by Francis Lee for the Saker Blog
The customary argument that ‘free-trade’ promotes global growth will, given an appropriate policy mixture of specialisation and comparative advantage, result in a rise in the maximisation of growth in particular and trade in general. Well, this is the conventional wisdom that is usually trotted out in the textbooks and university lecture halls. Moreover, governments across the board continue to be heavily engaged, either directly or indirectly, in trying to stimulate their industrial centres. Indeed, there are whole areas of the economy – notably those dependent on large, long-term investments in science and technology – where government and government policy are absolutely central. The real distinction then is between an overt and covert stance for example over whether a government can or should attempt to ‘pick winners’ which would involve states manipulating their import-export ratios; but this would bump up against the theory of free movement of goods and services. A problem in search of a resolution, no less.
In fact, states seem fixated as to whether or not there is really such a thing as ‘free trade’, and if it is even possible at all. In order to work, it seems some degree of equality between trading partners must exist and this we have seen at the global level is simply absent. That being said it is the nation state as an active mediating formation which makes the strategic difference between winning and losing in highly volatile and competitive international markets. It is thus a fallacy to reduce minimal state intervention to Keynesian fine-tuning, and even less to open markets and a hands-off economic regime. Modern government and the modern economy need all the basic ingredients for competitiveness. Essential state inputs into the modern economy will include, education, health, job training, R&D policies, infrastructure support, competition policy and so on and so forth. This is hardly a minor role for government for the post-millennium. But from the left to the right there is little discussion in this strategic area. Unfortunately, the policies promoted and put forward by the political/economic powers-that-be have merely tended to make a bad situation worse.
Subsidiary problems which have also arisen are the patterns of trade between developed and developing states. Most exports, certainly in the long run, face elastic demand – that is a positive value of Price Elasticity of Demand PED>1. Which is to say that exports which are greater than 1. In developing countries, however, if the demand for imports is inelastic then a change in price of one will lead to a smaller proportional change in the demand for them. PED<1. This is primarily because many commodities (raw materials, such as oil, copper, coffee, cotton, steel, rice, sugar, and rubber) tend to have an inelastic demand.
Thus, international trade openness will only work if the playing field is relatively level – which clearly it isn’t. And it also has to work both ways – which clearly it does not. In addition, tariffs imposed by developed countries on imports from developing country products remain very high. It is common for tariffs to increase with the degrees of processing (so-called ‘tariff escalation’) so that higher value products from developing countries are discriminated against. At the same time agricultural subsidies from developed states make imports from developing countries uncompetitive. In short, the odds are stacked against the developing states.
Downturn and Recovery 1
The big economic slumps and recoveries of the 1930s up to and including 2022 have borne witness to the current contraction of world output and trade particularly, both in the West and the peripheries of the global South. This was caused by multiple tendencies which have risen to the present situation and have been attended by a series of financial collapses and subsequent contraction of economic growth in domestic and global markets. It was the contraction of growth in the early 20th century which had the knock-on effect of a collapse in world trade. There were no tariffs, no protectionism until after the downturn. Back in the US the Smoot-Hawley tariffs mandated by the US authorities were an example of the collapse of growth resulting in the global trade breakdown. (1) In fact, both the US, Germany and the UK had effectively maintained mercantilist or protectionist policies since the end of WW1, so the Smoot-Hawley legislation was nothing new.
There has never been an example of industrial development and a sustained path of growth and raising of living standards based upon a policy of free trade. This is a simple empirical and historical fact. But the emerging nations in the late 19th century, most importantly the United States and Germany, were not about coming to terms with a subsidiary role in the world economy, with Friedrich List (Germany) and Alexander Hamilton 1755-1804 (the US) who both challenged and eventually overcame the British stranglehold on world trade. (2)
The Korean economist Ha-Joon Chang, writes in this connexion in his books Kicking Away the Ladder, and Bad Samaritans that ‘’ … all catching-up economies’’ firstly in the 19th century and then principally in East Asia in the 20th, ‘’looked at policies which had been used by the now developed countries. A consistent pattern emerges, in which all the catching up economies have used activist, industrial, technology and trade (ITT) policies, but not simply tariff protection, to promote economic development as had been the case since before Friedrich List’s time.’’ (3)
The much touted free-market, and free-trade policies worked for some (of the already developed) but hindered the development of many other lesser developed states. As a matter of fact, all the ‘newly industrialising economies’ of the 19th century – in particular the UK (the first) then USA, Germany, France, and other European nations as well as Japan, adopted a set of policies that were strongly protectionist and members only of a developmental capitalism predicated on the increasing restriction of price competition, oligopolistic market structures, monopolistic practices, and the avoidance of risk.
What became to be called ‘Actually Existing Capitalism’ was a system based not upon free trade but on its exact opposite. It pretty much always was with the world increasingly dominated by regional trading blocs – EU, NAFTA, ASEAN, MERCUSOR – whose whole object is to impose punitive entry conditions into their markets by outsiders. Moreover, up to 60% of world trade is now conducted between multinational companies and their subsidiaries – this intra-firm trade is carried out for various reasons the most egregious of which is the transfer pricing scam. Only about a quarter of global trade approximates to the classical Ricardian paradigm, and even here there are restrictions – clothing, textiles etc. This is the reality of actually existing capitalism.
