Tuesday, May 29, 2007

I wish I was a coal miner's daughter...

Not really...it's a dirty, dangerous business, but the Economist notes that if energy prices stay as high, coal is likely to be the fastest-growing energy source. America's Energy Information Administration released its annual International Energy Outlook which predicts that the world's energy consmption will increase by 57% between 2004 and 2030.

Bush nominates Goldman Sachs top dog to WB

Today, George Bush nominated a senior exec. at Goldman Sachs to the position of World Bank president. The Bush admin appears to have a natural affinity for Goldman Sachs employees. Robert Zoellick follows public service stints by Henry Paulson and John Bolton. According to this NYTimes article, the WB board is likely to approve Bush's pick--in line with the custom.

Innovations for the global poor

Pretty effing sweet...

Monday, May 28, 2007

*Natural Resources on the Offensive

Siglitz’s chapter 5 discusses the challenges faced by resource-rich developing countries to maximize their natural resource revenues and use them efficiently to the betterment of society. The Dutch Disease phenomenon, named after Holland’s 1970s discovery of oil in the North Sea, occurs when resource-rich countries start earning large amounts of foreign money from their natural resource endowments. When they convert the foreign currency into local currency, the value of the local currency appreciates and their exchange rate rises. This often makes it difficult for national exporters to sell their products, eventually slowing growth and raising unemployment.

Stiglitz argues that the Dutch Disease can be partially avoided by keeping a stabilization fund whereby the money earned from natural resources is not converted into local currency, but is reinvested abroad. In order for the stabilization fund to serve its purpose, it is essential that countries be allowed to use the fund money where appropriate. More important is the need for developing countries to “view their natural resources as their endowment” (150).

Stiglitz focuses his chapter on countries that are more or less victimized by their natural resources and the macro-economic implications and corporate entanglements that accompany them. Nigeria, Sierra Leone, the Congo, Sudan—all (with a qualified exception of Nigeria) are cookie-cutter rogue African states that are struggling to establish a rule of law. Stiglitz gives less analysis to the states that are on offence with their resource endowments. What happens when the resource-rich country happens to be one of the world’s recent superpowers—one that may just feel a tinge of resentment toward the West and its American ringleader? This week’s economist discusses the advantages of resource wealth from a different perspective than Stiglitz—the viewpoint of the power-hungry developed nation, Russia.

Russia has tightened its grip on its oil reserves and has begun to cut deals with neighboring countries like Kazakhstan and Turkmenistan to route their gas exports to Europe via Russia—a situation that threatens Western energy security and independence. Ever the free-market enthusiast, the Economist praises the Kremlin’s superior maneuvering skills and argues that the new plan may not be so devastating for the West. Yes, Europe will grow even more dependent on Russia, but Russian dependence on the European market will simultaneously increase. The magazine calls for a counter-strategy that involves more liberal and liquid European energy markets and a united stance against Russian attempts to divide and conquer.

Russia certainly isn’t the first to play bully with expensive grease, and it won’t be the last. Globalization is upping the ante for stakes in the scarce resource pot, and unless more R&D is dedicated to finding alternative fuel sources, the power structure could tip even more to the whim of resource-rich states. In the meantime, more open diplomacy is needed to maintain favorable and open trade and relations between countries that are increasingly recognizing their place in one world.

Friday, May 18, 2007

Dogged by past and present, Wolfowitz resigns...

Amidst a mountain of pressure from international voices, Wolfowitz stepped down today from a two-year stint as World Bank President. For a man focused on rooting out corruption, giving a leg-up to his girl friend was an ironic strike-out, but many credit Wolfowitz's pre-Bank push for an invasion of Iraq as his first and second strikes.

Thursday, May 10, 2007

Mugabe's Mess

Zimbabwe’s government announced yesterday that it would ration the nation’s electricity supply for households to 4 hours per day (that’s a 20 hour cut for those of us who can’t do math). The decision is the latest blow in Mugabe’s 27-year oppressive regime that has crippled the economy and prompted the highest inflation rates in the world—about 2,200 percent.

Once, one of the richest economies in Africa, Zimbabwe has deteriorated steadily since independence. In 1980, Mugabe came to power and seized control of all white-owned commercial farms (the main source of income in the agriculture-based economy) with the intent to redistribute the land to the black Zimbabweans. The result was sharp falls in production, rampant inflation, and critical food and fuel shortages. World critics generally blame Mugabe’s policies and the land reform act for the shortages while Mugabe blames the West for sabotaging the economy.

Zimbabwe is currently has substantial arrears to both the IMF and the World Bank and they have cut off further financing and debt-relief programs. Its problems, however, are more closely related to the corrupt Mugabe government and its oppressive tactics than to the ‘overborrowing’ or ‘overlending’ problems that Stiglitz discusses in Chapter 8. However, I believe the country’s outstanding debts would certainly fall under the ‘odious debt’ distinction Stiglitz makes for impoverished countries whose debt burden is incurred by a government that was not democratically chosen.

