Transcript of Roundtable Discussion on Globalization

"Whither globalization and its architects in a post-Sept 11, post-90s-bubble world."

Recorded February 4, 2002 at The Community Church of New York, New York City.

Hosted by Public Citizen, The Nation Institute, International Forum on Globalization and Public Eye on Davos


Lori Wallach, Director, Public Citizen's Global Trade Watch
Jeffrey Sachs, Director, Center for International Development, Harvard University
Victoria Tauli-Corpuz, Indigenous People's Network
Mark Weisbrot, Co-Director, Center for Economic and Policy Research

Michael Weinstein, Director, Geoeconomics Center, Council on Foreign Relations
John Nichols, Washington Correspondent, The Nation Magazine (moderator)

Moderator: I’d like to take a minute to introduce the folks who joined us this evening. Starting first off with our friend Mark Weisbrot, and Mark is the Co-Director of the Center for Economic and Policy Research. He has been probably one of the most outspoken and broadly published economists raising tough questions about economic globalization, neo-liberalism and a host of other issues. He has a great article that if you haven’t seen it yet, (can you hear? is this okay? alright I’m seeing a person going "hmm?") If you haven’t seen it yet it’s a year old but I would check it out on online. It is "Globalization for Dummies." It was published in Harper’s magazine. It really is, it remains one of the finer pieces on this subject.

Seated next to Mark is Dr. Jeffery Sachs. And Jeffery Sachs is the director of the Center of International Development at Harvard University. I am going to try and finish this evening by 9 o’clock so I will not read his full resume. But it does cover many pages. And Jeffery Sachs has among other honors been chosen to serve as chairman for the Commission on Macroeconomics on Health for the World Health Organization. I know he’ll want to speak tonight especially to some issues of AIDS as it relates to globalization. He has also been appointed by Secretary-General Kofi Annan of the United Nations as a special advisor on the Millennium Development Goals. He was named by Time magazine the world’s, I hope I’m right here, the world’s best known economist. He has also served, although I’m not sure - I don’t know whether we’re bragging about this now or not , as one of the people who tried to guide the former Soviet Union from communism to capitalism. I think he personally met with many stumbles along the way. Seated next to him…

JS: Thank you for putting it so gently…

Moderator: Seated next to him is Lori Wallach. Lori Wallach from Public Citizen Global Trade Watch. [Applause] We’re displaying our sentiments already here tonight. And Lori is the founder of Global Trade Watch along with Ralph Nader. And also easily one of the critical players in every trade debate that takes place in the United States and around the world. She looks remarkably good for somebody who has just flown in from Brazil where she was at the World Social Forum. And, Mark you were also there, right? … You don’t look nearly as good. But they both come up so they bring unique perspective having been at both events. And Vicky is here too. Who always looks remarkably good . She had to come via, we don’t want to introduce you quite yet dear, but she had to come via Philippines as well so that’s a more complex journey.

Seated next to Lori is Michael Weinstein, the director of the, now get this, the Geoeconomic Center of the Center on Foreign Relations. But a lot of us who covered trade issues and political issues here in the States know Michael as a very distinguished professor of economics at Haverford College and then is the guy who wrote a lot of the New York Time’s editorials about trade issues and economic globalization; some of which we disagreed with and some of which actually sort of tempered the Times’ lines for many years. Lori remembers going in there and having a few debates with him.

Finally at the end of our panel, Victoria Tauli Corpuz who is with the Indigenous People’s Network. [Applause] Victoria is, she’s done a tremendous amount of organizing in her native Philippines starting at the grassroots level in a fight against the Chico Dam project where people actually did something that a lot of folks who would consider themselves effective anti-globalization activists could not imagine, she actually stopped a major World Bank funded project. [Applause] Although she would be the first to tell you that she had a little bit of help along the way.

We’ve got a great panel here tonight. And I am going to go straight into questions of them. I’m going to pose a couple of questions to get this thing started. But, when you folks came in, you were given white cards; if you don’t have a white card there are people passing among us who have some of them. We’re going to invite you to write out some - any questions you want. I would ask only one thing of you. With this big of a crowd please direct the questions that you want asked to a specific speaker. It doesn’t mean that others may not address it but the broad questions to the whole group will eat up two hours very quickly. So if there’s somebody that you want to hit with a specific question please direct it to him, folks will gather them from you, we will try to ask as many as them as we can.

Also the other thing I want to notice is that tonight you will hear speakers say things that you agree with and disagree with and you will be inclined as I often am when I am in an audience like this to cheer and boo loudly. That’s fine. I don’t have any problem with that, it makes for a very entertaining evening. I would only ask you to do so in relatively quick bursts, because I have moderated panels of this kind before, in fact I’ve actually been involved with panels where Lori Wallach has spoken. She has a remarkable ability to get applause round after every sentence. And frankly, if you folks humor her in that regard we won’t get out of here until tomorrow morning.

So, with that, I want to go into, I want to just recognize a little bit of why we are here. And the interesting thing is that we are of course here at this church because up at the Waldorf Astoria there’s something called the World Economic Forum going on. I don’t have to, [laughs] I don’t have to explain it. It’s actually gotten a reasonable amount of coverage in the papers. We know that Elton John’s been there and Bono and Peter Gabriel and others. And we know that they had a great time. But we also know that in Brazil at the same time, there’s been a World Social Forum and I want to start with Dr. Jeffery Sachs and ask, you, as much as anyone that I know of, has written a great deal of these issues of globalization and about the challenge of bringing the neo-liberal model or some sort of model of economic change to countries around the world. And yet, we still, more than a decade into this process, apparently need to have a WEF and a WSF. Why can’t we just have one?

JS: Thanks. It’s a good question. And I think we should just have one which is why I am so delighted to be here as well as just making a nuisance of myself with the World Economic Forum a little while ago. I want to explain why. I also want to thank you for coming and especially for inviting me which I really appreciate both to Public Citizen and the Nation. I also want to apologize in advance that I have to catch the last shuttle out because I have to spare my wife who’s been watching our kids for four days while I have been in these meetings. And so, I’m going to go home tonight.

Moderator: I will interrupt and tell you. If you think that’s going to get you out before the tough questions, I don’t think…

JS: No, no.

Moderator: I’m just teasing you… [Laughter]

JS: I’m here to discuss and to discuss very tough issues. So, I’m not trying to get out I’m just trying to apologize in advance for what might look like I’m running which I’m not.

Look, there’s basic, I think there’s many issues of globalization that we should discuss, but there’s one issue which I want to discuss first, which is that whatever you say about markets, pro or con, markets do not serve the poorest of the poor. And the most important problem I see in the world is that for about a billion people in the world who are at the absolute bottom of the world’s material well-being, life is so disastrous that it is a gross exaggeration to say that they are living at the edge of subsistence because they are dying by the millions of their poverty every year. This is a documentable, absolutely rigorous fact. People are not just living at the edge, they are falling right over the edge by the millions. You mentioned Bono. Bono is, by the way not just a celebrity but one of the most substantive people I’ve ever met. And I happened to be with him about ten days ago in a trip through Africa where we saw things that I never could have imagined seeing and never want to see again. We went to Queen Elizabeth hospital in Blantyre, Malawi, which is the major hospital in that country, which is one of the most impoverished places in the world. We were taken to the medical ward. About 70% of the people in the medical ward now are AIDS related patients. But patients is a euphemism. There are no drugs in the clinic. So this was a room of dying people. It wasn’t that every bed was filled. It was that every bed in the entire ward was filled with two people in the bed and one or two under the bed. They’re running four to a bed. On a good day, it’s three to a bed. Hundreds of people were packed into the room dying of AIDS. Now, of course you know that calamity. But what you can’t fully appreciate until you see the unbelievable character of it – is that across the hall from that ward was the outpatients service, where for the tiny percentage of the public that can afford one dollar a day for the drugs, people are under treatment; their health is restored; they are back at work; they are tending to their children. Their children have mothers and fathers. And yet across the hall for a lack of a dollar a day were thrown away human beings. And we’re doing that by the millions right now. When you go out from the hospital into a village, a few miles outside of the city, you see another site you’d never believe could be true. The villages are orphanages. There were no working aged adults when we went. There were few grandmothers who, through translators, told us the story of how their four or five or six children had died of AIDS leaving them with ten or fifteen wards to look after, their grandchildren. In mud brick houses were what the social services can manage is perhaps to get a plastic tarp under the thatched roof to stop it from raining relentlessly all through the night. Now, the shocking part of this is that it would be so easy to address. For two years I chaired a commission for the World Health Organization looking at the conditions of health of the world’s poorest people. We found that 25,000 people per day in the poor countries are dying of preventable or treatable conditions because they lack a few bucks to get health care. It’s malaria, it’s AIDS, it’s TB, it’s things we have the drugs for. But we’re talking about the poorest places in the world. Markets don’t serve the poorest of the poor, especially the sickest of the sick among the poorest of the poor. So, what you can ask and what I’m trained to do as a macro-economist is to add up the cost. What would it actually take to address this. It turns out that if all of us in the rich world set aside one penny for every ten dollars of our income, one penny for every ten dollars, since the rich world is a 25 trillion dollar a world – a year GNP, one penny out of every ten dollars would mobilize 25 billion dollars a year, which our estimate showed when combined with the efforts within these countries themselves, could save 8 million people a year. Now, I just left the WEF where the last panel had a senior official from the state department who was asked by somebody in the audience, "what are we doing in today’s budget asking for – is it 40 or 50 billion dollars, I haven’t read the budget yet, but something like 50 billion dollars increase in military spending – to make us safe in a world of such vast inequality that we’re not talking about unhappiness, we’re talking about death by millions, death by millions." And he said, "oh, but we have a foreign policy that covers our security but it also – it covers the other things. We’re proud to be investing US funds into a global fund to fight AIDS" he said. What is the administration proposing today? Again, if yesterday’s press accounts are right when the budget was released today, 200 million dollars compared to 50 billion; Now, I’ve just done two years of the arithmetic and 200 bil – 200 million from the United States is a death sentence, is a death sentence for millions of people. It is nothing short of that. That to me is the number one issue that we face for our generation. Can’t we find a politics which leads us to one penny out of ten dollars to somehow translate it into 8 million lives per year? And the answer so far has been no. I actually, I don’t know your feeling about it, my feeling is not to give up on the American people. My feeling is that they don’t know how much they could do. The surveys show they’d be welling to do a lot. They think we give too much in foreign aid, but they think what we give is about 20 times what we actually give. So they say we should actually only give about 5% of the budget, which is precisely 10 times what we actually give right now. Because no president in 20 years, including the Democrats as well as the Republicans has explained this to the people. So just to end, at least what I’m trying to do – what Kofi Annan has honored me by asking …to help him do is to make some of the basic facts known. Whatever else we have in the world, I don’t think we want to live in a world where millions die out of our most callous neglect and that’s exactly what we have. Thanks.