Export led growth – as successfully practised in the past and present by the East Asian countries – is a particularly novel form of free-trade. Of course, it is a one-way street type of free trade where these countries rely on overseas export markets but restrict imports and inward investment. To repeat: the policy has been the classical mercantilist approach of Germany and the US in the 19th century, protection of infant industry until such industry was fit enough to compete globally. Whether this strategy is now, in light of the collapse of world trade, viable is another question. See below an interesting comment by J.M.Keynes:
‘’I sympathise, therefore, with those who would minimize, rather than with those who would maximise, economic entanglement between nations. Ideas, knowledge, art, hospitality, travel – these are things which should of their nature be international. But let goods be homespun wherever it is reasonably and conveniently possible; and above all let finance be primarily national.’’ ( Keynes, Biography – Skidelsky)
Bretton Woods. Rise, Decline and Fall
The Bretton Woods System 1944-1971. This arrangement between the Western/European-US bloc – I.e., the growth, development, and integration of a number of key states of the north Atlantic and Australasia came to form the basis of trade solidarity and currency affiliation. The US$ shaped the bedrock of monetary stability based on the fixed alignment of the satellite currencies of western Europe and Australasia. The system lasted until the US$ was delinked from gold and the satellite currencies floated freely from the dollar, although the rates fluctuated. This marked a definitive change in the post-war global set-up. The change had been brought about by the US’s decision to cut its losses and winding up its military interventions firstly in Korea and then in Indochina. Moreover, there were also domestic imperatives of US policies at the time pursued by the incumbent ministries under the leadership of President Lyndon Baines Johnson. Johnson the Democrat resigned in 1969, and in the same year leadership passed to Nixon, the Republican candidate-cum-President.
The post-war period of reconstruction and retrenchment lasted until the beginning of the 1970s. This social and political stability had been initially made possible (particularly during the war period) that had constrained the ill-effects of markets on society.
However, such post-war stability was not based upon the extension of unfettered markets; it was made possible by institutional reforms that constrained the deleterious effects markets may have on society. On the one hand, final and intermediate product markets were organized according to oligopolistic competition, cartel formation at the national or global levels as well as in accordance with sophisticated public regulations. As a consequence of this price wars were replaced inter alia by gentlemen’s agreements between large firms which adopted mark-up price formation and cosmetic product differentiation. Moreover, this ‘freeing-up’ of post-1971 market conditions and the impact until the present times, represented a rolling-back of all the gains made by the mass of ordinary folk since WW2. Implicit in the Second World War was a genuine capital-labour compromise that codified the respected benefits drawn from the implementation of Fordism. Managers were free to organize production and labour processes, whereas workers were from an implicit (or explicit) indexation of nominal wages with respect to consumer prices as well a sick leave and holiday leave, along also with productivity schemes.
This entire set of agreements and their co-ordinating mechanisms has been severely challenged post 1970, and a fortiori in the 1980/90s. It would not be an over-statement to say that the counter-revolution that has been a feature of the late 20th century has now become solidified in the 21st.
The present time and analysis lead to an impressive paradox. At the very moment the post WW2 and its institutions are assessed and found wanting by the powers-that-be. To be sure the State remains the most powerful institution to channel and tame the power of markets. But, in the absence of countervailing regulation, economic analysis shows that persisting unemployment, recurring financial crises, rising inequality, underinvestment in productive activities, such as education and research, a cumulative asymmetry of information and power are some possible if not actual results of a complete over-reliance on pure market functioning.
The derisory outcomes of the 1980s up until the present day (2022) should serve to wake us from our Rip Van Winkle world, but the masses sleep on in their induced somnolence and the masters of the Universe carry on with their ill-considered schemes, regardless of their efficacy and impact.
Central to this whole process of production/distribution/location is the uneasy relationship between Transnational Corporations (TNCs) and nation states. Both are continuously engaged in negotiating and bargaining processes. On the one hand, TNCs attempt to take advantage of national differences in regulatory regimes (such as taxation and performance requirements, like local content). Per contra states try to minimise such regulatory arbitrage and to entice mobile investment through competitive bidding against other states. The situation becomes particularly complex because, whilst states are clearly bounded geographically, a TNCs territory is more fluid and flexible. Transnational Production Networks slice through national boundaries – though not as smoothly as some would claim. In the process parts of different national spaces into transnational production networks (and vice versa).
States still have significant power vis-à-vis TNCs, for example to control access to their territories and to define rules of operation. In collaboration with other states, that power is increased (the EU is a prime example of this). So, the claim that states are universally powerless in the face of the supposedly unstoppable juggernaut of the ‘global corporations’ is highly contestable; the question is an empirical one.
It seems reasonable to assume that since the turn of the 20/21 centuries things have taken a turn for the worse. The cyclical movements in the global economy have always been a disagreeable adjunct of the trade cycle, however, in recent years – 1970-2022 – each successive crisis has become more severe and longer lasting than the one before. This is easy to list.
- The Dutch Tulip Bulb Bubble 1636
- The South Sea Bubble 1720
- The Mississippi Bubble 1720
- The US Stock Market price Bubble 1927-30
- The surge of bank loans to Mexico and other developing countries in the 1970s
- The Real Estate Bubble in Japan 1985-89
- The 1985-89 Bubble in Real Estate and Stocks in Finland, Norway, and Sweden
- The Bubble in Real Estate and Stocks in Thailand, Malaysia, Indonesia, and other Asian Countries in 1997 and the surge in foreign investment in Mexico 1990-1999
- The Bubble in Over The Counter (OTCs) Stocks in the US in 1995-2000
- The Bubble in Real Estate in the US, UK, Spain, Ireland, and Iceland between 2002 and 2007 – and the debts of the government of Greece.
