Nobel Laureate Stiglitz On Third World Economies
Better to Be A Cow

S.M.Jaffar
"It appears that it is better to be a cow in Europe
than to be a poor person in a developing country while
the average European cow gets a subsidy of $2 a day,"
said Joseph Stiglitz in his new book, Making
Globalization Work.Further he remarked thar half the
world's population subsisted on less.
Stiglitz won the Nobel Prize in economics
for information theory. He was the top economist
advisor for President Clinton and after that, for the
World Bank. Stiglitz ruffled many at the International
Monetary Fund (IMF), the World Bank and elsewhere with
his controversial opinions.
In his position at the IMF,he met often with
poor-country governments, and in his new book - a
follow-up to "Globalization and Its Discontents" - he
argues their case against the wealthier lands of East
Asia and the West
In Globalization and Its Discontents (2002), Stiglitz
pointed out that despite all the promises of
globalization, the developing nations of the world
didn't seem to be, well, developing. His book is
flavored with a deep distaste for inequality. "Those
who are concerned about inequality see much of it
arising out of luck - the luck of being born with good
genes or rich parents or the luck of buying a piece of
real estate at the right time," he writes. "Those who
are less concerned feel that wealth is a reward for
hard work."
The numbers that Stiglitz cites in the latest book are
staggering: 40% of the world lives in poverty. In
every region of the world outside South Asia, the USA
and the European Union, unemployment increased from
1990 to 2002; and 59% of the world's population lives
in countries where inequality is growing.

The poor countries have too much debt, he says, and it
is largely the fault of the lenders. The debts should
be forgiven, and followed by large increases in
foreign aid. The poor countries got back too little
from trade deals, he says. They should be given free
access to rich-country markets, and the fat countries
should quit subsidising their farmers.According to
Stiglitx "The liberalization of capital markets has
not brought growth: How can one build factories or
create jobs with money that can come in and out of a
country overnight? And it gets worse. Prudential
behavior requires countries to set aside reserves
equal to the amount of short-term lending. So if a
firm in a poor country borrows $100 million at, say,
20 percent interest rates short-term from a bank in
the United States, the government must set aside a
corresponding amount. The reserves are typically held
in U.S. Treasury bills--a safe, liquid asset. In
effect, the country is borrowing $100 million from the
United States and lending $100 million to the United
States. But when it borrows, it pays a high interest
rate, 20 percent; when it lends, it receives a low
interest rate, around 4 percent. This may be great for
the United States, but it can hardly help the
borrowers.

In trade talks, Stiglitz writes, "The job of Western
trade negotiators is to get a better trade deal for
their countries' industries." The U.S. trade
negotiator pushes for intellectual-property rights so
that Americans can get paid for what they invent. At
the same time, Congress blocks poor-country products
with one-sided anti-dumping laws, an outrageous sugar
quota and a ridiculous subsidy to cotton

But Stiglitz is hardly evenhanded. He brushes aside
rich-country anxiety, such as the U.S. trade deficit
with China. He caricatures the views of his opponents,
saying they believe that their undiluted version of
free trade will make everyone better off, when what
they actually believe is that by lowering prices it
will make most people better off. Stiglitz highlights
the flaws of markets, but he is not equally tough on
the deficiencies of government economic policies or
the failures of foreign aid.According to Stiglitz,the
countries which worked with their own efforts
certainly gained from a globalized economy,but those
who solely depended on the mercy of IMF could not show
much improvement." He further says" By contrast, in
the current process of globalization we have a system
of what I call global governance without global
government. International institutions like the World
Trade Organization, the IMF, the World Bank, and
others provide an ad hoc system of global governance,
but it is a far cry from global government and lacks
democratic accountability".

Stiglitz was an official in the last Democratic
administration, and this book might be a source of
ideas in the next one if it leans far enough left. He
criticizes the Kyoto accords on greenhouse gases, not
because they let China and India off the hook, but
because they ignore the effluents of the rich. "By
what right are the developed countries entitled to
pollute more?" he asks.
He proposes a set of green tariffs to offset damage to
the Earth. He has tried out the idea on officials, and
he says they liked it but tended to see it as "the
equivalent, in the trade arena, of declaring nuclear
war." He also proposes a global anti-monopoly
authority.
This book focuses on fair trade, patents, world
resources, the environment, the multinational
corporation, international debt and the global reserve
system.
Stiglitz puts extra emphasis on environmental concerns
and what he calls a "grand experiment" we are
conducting vis-a-vis global warming, "If we had access
to a thousand planets, it might make sense to use one
to conduct such an experiment, and if things turn out
badly -- as I believe this experiment will -- move on
to the next. But we don't have that choice; there
isn't another planet we can move to. We're stuck here
on Earth."
Some of these may seem like impossibly radical ideas
now, but you never know.They may make it possible for
the millions inhabiting the under-developed and the
developing counties to move out of their present state
of poverty and destitution. Books like "Making
Globalization Work" - and it is an intelligent,
feisty, partisan volume - are where such ideas get
their first popular airing.end