Archive for the ‘Development’ Category

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One more chapter in the biggest environmental justice case in history

February 15, 2011

Happy Valentine’s Day: a court in Lago Agrio, Ecuador, has ordered Chevron to pay $9 billion in compensation for damages wrought by Texaco during its time operating in a section of the Ecuadorian jungle about the size of Rhode Island. The case was filed in 1993 and surely won’t end with this ruling, as Chevron has already vowed to appeal. There are further legal complications given that Chevron has no assets in Ecuador and thus any reparations must be enforced by U.S. courts. Still, this is a pretty major step in the right direction.

Want more background on the case? I have two books to recommend: one academic and one photographic. And, of course, an excellent documentary.

Aside from that stuff, my uber-glib summary is: think the Erin Brockovich story, only with worse environmental degradation, worse health impacts, a much more complex legal environment thanks to cross-border issues, and – most importantly – vastly bigger power imbalances between the plaintiffs and defendant.

ADDENDUM: Here’s a breakdown of what the damages are supposed to go towards, courtesy of the Wall Street Journal:

  • $5.39 billion — To restore polluted soil
  • $1.4 billion — To create a health system for the community
  • $800 million — To treat sick people affected by pollution
  • $600 million — To restore polluted sources of water
  • $200 million — To recover native species
  • $150 million — To transport water from other sites to supply the community
  • $100 million — To create a community cultural reconstruction program
  • Total: $8.64 billion

Plus, I believe, a 10% legal fee that is supposed to go mostly to the Frente de Defensa de la Amazonía, the Ecuadorian organization that has taken the lead on representing the plaintiffs (and also helping organize them, and publicize the case domestically and internationally).

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The caring neoliberal

February 4, 2011

A while back, Jonas brought to my attention a couple posts by Ryan Avent and Mike Konczal making the case that neoliberals are really more concerned about the poor than progressives are – it’s just that they care about the global poor and not just the domestic poor. This is a pretty potent argument, and certainly one that’s well-supported by almost any introductory macroeconomics textbook available (I say almost because there is at least one exception).

Before going any further I should acknowledge that Avent’s post in particular is actually mostly about what leftists should and shouldn’t think about organized labor. Obviously, I have thoughts on that too, but that’s not the aspect of this conversation I want to talk about here. What I want to talk about is this, from Avent:

…I think that current neoliberals think of themselves as more honestly egalitarian than traditional leftists, based on their international view of developments in human welfare. The past few decades have witnessed an unprecedented reduction in global poverty thanks to liberal reforms in China and India. Countries containing twice the population of the currently developed world are now hurtling toward middle-income status, thanks to trade, thanks to deregulation, and thanks to the introduction of market reforms.

And Konczal:

…there is an argument that neoliberals have a claim on really being concerned about labor, because they care about labor on a global scale, that the nation-state where you happen to be born isn’t a suitable location to determine boundaries for justice.

The key to the argument, really, is that last sentence of the quote from Avent. For neoliberals to claim to be “more concerned” about the poor than progressives requires a belief that neoliberal policies – for simplicity, let’s lump into that potent phrase the Washington Consensus of liberalization, privatization, and deregulation, tempered very slightly by the kind of softness for human development indicators espoused by the World Bank of recent history – actually make the world’s poor better off.

That’s the major sticking point. It’s not that progressives only care about the domestic poor and would take improved outcomes for the American working class at the expense of the working class in the global South. (That might describe a particular kind of parochial liberal or working-class perspective, but not a truly progressive one, in my opinion.) It’s that progressives don’t buy that the basic package of policies advocated by neoliberals are actually doing anything to benefit the world’s poor – or, at least, that they’re not doing enough. It’s an argument about policy, not an argument about who cares about the global working class more.

Avent’s argument takes as self-evident that it’s trade, deregulation, markets, etc etc that have caused the rise in living standards in, for example, China and India. But there’s certainly an argument to be made that this is hideously simplified and potentially misleading, if not outright wrong. China and India are growing, sure; trade in some form has a lot to do with it, sure. But are China and India growing in particularly equitable ways, ways that improve standards of living for a majority of their populations? Are the specific kinds of trade and market policies advocated by neoliberals the ones that have accounted for that growth? Are these countries growing and improving because of neoliberal policies, despite neoliberal policies, or something in between?