- And at the present time the global crisis of indebtedness, inflation, and war. The Four Horsemen of the Apocalypse.
US debt levels have reached a cool $27 trillion which cannot possibly be repaid. The answer therefore is to print more US$. But of course!
We should take note that each crisis seems more widespread, deeper, and dangerous than the last. The crisis – of 2008 – plastered over the cracks of a deeply dysfunctional features of a system which represented possibly be the last throw of the dice. The system doesn’t work – it is bust. The question is, however? Can it be repairable? Last words.
‘’Paradoxically, the 2008 financial crisis seemed to offer a real opportunity for change. For the first time in several decades, both the economic inefficiencies and social limitations of free, unregulated markets were exposed for all to see. In particular, an economic system based so heavily on financial speculation is, in any social or moral sense, dysfunctional. It has failed. The opportunity must be taken to build a new system to redress the imbalance that has developed between states and markets, between the people and institutions and between the immensely wealthy and the rest. Such a project is global in both scale and scope, hence the need for coordinated international policy initiatives rather than individual national measures that would lead to destructive competition rather than collaboration. At the height of the crisis in 2008-2009, it seemed that such a building might, indeed, be on the agenda. But subsequently, as the worse seemed to be over (or is it?), there is a real danger of going back to the future (my emphasis – FL) It would be a tragedy in every sense if that were to happen. We can – we must – do better. (Erica Schoenberger 2014)
(1)The Tariff Act of 1930, commonly known as the Smoot–Hawley Tariff or Hawley–Smoot Tariff, was a law that implemented protectionist trade policies in the States. Sponsored by Senator Reed Smoot and Representative Willis C. Hawley, it was signed by President Herbert Hoover on June 17, 1930
(2)The same mercantilist policies initially carried out in England (as it then was) were then also in time operationalised in both the United States and Germany who played catch-up with the UK in the late 19th century. The architect of US mercantilism was Alexander Hamilton (born 1755 or thereabouts – died 1804) who overcame the free-trade preferences of Thomas Jefferson in the early stages of US economic development; but it was the civil war – 1861-65 – essentially a conflict between the protectionist north and the free-trading south, which settled the issue. Ex Commander-in-Chief of the Union Army of the Potomac, Ulysses Simpson Grant, later to become US President argued that:
“For centuries England has relied on protection, has carried it to extremes and has obtained satisfactory results from it. There is no doubt that it is to this system that it owes its present strength. After two centuries, England has found it convenient to adopt free trade because it thinks that protection can no longer offer it anything. Very well then, gentlemen, my knowledge of our country leads me to believe that within 200 years, when America has gotten out of protection all that it can offer, it too will adopt free trade.”
(3) Ha-Joon Chang – Kicking Away the Ladder – pp.25.26
(4) Furthermore, in Germany, Friedrich List (1789-1846) who also had scant regard for any ‘free-market’ nonsense and the Ricardian corollary of comparative advantage was instrumental in promoting a system of political guidance from above as a policy for economic development.
The first stage (of such a long-term policy) is one of adopting free-trade with more advanced nations as a means of raising themselves from a state of barbarism, and of making advances in agriculture; in the second stage, promoting the growth of manufactures, fisheries, navigation and foreign trade by means of commercial restrictions; and in the last stage, on after reaching the highest degree of wealth and power by gradually reverting to the principle of free-trade and of unrestricted competition in the home and in foreign markets’’
This was the policy instrumentalised by Bismarck during the middle and late 19th century which enabled Germany to outperform its European rivals, principally the UK. And still today in many ways German nationalist mercantilism which it rests upon has dominated the EU and is even now still much in evidence.
– There has never been an example of industrial development and a sustained path of growth and raising of living standards based upon a policy of free trade.
Let us check that claim
During Francis Lee’s Chile early 70-ies income per capita was $1,300. After Milton Friedman had gotten rid of all the Francis Lees in Chile, income per capital has become $12,600
Income per capita in Chile is today higher than for instance Mexico
To use Francis Lee’s words
– I think this unparalleled post-war economic boom had a great deal to do with post-war reconstruction. A point I made in the opening paragraph.
Fun with statistics. Better question. How was that income per capita income distributed? A handful of multi-millionaires can skew that number upward greatly, greatly decreasing overall well-being for the vast majority. It’s generally recognized that great income disparities are the prime driver behind social unrest, and not necessarily overall income itself, provided the basics are at least taken care of.
Mexico income distribution
lowest 10%: 2%
highest 10%: 40%
Life expectancy at birth: 72.32 years
Chile income distribution
lowest 10%: 1.7%
highest 10%: 41.5%
Life expectancy at birth: 79.79 years
US income distribution
lowest 10%: 2%
highest 10%: 30%
Life expectancy at birth: 80.59 years
Thanks. Those US numbers seem questionable, especially the upper 10%. We should also probably be talking about wealth distribution as well, as that’s where the real disparities lie. Income is highly manipulable, especially among the wealthy, who often claim no net income at all.