Moderator: I always have a policy on these things, when someone is speaking, whoever is taking the most rapid, violent notes on paper I call on to speak next. I noticed that Victoria down at the end if you haven’t filled a notepad, didn’t fill a notepad there tonight I wouldn’t be surprised. How do you respond to what, what Dr. Sachs had to say -- Jeffrey had to say – if we’re going to call you Victoria we’re going to have to call him

VTC: Yes…

Moderator: Jeffrey, don’t we.

VTC: Thank you very much. I’d like to thank Jeffrey also for raising that whole issue. And that’s an issue that is closest to my heart because I am a nurse by profession and I studied in a public nursing school in the Philippines that’s exactly the reason, actually, why I really became an activist. Ah, when I was, I finished my nursing degree in 1976 and, that was the time, we were still under the Marcos dictatorship, then. And one day I was helping a patient, a baby, who was just born. And we were trying to resuscitate the baby and we couldn’t, the ambulatory bags that we were using had holes in it, and we could not even put air into the baby’s respiratory tract because every time we pressed on the ambu bag air would come out, and, uh, I was so, I was so infuriated because at that time I knew, you know, in reality while there was all this wealth in the building, in these constructions, and we cannot even have an ambu bags which is even less than a hundred pesos which is, you know, like 30 cents or less, to even resuscitate the baby and the baby died. Anyway, really for me, that was the most frustrating for me because after I finished school, I went to the villages and worked in my communities to do community-based health programs, and all of us, many of us, some of the doctors and nurses who opted to go into the villages to do it, the main findings that we have is that all of the diseases that we have are really highly preventable infectious diseases which can be treated by better nutrition and even by very simple drugs like tuberculosis drugs but people cannot even take hold of it at that time when I was in the villages that was 1979-1980, we were, our country underwent a structural adjustment policies and the government would have to cut back on our health budget and all of that, we used to have some free medicines coming into the, into the rural health units and all of them maybe more than 80% of the medicines were, they could not come in anymore because of the cut in the budget, and all of the charity services in the hospitals, the government hospitals, had to be cut back because of structural adjustment. So I think what is really a serious problem, I totally agree that AIDS is a serious problem, public health is a serious problem, but we should not forget that one reason why the budget that goes into these public health services is because of the IMF and the World Bank policies, the structural adjustment policies, that they imposed on us. The second reason [Applause], and I can never forget the experiences I had one time I had to hike like 17 hours a day to go to a village because we had to do vaccinations and when we reached the village the vaccines were, we could not even use them because we did not have, we could not bring them in, in ice boxes and then we found out that the, all the vaccines that were there were also expired because we suddenly got those vaccines from I think the WHO and they just sent it to the villages because they were almost expiring but by the time we went to the villages they were all expired. So anyway, just to go back, the reason, the other thing about AIDS is that we all know that that really is a big problem in fact that is one of the reasons that we campaigned so hard at the WTO because this whole trade related intellectual property rights agreement where Glaxo Wellcome is producing AIDS medication, one treatment which costs three thousand dollars per treatment and India was able to produce these drugs, also, and can sell it at one hundred- seventy dollars per treatment and they were threatened to be sued in the WTO for, because they cannot sell because Glaxo Wellcome has the patent over the, over this drug. And I think this is really the greatest scandal for me that the pharmaceutical company has the, can sue a company, this small pharmaceuticals who can produce the AIDS drugs simply because they want to get profits and the AIDS patients who are dying each hour, each day, cannot even get access to these medicines because of that expensive amount, you know, expensive money, that you have to pay to Glaxo Wellcome. I think that really is something that has to be addressed by, by governments, by the international community, by WHO and fortunately enough in Doha many of the, it was because of the AIDS activists from South Africa from all over the world and also the NGOs who are supporting, that we managed to bring in the TRIPS in Public Health Declaration in Doha, which says that, ah, governments are, have the right to, not to, you know, to exercise their right not to adhere to intellectual property rights the agreements if their public health requires them to do so. And that was not an easy struggle. It has been a long struggle, because the countries who have the pharmaceuticals, are really, have really been very strongly opposing it, specifically some of the Swiss companies and in fact, in Doha and up to the last hour the Swiss government, the Swiss government, backed by their Swiss pharmaceuticals were trying to, their very best not to have that agreement come to the table. So I think we are really very much concerned about the AIDS, ah, situation all over the world, and that’s precisely why we are appealing to these corporations who have control over the manufacturing of these products to have a little bit of conscience to even make their prices lower and not to sue those companies who can develop the drugs at a much lower price. And I think that really is something that we need to stress here because it’s not, and it wasn’t an easy battle that we had in Doha, it’s not even a guarantee that if something like that comes again that they will file suit against these companies or against a developing country producing these drugs will come into WTO or any other court. Thank you very much.

Moderator: Thank you.


Moderator: Now we just heard from someone who was inside the World Economic Forum and someone who was down at the World Social Forum, essentially agreeing on a lot of the core problems and agreeing on a lot of the core points. So I would really like to go back to this fundamental question of why we need a World Social Forum and a World Economic Forum. Where is the, the break down? Lori Wallach, why don’t you, why don’t you try and answer that question.

LW: I’ll, ah, I’ll follow on that but I would also like to pick up with the line of discussion…

Moderator: Please, I hope you will.

LW: …It’s the same, it’s the same point, actually, which is I think that we need to think about systematically why are those folks that you described as the poorest of the poor so very poor at this moment in time and make the link with some of the resulting terrors, like the way the AIDS epidemic has ravaged Africa with some of the bigger structural issues. And I would say that the World Economic Forum approach of trying to deal with the causes – I mean the results – is meritorious. I am for more foreign aid, I am for people being able to get access to antiretrovirals and it’s a scam of the pharmaceutical industry, etc. I’m all for that, but, I would argue, and this is what you would hear at the World Social Forum that you need to take a step back and look more broadly about the whole scenario. So, let’s just look at Africa. I mean, I do also recommend Mark Weisbrot’s article about "Globalism for Dummies" because I’m a trade lawyer and not an economist he finally made all the numbers there accessible to me. And what does the data show? That African countries, who went through the International Monetary Fund structural adjustments, they reorganized their economies according to that model. That was supposed to be painful but then make them grow and make them rich: trade liberalization, finance liberalization, investment liberalization, deregulation, privatization, and new protections for property, the intellectual property protections that Vickie was talking about and also investment protections, that formula was supposed to, if painful in the transition, ultimately be the thing that would create the wealth that would allow for instance public health infrastructure, etc. And the data is exactly opposite. If you look at the period in sub-Saharan Africa for instance, prior to those adjustments, the growth rates are not great, but if you look afterwards it goes from a non-impressive positive growth rate to negative, 23% loss in per capita GDP in the period when the structural adjustments went into place and afterwards. Now, if you looked five years after it started, you could say, "all right, it wasn’t long enough, you can’t judge." Twenty years later for those parts of the world to actually having had the bitter medicine, to actually having a worse condition. And it’s not just the finance and investment stuff. In the WTO, the sub-Saharan African countries in the seven years that the WTO has been in effect, have seen their share of world trade decline. And if you look as well not just literally at the wealth that is there through either through the government or through individuals to buy their way into that one dollar a day, which so many people can’t, if you look at also what the IMF programs as far as cutting domestic spending did, and this gets to what Vickie was talking about, about the public health system, I mean why was it when the AIDS crisis in the U.S. was discovered there could be a public education campaign that would talk about how to prevent the transmission of HIV and for people who had HIV obviously there were meds, but part of the issue was, there was the infrastructure to do it. Versus, in many of the countries who have been structurally adjusted in the public health services have been eviscerated, that was the first stuff to go. So, a refrigerator in a hospital, forget that, just a campaign to tell people about condoms would be something no longer would be in the country’s capacity even though there were public health systems before. And then you start to look at Africa and the AIDS/HIV issue, you look at a lot of the wrenching economic changes that occurred and the many studies of, New York Times just did a big series on this, about the link between economically driven migration, the social dislocation of globalization breaking up whole regions, towns, villages, and the migration, and the pattern through the migration of the HIV spreading been bring back into the villages then the men leaving again to work as the local economies are basically destroyed. So, if you look at some of these underlying issues, and then you say alright now that all this has been caused, how do you treat it, and then again as Vicki said, the WTO rules on intellectual properties that’s the WTO agreement that basically say, monopoly patents on these drugs that make them inaccessible and when governments try to change that, they get threatened to be dragged to the WTO tribunal. So, where I’m for helping in any way possible to get meds to folks who are infected and to have more foreign aid, if we don’t deal with the underlying problems, it’s like putting band-aids on gangrene.


