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A few well-written words can convey a wealth of information, particularly when there is no lag time between when they are written and when they are read. The IPS blog gives you an opportunity to hear directly from IPS scholars and staff on ideas large and small and for us to hear back from you.



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Entries since March 2012

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The Race for World Bank President Takes Shape with Two More Candidates

March 22, 2012 ·

The World Bank presidency fight is getting really interesting.  There may be two developing country candidates in addition to Jeffrey Sachs and the U.S. candidate.  Jose Antonio Ocampo (from Colombia and also now at Columbia University) has a lot going for him. IPSer Sarah Anderson has worked with him on capital controls and trade agreements and he is terrific on that issue.  Looks like he'll become the Latin America candidate, with Brazil in the lead.  

The other possible candidate is Nigeria's Ngozi Okonjo-Iweala; she is more traditional and a lot less interesting.  The U.S. has until tomorrow to name their candidate.  Rob Weissman and others have done a great job at knocking down Larry Summers possible candidacy. Here is our latest on the Sachs' candidacy in the Nation. Thanks to several of you for participating in this debate.

Yesterday morning, I was leafletting outside the World Bank because a Canadian mining firm has brought a case against El Salvador in the Bank's International Center for the Settlement of Investment Disputes.  A number of us have been leafletting to tell the Bank not to interfere with El Salvador's decision to stop issuing gold mining permits. 

As I was leafletting World Bank employees, I used my growing "friendship" with some of the them to ask who they want to be their next World Bank president.  I spoke with 7-8 in more depth.  Every single one told me that they don't want an American.  (And, I realized as I spoke to them that I haven't met one American who works there.  This really is a colonial outfit: a largely developing world workforce and an American president.)  The don't like Zoellick and no one I spoke to wants Sachs.

Why We Are Still Not Supporting Jeffrey Sachs to be World Bank President

March 20, 2012 ·

Thanks to The Nation for creating the forum for this important dialogue on the World Bank presidency and also to Jeffrey Sachs for participating. Progressives should not expect that we will always march together to one song; we should savor the venues like this where we can debate as allies. We appreciate the many comments that have been posted and others that were sent to us privately.

We will use our limited “rebuttal” space to respond to two key issues.

Jeffrey Sachs should not be the next World Bank chief. Photo by Ryan Rayburn.Some progressives are urging us all to be more “strategic,” to support Sachs for World Bank president because he is better than possible Obama pick Larry Summers. We agree that Summers would be a terrible choice to head the Bank and, indeed, have joined tens of thousands to sign a petition to the Obama administration opposing his candidacy. However, the deadline for governments to announce their candidates is not until March 23. By then, several governments will nominate Sachs. The United States will announce a candidate. And, other governments may nominate someone else. After that point, it will be important for progressives around the world to debate who, if anyone, deserves our support. Before the 23rd, we believe that one productive strategic role for progressives is to critique the traditional presumption that Americans will support the European choice for the IMF head and Europeans will back the U.S. choice at the Bank, virtually assuring that the rich countries get their way. We commend the Bretton Woods Project for their open letter arguing for a reformed selection process.

So too do we think it strategic for progressives to put forward the best candidates from across the globe, candidates with the qualifications to run a large organization and with the vision, humility, sensibility, and ability to listen to the 99 percent -- all necessary to transform the Bank. Since we wrote our initial piece, dozens of people have sent us such names: Nobel laureate Amartya Sen, former UNDP head Gus Speth, urban poor advocate Sheela Patel, Greenpeace International chair Kumi Naidoo, UN Special Rapporteur on the Right to Food Olivier de Schutter, former Brazilian president Lula, and ActionAid International head Joanna Kerr, among others. Any could be a great leader of the Bank, but people and governments hesitate to put "best" names forward so long as the U.S.-European grip on the selection process continues. If U.S. progressives spent as much time promoting a "best" candidate as they are backing Sachs, that person might take-off as a candidate. Such a "best-person" list also presses those who are running to prove they match such high credentials, not that they are better than the worst.