– Thanks. Those US numbers seem questionable, especially the upper 10%.
Sure CIA factbook will get into problem about wealth distribution in US.
Income distribution is better in Germany and France (3.6% for lowest 10%).
The open market economies Germany and France have a well developed social welfare system, a dream for any Israeli. Germans and French are living 2 years longer then the Americans. As statistics above told: Chileans too have an excellent life expectancy.
Sosialist type EU states? I suggest Portugal and Greece. That is bottom of western Europa, socialism has not helped them. They are the nicest people you can think about, but their politicians are incompetent socialists.
Italy and France are not far behind.
The socialism of Portugal and Greece was destroyed by bank debt imposed by Germany, aided and abetted by the turncoats Syriza and Yanis Varoufakis the fake economist.
Numbers for Mexico are plainly wrong. There is a 40% of poors, so lowest should be for a broader base, and yes it is very low, in Highest you are not counting fiscal paradise´monies so 1% should account for that 40%, and for life expectancy you are using a UCLA “research” that said so, real numbers are 77 years, and a very elusive number after pandemia that brought it down to 75.
Well he did not mention that ! He left that bit out!
After Pinochet was installed, the IMF and World Bank restructured Chilean debt on much more favorable terms than those afforded Allende, and foreign banks returned almost overnight.
For the economy at large, however, living standards dropped and income inequality became the worst in Latin America. From 1970 to 1987 the proportion of the population falling below the poverty line rose from 20 percent to 44.4 percent.
Neoliberals call Chile’s 1974-90 period a miracle!
Well Professor Hudson does not think so!
Under what became known as the Washington Consensus the economy was subjected to totalitarian libertarian doctrine. Public enterprises were given away of to the junta’s supporters with virtually no money down. The result was mass bankruptcy, economic collapse, and a polarization of wealth and political power that transformed the country that had been one of Latin America’s most stable middle-class democracies.
– Well Professor Hudson does not think so!
Especially Dr. Hudson is not reliable.
– Neoliberals call Chile’s 1974-90 period a miracle!
From Wikipedia: – Friedman defended his activity in Chile on the grounds that, in his opinion, the adoption of free market policies not only improved the economic situation of Chile but also contributed to the amelioration of Pinochet’s rule and to the eventual transition to a democratic government during 1990.
Milton Friedman is a strict monetarist, the opposite of myself. I will adapt South-Korea and cheap money.
Milton Friedman is not that different from RCB economy policy today.
(My impression of Chile was Chile under Pinochet politics disappeared from curriculum. Student learned to think business instead of politics. There was never any discussion of imperialism / gender neutral pronouns / critical race theory under Pinochet. That could not be put on dinner table to own children.
While under Allende the students would discuss Lenin vs. Trotsky, and how to create a people front against the capitalists?)
I am hinting maybe Friedman’s theories were not that determinant regarding Chile’s development. It may also be Pinochet must be credited as the “Bismark” of Chile.
The Gini index for Chile, after taxes and transfers, is 0.47.
This number places Chile in 24th place in terms of inequality out of the total of 159 countries with available data, and crowns Chile as the most unequal country in the OECD.
The highest income percentiles concentrate a substantial part of the income. For example, in Chile the richest 10% appropriate more than 50% of the total income. However, other studies indicate that the corrected Gini index for Chile is 0.68.
Another element of inequality is the Chilean pension system, which can only be afforded by those who will never lose a job under the promise of a decent pension.(HaHaHa) What happens then? with the majority of workers who cannot afford the expenses that the bank charges you to maintain your pension fund?
In my opinion this system is a Ponzi scheme.
Life expectancy: 77.72 years
Income per capita: $16,400 (2020 est.)
lowest 10%: 2.1%
Taxes: 21.3% (of GDP) (2017 est.)
Income lowest 10%: $3444
Life expectancy: 79.79 years
Income per capita: $23,300 (2020 est.)
lowest 10%: 1.7%
Taxes: 20.8% (of GDP) (2017 est.)
Income lowest 10%: $3961
People are better off in Chile compared to China, in all ways.
China is like liberal California on steroids. People are fleeing China, like California.
How could any intellectually normal person compare China and Chile? What is noteworthy about Chile, with its benign climate and rich resources, is how poor its economy has performed ( Live expectancy in China in 1949 was under 35 for those who made it past infancy; in Chile it was 52 at birth!).
Life expectancy: 79.79 years
Income per capita: $23,300 (2020 est.)
lowest 10%: 1.7%
Taxes: 20.8% (of GDP) (2017 est.)
Income lowest 10% tax adjusted: $3129
Life expectancy: 81.49 years
Income per capita: $27,300 (2020 est.)
lowest 10%: 1.7%
Taxes: 49% (of GDP) (2017 est.)
Income lowest 10% tax adjusted: $2366
Socialism in Greece – income tax + 25% VAT – is causing the poor Greeks to have less money than the poor (Indians) in Chile.
And of course pensions for public employees in Greece are at German level, starting at 55 years?
Dr Hudson is not just reliable but speaks the truth, which is what you are doing all the time with obscure facts.
Salvador Allende was shot in his office and Pinochet replaced him, a murderer, just like the shah of Iran, when they deposed mossadegh.
Pinochet murdered and tortured thousands, sometimes dropping their bodies from helicopters. Every year there is a memory of the lost ones with pictures of the disappeared.