Moderator: I’m getting the eye here from Mark Weisbrot, who has been referenced in a couple of these comments …. Is it really all that bad, Mark? I mean, we certainly see, and I would venture to suggest to the majority of folks in this crowd would tell you that economic globalization had not all been to the good, but is it really as bad as Lori says?

Mark: Yes, I think it’s worse, actually.

Moderator: So, Lori’s wimping out on us here. Is that right?

Mark: Well, it’s just wider; it’s not just Africa. I think that’s the thing. I mean, of course I agree that the poorest of the poor are the most important problem are the people starving and people don’t have access to essential medicines. But you also have to consider that the entire low and middle income countries, you take the entire low and middle income countries all of them as a group, they’ve lost out over the last twenty years. The rate of growth of income per person is less than half what it was in the previous twenty years. So there’s been a real failure of this whole entire model that’s been pushed by Washington and the Fund and the Bank. And it really is, I think you really would have to agree with me on this, Jeff. It is a failure of the economics profession and as a result of the politicization of the economics profession that you don’t have people talking about this. I mean, if economists don’t care about economic growth, who is going to? This should be the question that’s in the papers everyday: what went wrong over the last twenty years? This is the worst economic failure since the Great Depression and the most widespread. And, you know, it’s true, Africa was hit the worst a sense that they had positive growth of about 34% in the first, from 60 to 80. And of course, you know, if they had continued with that rate of growth, there would be at least some more means of treating people there not in the very poorest countries but in some. And, ah, then of course, Latin America grew by 75% per person from 60 to 80 and has grown about 7% since 1980, and there it’s very clear what kind of policies, some set of policies were introduced in the last 20 years. And 20 years is a long time; this isn’t an artificial cut and Jeff will back me up on this too. This is a business cycle at its peak. You had oil shocks in both periods you…this is a fair comparison. You put the 50s in there, you’d make it even worse. We just don’t have the data going back that far for everyone. So, this is a clear phenomenon that’s being ignored for ideological reasons because the press and the economics profession, I guess I blame the profession more than the press because the press really takes their lead from the economists on this, is not willing to look at any of the causes. It was because of Jeff and Joe Stiglitz during the Asian financial crisis that the press did at least notice that the, that the crisis was actually caused and exacerbated by policies promoted by US Treasury and the IMF. If they had not spoken out, that would of gone right by and it would have been treated as another success like the Mexican, the so-called Mexican bailout. I don’t like to use the word bailout because mostly it’s the people been thrown overboard. And it’s the banks, as in the Asian crisis, all they really did was bailout the banks and make the governments of that region, ah, guarantee the private debt, and Jeff has written about this as well. So, I agree with you and with everyone else here, I mean, you know, and I’m completely supportive of Jeff’s project to try and get more foreign aid where it’s most needed. It is a shame, it’s a disgrace that the United States spends away one-tenth of one percent of GDP, as compared to…as overseas development assistance, not foreign aid which includes, half of that is Israel and Egypt and doesn’t really go to help people, it’s political, it’s military. But, and that’s why I don’t blame the people of the United States either. They don’t support foreign aid because they know our foreign policy is rotten to the core, even if they don’t know where Burkina Faso is - they know what we’ve done in the world a lot of them lived through the Vietnam war and they know it hasn’t changed very much at all since then. We’re still doing the same things in the world. We’re making things worse. That’s why my goal is even more modest than yours’, I guess. We’re trying for harm reduction, okay, we’re trying to stop the United States from making the situation for people in Africa and Asia and Latin America worse. Right now, the IMF is in there negotiating, pressuring the Argentine government to back away from its program which would have made the banks pay for devaluation instead of the people, okay, 9 billion dollars of European and US banks. I thought that was going to go for sure, and, but that’s not up in question even because the Fund is pressuring them right now. Okay, right now in secret negotiations that we don’t even know what they’re doing and how they’re leaning on them and they’re pressuring them not to do the other things they want to do, tax the oil companies. So, you can go through case after case in country after country and Jeff has done this too, he’s talked about it and maybe you can’t talk about it as much now and that’s fine because you got a different project, you’re trying to get these people to cough up some money and like I said, I’m very much for that. But, you know, it took thousands of people in the streets, you know, Act Up Philly to get the United States screaming "Gore’s greed kills" a couple years ago to get the United States government to stop threatening South Africa with sanctions through the medicines act which would have allowed them to import and produce generic equivalents for AIDS drugs. That’s what we’re dealing with. We’re fighting them every inch of the way just to let people, just to let a decent government where it exists or a rotten government that wants to pursue a decent policy do what’s best for their own people, that’s what we have to fight everyday.


Moderator: Two quick housekeeping matters. Folks who are seated please try to move in. The management of the church, and I don’t know if that’s God or somebody lower down the rung, but the management of the church is very concerned about people standing in the aisles and stuff like that so if you can make some room and if people can try to sit down that’s great. It would be very… you’ll make us more popular with someone in a position of authority. Second, if you have cards with questions for some of our panelists and I know a lot of you folks do, our able minions will be passing among you, please pass them at the ends of your rows so the folks can pick them up and pass them in … , do you want to pass them through the front, Michael or to the side? To the side? [inaudible] Pass them to the outside of your rows. People are moving very well, this is the sort of cooperation we’re looking for. While you’re doing that, before I go to Michael, I want to take Jeffery for one second. Jeffery, is it really the failure of the economists? Are you guys totally at fault for all the ills in this world?

JS: I think it is the basic fact that just about everything in our society follows the money and, ah, even economics spends almost all of its time looking at problems of rich countries and not problems of poor countries. It’s almost like everything else. So, I agree with the criticisms very much. I also agree that …

Moderator: Can we pause for just a second. You do agree with the point that economists have become too politicized or with the broader point of …

JS: I was making a simpler point, that they have neglected this issue. So, they just haven’t, they don’t even spend time worrying about it. It’s not that they have some great wrong answer, they don’t even know it’s a question often. I think that’s more of a problem, actually.

Moderator: Do they care?

JS: Well, they don’t notice. They probably would care, but in general, development economics is the kind of sidelight to the economics profession. So I think there is a, most of the economists go into the financial markets or other issues involved with the US economy. We’re trying to battle back, and point out that five-sixths of the world lives in the developing countries, so-called developing countries, the world is the developing world not the developed world that’s the very odd one-sixth. [Applause] And odd we are indeed. Let me say a word about the IMF and then … I’m going to enter into a point that probably will be a point of controversy but I just want to do it for the sake of clarifying one big aspect of the debate. So far I haven’t disagreed with a word that I’ve heard. And there’s actually a tremendous amount of sentiment around here. The IMF’s structural adjustment era was a massive failure. This is not an ideological point. This is just a point in the data. There’s no question about it. That era was a period from 1982 to 2000 roughly. It is over, actually. It’s over because it was such a massive failure. You have the IMF managing director now – Horst Köhler speaking almost everyday calling for vastly increased sums of assistance to help poor countries, ah, saying that we can’t go on like we were, cutting budgets at the expense of dying people. And I think this is extremely important, and it’s also important to understand that the IMF for a long time was serving the purposes mainly of the U.S. government which did not want to face up to the lack of foreign assistance that we give. So, we told countries, tighten your belts rather than looking at the scale of the emergency honestly. Now there’s a push back and the push back is to tell the United States, you look at this honestly without more assistance from the richest country in the world you can’t square the circle. There’s going to be too much death and suffering unless there’s going to be help from the United States. Incidentally, just as a, for anyone interested in the Health report, it’s online for free at our website at our, at Harvard which is,, you can download the report and I hope you will because a lot of expert work from around the world went into it.

Moderator: Before you cause some controversy, I want you to cause some controversy, but before you do, I want to do two quick things. Can you hold the controversy for a sec?

JS: Sure…

Moderator: All right. Good. I want, Lori do you want to say something quick in response to this? And then I want to, we’ve got poor Michael here who has probably communicated with more people on issues of economic globalization than any of us, sitting quietly and waiting, I appreciate that.

