masterwordsmith-unplugged

Chang explores the workings of multilateral institutions (World Trade Organizations, World Bank and International Monetary Fund) and exposes the double standards they impose on countries of the Global South most unfairly through regulations and conditions that countries of the Global North never followed themselves as they chased economic development. We can see that proponents of neo-liberalization (who operate from multilateral institutions) behave as if the development is carried out via uninterrupted liberalization and pure free market rule.

The author supports this premise by reminding us that it was the first Secretary of the US Treasury, Alexander Hamilton, who came up with the concept of ‘infant industry’. That concept argues that new and emerging industries must be protected by regulations until they have developed a strong foundation to face global competition. Obviously, western countries exercised enormous protectionism to shield their industries throughout their development. They only open their market to international competition when they feel these industries could become internationally dominant.

He argues that multilateral institutions demand that countries of the Global South open their market, often unconditionally, to global competition and foreign investments without giving these countries the time to develop their own infant industries. Neither do these multilateral institutions try to strengthen their social institutions - necessary move for market to function properly. As such, no one is surprised at the disastrous results. Even now, those institutions are now reluctantly admitting their mistakes.

A Korean, Chang calls the North "bad samaritans"because of such practises and provides many examples from all over the world to expose the blatant unfairness of this current regulatory regime.

Interestingly, Chang consider social and political factors that influence economic decision making and its influence on the global governance regime. Chang explores how African nations have had their share of corrupt dictators that used the means of the state to engage in systematic looting (along with major violations of human rights) of their countries. Does this sound eerily familiar?

Chang shows the hypocrisy of Western nations who installed and supported those dictators as part of the neo-colonialist regime. In a hypocritical move, some Western nations who are reputedly concerned about corruption often turned a blind eye when a favored dictator engaged in questionable practices.

Excerpt from page 161 of his book:

"Corruption is a big problem in many developing countries. But the Bad Samaritans are using it as a convenient justification for the reduction of their aid commitments, despite the fact that cutting aid will hurt the poor more than it will a country’s dishonest leaders, especially in the poorest countries (…). Moreover, they are increasingly using corruption as an ‘explanation’ for the failures of the neo-liberal policies that they have promoted over the past two and a half decades. Those policies have failed because they were wrong, not because they have been overwhelmed by local anti-developmental factors, like corruption or ‘wrong’ culture, contrary to what is becoming increasingly popular to argue among the Bad Samaritans."

I found his discourse on Africa to be very interesting and relevant to our country. Previously, some argued that Africa is poor because it is corrupt. That is an old racist prejudice that Africans cannot govern themselves. Chang reminds us that the quality of governance in Africa is low, but so it is in all poor countries. He argues that Africa is not poor because it is corrupt but that it is corrupt because it is poor.

What about our country? Why then is corruption a problem? Comparatively, our GDP levels are not high and yet the status quo is spending a lot instead if making our country more globally competitive. Does this augur well for our country? Don't forget that interest rates are slowly increasing - a negative sign for long term consequences. Sorry for the digression - back to the book now.

Chang opines that higher incomes in a country can improve governance because:

(1) a more affluent society is also more educated.
Citizens are informed about government policies and can express their opinions of these via the right avenues - made possible by media and telecommunication technology support such a role (as illustrated by the role of bloggers in our country)

(2) a richer society also can afford better governance.
Logically, a richer population generates more money through taxes. With a more affluent and educated society, civil servants and public administrations are managed more competently and openly (without the need of spending millions to consult foreign PR companies etc!).

However, in many countries, good governance is a luxury and a product of economic development i.e. to say if the country does well economically, the higher the chances of the people getting good governance. A good example is Singapore where they enjoy high GDP (as discussed in previous posts) and even the Cabinet and civil servants enjoy high salaries!

On the whole, this book is very readable despite the heavy topic and the volume of data and case studies that he has included in his write-up.

After reading the book, I stand together with many others to urge our government to raise our productivity level to raise our GDP and per capita income. I urge them to use public funds wisely and fairly in such a way that it benefits the rakyat directly instead of doing cosmetic surgery or window dressing. The many changes in education policies is one area which cost a lot of money and yet we have not seen results; on the contrary, standards are still dipping.

Suffice to say high productivity and a development of our various sectors will lead to greater affluence, higher tax revenues and then more public funds for future development. Instead, we see how subsidies are about to be removed and talk about the possibility of the implementation of GST - both of which do not solve the problem but merely cure the symptoms of an ailing economy!

Try to get your hands on the book! Thanks for reading. Do leave a comment to share your thoughts and views. Thanks! Take care and enjoy today!