I confess to knowing less than I should about China and India. But I do know that neoliberal policies have not improved the situations of most developing countries from the end of World War II until today. It’s a tired but still relevant argument that those countries that have grown the most have done so partly because at some point in their history they rejected neoliberal doctrine and the fetish for a quick transition to free markets and an open economy. Is the progressive who criticizes neoliberals by citing these historical (and current!) examples just trying to make sure the U.S. working class gets its fair share of the pie? I don’t think so. Do neoliberals really care about the global working class? I don’t know. What I do know is that their policy prescriptions have historically been a pretty terrible way of expressing whatever care and concern they might feel.

Flying Whale

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Dani Rodrik’s new world order

January 13, 2011

Heterodox Harvard economist Dani Rodrik recently posted a list of seven New Rules for the Global Economy. I generally find Rodrik pretty compelling, but this list is particularly fantastic. The whole thing is well worth reading; here are a few of my reactions to individual points, including a rather large open question.

First:

Markets must be deeply embedded in systems of governance. The idea that markets are self-regulating received a mortal blow in the recent financial crisis and should be buried once and for all.

A crucial piece of any necessary reform of the global economy. I continue to believe that reform-minded activists missed a huge opportunity when the financial crisis hit to push for broad changes in the global economy and in the ideological domination of markets in the public consciousness. The moment hasn’t entirely passed, though, and having high-profile intellectuals like Rodrik continue to cite it as an impetus for reform is enormously helpful.

For the foreseeable future, democratic governance is likely to be organized largely within national political communities. The nation state lives, if not entirely well, and remains essentially the only game in town.

Neocons and liberal internationalists alike share a certain “one world” rhetoric that sounds great but has profound implications for the way policy is made. I like Rodrik’s formulation of this idea, in that he doesn’t claim that independent nation-states are necessarily the best form of governance, but he strongly advocates that since they’re not going anywhere, we should respect their sovereignty. That’s a statement that sounds common-sensical but has far-reaching implications.

Countries have the right to protect their own regulations and institutions [… and] Countries have no right to impose their institutions on others.

And these are some of those far-reaching implications. The first part of this should seem fairly straightforward, I hope, although in today’s political climate it is nevertheless a fairly radical thought. The second part, however, is a bit trickier. Certainly it sounds agreeable, but it also perhaps conflicts with Rodrik’s seventh and final rule:

Non-democratic countries cannot count on the same rights and privileges in the international economic order as democracies.

While Rodrik isn’t arguing for the outright imposition of democratic institutions on countries, he’s certainly arguing for a certain kind of international pressure for democratization, which seems to go against the above rule. Also, there are numerous examples of policies that progressives would consider “good” that involve the imposition of values or the imposition of an anti-institutional value system – for instance, the procurement rules and boycotts used to provide international pressure against the system of apartheid in South Africa, or the junta in Burma. Would Rodrik condemn these policies in the same way he would condemn “trade sanctions or other pressure to alter foreign countries’ labor-market rules, environmen­tal policies, or financial regulations”?

While this is a criticism from a logical standpoint, it may not be one from a normative standpoint – I’d probably agree that there are real differences between imposing values that prioritize global commerce and those that prioritize (for example) democratic process or human rights. But it’s not necessarily a completely straightforward, logically airtight argument to make.

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Kevin Gallagher gets it right

January 7, 2011

It should be no surprise that I agree with Kevin Gallagher (Boston University/Tufts Global Development and Environment Institute), but it’s nice to see that he basically echoes what I’ve been saying over the past few posts about the China/WTO/green energy issue: “The US should not try to beat China down, but should pursue its own green jobs policy and reform the WTO, so the rules allow countries to combat climate change.”

Gallagher does seem to be a bit more optimistic about the WTO than I generally am, as he sees potential room for allowing green-energy subsidies to be exempt from WTO disciplines:

…there may be a window at the WTO for subsidies for alternative energy. Developed countries saw to it that the subsidies agreement at the WTO left room to support research and development, regional inequality and environmental protection. This window closed in 2000, but is under review in the (stalled) round of WTO talks, and could be expanded.