Michael: [Laughs] I’m not happy about that…

Moderator: Lori?

LW: I just wanted to bring up a hot pursuit point about the IMF and their rethinking because it should be from your mouth to God’s ears that that is the case. But from what I can see…

JS: That’s why we’re here…


LW: From what I can see with what the IMF has to say about Argentina, we all better start praying. I mean I don’t see such a huge shift. I see more of the same stuff. And what’s worse is that for all of the same countries who signed the contracts to do the structural adjustment that’s flopped. I don’t see the IMF running around saying, "Oy! What a mistake that was! Let’s rip that up and start over." They’re still [motions as if hanging herself] around the neck with the same damn contract, going down the tank, and that would be bad enough, except here’s a moment to turn the page and are they turning? They’re going backwards with Argentina, and I just had to say that.


Moderator: Let me, Let me just I’m going to hold you for a second here

JS: Sure

Moderator: Michael you have actually written more than anybody I know of about how these institutions can actually learn and be tweaked. Ah, you’ve written especially about the WTO, how it relates to Green issues, environmental issues, we’ve got to little bit of a discourse on this panel about whether the IMF has actually learned anything. Let me ask you first off, how – you’ve covered all these institutions – how bad are they? How good are they? And to what extent can they be made better?

Michael: That’s all you want to know?

Moderator: Yeah…


Moderator: And if you could do that in about thirty seconds there, that would be great…


Michael: Let me start at a slightly different point. My head is swimming from the generalities that I have to, I’m losing sight of exactly what the question is. You’ve asked about a whole set of institutions all at once which have different cultures, different histories, do different things. I guess my visceral reaction is that we’re painting with an awfully broad brush and I’m not sure that’s, that’s terribly useful. It’s one thing to condemn the IMF, they’re an easy target. It’s also easy to condemn a lot of what the World Bank has done. I sense a spirit here that we’re going to use the same instincts to begin to indict this term called globalization and I guess that means trade, and I guess that means the World Trade Organization. [Applause] I think you begin to get. Well, well listen…I start with two points down. You’ve indicted the press and you’ve indicted the economists. And I unfortunately qualify under both categories. [Laughter from the panel] This is quite a hopeless exercise. But…

Moderator: Redeem them both. [inaudible]

Michael: I guess one caution is a little humility here would go a long way. We don’t know very much about how to get countries in Africa growing. We don’t even know very much about how to get the U.S. economy growing very successfully. And I think one ought to be cautious about these broad indictments of institutions and theories and everything else along the way. Yes, Jeff is right that development economics is not the profession’s proudest moments. It’s actually interesting to think about why that’s true. It’s not because a lot of people haven’t been doing it. It’s not because a lot of smart people – smart economists have not thought about it. But they have been spectacularly unsuccessful. And perhaps one of the reasons is that it’s perhaps the most inherently political of all economic questions in which the politics of economic advice is at the center of the advice and can’t be relegated to some afterthought of the way we do fiscal policy or monetary policy or a lot of even welfare policy as odd as that’s going to strike a lot of you. Where the politics of the policy advice can be [inaudible] we’ll let the politician’s handle that. But we have a lot to say about deficits and spending and setting time limits on welfare. In development economics, it just never worked - with the issue inherently caught up with politics that you can’t even say five sensible words. And therefore, at least in my generation, economists existed in droves because they couldn’t use their math and they couldn’t use their statistics and they couldn’t get very far. That’s reversing in some ways and the profession has never honored people who did applied policy very much and development economics have been about applied policies and people have never gotten professional recognition for heroic attempts. I worry a lot about the feeling in this crowd that you can indict …. Well, there is a lot of evidence in the economics profession that trade helps, that globalization can help poor countries grow, I don’t want to overstate the case. I don’t want to state the case that, what’s called free trade, a concept I have no idea what it means, liberalized trade is always good … it’s not. People like Joe Stiglitz have compellingly argued that in many ways it’s been destructive and certainly when pushed very hard. But I think the goal from rejecting the entire breadth of findings of how good open market activities have been for getting growth started, a number of these studies authored by Jeff Sachs, to go from rejecting them with a flick of the wrist to the notion that it’s all a sham and it’s all a conspiracy and it’s, it’s open trade and trade liberalization that’s burying developing countries in their poverty, I think is making a gruesome mistake. The IMF, even the IMF mistakes are rather complicated…

Mark: Who said that Michael, because I haven’t seen anybody say such things.

Moderator: You got to use the mike if you’re going to ask him a question.

Mark: Sorry…

Moderator: I like you asking him a question, I just…

Mark: I really think that’s important because people are always trying to portray … that’s why I don’t use the word anti-globalization, either. We are…, first of all, there was an article in the New York Times’ , an AP article this week and it said, the success of Porto Alegre was due to, ironically globalization. The cheap airfares, and to, you know, more open borders and the internet, and all of these things that most of the anti-globalization activists, or most of the people here are against. That’s almost an exact quote. That was just such a caricature! You couldn’t find one person in Porto Alegre who was against open borders, more open borders, the internet, or cheaper airfare. [Laughter] And, we’re not against trade or foreign investment, we’re for countries doing what they want to do. We’re the ones, you’re talking about humility, where do you see the left or the critics that you’re referring to come up and say we have a formula for every country to follow like the IMF does that measures success by the degree of openness regardless of the consequences of that openness are. We don’t do that. We want self-determination and democracy, that’s our criticism of the WTO, and the IMF, and the World Bank. [Applause] The IMF is a creditor’s cartel, we don’t think that’s legitimate. We don’t think there should be a cartel. One organization gets to say if you don’t do what we want you don’t get money from the World Bank, from the IDB, from the G7, from USAID, and most of the private sector, either. That’s what we want to break up.

Michael: Can I stick my neck out and say that I’m also for democracy and self-determination. I did not…

Moderator: And for cheap airfares?

Michael: Excuse me?

Moderator: And for cheap airfares?

Michael: huh? … nah….

Moderator: Alright… [Laughter]

Michael: I did not detect in your writings a careful distinction of the component of what you labeled the Washington Consensus and liberalization and there was a broad, broad brush rejection of their …

Moderator: use the microphone

Michael: But, let me come back to the original question, which was, are these organizations hopeless? Let me talk about one, which is the WTO, and the debates that Lori and I have been having, I don’t know – for ten years or more, since my old days on the editorial board. I actually think the WTO has been surprisingly effective, successful, and constructive since [boos from the audience]. I’m a journalist and an economist, I get to make …

Moderator: That was a very quick and effective boo. If you’re going to do it, that’s how to do it. Now let’s hear…

Michael: Now, of course the, the substance of that remark depends on what expectations I had when it was started. Let me just refer to specifically, since I was asked about it, the WTO record on the environment, which is reflexively rejected, I’m sure, by everybody in this room. But, I think it is a far more complicated and subtle history than is normally allowed. The WTO is held responsible for a set of rulings in which it said United States policies were to be declared WTO illegal. There are a couple such cases. Perhaps the most important one was, shrimp-turtle in which it said that US regulations that said countries that collect, that caught shrimp with boats that needlessly killed turtles, sea turtles, that shrimp would be kept out of the United States. And the WTO did so rule and the environmental movement for the most part was quite condemning of the ruling for obvious reasons. But in a pattern I won’t go through because it would take an hour, if you look at that ruling and look at other rulings since 1995 you will find something far more subtle and, I think, constructive and encouraging. This is in fact what the WTO appellate body ruled, equivalent to the Supreme Court, if you will, was that the law that the United States passed was perfectly fine. That they were embracing the notion that the United States can pass laws that said we’re not going to take your products if they were produced in a way which we deem damaging to the environment, a principle that has never been established under an international law before that. They did condemn the United States solely because they argued it was implemented in a needlessly discriminatory fashion. That it hurt the foreigners in ways that advantaged the domestic producers in ways that were unrelated to the purpose of the law and could be gotten around by just non-discriminatory means. Lori and I have had hours of conversation about the quality of that ruling. But, that and many other rulings, the WTO was staking out ground that has given a lot of leeway and a lot of room for countries under the WTO law to protect the environment even beyond that which existed before the WTO came into being in 1995. There is case law now being developed; one case at a time in which the environmental leeway of countries like the United States is being expanded one step at a time. It is now in many ways become a political battle and that’s exactly right that organizations around the world are becoming organized fighting within the WTO. WTO so far is a very closed organization, the most important thing to do is open it up. I’m not a WTO fan – there’s a lot of changes that have to be made. My point is the same point, which is don’t condemn with a broad brush. There are things going on that are constructive; there are things that are remediable; there are things that can be improved. The WTO is one of them. We can go on and talk separately about the World Bank and the IMF as they are very different institutions.

Moderator: Thank you Michael [Applause] Let me quickly grab Lori because Michael, you reference her a great deal. Lori I’m going to ask you to be very quick if we can only because I don’t want to lose Jeffery Sachs before A) he causes controversy and B) we ask him at least a question or so.

LW: I simply wanted to point out, and we can’t have this debate in all it’s glory here because everyone would fall asleep as we spoke in GATT-ese, but for anybody who’d like a very different take because there is a very different take on the environmental record of the WTO, buy our book, it’s right out there, Thank you.