The country descended into abject poverty as is always the case.
It has been the same throughout south American history at the behest of America. I can list them all.
You can quote Friedman,Keynes or any other Jew that you like, but I will tell you this: your world is coming to an end.
Chile 1980 till current time has been free trade/market economy.
China is also free trade/market economy.
As I have learned, North Korea became internally market economy similar to China.
– There has never been an example of industrial development and a sustained path of growth and raising of living standards based upon a policy of free trade.
Factual wrong. Free trade/market economy worked fine in Chile. GDP growth in Chile has been 60% higher 1980 till today compared to other Latin-American states.
– Chile 1973: Inflation topped out at an annual rate of 1,000 percent, foreign-currency reserves were totally depleted, and per capita GDP was roughly that of Peru and well below Argentina’s.
You clearly have no understanding of the essence of what Lee and Hudson describe. You bark about “free trade”, which is something that has NEVER existed, anywhere, ever, up to and including today.
What has always existed, and varied only by degree, according to power structures and the control of ‘money’ in any given period or era, is “PREFERENTIAL Trade”.
As for all the nonsense about ‘differences’ b/w Neo-Conservatism and Neo-Liberalism, get to grips with understanding how all ideologies converge over time, according to how those same power structures and controllers of money figure out how they can best exploit elements of any ideology ‘in play’ during a particular period/era.
“Arbitrage” doesn’t just operate on trading ‘exchanges’.
Specifically on Chile, its ‘economic miracle’ had little to do with Friedman, and a lot to do with Chile having one third of all the world’s copper resources, yet only 0.25% of the world’s population.
As the world has continued to electrify, that is one gigantic ‘competitive advantage’. Try electrifying without copper. It’s not called “Doctor Copper” for nothing.
Otherwise, you’re just making lots of noise, but ‘creating’ little of ‘value’.
‘ave a nice day.
Free trade is generated within the trading blocks such as NAFTA or the USMEXCAN pact. That is unless you talk about the Canadian Dairy Industry or when the US decided to place tariffs on steel and aluminum and timber because of “dumping”
Professor Lee is right on the mark. To reiterate , the current debt levels are not sustainable in the US, it is impossible to pay it back. It’s called the law of diminishing returns. I have spoken to Canadian bankers who discount this based on GDP growth and productivity which will always generate enough liquidity. It’s false, the US is essentially bankrupt. The question to ask is the US worth 27 trillion dollars?
The former Greek finance minister Varoufakis quickly accepted that the Greek economy was at default and the only way out is bankruptcy and taking control back of the countries money supply by dumping the Euro. Of course the EU would have no part of it and Varoufakis was betrayed by his PM Tsipras . So Greece continues to operate essentially bankrupt and selling off its industries for “collateral”.
An additional point is that are the current measures such as GDP truly reflective of the state of a countries economy? You don’t see the level of poverty on the streets in Greece or even Serbia compared to major cities in Europe such as London or the US in San Francisco or Los Angela’s. However, the city of Athens was affected greatly during the financial crisis and it was shocking to see Greeks sleeping outside the yacht ports near the high income area of Glyfada.
@ kjell108: may you live in a paradise created by Milton Friedman. In case of Chile we know how it went – blood, sweat, and tears; and a few dead people. After Friedman came Pinochet, eh. Too bad you never lived under Pinochet types.
As for numbers, average of anything is the most deceiving value. In case of Chile, I assume there is a thin layer of people 1% with per capita income 1,131,300 per year, and 99% with income with income 1,300 (if they are lucky). The math gives us average 12,600 per capita. The math is real, trust me:
Avg = (1*1,131,300 + 99*12,600)/100 = 12,600
If you do not understand the math, then there is nothing to discuss. If you do understand the calculation, and you feel ratio 1,131,30/1,300 = 870 is OK. I believe it is written somewhere that ratio between incomes of 1% and the rest, in developed countries, is about 800:1. If you missed the memo from Frances Lees that could be the reason they fight in Ukraine.
If any of this sounds weird, I can refer yo to Andrey Martyanov
– If you do not understand the math,
Don’t be naughty. I belong to the generation who had to learn math.
– If any of this sounds weird, I can refer yo to Andrey Martyanov
Not one of our authority relying liberals responded to Andrey Martyanov’s math, because they don’t know that kind of math. For me it is in the blood.
It seems that kjell108 is a student. This ‘sudent’ would not hear anybody, here — s/he may just be using the space of the blog to promote a pro-capitalist-imperialist system (banking, World Bank, IMF…) as saviours of the world as if this system has not already proven it has passed its progressive phase at least 50 years ago. S/he is here to distort our conversation, and his support for Pinochet is revealing (see other comments below, all of them glorifying capital!). Better to ignore these comments if the MOD permits their interference in the blog.
Secret Filming | Military Junta | General Pinochet | Chilean Revolution | This Week | 1977
Four years ago, a military junta led by General Pinochet overthrew Chile’s democracy and its elected President, Salvador Allende. The coup was followed by ****mass arrests, torture, murder, imprisonment, exile.****
Now, four years later, the first filmed report of the scale of ****Chile’s misery**** has been smuggled out by ‘THIS WEEK’ reporter Jonathan Dimbleby. Using a tourist camera, he has recorded life in the city and the countryside, for the starving slum—dwellers and for the expropriated peasants.