I didn’t know this particular tidbit about the subsidies agreement – very interesting. That said, I don’t really think the ideal course of action is to add more exceptions to misguided WTO rules, since, as they say, the exceptions prove the rule.

What I find most interesting in Gallagher’s piece, though, is this quote he pulls from Barack Obama’s The Audacity of Hope:

“Indeed, countries that have successfully developed under the current international system have at times ignored Washington’s rigid economic prescriptions by protecting nascent industries and engaging in aggressive industrial policies.”

Too bad this passage doesn’t much fit with what Obama’s apparent international economic policy has been thus far.

Flying Whale

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CGD’s nonsensical response to the China clean-energy subsidy case

January 5, 2011

It’s not entirely surprising that the folks at the Center for Global Development are about as appalled at this WTO case on Chinese clean-energy subsidies as I am. Unfortunately, the apparent logic behind David Wheeler’s indignation doesn’t make a whole lot of sense. He starts off nicely: “…it’s clear what we have to do now: Subsidize clean power, exploiting scale and learning economies to drive it to cost parity with fossil power as quickly as possible.” And then, after contrasting the Obama approach to this proposed solution, Wheeler gets nice and outraged towards the end:

Think about it: The Obama administration, having defined climate change as a global emergency, has responded to a massive Chinese drive toward cheap clean technology by demanding that they retreat! Mr. President, by the logic of your own rhetoric this is insane, because we’re out of time.

But then he reels off this killer concluding sentence:

Anything that makes renewable energy cheaper, anywhere in the world, should be welcomed without reservation. For trade in clean power technology that means no restrictions: no tariffs, no quotas, no sanctions, no limits of any kind, from now on.

It doesn’t take a genius to sort out that the WTO case against China is probably legitimate because the sort of policies that Wheeler is agitating for – the sort of policies that China is trying to implement – are likely WTO-illegal trade-distorting subsidies. (Important aside: the solution to this should not be to change these subsidies to conform to WTO rules; the solution should be to change the WTO rules!) These days, “no restrictions” on trade sure as hell means no industrial policy. So which does Wheeler really want: the smart industrial policy to promote clean energy that he seems to push for most of his article, or the ideological purity of “free trade” that CGD so frequently advocates, implicitly and explicitly? It’s got to be one or the other – it can’t be both.

Flying Whale

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The American South as developing country

November 22, 2010

This past Saturday, GOOD put up a nifty infographic (that’s what they do) showing Human Development Index scores by U.S. state. “Does America Have ‘Developing States’?” is the headline, and the brief text asks whether we should think about West Virginia and Tennessee as “developing.”

This is not a new concept; in fact, in a development class I TA’ed for in 2001, the instructor used the question, “Is the American South effectively a developing country?” as an organizing principle for part of the class. (Keep in mind the instructor got his degree from a university in the American South, and all the students were also from the American South.) This isn’t just a glib question. Human Development Index scores are clearly lower in Southern states than elsewhere in the country, particularly the northeast and west. Furthermore, it could well be argued that through the history of the United States, the economic organization of the country has been set up in a kind of extractive developed/developing relationship, with the industrial (and protected) North exploiting labor and cheap primary products from the agricultural (and more free-trade) South.

I haven’t seen the argument taken much further than this, but I don’t have much doubt that it could be. It’s certainly a useful teaching tool and food for thought.

Flying Whale

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On BITs

November 10, 2010

Kevin Gallagher (Boston University, Tufts Global Development & Environment Program) and Jayati Ghosh (Jawaharlal Nehru University in New Delhi) have written a great piece using Obama’s India visit as a hook to talk about Bilateral Investment Treaties. We hear about bilateral FTAs and multilateral organizations like the WTO all the time, but BITs have flown underneath the radar for a while. This is a great and timely intro for the uninitiated – BITs are essentially the crappy foreign investor protections contained in NAFTA-style FTAs and the long-dead Multilateral Agreement on Investment, stuck into independent treaties.

The Bolivian Cochabamba water privatization fiasco? There is a BIT relevant to that case, which Gallagher and Ghosh use as their illustrative example. And here’s another case study at Eyes On Trade of how BITs empower multinationals at the expense of sound domestic policymaking.

Flying Whale