Michael: She’s right it is very different.

Moderator: Oh very good. Double endorsement. Now, Vicki, Victoria, I’m not going to call on you because, you’ve got a pile of…, you are the winner of the question contest. You got the most questions. So, we’re going to get to you in a sec. Jeffery you’re going to cause some controversy, I hope?

JS: Yeah, and then sadly because things are just starting up and I’m going to have to unfortunately get umm…

Moderator: Very good.

JS: Okay. Where to begin. First I want to recommend a good book by Angus Maddison. It’s called Monitoring the World Economy: 1820-1992. I’m just, uh…it’s called Monitoring the World Economy. Angus Maddison. It just…if you’re interested in a long history of what’s actually happened in the world in data, sorry, but it’s interesting. I found it, I assign it the first day, because it’s got a lot of interesting numbers and the point I wanted to make was the following: Africa has been poor for two hundred years, impoverished. It’s never grown rapidly. It’s a terrible tragic environment. And there are many questions why, but the burdens that it has faced from malaria, colonialism, to slavery, to the period of slavery and the heavy dependence on a few primary commodities in trade are all part of the story. Now the IMF failed to change its, Africa’s basic dependence on primary commodities, even one iota. That’s the most important failure of structural adjustment. There was no structural adjustment. Nothing changed. Africa did not get foreign direct investment. It remains as dependant on coffee, tea, cocoa, with all their declining prices and instability, as it was 20 years ago. Africa barely gets foreign direct investment, now, except for the oil sector and maybe diamonds and so forth. It does not export even textiles and apparel to the US.

[Interruption inaudible]

JS: I’m sorry?…Yes, of course, it was forcibly exporting slaves up until basically the end of the 19th century and there is still some slave trade going on today in Sudan and Mauritania and other places. But, the point that I wanted to inject was that the other side we should look at, my biggest urgency is with the poorest of the poor, I think life and death is really our first task. There are lots of middle income countries where the story is much more complex. Let me give you a few quickly. China has had the fastest economic growth in the world, in history, actually, during the last twenty years. Korea, Taiwan, you know these cases, Malaysia, Singapore, these are all fascinating examples for us to understand because they’ve been period, they’ve had rapid economic growth accompanied by massive improvements in social conditions, with life expectancy rising to above 70 years, with sharp drops of infant mortality rates, with big increases of nutritional content of diets and so forth. In all of those cases, those countries were successful in generating new export sectors in manufactures and attracting a tremendous amount of foreign direct investment. It’s actually the most marginalized economies in Africa, for example, where no one goes except to drill an oil well or to dig a diamond mine that are the worst of the worst and the fastest growth has come for the economies successfully attracting foreign direct investment and able to increase exports like China has. China, you know, went from about $20bn of exports in 1980 to $250bn of exports last year. Every other shoe in this country is made in China, usually the left one I suppose, but the point is that that export boom was sufficient to carry 1.3bn people on a stupendously dramatic increase in material well-being. Now, to me that’s the point of controversy. I don’t know if it’s controversy, because I liked how Mark described it, mostly. But the point of controversy, for me as a strategist economically, I try to help countries attract foreign direct investment and stimulate exports, because, not in the traditional sectors because I don’t believe you can get rich on sisal, jute, coffee, tea, but I do think you can get rich on semi-conductors, I do think you can get rich on automotive components, on plastics, on other, that sounds like The Graduate, doesn’t it? But wait, just to make the point, just so I can complete the point, my biggest worry in the world is for the countries that investors aren’t interested in at all and what I believe on the economic growth side is that the key is to escape from this narrow group of commodities on which they live into a much more diversified base for material well being. Then you ask the question, "Why don’t they get that?" Now there are many answers. One is that the trading system is biased against the poor countries. So why don’t you actually make chocolates in Africa rather than just cocoa beans? The reason is that there is a 26% tariff on finished chocolate into the European Union. So you make the chocolate in Europe you sell the, and all you can do is import the coffee beans duty free. So, in other words, the trade regime works against the poor countries. It does in textiles as well. It does in many different areas. So that’s one answer. Second is some of the poorest places in the world are geographically in extraordinarily difficult conditions. Companies, other than for oil or diamonds don’t go to landlocked regions, generally, they don’t go to mountainous regions, they don’t go to far away regions, they go to the coasts and so this is an important point. They don’t go to malarious regions in general. Even disease can be a major hindrance. So there are many reasons why different countries are not yet successfully in this game in the right way I would say. And finally, the IMF gives bad advice on how to attract foreign investment. You’d be surprised actually how bad the advice is. It’s just not clever. They tell the countries the wrong things and the investment goes to countries not under IMF programs, but to the rest of the countries. So there’s the matter of bad advice also. The point I want to make though, where there may be some controversy, or maybe not, is that as a strategy of economic development I believe that there are, what I like to summarize as two pillars. One is health and education and that’s no matter what country we’re talking about and what level. Investing in people is a fundamental bulwark not only a human right but a sound economic strategy. You need healthy, educated people. But the second you need economic growth and I do believe that for a poor country the best way to grow is to have diversified rapidly growing exports often by attracting American multinationals in, like Intel or others to produce…

[Interruption inaudible]

I’m just explaining my different…I told you it would be controversial! I just want to explain it. So just let me finish and just explain it. My observation is that in the countries that are successful in attracting such companies that’s actually where the growth is most successful. And the reason that countries don’t get that is that sometimes the exports that would come from those firms are barred from the US market. For instance still in Africa today, they can’t effectively export here textiles unless they are made in America, that’s the protectionism. So, that’s one reason, and second there are, you know, as I mentioned, a host of other reasons why countries don’t get the investment including their own, their own mistaken policies sometimes of chasing out companies. So that’s where we probably would not see eye to eye. You’d be, you’d think it would probably, my guess is that a lot of people here would think it would be a terrible thing to try to go after that investment. I just want to say my observation is that the countries that have been successful in attracting such investment actually are the ones that have had the fastest growth. And…


JS: I’m sorry…


Moderator: Terrific question.

JS: Yeah?

Moderator: Wait, wait, wait, guys.

JS: Okay, I…

Moderator: Folks! Please!…

JS: It’s a good question…

Moderator: That’s a good question from the audience done with direct action. Good. And Jeffery’s got…now Jeffrey you’ve got to get home to your kids.

Someone in the audience: Yeah, right!

Moderator: But…Hang on, hang on, hang on. Why don’t you take it up and we’ll let… then…

Mark: Okay, before you leave, I was just wondering, I’m just going to get him to agree to something. This is one of the good things about debating economists is that we agree on certain things, okay? Now foreign direct investment, your argument has a great benefit to, and quite a big role in China. But, as a technical matter, if they could do the same thing without the direct investment if they just license the technology or found a way to get the technology, right? They don’t actually need the foreign ownership or direct investment itself unless they’re actually using it to finance a trade deficit whereas China has been running a trade surplus all these years. So, if they’re getting a benefit, if the foreign direct investment contributed to their growth in the way that you believe it did, and I would probably estimate a lot less than that, but if it did, it was through the transfer of technology. So, economists and the World Bank and the IMF and everyone else should be pushing technology transfer rather than just foreign direct investment and in fact, you would also agree that they are doing the opposite of promoting technology transfer, by trying to tighten all the rules around intellectual property rights. Do we agree on that?


Moderator: Hang on. Hold your thought, keep that in your very large brain.

VTC: But just very briefly…

Moderator: [Inaudible] as we’ve already said, is because this guy does have to his kids

VTC: But, yeah…

Moderator: I wanted to get this in in time to answer the questions

VTC: Yeah, I think that I agree with a lot of the things that Jeffrey is saying, but isn’t it that China has really grown that much precisely because it has never followed any IMF proposals? [Applause, laughter] It has strict currency controls, you know, it really has developed it’s own technology to be able to process this product and that’s one of the problems that we have in our country, in the Philippines, for instance, although we have all the rich resources of metals and minerals and all that we have never been able to develop the technology to process this into finished products that can be sold at a higher rate, I mean, that’s really, that’s the sad story of the third world where

JS: Can I…?

VTC: we have been always reduced to being the source of raw materials but never really allowed to process these so that we will be able to sell at a much higher price. But I think that the only question I wanted to ask really was that China and even Malaysia they never really followed exactly the IMF and World Bank prescriptions and that’s why they are in that state.


