourself, and to
bring some bubble gum, a game of Molopoly, a squirt gun, and your
latest copy of _The Economist_ with you. Bubble gum is banned by the
Ministry of the Environment, and can result in up to a year in jail.
(You DO have the freedom to chew gum that was never imported,
manufactured, or purchased, however.)
The foreign press doesn't have the
economic freedom to import their publications. In 1993 _The Economist_
was limited to one copy per library - and no others in the entire
nation.
It takes a special breed of fanatic to claim friendship with those who
censor you!
Also banned are: "fire crackers, coins, or
toy currency, pornographic material, guns, or gun shaped products like
cigarette lighters...Prescription drugs you have should be accompanied
with a letter from the doctor stating that they are necessary to you
[sic] health." According to singapore-travel.org.
Spitting and a certain fruit are banned on the (government)
subways. Hot Dog stands are only allowed at regulated locations.
Driving downtown at certain times is taxed. Jaywalking results in fines
up to $50.
The government owns Singapore Airlines, shipyards, banks, and
factories and taxes heavily for the "Central Provident Fund". 10% tips
for waiters etc. are mandatory, much like Europe.
This favorite of right-wing drug-legalization libertarians
also hung two Australian teenagers caught with a gram of drugs after
their plane had an emergency landing.
In fact, I'm probably banned from the nation just for writing
this, which is too bad, because I agree with them on flogging people
who spit at subway stations.
What do neos think of the Asian
economic crisis?
Despite the facts above, neoliberals have
claimed Asia as their own.
In 1995, when the Heritage Foundation
released its "index of economic freedom" 4 of the top 7 countries were
Asian, including Japan and Taiwan.
David Aikman, a journalist for Time, wrote
a book about Asia, saying that Taiwan and Hong Kong where "faithful"
to "American conceptions of free enterprise."
_The Economist_ magazine (see Singapore
above) said that the Asian nations had "the least price-distorting
regimes in the world."
The chief economist of the World Bank's
East Asian desk wrote a book in 1993 claiming Asia as being neoliberal
while a World Bank study concluded that "rapid growth in each
economy was primarily due to...market-friendly economic policies."
Jeffrey Sachs called the East Asian economies "highly market
oriented, with a long period of relatively free trade... and limited
distortions from government regulations".
But when the crisis hit, the neoliberals
decided to rewrite history, just like Stalin and neo-nazi revisionists.
Paul Craig Roberts of Business Week said
that government "industrial policy fostered appalling investment,
banking, and monetary practices".
_The Economist_ said that all along Korea
was run by "civil servants," while Rudi Dornbusch said that in
Korea "statism" was to blame. The op-ed pages of the Wall
Street Journal were the same. Why investors sent billions of dollars
into "appalling" situations was never explained.
At best, Neos are like a con-artist who
pretends to be a friend when you are useful, but stabs you in the back
when you need help. At worst they are Orwellians who rewrite history
like Stalin and neo-nazi revisionists.
Notes:
What everyone can agree on is that The
Asian Tigers have lots of women working, and well funded education.
They also have high savings rates, which we could have if we taxed
high-end luxuries and had less advertising telling us to "buy buy buy".
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