WORLD BANK, IMF, WTO, AND
                                  FARM SUBISDIES
                        Copyright © 2009 by Shi...
In the world of international banking, a vast network of American and European capitalists exists. It is
conceivable that ...
Those that have followed the guidance of IMF have landed themselves in deeper trouble.

European and American economists o...
American politicians quickly come to realize that the best thing to do is tow the line of special interest groups
and glob...
modified (GM) agricultural products. As European laws do not allow the introduction of GM agro-products,
many American com...
ingenious ideas and ideologies from traders of the nineteenth century. In those days, trade occurred between
less civilize...
capitalists are never overly concerned about jobless growth and wage less growth. Industrial nations are
generally satisfi...
protecting Asian nations from communistic threats. Perhaps, the secret agenda of the WTO extends beyond
dealing with simpl...
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WORLD BANK, IMF, WTO, AND FARM SUBSIDIES

  1. 1. WORLD BANK, IMF, WTO, AND FARM SUBISDIES Copyright © 2009 by Shivaprasad Srikantia. All rights reserved. Contains extracts from the book titled AMERICAN CAPITALISM, AMERICANOMICS, & MULTINATIONAL CORPORATIONS - The concealed economic and political secrets of capitalism that made America a superpower in less than one century, by Shiv Srikantia. Paperback edition of book available at www.lulu.com/content/2353971 PLEASE CLICK ON BOTTOM RIGHT CORNER OF THIS TEXT WINDOW TO VIEW THIS ESSAY IN FULL SCREEN MODE The World Bank was founded in 1945. It is officially known as International Bank for Reconstruction and Development. With headquarters in Washington D.C. it has loaned money to member nations and profited enormously from such activity. The International Monetary Fund (IMF) was also established in 1945. After World war II, for a brief period of time, the IMF wished to eradicate pockets of dire poverty in weak economies to prevent an opportunistic takeover by communist powers. After the collapse of Soviet communism, communist threats began to wane. Thereafter, the IMF had no reason to be eradicating poverty or bailing out derailed economies. After the dismantling of colonial regimes, the European economies were unable to maintain a high standard of living based on fair trade. Therefore, the WTO was founded in Geneva in 1995. It was spearheaded by European nations who had a history of colonizing. The WTO does not, in reality, have a serious reason to be genuinely interested in offering a level playing field for global trade with the developing economies. Perhaps, the WTO was conceived to covertly help expand international trade in a manner that would primarily benefit the G-7 nations, and restore economic prosperity to the old colonial levels. The WTO is an institution that could help the G-7 nations legitimize trade practices that would normally be considered unethical, illegal, immoral, imperialistic, or discriminatory. It is likely that the WTO executives wish to clandestinely help special interest groups in Europe. Institutions such as the CIA, World Bank, IMF and WTO operate under a cloak of secrecy and the omerta code of silence. Manipulative special interest groups can safely hide behind the closed doors of the IMF and World Bank. The middle class voters in G-7 nations are generally not aware of these issues. However, in recent years, young people in Western nations who have been troubled by the attitude of their governments have voiced their protest at venues where WTO officials have congregated to hatch free trade conspiracies. The WTO executives, however, have continued to remain extremely stubborn and secretive. The WTO is controlled by powerful capitalists and politicians from Europe. America and Japan carry a lot of clout in the World Bank setup. The IMF and World Bank can intimidate and persuade senior politicians in Asian, African, and South American countries to align with the G-7 nations. 1
  2. 2. In the world of international banking, a vast network of American and European capitalists exists. It is conceivable that this Euro-American network does not see boundaries in matters of trade and finance. Perhaps, it also sees no serious compulsion to follow democratic conventions. This Euro-American network, which holds considerable political clout, might have secretly agreed that the World Bank and IMF give special status to America. In such an arrangement of reciprocity, the European nations would have special status within the WTO. It is known that America’s military power and economic clout can be leveraged over Asian nations, and countries in the Middle East. Perhaps, many Western capitalists feel that for the good of the American and European economies, the World Bank, IMF, WTO need to be run in a manner that will allow special interests groups and big businesses in America and Europe to frame critical policies. This suggests that the IMF must ensure that the United States Treasury is able to exert force on other Asian nations and be able to protect American or European banks operating in Asian nations. Nobel Laureate