Whatever you say, comrade banker.
Manufacturing a Food Crisis: How "free trade" is destroying Third World agriculture—and who's fighting back is an excellent article on the impact of three decades of developed world trade policy on agriculture in the developing world. Both in "trade" agreements like NAFTA and WTO and in "structural adjustment programs" imposed by the World Bank and IMF, developing nations have been forced to discontinue the subsidies, price stabilization programs, and other preferences to domestic agriculture and accept imports of highly-subsidized agricultural products. "Since the late 1990s subsidies have accounted for 40% of the value of agricultural production in the European Union and 25% in the United States." The unfairness—and the indefensibility under economic theory—are obvious, but one has to read the article to appreciate how much like the blundering and arrogant central planners of a soviet state the World Bank and IMF became as they crammed down "the Washington Consensus." The law of unintended consequences ruled.
When Ferdinand Marcos fled the Philippines in 1986, the World Bank and IMF stepped in and forced the government to stop subsidizing agriculture and to use the funds to repay foreign debt. The experts said Filipino farmers should switch from rice to growing "high-value-added" export crops like cut flowers, asparagus and broccoli. The Philippines went from being self-sufficient in food to being a big importer of rice from China, Vietnam, and Thailand, where rice farming is heavily supported by the governments. The cut flowers, asparagus, and broccoli? Don't ask. Instead of increasing by 500,000 as projected, agricultural employment dropped by 400,000.
In Africa, the World Bank encouraged its clients to grow export crops to generate foreign exchange in order to service their foreign debt. Its "experts" thought it would be a good idea for Ghana (and several other African nations) to focus on cocoa and for Ethiopia to concentrate on coffee. Results: the world prices for cocoa and coffee both collapsed. The World Bank's chief economist for Africa said, "We did not think that the human costs of these programs could be so great, and the economic gains would be so slow in coming." An economist who never heard of supply and demand?
In 1999 the government of Malawi started subsidizing agriculture with free seed and fertilizer, a big surplus of corn resulted. The World Bank forced Malawi to stop the subsidy, because there were "more productive ways" for the Malawi government to use its resources, and to sell off the accumulated surplus to pay foreign debt. By 2001-02, the surplus was gone and the nation was in famine. The new government defied the World Bank by resuming the subsidies in 2005. Now Malawi feeds itself and exports corn to South Africa. Oh, 1500 Malawians starved to death.
By tradition, the US appoints the head of the World Bank, now Robert Zoellick and before that Paul Wolfowitz. Did they not get the email saying the United States is opposed to having governments pick economic winners and losers? Or are they just bankers behaving like bankers?
Update on Thursday, May 22, 2008 at 09:07AM by
Skeptic
Another article in the same issue of The Nation, Haiti on the 'Death Plan', quotes an economist with the Haitian Platform to Advocate for Alternative Development:
Since the 1980s, the IMF and World Bank have decreed that we apply structural-adjustment programs to liberalize our finances and foreign commerce, privatize our public enterprises and deregulate foreign investment. They told us that we're right next to the biggest agricultural producer in the world, so there's no reason to produce our own food because we can buy it at a cheap price, and that the peasants should go to the city to sell their labor to American assembly plants to make textiles and electronics for export. Since then, we've gotten poorer, more dependent and more vulnerable to the fluctuations of the international market.
So, Haitians, you have a choice. Who are you going to believe about economic neoliberalism, the mainstream theoreticians or your own lying eyes?