The
      Cadre
      +
      2February
      1999
     
    
   
   
    
     
      Globalization
     
     
      brings
      misery
     
     
      and
      instability
     
    
   
   
    
     
      By
      BRIAN
      O'NEILL,
     
     
      Programme
      Co-ordinator
      for
     
     
      Oxfam
      Canada
      in
      Halifax.
     
    
   
   
    
     
      This,
      the
      first
      week
      in
     
     
      February,
      is
      International
     
     
      Development
      Week.
      Brian
     
     
      O'Neill
      argues
      that
      the
      proc-
     
     
      ess
      of
      international
      devel-
     
     
      opment
      is
      increasingly
      be-
     
     
      ing
      undermined
      by
      wealthy
     
     
      investors
      and
      their
      policy-
     
     
      making
      friends.
      Not
      only
     
     
      has
      this
      produced
      devastat-
     
     
      ing
      impacts
      on
      hundreds
      of
     
     
      millions
      of
      people
      in
      dozens
     
     
      of
      countries,
      but
      the
      volatile
     
     
      and
      fragile
      nature
      of
      this
     
     
      globalized
      economy
      threat-
     
     
      ens
      all
      of
      us.
     
    
   
   
    
     
      “The
      world
      capitalist
      sys-
     
     
      tem
      is
      coming
      apart
      at
      the
     
     
      seams.”
     
    

    
     
      This
      is
      not
      a
      Cold
      War
     
     
      rant,
      dug
      up
      from
      the
      archives
     
     
      of
      Radio
      Moscow.
      Rather,
     
     
      these
      are
      the
      words
      of
      George
     
     
      Soros,
      global
      investment
      fund
     
     
      operator
      and
      currency
      specu-
     
     
      lator,
      in
      a
      presentation
      to
      the
     
     
      House
      Banking
      Committee
      of
     
     
      the
      U.S.
      Congress
      on
      Septem-
     
     
      ber
      14,
      1998.
     
    

    
     
      George
      Soros
      should
     
     
      know
      what
      he’s
      talking
      about.
     
     
      Worth
      about
      $14
      billion,
      he
      has
     
     
      profited
      handsomely
      from
      eco-
     
     
      nomic
      globalization.
     
    

    
     
      But
      Soros
      knows
      that
      the
     
     
      very
      framework
      through
      which
     
     
      he
      made
      his
      fortune
      has
      be-
     
     
      come
      fraught
      with
      instability.
     
     
      In
      short,
      with
      the
      Asian
      eco-
     
     
      nomic
      crisis
      as
      the
      catalyst,
     
     
      globalization
      iscomingundone.
     
    

    
     
      There
      area
      host
      of
      grow-
     
     
      ing
      problems
      with
      the
      system,
     
     
      not
      the
      least
      of
      which
      is
      the
     
     
      brutal
      fact
      that
      the
      crises
      which
     
     
      emanate
      from
      it
      are
      killing
      lit-
     
     
      erally
      millions
      of
      people.
     
    

    
     
      The
      powerful
      promoters
     
     
      and
      defenders
      of
      globalization
     
     
      advance
      a
      rationale
      which,
     
    
   
   
    
     
      briefly
      stated,
      argues
      that
      the
     
     
      liberalization
      of
      trade
      and
      capi-
     
     
      tal
      flows
      creates
      economic
     
     
      growth.
      And
      this
      provides
     
     
      opportunities
      for
      everyone
      to
     
     
      benefit
      from
      increased
      pros-
     
     
      perity.
     
    

    
     
      It’s
      an
      attractively
      sim-
     
     
      ple
      theory.
      Problem
      is,
      it’s
     
     
      wrong
      on
      both
      counts.
     
    

    
     
      Even
      though
      trade
      and
     
     
      capital
      liberalization
      have
      de-
     
     
      veloped
      a
      much
      greater
      mo-
     
     
      mentum
      in
      the
      1990s,
      world
     
     
      economic
      growth
      has
      slowed
     
     
      considerably,
      from
      an
      annual
     
     
      average
      of
      3.1
      per
      cent
      in
      the
     
     
      1980s
      to
      2.3
      percent
      so
      far
      this
     
     
      decade.
     
    

    
     
      Furthermore,
      the
      eco-
     
     
      nomic
      benefits
      of
      globalization
     
     
      have
      clearly
      favoured
      the
      rich
     
     
      and
      powerful,
      and
      not
      the
      ma-
     
     
      jority
      of
      people.
      The
      United
     
     
      Nations
      Development
      Pro-
     
     
      gram
      reports
      that
      almost
      one-
     
     
      quarter
      of
      the
      world’s
      popula-
     
     
      tion
      experiences
      absolute
      pov-
     
     
      erty,
      living
      on
      less
      than
      one
     
     
      dollar
      aday.
      And
      that
      number
     
     
      is
      growing
      by
      47
      every
      minute.
     