JS: Let me say again, let me say again the IMF and the World Bank terrible at attracting foreign direct investment and I think the advice has been very bad. So, neither organization has ever depended on actually attracting a dollar of real investment so I agree that it, you know, has not been a way to economic development. And I agree in part with what Mark says but I would put a bit of nuance on it which is that I also favor technology transfer and I think there are many ways to do it but in practice one of the most important ways is foreign direct investment. And I just saw, for example, in Costa Rica, I worked with the government in 1995/96 to help them attract Intel in an international competition where many countries were trying to get this plant. Intel was building a $1bn semi-conductor plant and they were looking at different places. My thought was that it would be extremely good for Costa Rica to get it so that Costa Rica wasn’t dependant only on coffee or on bananas but would also be selling semi-conductors. They competed hard, they won the investment, they are a major semi-conductor exporter right now. You could not transfer that technology. That is, they went, beautifully, to about the highest standard of production in the world markets and they are doing hundreds of millions of dollars of exports through successful FDI, but very clean energy a very clean environmentally sound, a very high tech company in San Jose and the results are quite good. In China, China’s pulling in about $50bn of foreign direct investment every year right now which is the fuel of the long term economic growth. It’s been hugely successful. Malaysia is another country I would recommend that you have a look at. Malaysia is a country that, probably among the tropical primary commodity producers, the one that did the best in moving out of that dependence on a few primary commodities to a diversified consumer appliances electrical machinery semi-conductors high-tech in the last 30 years and they did it by attracting Intel and others as well. So, I think, there is a record and I’d love to spend, I hope you invite me back, because I’d love to do this when I didn’t have to run, it’s unfair and it looks…

Moderator: Jeffrey…

JS: But wait a minute, sorry. But I want to answer the question that was asked here. I think you asked, how, who was the beneficiary of this?

Member of Audience: [Inaudible]

JS: Right. What I would ask you to do, what I would suggest so you can be the judge, not me, a good place to look at the data is the Human Development Report each year of the United Nations Development Program because they have the data in the back of the book on life expectancy, caloric intake, the maternal mortality, other, other very, very critical variables other than GNP per capita. I’m saying the real conditions of life and the Human Development Report does a beautiful job in collecting those data and they’re available on the website at or find the thing and what I’d ask you to look at is a case like China or Malaysia or these cases that I cited to look at how dramatically rapid has been the improvement of life expectancy, reduction of infant mortality and so forth. It’s not uniform across the countries, but it is, for hundreds of millions of people, it’s about the most spectacular rise that you’ll find. But anyway, I don’t want to be the judge, I want you to look at the data, that’s where, I would suggest, you find it. I do apologize… I have to go…

Moderator: Ladies and gentleman please thank Jeffrey Sachs for joining us.


LW: As Jeff runs out the door…

Moderator: Yeah, you’re going to grab him as he goes…

LW: As he runs and hears, the issue of China and Malaysia is a perfect example, because if you look at the formula that folks are supposed to sign up for, China and Malaysia are the outriders. So if the formula is, for instance, finance liberalization. China and Malaysia control their currencies. So, if you look at who survived the Asian financial crisis, it was the two countries in the region, China and India, who don’t have freely convertible currencies. I mean, you can’t speculate on the Chinese Wan, it’s not traded. So the government is actually controlling that. That’s one of the key sort of premises of the model. Look at the trade stuff. For Korea as well. These are countries that have very high import restrictions. There’s still an 80% domestic content rule that the IMF is trying to chisel away at in Korea right now for cars. So these are countries that have very protected imports, there’s not a lot of imports but they offer inexpensive labor, as this man back here points out, for companies to invest to export out. So they got investment, they got exports, but in fact, they protected their domestic markets. They had huge domestic public expenditures, part of the formula is to cut down you’re domestic spending. I mean in China, obviously, I mean, the energy sector, everything is the government. I mean part of how the companies export successfully has to do with huge government run sectors. And as far as technology transfer, I mean, basically, if you look at a lot of the success in countries like China, a lot of it has been in off the intellectual property rules transfer of technology, sort of like it or not. And frankly, let’s be honest about this. This is what the US did vis-à-vis Europe when the US was a developing country. We did technology transfer. We exported stuff and had very strict restrictions on imports. We had a very tight money policy and this is the same technique that then Korea and other countries use Japan vis-à-vis the US and Europe. And what the WTO’s rules the IMF’s programs do is pull up all those ladders and it does it in a way such that you see the countries that wouldn’t buy the whole formula like Korea, like Malaysia, who are the ones who A) grew the most and B) have withstood the lumps. And so those two cases actually make the counter point if you ask me.


Moderator: Michael Weinstein, is the WTO pulling up all the ladders?

Michael: In some sense we’re fighting last year’s war. It is the economists at the World Bank who have written a devastating critique of the World Bank record and told us that the World Bank has an unblemished record of failure. It is the best and the brightest of the economics profession, the Joe Stiglitzes a recent Nobel Prize winner, who has told us of the dreadful record of the IMF. By the way, it’s interesting that Joe Stiglitz, who was the chief economist of the World Bank, does not apply the same comment to the World Bank that he does to the IMF. Stan Fischer at the IMF will tell you how the World Bank has been dreadful, but the IMF has been just fine. [Laughter] There is turmoil here by people whose hearts are in the right place and are trying to figure it out. It’s not simple how to get this stuff straight by any stretch of the imagination. Stan Fischer, who was head policy for the IMF for years, was Africa’s candidate to become head of the IMF. No one can question his intelligence as one of the best economists of his generation. No one can, I think, seriously question where his heart is, and who he wants to help. There’s profound questions about policy issues. In some sense, Lori, I find, is just picking on the worst part of the IMF which almost the economic profession as a group has also condemned. The question is, now, what to do about it. There’s tremendous questions about should the World Bank get out of the business of lending money. Move to a grant system, that is to say stop lending money to countries that can never pay the money back to create public service, [Applause] public health structures that we know are going to be subject to corruption and be ineffective and go to a system where the World Bank will just pay to get kids vaccinated. Let me pick up one, just a few nuggets from Jeff’s comments. Jeff talked about a strategy that he finds has worked some places, of an export-oriented strategy for growth and acceptance of foreign direct investment as a way of promoting technology transfer and productivity. Jeff can make that case. Believe me, nobody can reject that case out of hand. It’s not, it’s not nearly that subject to criticism. But let’s be clear in case it’s not, that if some countries are growing by exporting, there are going to have to be other countries that are importing. You can’t just export in this world, there’s got to be a system, and so therefore you’re led to the importance of trade liberalization, of pounding on the US and Western Europe to drop their barriers against agricultural and textile imports against imports that mostly come from third world countries. Trade liberalization and the kind of exercise the WTO is engaged in has to be won. There are lots of things about the WTO that you’re not going to like. There are lots of things about the WTO that must be fixed. But just don’t wave it and say, "What a disaster". It’s not that simple.

Moderator: Vicki… Vicki is trade liberalization the great hope for indigenous and poor peoples around the world?

VTC: Well actually, that was not what I was going to say. Well actually we’re not really saying that we are totally disregarding the WTO, that it’s totally useless and that’s precisely why we have been studying all the different agreements under WTO and looking at how these agreements are really effecting different people in different countries. And what we are saying is that the problem with WTO is that, and even the IMF and the World Bank is their policies. It’s like a one size fits all kind of policy and it doesn’t distinguish between the different developing stages of all the different countries in the world. And, and like for instance if you look at what we have seen China that hasn’t really used the IMF prescriptions of floating their currency, opening up financial liberalization and really trying to develop their technology for processing products, then, of course they will be able to grow that fast. But the countries which have really accepted all the requirements, the prescriptions of the IMF, like the Philippines, for instance, you know, in spite of the fact that we have all the richest, the rich resources in the world, I mean, you know, we have gold, we have silver, we have copper, we have everything and yet we remain the poorest country precisely because we have been following all these prescriptions. And that’s exactly why we’re saying that you know these kind of prescriptions are a failure of the IMF and the World Bank in really trying to bring these countries into countries that are more progressive and economically more able to distribute wealth to their citizens. These kinds of prescriptions should already be removed and the IMF should not keep on pushing these kinds of prescriptions to other countries, when will we ever see, I mean up to now I have never seen the IMF really changing its positions, changing its prescriptions in spite of all the failures, of which Argentina is the latest. We don’t still see really a significant change in that. And the other point is that, that’s why this trade liberalization, of course it can be good for countries who really have the capacity to trade, and if the barriers to their exports are not there, you know. And Malaysia, Malaysia is always cited as an example. I agree that it has really taken advantage of all the possibilities in trade. But, again, we should not forget that Malaysia is not a World Bank country or an IMF country. And then the point about trade liberalization it’s not something that will work for everybody as I was saying, for instance in our, when you have a situation where developed countries, the richest countries, are able to put up barriers against products that are coming from developing countries, you know, and you have a situation where they condemn their products which are highly subsidized, you know, and highly subsidized domestically and they are even given export subsidies. They can sell those products at a much cheaper price than the products of local corporations. Then of course you will have an economic crisis in that country and it has been happening in many countries now, ever since WTO came into being that is the story, for instance, in the Philippines when many of our corn farmers lost almost 550,000 corn farmers in Mindanao lost their livelihoods because cheap corn, highly subsidized corn which came from Canada and the US were dumped into the country and they were sold at 50% lower. Of course they will say, "That’s because you are not efficient in your production" but is that the way that we should measure? I mean, you know, it’s really, it’s really very unfair, the whole trading system as far as I’m concerned which is abetted by the WTO. It’s so unfair to the developing countries. It’s so, it doesn’t really put a level playing field as they would say and those kinds of rules that are protecting the developed countries are the ones being put more into the WTO more than the rules that are really disadvantageous for the developing countries, so that’s precisely the battle in Seattle and in Doha where the developing country governments wanted the implementation of the present agreements should be reviewed because this has caused a lot of problems for the developing countries but instead of doing that the developed countries came in and wanted to put more new agreements and put together a new round of agreements on foreign direct investment, competition, government procurement and trade facilitation. That is not what the developing countries were asking for and I think really, what we should demand as citizens especially for you who are here in the United States is to really pressure your own government not to continue that kind of position, because if they really would like for peace, you know, and stability and development to reign in the world those kinds of proposals are creating more violence, more instability and therefore the problems that we have in relation to this, you know, the instability that we see in the world will never be resolved unless really, the governments, the rich governments, will be able to come up with these agreements that will really give more favor to the developing countries. As they say, you know, we have been victims of colonization. You know, we have been victims of all these IMF and World Bank rules, and therefore we cannot in any way compete with the giants, with the developed countries who have developed very much because they colonized us.