Milton Friedman was from the same school as Soros.
– After Friedman came Pinochet, eh. Too bad you never lived under Pinochet types.
zidar is too young to know history. Milton Friedman had no involvement with the military coup 1973.
Denis A. Conroy https://thesaker.is/how-problem-solving-became-the-problem-in-the-west/
– The neo-conservative West tried exporting its’ Globalization (WTO) rules-based business-school mentality that underpins the theories of the Chicago School of Economics to the entire planet. The white man’s burden should be applied and set… and reset… according to the rules of the inchoate modernist unilateralist and utility-minded who eschew democracy over money.
Here Denis A. Conroy is mixing together “Chicago School of Economics” with “Project for the New American Century”
“Project for the New American Century”
Washington Public policy think tank started 1997 and dissolved 2006
“Chicago School of Economics” i
The Chicago school of economics belongs to “School or tradition Classical Liberalism
– As of 2018, the University of Chicago Economics department, considered one of the world’s foremost economics departments, has been awarded 13 Nobel Memorial Prize in Economic Sciences—more than any other university—and has been awarded six John Bates Clark Medals. Not all members of the department belong to the Chicago school of economics, which is a school of thought rather than an organization.
It is a shameful accusation from Denis A. Conroy to associate Leninist liberals with with Chicago University – two opposites.
The Saker should ask Denis A. Conroy to correct himself before more readers than zidar start to believe him.
thank you. finding respect for the vast majority from the elites is fading away, with their entrenched networks of privilege and power. true cooperation and a genuine desire to see all life thrive is ridiculed.
i very much hope that your thoughts filter into the global levers of power.
“US debt levels have reached a cool $27 trillion which cannot possibly be repaid. The answer therefore is to print more US$. But of course!”
You don’t have to repay the Principal, it is a revolving loan, the Principal didn’t cost anyone anything, but you must make your Interest Payments, forever if necessary!
All with newly printed, debt-based money, of course. Even better than a classic Ponzi scheme, since the unwitting suckers – the American people via the Fed – have bottomless pockets, theoretically at least. You’ve gotta hand it to the banksters for coming up with this diabolically simple and yet opaque subterfuge. It’s so simple that when you explain it to financially unsophisticated people they literally refuse to believe it.
Having money = gold as intrisic value caused a disaster (1929-1933)
Money is just
– An “I owe you” (IOU) is a document that records the existence of a debt.
Here the (Jewish) Austrians have no connection to reality. It is especially true in the age of digital money.
1929-1933 = dollar became stronger and strong
2022– = Ruble will become stronger and stronger?
On a per capita basis, the national debt compiled by a family of four is not all that different from the mortgage they might end up paying on a house. They don’t seem to have all that much problem with that over the long run, even if from time to time parentheses like now parentheses it becomes more difficult. Furthermore massive amounts of the United States debt are strictly internal, where one organization in the federal government owes another organization and the federal government God knows how many gobs of billions of dollars. Third everybody gets into ballyhoo about how future generations will have to pay off this debt. They completely forget that debt is a balance sheet item. When the debt is paid off who will it be paid off to? Answer: those very same future generations.
I dare say right now the demand for United States debt, as the highest quality debt instrument worldwide in a world full of inferior choices such as the euro and the renminbi, means that really what the United States should do is roll over our debt to 100 year bonds. The treasury has looked at this but has not done very much about it yet.
The opportunity must be taken to build a new system to redress the imbalance that has developed between states and markets, between the people and institutions and between the immensely wealthy and the rest. Such a project is global in both scale and scope, hence the need for coordinated international policy initiatives rather than individual national measures that would lead to destructive competition rather than collaboration.
Evidently Russia and China took these words to heart and are working diligently on just such a system. Predictably, for the existing hegemon, the US and their Euro lackeys, these words had no meaning, and they have worked diligently to cement their failed system even further. For better or worse, this will be the driving historical theme of the 21st century, albeit surely not the one that PNAC envisioned in the waning days of the 20th. The US is firmly on the wrong side of history this time.
An excellent article for reference!
I see now. It is kjel108 who want to convert us to his religion. Like any religion, we think that ours (social justice and just income distribution) is way better than yours. there is no way you can convince us otherwise. We simply feel that way and that feeling is comforting for us. Religions exist to give people some comfort, and we do not question them in any rational way.
Go proselytize somewhere else. Here, you are just wasting time and space. We do not come to this blog to enjoy in countering each other at any price. Got o Startfor, CNN, New York Times, WaPO – you will be much happier there, people of your religion congregate to those churches.
Here, people will simply start ignoring you. And if you keep posting just to annoy us, I am sure moderators will know what to do.
Saying “After Milton Friedman had gotten rid of all the Francis Lees in Chile,..” sounds denigrating and ad hominem towards mr. Lee, who is decent enough not to get involved in futile discussion with you. you love Pinochet, fine, go start your own blog.
– we think that ours (social justice and just income distribution) is way better than yours.
United Russia does not define themselves as a Social Justice or a Socialist party. That belongs to US Democrats. Both Putin and Xi support free market, while Biden and EU promote trade as a Leninist weaponry.