Our second rebuttal issue has to do with the development record of Jeffrey Sachs. Knowledgeable commentators below have added their reflections on Sachs’s role in "shock therapy" and its impacts, particularly in Bolivia. In terms of Sachs’s current work, we note that nobody supporting Sachs has demonstrated that the Millennium Villages represent a "sustainable" future; whatever the pesticide costs per person, fossil-fuel dependent agriculture is not the way forward. We have spent time on the ground with sustainable farmers and "farmer scientists" who are restoring the soil, cutting costs, and raising yields without chemicals. In the era of climate catastrophe, they are the future of agriculture. Millennium Villages and the World Bank should be on board to accelerate the transition to post-chemical, sustainable farming that is good for farmers, consumers, the land, and the climate. Agribusiness firms and fertilizer corporations will fight this transition every step of the way; we need a World Bank president who will stand up to them.

The Lineup: Week of March 19-25, 2012

March 19, 2012 ·

In this week's OtherWords editorial package, Sanjeev Bery addresses the situation in Syria and Jim Hightower lauds the residents of Keene, New Hampshire who don't want their town to get its own tank. Get all this and more in your inbox by subscribing to our weekly newsletter. If you haven't signed up yet, please do.

  1. The Humanity of Poetry / Sarah Browning
    The 500 poets participating in Split This Rock festival come from all walks of life and all levels of education and training.
  2. Consumers Need to Know about Those Newfangled Ingredients / Andrew Korfhage
    Between 70 and 80 percent of the processed foods Americans eat contain genetically modified ingredients.
  3. Syria's Systematic Torture / Sanjeev Bery
    Concerted action by the international community appears to be the only recourse
  4. What's Good for the CEO May Be Bad for Business / Kenneth Peres
    Today's corporate elites should stop pushing for austerity for the many and prosperity for the few and embrace Henry Ford's strategy of shared prosperity.
  5. I Don't Like Ike's Memorial / Donald Kaul
    If you're going to do something that big, don't put it on the National Mall.
  6. Standing Up For Common Sense / Jim Hightower
    Keene, New Hampshire has no crime that would warrant rolling out a tank.
  7. Our Health Care Racket / William A. Collins
    The purpose of America's health care industry is to provide cozy income to the few at the top while abusing the poorly paid health aides at the bottom and consigning vast swaths of the population to inadequate care.
  8. Syria's Butcher / Khalil Bendib

Syria's Butcher. an OtherWords op-ed by Khalil Bendib.

What Do The New World Bank Statistics Really Tell Us?

March 15, 2012 ·

Now here is what sounds like a New York Times headline to celebrate: “Dire Poverty Falls Despite Global Slump, Report Finds.” That report would be a 6-page World Bank briefing note, the press release for which is titled: “New Estimates Reveal Drop in Extreme Poverty 2005-2010.” Echoes The Economist: “For the first time ever, the number of poor people is declining everywhere.

If it were only that easy. Let us dig into what the World Bank’s new briefing note really tells us and ask two questions: Do the statistics really show a fall in extreme poverty across the world? And, what policies lie behind the changing poverty figures?

What the figures tell us and do not tell us:

