Monthly Archives: July 2015

As readers may have noticed I have especially since 2011 focused orally in my broadcast on radio munansi and in writing on providing information to reorient NRM’s failed politics and economics. On economic matters, I have drawn on economic successful experiences including of South Korea, Singapore, Vietnam, Japan and Germany. Now I focus on the economic success story of China since 1978 under the leadership of Deng Xiaoping and since his passing. The struggle between radicals led by Moo’s widow – Jiang Qing or the ‘gang of four’ and the moderates led by Deng ended in the defeat of the radicals.

Deng was a veteran party leader who had distanced himself from Mao’s failed economic policies. He was accused of being a capitalist, purged and humiliated several times. With the radicals out of the way Deng sold his new and transformative program to the party. He de-emphasized Marxism ideology and class struggle and focused on economic growth with modernization. He de-emphasized central planning and ended collectivized agriculture. He encouraged private business, competition and production for profit. Regarding public enterprises he demanded they become profitable and accountable for their commissions and omissions. Like in the case of West Germany’s social market economy, China’s economy was a mixture of public and market economy. As noted already collectivized farming was ended and individual farming encouraged. Western technology and management and private financial flows welcomed. Industrial production focused on consumer products such as bicycles and motor cycles.

After the war Germany was divided and occupied by the United States, United Kingdom, France and the Soviet Union. The Western allies (USA, UK and France) increasingly turned over their occupied zones to German officials. They arranged for the German Assembly to write a federal constitution approved in May 1949. In September of the same year the three western zones were combined to form the Federal Republic of Germany. In May 1955 the Republic was declared completely independent.

The new German Parliament elected 73 year old Konrad Adenauer as federal chancellor. Adenauer had many qualities. He had experience, having begun his career in pre-1914 imperial era. He had a strong-willed personality and an ambition to regain for Germany a position of dignity and international respect.

The constitution guarantees proportional representation, meaning that each party is apportioned seats equivalent to the share of the popular vote. However, to receive seats in the legislature a party has to win at least 5 percent of the national vote. The Christian Democratic Union and the Social Democratic party have dominated German politics. The Free Democrats, a small liberal centrist party, has played a lesser role through coalitions with one or the other of the major parties when necessary.

The United Nations is currently engaged in negotiating a post-2015 development agenda to 2030 with the overarching goal of eradicating poverty in all its forms.

The Open Working Group (OWG) of the UN General Assembly spend 18 months developing Sustainable Development Goals (SDGs) that will form the core of the post- 2015 development agenda: other parts being the preamble or introduction, means of implementation and review and monitoring. At the end of the work of OWG many delegates felt this political SDGs document was flawed and should be revisited in one way or another. But the majority felt that though imperfect the SDG document represented a delicate political balance and should not be altered in any way. A similar observation was made about the UN Charter that was crafted by delegates from 50 states that met for two months in San Francisco, USA from April to June in 1945.

Japan’s economy recovered quickly after the devastations of WWII. During the war Japan’s lost 40 percent of its industrial capacity and was subsequently occupied by the United States that made important political and economic changes. The economic system was liberalized. Economic recovery received priority in part in an attempt to contain the expansion of communism in Asia. The security and economic umbrella provided to Japan by the US accelerated economic growth.

Additionally Japan’s political and economic leaders were determined to join the club of industrialized countries. Ipso facto they rejected the comparative advantage of engaging in the production of low wage and instead embraced capital-intensive and high-tech production. The government largely through the Ministry of Trade and Industry (MITI) and Ministry of Finance played a significant role in directing the economy. This involved setting priorities and protecting infant or ailing industries through subsidies, guiding investments and managing the foreign trade process.

The government mobilized resources for industrial growth. Industrial protection was accompanied by strict protection of domestic markets for finished products. Japan products also benefited from relatively open access to foreign markets.

“Critics [of foreign aid have] increasingly questioned the purpose, philosophy and methods of those who dispensed and received development assistance. Some charge that aid is a tool for serving the political and economic interests of donor countries. Moreover, aid props repressive Third World governments, worsens inequality, and destroys the environment. Others attack aid as a needless and costly subsidy that sustains bloated Third World bureaucracies and discourages recipient governments from carrying out needed policy reforms or supporting private sector growth. Both left and right condemn the inefficiency and corruption that too often plague foreign aid”(Thomas D. Lairson and David Skidmore 1997). What are your thoughts?

Many commentators have equated globalization with the Washington Consensus which implies eleven key commitments:

1. International financial market liberalization;

2. Domestic capital market liberalization;

3. Trade liberalization (particularly in developing countries);

4. Labor market ‘flexibility’;

5. Secure individual property rights over physical and financial assets;

6. Weak property rights over human assets (particularly skills);

7. Reduction in size and role of the public sector, including privatization of publicly-owned productive assets, and an end to managed trade and industrial policies;

8. System of taxation that is not only less progressive but also shifts taxes from capital to labor, and subsidies from labor to capital;

9. Independent central banks (as part of a more general move towards the ‘technocratization ‘ of economic policy making);

10. ‘Social safety net’ type of approach to social protection, i.e., more targeting, selectivity and conditionality;

11. Privatization and liberalization of social policy.

Source: ILO: Economic security for a better world 2004)