Paul Craig Roberts:
– Once Russia is banned from foreign capital, the Russian central bank will have to do its job and finance Russia’s internal development. Foreign investment in Russia only serves to impoverish the country as the earnings are repatriated abroad and taken out of the country. Indeed, the sanctions and seizures of deposits of Russian banks is a great reason for Russia to regain ownership of its own resources by nationalizing all foreign investment in Russia. It is unclear whether the Kremlin is sufficiently sophisticated to understand this.
What RCB has done is to put heavy restrictions on credit creation – when Russian business are in need of credit (i.e. new Money)
”Free markets”? Where?Did you actually read Francis Lee’s article? Countries that got rich did so by PREVENTING free markets.
– Countries that got rich did so by PREVENTING free markets.
In these times is the complexity of products is changing. Diesel need additives. Engines need special oil, only available from some companies. There is no way to produce a F-15 without parts from China and Tawain and South Korea and Japan. It is so bad car production has to be halted because a necessary chip is not available. A single factory in Taiwan seem to produce most chips.
US cannot deliver baby milk (?)
Bottomline: Today every country have become dependent upon trade. The classical economists had no clue about what 2022 would be like. You have to update yourself.
Here is an example of a log hut built 100% with local materials
He could not sleep there because of all the mosquitos and midgets.
Those who are interested in self sustainable living should look at Alaskan YT channels. Nothing to aspire.
Never were there ‘free markets’ in Japan, South Korea or Taiwan. These countries got rich by exporting and not importing, where possible. Of course, there is trade, but it is not free trade. Trump put taxes on all kinds of Chinese goods, while US agriculture gets gigantic subsidies, and the product then gets dumped in India to compete with Indian farmers on the ‘free market’? The Russian economy will now gain from the limits imposed on the so-called ‘free market,’ though no doubt certain oligarchs will be howling!
In my words, what we are talking about here is why BRICS is so important. Not because Yuan will be a reserve currency, but because BRICS will create an alternative free market, and take away the strangulation Cuba / North Korea are subjected to.
I will add: Why not make North Korea a Russian satellite, so they have to sanction all Russia + BRICS.
– “Did Nixon predict that his visit to China would contribute to the spectacular rise of a superpower, which may eventually rival the United States?”
China trade status signed 1980 – Most favored nation (MFN) status is an economic position in which a country enjoys the best trade terms given by its trading partner(s). That means it receives the lowest tariffs, the fewest trade barriers, and the highest import quotas (or none at all). In other words, all MFN status trade partners must treat each other equally.
Putting tariffs on trade is standard procedure. It is some way to create tax income. Tariffs are not meant to stop trade
So the largest economy in the world (China) was built on free access to world market. No need to deny what is obvious for all of us. China created a legal framework to adapt to market economy
I agree & glad you spoke up. I also am getting annoyed by kjel108 & especially his support for Pinochet who was an absolute thieving blood thirsty monster !
Under Putin Russia has become a country with record low taxation
Taxes and other revenues
16.4% (of GDP) (2017 est.)
Compare that to Germany or France or even US. There is much less tax in Russia than in US. US is closer to a socialist state than Russias.
Russia has also less tax than free market Chile
Taxes and other revenues
20.8% (of GDP) (2017 est.)
Russia is more “The Chicago school of economics” than Chile.
Russia is also close to classical austerity regarding economy policy, where gold is money.
BRICS is about creating a system for trade, with it’s own currency, that cannot be cancelled by West. So we may say BRICS is consistent with the Milton Friedman school of economics, and the opposite will be true for Francis Lee. Francis Lee and james1 is representing the cancel culture?
The first free trade treaty between states was the Cobden-Chevalier Treaty of 1860 between Great Britain and France. These two states were the most industrially developed states at the time. They both had coal and iron ore and had initially acquired the basis of their wealth through slavery and piracy (Sir Francis Drake, who captured Spanish gold and silver fleets on behalf of Elizabeth I).
The U.S. initially earned its wealth by exterminating Indians and appropriating their land, and by cheap slave labor in the southern states (cotton plantations). George Washington was a slave owner. Nevertheless, this was initially not enough to compete with the British on the world market. The decisive turning point in favor of the U.S. came only during World War I, when the two main rivals, Great Britain and the German Empire, bled dry, and Great Britain became a debtor to the United States.
The stupidity of German politics, with Kaiser Wilhelm II at its head, deprived the German Empire of the leading position in science and technology it had gained under Bismarck.
At present we have again such politicians who let themselves be pushed around by the political clown Zelensky and his ambassador Melnyk. Zelensky does this on behalf of the USA without getting his hands dirty (as they themselves believe). The American diplomat and intelligence officer Karen Dornfried calls the Ukraine war the “German Nine/eleven”.
It is not by chance that in English and French the (white) male man was identified with the man par excellence.
In other words, liberalism and neoliberalism built its supposed superiority of the white race on the exploitation of the non-white majority of our planet.
– In other words, liberalism and neoliberalism built its supposed superiority of the white race on the exploitation of the non-white majority of our planet.
Maybe you too are confusing “liberalism and neoliberalism” with “neo-con” (Project for the New American Century)
Dear KJELL 108,
thanks for your reply.
No, I am not confusing the terms liberalism and neoliberalism. Neoliberalism is a variant of the neocon concept, but one can see the neoconservatives als as followers of neoliberalism. Its first practical application was Milton Friedman and his Chicago boys after the fascist coup in Chile – this has been mentioned here several times – and Jeffrey Sachs, also a Chicago boy, acted as Yeltsin’s advisor with responsibility for the shock privatisation of the Russian economy. Interestingly, he later partly distanced himself from this (If such and such had not happened, I would have…).