  1. The figures do not tell us anything about the impact of the recession: The actual data cover 1981-2008; figures ending in 2008 cannot possibly tell us anything about the impact of a recession that started in the United States in late 2008. The briefing note alludes to “preliminary estimates” for 2010; based on these, the Bank makes the bold assertion that the Millennium Development Goal of halving poverty (defined as $1.25/day) from its 1990 level was achieved in 2010. But, preliminary estimates are, well, just preliminary estimates. These are extrapolated from significantly smaller samples. Hence, the data cannot back up the Bank’s confident claim because, again, the real data end in 2008. We have been following World Bank projections and estimates for decades now and have found them highly unreliable – and typically over-optimistic.
  2. If one sticks to the 1981-2008 period, China is the key: Between 1981 and 2008, the entire drop in the number of people living in “extreme poverty,” that is those who live below $1.25 a day, is accounted for by China — where the number of extreme poor fell by 662 million. Over this period, the number of people living below $1.25 a day outside China actually rose by 13 million, and hovered around 1.1 billion people throughout this period. More people fell into poverty in South Asia over this period (interesting, given India’s rapid growth over the past decade) and in sub-Saharan Africa. Hence, a more accurate headline would have read: “Numbers in poverty plunge in China over past three decades from 1981-2008, while rising marginally in the rest of the world.”
  3. To extend this last point: As we have argued elsewhere (pdf), in countries such as South Africa, where government services are generous, $1.25 a day goes further than, say, in Haiti. Furthermore, as nations grow rapidly, as have China and India over the past decade and a half, the amount of money needed for people in the cash economy to maintain a decent standard of living also rises. As for those who subsist in rural areas on less than $1.25 a day, many consume much of what they produce. Many live in self-built homes and depend on traditional medicines. While their poverty may be “extreme” by the Bank’s monetary measure, their quality of life may be much better than that of their urban counterparts, even though their incomes are often smaller.

Related to this, our experience living with poor families in rural areas suggests that it has been the opening of their natural resources to global agribusiness, factory fishing fleets, and corporate interests that often leads to real poverty. Millions have been pushed off their land over the past few generations into urban slums where they live in squalor, although they may bring home a few dollars a day. In sum, the statistics upon which most poverty elimination strategies are based are extremely misleading, and often steer experts toward the wrong solutions.

This raises the other question of what policies are behind the figures:

  1. Neoliberalism and poverty: What is behind the data that shows those in poverty outside China increasing in most regions from 1981 to 2005? This period coincided with the heyday of corporate-friendly neoliberal policies in most countries. So the data could be read as a confirmation of what critics of neoliberalism have been saying: the wave of market fundamentalism contributed to increases in the numbers of people in poverty. That data also reveals that in one region, sub-Saharan Africa, the percent of people living below the poverty threshold also rose over this period. We hardly need to point out that in the one country where poverty plunged – China – leaders did not pursue blind neoliberalism, but instead combined state direction of much of the economy with market-openings in selected sectors.
  2. How about the subsequent period from 2005 to 2008, a time range during which the data reveal poverty numbers and rates falling in all regions of the world? As opposed to 1981-2005, this was a period of spreading cracks in the neoliberal Washington Consensus. It was also a period of rising of commodity prices and rising of balance of payments surpluses in many Southern countries. As a result, many Southern countries were able to repay the IMF and World Bank and wean themselves from World Bank and IMF loans and neoliberal conditionality.

Hence, the new World Bank poverty figures may tell a very different story from what has been suggested elsewhere: The numbers in poverty outside China rose during the heyday of neoliberal policies, and began to fall as the grip of those policies was loosened after 2005.

Robin Broad is Professor of International Development, School of International Service, American University. John Cavanagh is director of the Institute for Policy Studies. They are authors of Development Redefined: How the Market Met Its Match. This post originally appeared in the Triple Crisis blog.

Happy Days Here Again, 21st Century-Style

March 13, 2012 ·

We can wait all we want, but sometimes history never gets around to repeating.

The equalizing that began in the 1930s didn't just happen. Average Americans made it happen.History — more specifically, the history of the Great Depression in the 1930s — has been a constant presence in America’s political discourse ever since the Great Recession started slamming us in 2008.

Analysts have drawn all sorts of useful and entirely appropriate parallels between the run-up to the Great Depression and the years before the Great Recession. And inequality — the gap between America’s rich and everyone else — has figured prominently in those parallels.

In 1928, the year before the stock market crash, America’s richest 1 percent were taking in just shy of 24 percent of the nation’s income, a modern-day high.

