Monitoring Policy Making at the United Nations |
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Global Policy Forum List-Serv
GPF List-Serv
January 17 - 21, 2000Greetings from Global Policy Forum!
Readers expressed keen interest in our postings for the last two weeks on Joseph Stiglitz, outgoing Chief Economist at the World Bank. As we looked further into Mr. Stiglitz' speeches and writings, we discovered an especially interesting presentation on workers' rights at the Industrial Relations Research Association, during the annual meeting of the American Economic Association in Boston. The speech critically analyzed the role of labor in neoclassical economics and called for far greater worker participation in economic and political decision making. Some of the quotes we cited last week are to be found in this paper, which is posted on the World Bank web site.
The speech provides a scholarly and technical account, but readers will find fascinating insights into the tension between the theory of pure market "freedom" and the most elementary human rights. For example, the father of neoclassical economics, Alfred Marshall, discovered to his own surprise in 1920 that labor had some legal peculiarities, among which "A man is not even free to sell himself, he must *rent* himself at a wage." The matter of whether slavery is permissable has not yet been settled in academe, however. Robert Nozick, a Harvard philosophy professor, has wondered "whether a free system will allow [an individual] to sell himself into slavery," concluding: " I believe that it would." An economist from Johns Hopkins University even argued in testimony before the US Congress that the "optimal allocation of resources" could only occur if laws would allow "individuals to sell or mortgage their persons. . . "
The Chief Economist concludes that "the fantasy world of the "idealized" competitive equilibrium model is not only unrealistic . . . it has even been illegal since the abolition of slavery."
Another important Stiglitz essay, "The World Bank at the Millenium," published in The Economics Journal, can also be found on the Chief Economist's page, along with a section called "Joe's Conference Watch" and much else. Since it's quite possible that the Bank will remove these materials soon, we recommend a speedy visit!
In other economic news, the week saw the conversion of the national currency of Ecuador to the US dollar, an extraordinary but not entirely astonishing development, since US dollars serve as parallel currency in many countries. Though rriots soon deposed the Ecuadorian president, the policy has not, to our knowledge, yet been repudiated by the new government. These events reminded us of the unique and at times bizarre role of the dollar in the world's economy.
The United States government vigorously *exports* paper currency, a policy greatly accelerated when the dollar was de-linked from gold in the early 1970's. Presently, the US depends on currency exports as one of its key trading commodities, at a time when the US trade balance is deeper in the red than ever. The US is believed to export more than $10 billion in paper currency each year, an export that costs virtually nothing to produce -- only fancy rag paper, green ink and a bit of time on the press. Some believe that the currency export figure is much higher -- perhaps $20 or $30 billion -- much of which passes from the US Treasury direct to offshore banks and eventually is used for money laundering as well as parallel currency transactions, large and small. Hundred dollar bills are in especially heavy demand.
An article in New York Magazine a while ago told of crates of hundred dollar bills being shipped by jumbo jet to Moscow, in what the article claimed was a weekly haul from Kennedy Airport. The crisp new bills came directly to the waiting aircraft from the Federal Reserve Bank of New York, fresh from the presses of the US Mint. According to the article, the bills quickly find their way into the hands of the Russian mafia and circulate as the principal means of exchange for mafia operations. Some of this currency is re-deposited in banks and some simply circulates on the streets of Moscow as parallel tender.
The New York Times reported on Friday that the US trade deficit in 1999 would probably reach $267 billion, when all the figures are reported, sometime in mid-February. This is $100 billion more than in 1998, itself a record year. Every knowledgeable observer knows that this huge imbalance cannot long persist. In almost any other country, a similar deficit would long ago have provoked a run on the currency, and a stern intervention from the IMF. But the US dollar somehow miraculously defies the law of gravity, like the US stock exchange.