However, neoliberalism does not have a clear definition, so I quote the English Wikipedia:
“Neoliberalism, or neo-liberalism, is a term used to describe the 20th-century resurgence of 19th-century ideas associated with free-market capitalism. It’s a significant factor in the rise of conservative and libertarian organizations, political parties, and think tanks, and predominantly advocated by them, it is generally associated with policies of economic liberalization, including privatization, deregulation, globalization, free trade, monetarism, austerity and reductions in government spending in order to increase the role of the private sector in the economy and society; however, the defining features of neoliberalism in both thought and practice have been the subject of substantial scholarly debate.
As an economic philosophy, neoliberalism emerged among European liberal scholars in the 1930s as they attempted to revive and renew central ideas from classical liberalism as they saw these ideas diminish in popularity, overtaken by a desire to control markets, following the Great Depression and manifested in policies designed to counter the volatility of free markets, and mitigate their negative social consequences.
One impetus for the formulation of policies to mitigate free-market volatility was a desire to avoid repeating the economic failures of the early 1930s, failures sometimes attributed principally to the economic policy of classical liberalism. In policymaking, neoliberalism often refers to what was part of a paradigm shift that followed the alleged failure of the Keynesian consensus in economics to address the stagflation of the 1970s. The collapse of the Soviet Union and the end of the Cold War also made possible the triumph of neoliberalism in the United States and around the world.
The term has multiple, competing definitions, and a pejorative valence. English speakers have used the term since the start of the 20th century with different meanings, but it became more prevalent in its current meaning in the 1960s, 1970s and 1980s, used by scholars in a wide variety of social sciences as well as by critics.
The term is rarely used by proponents of free-market policies. Some scholars reject the idea that neoliberalism is a monolithic ideology and have described the term as meaning different things to different people as neoliberalism has “mutated” into multiple, geopolitically distinct hybrids as it travelled around the world Neoliberalism shares many attributes with other concepts that have contested meanings, including representative democracy.
When the term entered into common use in the 1980s in connection with Augusto Pinochet’s economic reforms in Chile, it quickly took on negative connotations and was employed principally by critics of market reform and laissez-faire capitalism. Scholars tended to associate it with the theories of Mont Pelerin Society economists Friedrich Hayek, Milton Friedman and James M. Buchanan, along with politicians and policy-makers such as Margaret Thatcher, Ronald Reagan and Alan Greenspan.
Once the new meaning of neoliberalism became established as a common usage among Spanish-speaking scholars, it diffused into the English-language study of political economy. By 1994, with the passage of NAFTA and with the Zapatistas’ reaction to this development in Chiapas, the term entered global circulation. Scholarship on the phenomenon of neoliberalism has grown over the last few decades.”
One can also say liberalism corresponds to colonialism and slavery; neoliberalism corresponds to neocolonialism and “contract labour”
Stay healthy and happy my friend and always on the alert!!!
Translated with http://www.DeepL.com/Translator (free version) and personal corrections.
– . Its first practical application was Milton Friedman and his Chicago boys after the fascist coup in Chile
As you will understand from quote from Paul Graig Roberts, the early trait of the neo-cons is found 1992 represented by Paul Wolfowitz, later a founder of NPAC = which became the blueprint for NATO’s expansion to Russia’s borders
Paul Graig Roberts
– The Neoconservative Threat To World Order is a compendium of his essays written between February 2014 and July 2015. Most of them deal with Washington’s destabilization of Ukraine and its ongoing threats against Russia. Roberts sees this new Cold War as rooted in the neoconservative doctrine of world hegemony. He correctly argues that this is based on the Wolfowitz Doctrine, written in 1992 by neoconservative Undersecretary of Defense Paul Wolfowitz (a signatory of the 1997 Project for the New American Century), which became the blueprint for NATO’s expansion to Russia’s borders and the growing threat of nuclear war that we are faced with today. In the preface Roberts writes:
Chile such a great country. Nice weather, beatiful landscape, nice people.
Is anyone of you a chilean?
I am. I can tell you the diference before and after Mr. Pinochet. We were a country with such a poverty level that there was undernourishment.
Mr. Pinochet save Chile from this and other huge problems.
“How Milton Friedman Saved Chile” (from an Earthquake the size of a million Hiroshima bombs)
while 230,000 perished in Haiti because of lack of housing
The US interference in Chile (coup d’etat removing President Salvador Allend, who was assassinated, in 1973) and in Haiti (coups d’etat removing President Jean-Bertrand Aristide twice — in 1991 and in 2004!), which caused wide spread impoverishment in both countries, are clear evidence of imperialism. If you do not recognise this, then this blog is not for you.
Pinochet saved the US, not Chile. Chilean people became poorer after Allende was removed from power by the filthy CIA coup d’etat in 1973. Chile is NO different than than the other Latin American countries that the US exploits with its imperialist policies.
Pinochet ruled a police state who disappeared people en masse after they were arrested.
Chile has recovered somewhat since Pinochet was removed fro office.
“US debt is now a cool $27trn”. I assume this article was written a couple years ago because US debt is now an even cooler $31trn.