In 2007, the year before our Great Recession's Wall Street meltdown, America’s top 1 percenters were pulling in 23.5 percent of the nation’s income, the top's highest share since 1928.

But the parallels go even deeper.

The early years of both the Great Depression and the Great Recession hammered incomes at America’s economic summit. In 1928, the nation's top 1 percent were averaging just over $400,000, in today's dollars. Two years later, that top 1 percent average income had dropped by half, to just over $256,000.

The early years of the Great Recession had much the same impact. America’s top 1 percent averaged $1.44 million in 2007, the year before Wall Street's epic meltdown. In 2009 top 1 percenters averaged over $520,000 less, more than a 36 percent dropoff.

Back in the Great Depression, after the initial income shock for the super rich, the shocking would continue. Top incomes kept dipping as the Great Depression wore on. Average top 1 percent income didn’t reach the $256,000 level of 1930 again until 1936 and didn’t regain 1928’s $400,000 level — the inflation-adjusted pre-Great Depression high-water mark — until decades later, in 1965.

By that time, the incomes of America’s bottom 90 percent had jumped from just over $9,400 — their 1928 level — to nearly $28,000.

In other words, in the three decades after the onset of the Great Depression, the incomes of America’s top 1 percent — after you take inflation into account — essentially didn’t rise at all. Over those same years, Americans in the bottom 90 percent saw their average incomes triple.

No gains for America’s rich. Big gains for average Americans. By the 1960s, those average Americans were sharing in the wealth their labor created. The United States had become a fundamentally more equal and prosperous place.

A history worth repeating? Absolutely. But this history, new data released earlier this month indicate, isn't repeating. Not at all. Our contemporary rich have already resumed their rocket ride to ever grander fortune.

The rich back in the 1930s were still reeling three years after the Great Depression hit. The rich today, we now know from the newly released data, are reeling no longer.

The new data comes from University of California at Berkeley economist Emmanuel Saez, the scholar who has revolutionized our understanding of America’s highest incomes with his work over the last decade.  

Saez has spent this last decade parsing IRS statistical records to tease out the incomes of America’s richest, over time, and compare the incomes of these rich — in the top 1, top 0.1, and top 0.01 percent — to the incomes of much more average Americans.

Earlier this month, using newly available IRS data, Saez updated his numbers, to take the U.S. income story through 2010. The Great Recession, Saez found, is most definitely no longer following the Great Depression script.

Back in the early 1930s, incomes for America’s top 1 percent were still dipping two, three, four, and more years into the Great Depression. In our Great Recession, the dipping of high incomes hasn't even lasted two years.

In 2010, the incomes of America’s top 1 percent did not decline. These incomes rose sharply — by an average $105,638, or 11.6 percent, over 2009 levels.

Incomes for America’s bottom 90 percent? These incomes did continue to dip in 2010 — by $127, to $29,840. Some perspective: In 1973, after adjusting for inflation, America’s bottom 90 percent took home an average $33,795.

So where do all these numbers leave us? Back in 1929 Coca-Cola filled the airwaves with what would prove to be an all-time classic advertising slogan, “the pause that refreshes.” Our Great Recession, if current income trends continue, may prove to be the pause that refreshes . . . inequality.

The Great Depression began a hammering of incomes at the top that left the United States more equal. The Great Recession, the new Emmanuel Saez data suggest, will have nowhere near that impact. Our rich appear about to regain most all the ground they lost in the Great Recession's early stages.

But we need some caveats here. The equalizing that began in the 1930s didn't just happen. Average Americans made it happen. They marched and rallied and staged walkouts and sitdowns. They elected candidates who fought to level up America’s least fortunate and level down our most fortunate and powerful few.

All this mobilizing would take years to make a significant equalizing impact. We today can make a significant equalizing impact, too. We just need to get going. History will only repeat if we make it.

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