    

    
     
      While
      the
      poor
      here
      in
     
     
      Canada
      and
      elsewhere
      are
     
     
      getting
      poorer,
      the
      rich
      are
     
     
      doing
      fabulously
      well
      by
      glo-
     
     
      balization.
      The
      wealth
      of
      the
     
     
      richest
      250
      people
      is
      equal
      to
     
     
      the
      annual
      incomes
      of
      the
      poor-
     
     
      est
      half
      of
      humanity,
      some
      3
     
     
      billion
      people.
      And
      an
      April
     
     
      1998
      report
      by
      the
      Wall
      Street
     
     
      investment
      firm
      Merrill
      Lynch
     
     
      concluded
      that,
      the
      Asian
      fi-
     
     
      nancial
      crisis
      notwithstanding,
     
     
      he
      wealth
      of
      the
      mega-rich
     
     
      will
      grow
      by
      10
      per
      cent
      for
     
     
      each
      of
      the
      next
      three
      years.
     
    

    
     
      It
      is
      the
      very
      nature
      of
     
     
      this
      system
      of
      economic
      glo-
     
     
      balization
      greed,
      speed
      and
     
     
      self-serving
      economic
      policies
     
     
      that
      threw
      East
      Asia
      into
      eco-
     
     
      nomic
      and
      social
      catastrophe
     
     
      in
      the
      summer
      of
      1997.
      It
      has
     
     
      since
      spread
      to
      Russia,
      south-
     
    
   
   
    
     
      ern
      Africa
      and
      is
      now
      starting
     
     
      to
      affect
      much
      of
      Latin
     
     
      America,
      via
      Brazil.
     
    

    
     
      Prior
      to
      the
      collapse
      of
     
     
      Thailand’s
      currency
      in
      July
     
     
      1997,
      that
      country
      and
      its
      neigh-
     
     
      bouring
      Asian
      tigers’
      had
      been
     
     
      doing
      everything
      right,
      accord-
     
     
      ing
      to
      reports
      from
      the
      Interna-
     
     
      tional
      Monetary
      Fund
      (IMF),
     
     
      Wall
      Street
      banks,
      the
      biggest
     
     
      international
      accounting
      firms,
     
     
      etc,
     
    

    
     
      So
      “hot
      money”
      —
      specu-
     
     
      lative
      investments
      and
      short-
     
     
      term
      loans
      —
      kept
      flowing
      into
     
     
      East
      Asia,
      particularly
      i-
     
     
      land
      where
      much
      of
      it
      went
     
     
      into
      real
      estate
      and
      property
     
     
      development.
      This
      created
      a
     
     
      $20-billion
      surplus
      ofofficeand
     
     
      residential
      space
      in
      Thailand’s
     
     
      capital
      Bangkok.
      The
      loans
     
     
      for
      these
      structures
      could
      not
     
     
      be
      paid,
      creating
      a
      crisis
      of
     
     
      confidence
      in
      the
      Thai
     
     
      economy.
      Hence,
      the
      devalu-
     
     
      ation
      of
      the
      Thai
      baht
      in
      July
     
     
      1997,
     
    

    
     
      Then
      the
      herd
      of
      lenders
     
     
      and
      investors
      mostly
      Japa-
     
     
      nese
      and
      Wall
      Street
      banks
     
     
      took
      their
      money
      out
      faster
     
     
      than
      they
      had
      put
      it
      in.
      This
     
     
      herd
      mentality
      affected
      not
      just
     
     
      Thailand,
      but
      much
      of
      East
     
     
      Asia:
      the
      Philippines,
      Malay-
     
     
      sia,
      Indonesia
      and
      South
      Ko-
     
     
      rea
      with
      the
      latter
      two
      being
     
     
      the
      most
      severely
      affected.
     
    

    
     
      From
      anet
      capital
      inflow
     
     
      of
      $90
      billion
      to
      the
      region
      in
     
     
      1996,
      Ezst
      Asia
      experienced
      a
     
     
      net
      capital
      outflow
      of
      $100
      bil-
     
     
      lion
      1997.
     
    

    
     
      When
      the
      IMF
      then
      went
     
     
      to
      bail
      out
      Indonesia,
      Thailand
     
     
      and
      South
      Korean
      (with
      loans
     
     
      of
      taxpayers’
      money
      from
     
     
      Canada
      and
      other
      developed
     
     
      countries),
      their
      first
      priority
     
     
      was
      to
      ensure
      that
      the
      Japa-
     
     
      nese
      and
      Wall
      Street
      banks
      got
     
    
   
   
    
     
      *Continued
      on
      page
      12
     
    
   
   
    
     
       
     
    
   
   
    
     
       
     
    
   
   
    
     
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