Moderator: Lori quick and then …

LW: I’m going to take my turn to be on straw man or straw person patrol because I don’t think we have basically chucked out the whole notion of multilateral trade rules or a system of rules. The movement is very internationally oriented in it’s for fairness and so just to pick up a report, we don’t have time to go through it but the International Forum on Globalization has a big huge honking thick report coming out and this is the summary. It lays out, as a system, things that should be cut back, things that should be added, things that are missing, places to create more democracy, places to change the current institutions. It does, we’re not just saying what we’re against; we’re saying also what we’re for and so I would ask people to take a look at this. They’re out on the table.

Moderator: They are out on the table. Okay, let’s, alright, you folks have actually caught a lot of the questions that we’ve gotten from folks in the audience, but I want to focus in on a couple of them here. And uh…he’s going to promote your website very quickly.

Mark: I’d just like…it’s because I couldn’t haul all that literature back from Porto Alegre so if you want more information it’s Thanks.

Moderator: Well, Mark, I’m going to, I’m going to stick with you there, and hang on, you got a question here that I want you to address and that is at core we hear a lot of criticism of the current structures and current approaches. You were just at the World Social Forum in Brazil. Can you give us a sense of how we might, as this question asks, globalize an appropriate response to the current circumstance, particularly addressing your references to the slowing growth and lack of growth.

Mark: Yes, well, I think for one thing, I mean the most important thing is that countries need the autonomy to set their own macro policies which they don’t have right now. Because I think that’s where the argument is a little more difficult. The WTO, at least formally, has a consensus process so when Michael argues that this is basically a consensus process I don’t agree on that, I agree much more with Victoria that it is totally dominated by the rich countries and used as a vehicle for their interests. And it is set up that way, but in theory, ah, in theory it could be an organization for rules-based trade that was fair. I don’t believe that’s ever going to happen with this WTO until the world changes drastically until it’s nothing like what it looks like today. But at least the argument you make, you look at the IMF, this is just a cartel, right. There’s no pretense, you know, the New York Times refers to it as a proxy for the United States, that’s a direct quote from a news article, okay. It is known that it is controlled by Treasury, that is 182 nations are part of an organization where the U.S. Treasury Department exercises not only a veto but basically determines the policy. And Europe and Japan of course could outvote the United States, because votes are proportional to contributions, but they never do, they haven’t done it for fifty-five years, because they have a deal. The United States supplies the military force and they get to run the IMF, Washington gets to run the IMF and the Bank. Now in the WTO they fight because that’s still contested terrain, that was only created six years ago, now it’s seven, or six [member of the panel: 1994]. But those organizations really should not be treated with the legitimacy that they are treated in the press and among the intelligentsia in this country. [Applause] And by the way the Bank is in there, too, because the Bank is part of the cartel. Until the Bank says that we’re not going to follow this informal arrangement that we will not make most loans unless the IMF makes a loan and the country agrees to the IMF conditions – till the Bank breaks with that then you can’t really, I mean it’s nice that Joe Stiglitz chooses not to slam his former employer, but the fact is you can’t really say the Bank is better, even though there’s a lot more good people in there, they don’t have an influence over policy, but they are there. And so it is different in many ways, it has a different agenda, an ostensible agenda, you go to their website and it says "a world free of poverty" and things like that. The IMF doesn’t say that. [Laughter]

Moderator: So that’s progress, right?

Mark: That’s not their job. So there are differences but as long as they have that cartel, the Bank can’t come in here and say "Oh, no. We’re different." This is important because, you know, there is a boycott in World Bank bonds, for instance, that’s a major pressure tactic right now. You know, they’ve gotten San Francisco, Oakland, Berkeley, Boulder, Milwaukee’s going to be in a couple of weeks to boycott bonds, major unions and socially responsible investment funds. [Applause] so that’s the kind of pressure it’s going to take before you get any relief from these kinds of institutions.

Moderator: Thank you. Lori Wallach, a bunch of questions that actually relate to this, in fact, it’s amazing how sophisticated our audience is to know how to do the follow-up questions. And they all come back to this core question: what do you think should be the role of international law and legal institutions in mediating disputes concerning the IMF, the WTO, and other institutions of this sort. And a related question, that to the effect of, I thought we beat MAI, and coming into the point of that a lot of aspects of the MAI have seem to have snuck in that’s, you can describe better than I, but that it snuck into NAFTA.

LW: Okay. On the broader question of the role of international law, this is actually, or international rules, this is where this International Forum on Globalization report is helpful. The key ways that I would describe what the movement of global justice is, is a movement for democracy and diversity. And so the point is, that there will need to be some rules at the global level because there is reality granted by technology, etc, of having global corporations, global capital flows, and so particularly a poorer, weaker country, certainly on their own can’t stand up and absent some internationally, multilaterally agreed rules, there is sort of no playing field that is set out so it becomes, sort of rule of the jungle scenario. But, but…the current set of rules that we have covered too many issues -- one-size-fits-all -- and covered things that should not be commodified, liberalized, traded, such as world-wide rules about patenting human genes, patenting life forms, trying to commodify fresh bulk water, right now, who will own rivers, streams and ground water. Literally, not the treatment of it but who will own the ground water. There are things in our common heritage, our, there in the "commons" that should be outside the scope of those kinds of, commodification terms… [Applause]. And if we look at things that should be kept outside, floors of conduct, for instance, right now, we have global rules that handcuff government’s ability to fight for the public interest. But we have no regulation of global corporations, global capital at the same scale that they operate. And so, there needs to be a bottom put in and not a ceiling. Currently there is a ceiling on the international rules at the WTO, the IMF, of everything you can’t do as a government because it constrains trade and undermines the priority of more volume in trade, blah, blah, blah. There is no floor. So, the rule, the role of the multilateral rules is to set up some floor. But the key point is, there has to be much more space for countries to make their own choices – economically, politically, socially according to the priorities in the country, according to the peoples who’re going to live with the results, which is why diversity and democracy, the people who are going to live with the results need to be empowered to the greatest degree possible with making decisions because there will be trade-offs, but the people who are going to live with the trade-offs should be the ones who decide them for each different country at each different time. And so while we believe there is an important place for multilateral rules, we also believe that there needs to be a huge pruning of the current rules. So, for instance one of the documents out on the table is the WTO Shrink or Sink Campaign – the idea is either it needs to shrink back to being multilateral trade rules and not protectionism for patents and commodification for services and rules against the environment, but rather it needs to either shrink back to where it is something that could be checked and balanced again by other institutions or it’s going to get tanked and we’d have to start over with new multilateral trade rules because what’s out there right now are numerous multilateral rules, there is a lot of consensus multilaterally on this substance of countervailing public interest standards and so, for instance you have this World Health Organization treaties, you have almost 200 multilateral environmental treaties, at the ILO, the International Labor Organization - you have this substantive agreement about what are basic labor rights, the problem is a matter of law and a matter of power. Right now the dictates of the WTO, the rules of the IMF’s structural adjustment policies literally trump a country’s ability to decide to prioritize other multilateral agreed rules, so it’s not the US saying, "Hey, this is what we say". The thing about labor rights is. There are countries all over the world that have signed on to an agreement about what it is. But if a country would want to basically say to a corporation, "You can’t invest here unless you do X, Y, and Z because we have signed these following ILO conventions." That’s actually probably a, it’s certainly a violation of the NAFTA investment rules, and could be of the trade related measures of the WTO, depending on how you do it. Which gets to the point of: Didn’t we kill the MAI?… For everyone…

Moderator: It’s a very quick point, I believe.

LW: For everyone who has seen the horror movies where the thing you keep killing keeps coming back. [Laughter]. It’s like we boxed it, we buried it, but we forgot to incinerate it somehow. No. [Laughter] The problem is that the concept, the concept stays and so the way to thing about this is, and this is, you know, if you have a different vision of how you think the world should be and what you think the rules should be you have to keep thinking that, think of the shell game in the carnival, you know, you put a pea under the different shells and you try to figure out where the pea went, well, basically it’s that same damn pea. And the pea is the difference between what’s in the NAFTA, an agreement that was negotiated with an incredible power imbalance, so Mexico and Canada couldn’t fight back, versus what’s in the WTO, the multilateral rules, where India and Brazil and for that matter at that point the European Union fought back. So NAFTA’s worse, NAFTA actually goes farther in all the most extreme areas and so the MAI agenda is getting the stuff that’s in NAFTA that’s not in the WTO put onto more countries. So, alright, there it was the Multilateral Agreement Investment. BOOM! That shell gets smashed pea goes under, next, the WTO Seattle Millennium Round. BOOM! That pea gets smashed, that shell gets smashed. The pea goes is under the FTAA shell. NAFTA expansion to 32 countries. There it is, it’s under there right now and its actually still under there and we have to smash that one. That one needs some smashing. [Laughter; Applause] Meanwhile, over here at Doha there it goes under the other shell. And it’s the same agenda. We have to watch it on all fronts, we have to stop the further expansion of that model, create a demand for change and come to consensus about the alternatives in our different countries to fight for. [Applause].