The obvious short-term solution to the problem is regime change, yet this seems increasingly unlikely to happen. The 83 year old Mugabe has recently declared that he’s “running” again for yet another term next March, and though the opposition, Movement for Democratic Change, recently made international headlines with the brutal beating of its leader, it remains severely fragmented and has not yet convinced the people that it can prove a formidable force against Mugabe’s strict political oppression and control.

So when can Zimbabweans devalue their currency and stop shopping for scarce food with heaps of virtually valueless cash? I believe the answer lies across the southern border. South Africa hasn’t helped the situation much by refusing to lead a regional stand against Mugabe’s rule. Its inaction is somewhat ironic given the nation’s avowed leadership as a beacon of democracy and human rights on the continent. Faced with a similar small white elite and a poor black majority, the two countries took vastly different roads. Mbeki’s abandonment of the redistributional model in favor of free-market policies have definitely spurred growth and enlisted South Africa as a noble contender on the global stage (however, see criticism below) while Mugabe’s fermented redistribution and current policy of do-anything-to-stay-in-power have led his once-powerful country into a formidable crisis. The situation in Zimbabwe is having huge negative spill-over affects for the rest of Southern Africa as Zimbabwe is no longer the region’s bread-basket but a destabilizing agent. More than anything, the region needs a bold South Africa to stand up to the Mugabe regime and pressure the country into electing new leadership. Almost as important, it needs to ensure that that leadership is both competent and compassionate in order to reverse the terrible affects of past bad governance.

Thursday, April 26, 2007

Initial thoughts on globalization...are all peas really in the pod?

The cover of Marin Wolf’s book, Why Globalization Works, is intriguing. It’s an illustration of five little world “peas” nestled in the sheath of a green bean. This ‘peas-in-a-pod’ perspective on the global order resonates well with me. It could be interpreted as a ‘we are all citizens of the world so lay down your nuclear weapons and stop polluting’ world view. If the idea is less intense nationalism and a more humanist perspective on what is universally just, than I applaud the idea. My reservations come in when I hear the argument that globalization does not exploit the poor, it helps them. I admit, this may be true in the long run as poor countries can free-ride on the R&D investments and technological innovations of other countries, but there is much evidence (especially in Africa) that globalization has further marginalized the extremely poor and has led to grinding poverty and swelling inequalities within poor countries—how’s that for some powerful clichés?

I have studied South Africa extensively for my Shepherd poverty capstone, and the patterns of globalization there are pretty frightening. South Africa is an interesting case-study because it has made enormous gains in the last decade and a half, and yet it has social problems that are only worsening. Thirteen years after the fall of apartheid and the peaceful transition to democracy, the country is enjoying steady economic growth with a GDP that is nearly as big as those of the 47 sub-Saharan nations combined (2005 WB Country Report). The current president, Thabo Mbeki has somewhat controversially embraced free-market policies while abandoning the Marxist distributional model the ANC had promoted while in exile. As a result, South Africa is the leading economy in Africa and has been a solid model of good governance and democracy, but there is a near-pandemic of poverty, inequality, and unemployment within the country.

A few statistics to mull over…the Human Development Index in South Africa has worsened from 0.73 in 1994 to 0.67 in 2003 and poverty still engulfs 48.5 percent of the nation (21.0 million in 2002) (UNDP 2003 Report). Income inequality has actually increased after the fall of the apartheid government from 0.60 in 1995 to 0.63 in 2001. The richest 20 percent of the country enjoy 64.8 percent of consumption while the poorest 20 percent share only 2.9 percent. The unemployment rate stands at 25.6 percent. South Africa also has one of the highest crime rates in the world and a very high prevalence of AIDS. Without the AIDS pandemic, South Africa’s life expectancy would rise by 19 years.

So forgive me for my skepticism. In my eyes, South Africa represents the nexus between the First and the Third world and despite huge advancements, the living standards for many of the poor have actually declined with increased liberalism. If we ascribe to Thomas Pogge’s ‘do no harm’ philosophy, than as affluent citizens of the world who are benefiting from an institutional world order that harms the poor, we actually have a negative duty to reform these institutional practices. That was me playing devil’s advocate...I actually think globalization can be a helpful tool, but only when controlled effectively. Additional state action must be applied to specifically target those who are negatively affected by globalization. Thus, global citizens have a positive duty to act. In the words of Martha Nussbaum, “Our world is increasingly dominated by a profit motive, as multinational corporations and global markets increasingly leach sovereignty away from national governments. The dominant economic paradigm encourages continued insensitivity to the situation of the world’s poorest people and to the special disadvantages suffered by women.”

I’m writing this before reading any of the assigned literature, and it will be interesting to watch my opinions become informed and evolve. I don’t know whether I’ll look back on this blog and laugh, cringe, or clap, but I do know where I stand now.

Tuesday, April 24, 2007

Premier Post

Considering this is my first blog, it should be interesting...

Fav political website of all time: http://politico.com/