Experts estimate that at least $100 billion in US currency, not to mention dollar-denominated accounts, circulates outside the country. All these dollars serve as an informal global currency, providing liquidity for international trade, as well as grist for the manipulations of arbitrageurs, hedge funds and the like. In all, more than $700 billion in dollars are traded every day in the currency exchange markets. The holders of offshore dollars participate in a grand illusion -- that the US economy is sound and stable and that all will continue as before, in spite of the ballooning trade deficit, the unprecedented levels of personal indebtedness of US households, and other ominous signs. Now, as Federal Reserve chief Alan Greenspan hikes interest rates, a day of reckoning appears close. When the US stock exchange falters and foreigners begin to doubt the value of their dollar holdings, investors could "head for the exists" as they did in Asia, proving a fatal weakness of the deregulated global financial system.
One of the few "bright spots" in the merchandise trade account of the United States is the burgeoning sales of weapons, large and small. A few days ago, outgoing IMF chief Michel Camdessus was in Libreville, at a meeting of African leaders on the question of poverty. Though we often disagree with Mr. Camdessus, this time, he seemed to be on target. He called attention to the terrible burden of war and of arms spending and he pointed out that 90% of the arms sold in Africa come from the G-8 countries. The United States alone accounts for a very large proportion of the total. Camdessus called on the G-8 to cut exports "not only of heavy weaponry but also of the light arms which are carried by children in the front line of the conflicts." We have posted this week an article on the Camdessus meeting and also linked to an important report by William Hartung of the World Policy Institute on the arms trade in Africa.
Arms not only provide instruments of killing, but their sale fosters secrecy, bribery and corruption of public officials, undermining governments throughout the continent and the world. This week, one of our postings offers a report by Transparency International that shows the special role of the arms trade in fostering corruption.
Africa has been at the center of attention at the UN this week, as Ambassador Richard Holbrooke of the United States, President of the Security Council, has been holding a series of open meetings on Africa. The series began with US Vice President Al Gore's session on AIDs on Monday the 10th. On Monday the 17th, the Council met in open session on Angola and the following day Nelson Mandela came to speak about his new role as mediator in Burundi. Next week there will be two more big open meetings which will include many African political leaders.
Opinions on the Holbrooke series have been mixed. Many delegates and NGOs have viewed these meetings as a publicity stunt, a waste of the Council's time, and a bid for African support in the voting to change the US dues assessment. But we are inclined to look on the positive side and to welcome this dramatic break with recent Council practice of secrecy and private diplomacy. After years of resistance to change by all the Council's permanent members, the US delegate has now held a record number of open meetings during his presidency. In a period when Washington has generally played down its role in the UN, the ambassador has very publicly called attention to the Security Council and its importance, even injecting it visibly into the US presidential campaign.
By inviting senior officials from Africa to address the Council in open meetings, a procedure forseen in the Charter, it is now possible that informal Arria Formula briefings can be used as originally intended, for interaction with representatives of civil society. Finally, by inviting many people to sit as guests and observers in the gallery (it has been full for most sessions), and ordering the UN to fix the broken gallery ear pieces needed to hear translations, Mr. Holbrooke has once again made the Council a public place, accessible to NGOs and citizens. These are powerful and welcome precedents. There can be no doubt that this is a Council presidency that will long be remembered.
On Thursday, in a break from Africa, US Senator Jesse Helms spoke to the Council, while sitting in the chair of the presidency. Much has already been said about this "historic" appearance, in which Helms lectured the Council on the shortcomings of the UN and Council members vigorously replied. We have posted the full text of the event on the site this week. The spirited ripostes of the ambassadors provided a spontaneous and inspired defense of international law in the Council's chamber.
As the Council again embarks on a number of new peacekeeping operations, peacekeeping is again at the top of the UN's agenda. GPF has responded by greatly enlarging our web site offerings on this topic. Christian Kaufholz of Columbia University has assumed this responsibility and the GPF site now hosts a unique archive of materials on past and present peacekeeping operations, as well as many proposals for future innovation and reform. Our thanks and congratulations to Christian for these excellent results. The project continues.
We end with a note of sadness at the death of our friend Michael McCoy, one of the most active NGO leaders at the United Nations. Michael was founding co-chair of the NGO Network on Sustainable Development and he was a good friend of NGO activists all over the world. He knew the UN system well and used it effectively to promote many good causes, especially in the environmental field. He died at the age of 47. We will miss him.