Moderator: Michael Weinstein, this is very à propos because you just heard Lori give a pretty good synopsis of where, what is often casually referred to as the anti-globalization movement, stands. And we’ve got a couple questions from you that come around to this core question, I think, mainly because of your media background. And that’s has mainstream media coverage of globalization and trade policy issues become more or less nuanced since Seattle? And is the complex critique of the fair trade movement, treated in simplistic and biased ways by the media? Also, quickly, related to that, do you think that the term anti-globalization is arbitrarily applied to a social, a real social democratic movement and that arbitrary application actually advantages corporations and disadvantages the movement?

Michael: I don’t know how to draw a generalization about media coverage of these things. It was interesting, my son was home from college in order to join the protests at the WEF this weekend [Applause; Laughs] And knowing of a certain predilection of mine towards those demonstrations in my past…

Moderator: Michael, I think you’ve given the New York Times a good feature story.

Michael: Well, on the very day that the Times was carrying an op-ed of mine about the progressive environmental progress of the WTO, he was being quoted on NPR for why the CIA had to be brought to its knees [Laughter]. And he doesn’t believe a word I’ve ever written about trade. But it was interesting to go down, I did walk with him to the demonstrations, I told him I wouldn’t join them, but I told him that if in fact, when we got down there I could walk away with a coherent 5 sentence explanation of what I was to be protesting, were I to join the march, that I would join it even if I disagreed. I didn’t stay. I think one of the problems is, is that the demonstrations this weekend, somewhat reflective of the movement in general is not a soundbyte related protest. Unlike civil rights, Vietnam, etcetera, in which the protests were crystal clear, the passions were crystal clear, the issues were crystal clear. This one, so far, is not. And it’s very hard for my colleagues, my former colleagues in the journalism profession to take, to go to a protest in which some are anti-war and some are anti-global capital, and some are anti-this and some are anti-that and then put a story together that makes any sense [Member of the audience yells; Inaudible], so it’s a lot easier. [Inaudible shouts from the audience]

Moderator: Hey, folks, an excellent direct action question and I think the point coming up is that they are not with you.

Michael: I come from a background in which all the hipbones are tied to the knee bones and the whole bit. Yes, they are not separate issues to the people in this room. And at a deep intellectual level they are not separate issues. But if you, the question I was asked was about media coverage. And media, and reporters are not philosophers. They are not particularly deep, that’s not how you get ahead in that profession. And if you want to get your story covered in the New York Times…

Moderator: Hey!

Michael: you will get ahead by making it real simple. Where there’s a headline, in fact the question that the editor will put to the reporter is, "What’s the headline?" And that headline had better be about seven to ten words, at most, which will be cut down to five when it appears in the paper. If you can’t express what you’re doing in a headline it will not be covered adequately, maybe not at all. [Shouts] And the question was about coverage.

Moderator: Hang on, now let’s, let us, folks…

Michael: Let me say…

Moderator: Folks, Let him…

Michael: Let me say [Inaudible shouts] Well, that’s not a headline, that’s an organizing phrase…

Moderator: Michael, let me focus you in on something because [Comments from audience; Laughter]… A core part of that question was does the simplification of this advantage corporations, advantage the people who like the current system or want it to expand, and disadvantage legitimate thoughtful critics of the current process and of globalization on a corporate or economic, an economically based or corporate model?

Michael: The obligation of all of us that are involved in political movements one way or another is to get the job done. So if simplification serves the purpose of whatever politics is represented in this room, it seems to be you’ve got to get in the game, you’ve got to make an effective way of presenting your case.

Member of the Audience: What do you recommend?

Michael: Well, you’re asking me what my priorities are.

Member of the Audience: Yeah

Michael: My priorities are going to be far more focused than what I hear tonight. They’ll be things that I deem doable. I was, I try to organize editorial policy of the New York Times very much in line with Jeff Sach’s campaign about public health because it’s doable. I think democracy is doable. I think we can make, I would like to see a focused agenda, which, in fact, I am working on in a different context. To put, it may come as a surprise to you, but democracy is not in the charter of any of the organizations we’ve mentioned tonight. It is not a goal of the IMF to promote democracy. It is not a goal of the World Bank to promote democracy. I think we’d go a long way if we forced those organizations to take that seriously. Now if you asked us that, a bunch of words without meaning, you can, a lot of what I think has gone haywire in both the Bank and especially the IMF has been an issue of democracy. When the IMF hands a country like Ecuador or Argentina, or any of the other countries that they supposedly bailed out a bill of particulars, when they went into South Korea, they told the South Koreans how to organize their labor markets. This is a country that had shown spectacular growth for 20 years and we’re telling them how to organize labor markets as if we have any kind of moral or economic standing on that issue. Besides the offensiveness of it all, besides the arrogance of it all, partly, what galls me most is the lack of democracy of it all. We’re going in and dictating to Koreans, institutions that the Koreans should dictate to themselves. That’s where my focus would be. I would focus very heavily on aid budgets. I’d be very focused on debt relief. I’d be very focused on changing what the World Bank does, so we get out of the business of tying poor countries into loans they can’t repay. I have a lot of specific agenda. I would be reorganizing, be fighting for certain reforms of the WTO, mostly transparency. By the way, it’s not a news flash that the World Bank, the IMF and the WTO are controlled by the United States and the OECD countries. If you wield the money and if you wield the economic power you’re going to control these organizations. Next question: What do we do to make them better?

Moderator: Mark Weisbrot [Applause]

Mark: Yeah, let me just, I want to defend both Michael and Jeff because I do, first of all I do believe that they are sincere in their arguments, you know, all politics is…

Michael: [Laughs] We’re rotten to the core…

Mark: [Laughs] No, really though, I understand your arguments, right? I deal with, I had the same economics training that both you and Jeff had, right? So I know what economists believe and it’s a belief, it’s not a…

Michael: A very thoughtful reflection.

Mark: And neither is it pandering to power, which a lot of people would see it as. Now, as a systemic problem the media still does have a problem. And so that’s why I don’t I never focus on individuals and their motivations because people can have the best of motivations and still come down on the wrong side of a question. And [Laughter] I think,

Michael: I know

Mark: Yes, [Laughter], so, I think I understand, you see, I can explain their argument a little bit too. What they are thinking, and you can correct me if I am wrong, and this is where, maybe we can reach a little bit of agreement, but first, let’s reach a little bit of agreement on the media though, okay? I think you’ll agree with me that it’s unfair for press to refer to the FTAA or NAFTA as a free trade agreement, okay? That’s a mischaracterization. When Ronald Reagan tried to call the MX missile the Peace Keeper, the media did not adopt that slogan. Okay, so it’s wrong to take the slogans of the, of a particular group of people which is in a minority on the issue among the American public, and adopt that. The FTAA and NAFTA were both heavily protectionist in the area of intellectual property rights, and, of course, they have a whole set of rules which Lori has worked very hard against, the Chapter 11 and everything else, these had nothing to do with free trade and, I think it’s fair to say that these are the most important parts of the agreements. I mean, we didn’t have much barriers for Mexican goods anyway. Two and a half percent average tariff, so the free trade part wasn’t what that whole big fat agreement was about. So, that’s, would you agree with that?

Michael: Absolutely.

Mark: Okay, So you see there is…

Moderator: This is great. [Applause]

Mark: There is a systematic…

Moderator: Alright.

Mark: And if you want to read, we do a weekly review of the New York Times and Washington Post press coverage on these issues, and Michael reads it, I know he does. And so if you want that, so I recommend that, so if you want to you can sign up, it’s by my colleague Dean Baker. So there is a systematic prejudice in the press and that’s a serious problem. And I’m glad we can agree on that.

Moderator: Mark, you finished that question without even referencing Thomas Friedman.

[Inaudible comments from the audience]

Moderator: Speaking of well meaning people and we’re getting toward the end here tonight, but I want to, Vicki there are a whole bunch of questions for you. And we have a crowd that’s actually pretty, you know, self critical, thinking about what’s going on because a lot of questions were along the lines of, "To what extent do the fair trade anti-corporate globalization all the movements in the US help you in what you’re doing in the Philippines, and to what extent do they hinder you? Where are they doing more harm than good?"

VTC: Okay, well, in terms of how they are helping us, I think the anti-, you know, this movement for corporate accountability, is really something that’s going to help us tremendously because most of the corporations that are found in our countries are really the biggest corporations that you found in the WEF. And most of these corporations are not accountable for, [Inaudible]. We were talking about this corporation actually awhile ago in the UN because there was there—

[End of recording]