Joseph Stiglitz, a professor of economics at Columbia University, has been examining issues connected with the World Bank, IMF, and WTO. The IMF also offers a mechanism for quickly bailing out creditors from the G-7 nations. During the financial crisis that gripped Asian nations, most of the creditors from European nations were safely bailed out by the IMF. Many economists argue that the IMF was primarily created to keep the communists off the poorer nations. Perhaps, the IMF was never seriously interested in helping nations which had no visible communistic threat lurking in the corner. We note that IMF guidance has often caused serious shortages in the supply of food and lead to starvation in developing nations that were not exposed to communist threats. It would be wise to infer that the IMF will be willing to make huge sums of money to bail out European creditors, but will be unwilling to make money available to arrange food subsidies in poor countries facing a financial crisis. The World Bank, IMF, and WTO do not strictly observe the rules of democracy in international governance. At present, the G-7 member nations can exercise almost 50 percent of the power in voting. Furthermore, America has a special veto status. In addition, America gets to choose the head of the World Bank. The unwritten rule is that the American President has the freedom to select the chief of the World Bank. However, as a formality, the selection of the chief is done by a secret voting procedure involving 24 members. For instance, the George Bush administration ignored mild protests from European members, and had Paul Wolfowitz installed as the chief of the World Bank. Surely, these were not democratic initiatives. Under ordinary circumstances, at least the European countries could have raised objection. However, the banking, trading, and financial systems in Europe are managed by a complex web of bankers and capitalists having a cordial link of brotherhood with bankers and capitalists in America. Most of the member nations that seek money from the World Bank are developing countries without sufficient political clout. In total, the World Bank and the IMF have enlisted 185 member nations. Many economists and experts feel that individuals working for the IMF and World Bank are inadequately qualified to the point of being grossly ill prepared to handle the responsibilities in a competent manner. In the elite economic circles, it is believed that economists making policies at the World Bank do not have the intellectual finesse to be able to understand the nuances of financial markets in the third world. They appear to be puppet economists hired to carry out the hidden agendas of special interest groups within the G-7 nations. It is also believed, that these pawn economists work with economic models that are too simplistic to reflect the real world situation in third world countries. At times of economic crisis, third world countries that have declined the guidance of the IMF have done very well in recovering from a serious downturn. 2
  3. 3. Those that have followed the guidance of IMF have landed themselves in deeper trouble. European and American economists of the current generation do not seem to understand the aberrant economic problems of the developing nations in Africa, Asia, and South America. Incidentally, many eminent economists and scholars have noticed that the Federal government in America is reluctant to follow the advise from the IMF. However, officials of the World Bank insist on developing nations seeking approval from the experts at IMF. When nations in Asia face an economic downturn, the IMF advises them to practice austerity and establish higher interest rates. However, when the American economy faces a downturn IMF recommends lowering interest rates and increased government spending to stimulate the American economy. Though camouflaged as a benevolent organization, the IMF has all the characteristics of an organization with ambitious political agendas. Not only have the policy makers at the IMF managed to make callous errors of judgement, they have also shown an unwillingness to learn from their mistakes. Countries such as China, India, and South Korea have lost confidence in the IMF. Political leaders in China and South Korea probably see the IMF as an organization with dishonorable agendas. The current belief in Asian bureaucratic circles is that the new wave of regulations created by the WTO, IMF, and World Bank are in place to help the G-7 nations tackle the emerging economic and political clout of Asian nations. At present, America is becoming overly dependent on Asian nations to manage trade deficits. In fact, a prestigious American bank recently sought financial help from wealthy banks in the Middle East and the Far East. The total bailout package ran into several billion dollars. Emerging economic powers in Asia have now become wiser. They are now declining assistance from the World Bank and the IMF. Currently, the G-7 nations are threatened by lower labor costs in Asia. Labor saving technologies installed by G-7 capitalists have resulted in high unemployment levels. About 20 percent of manufactured goods have to be imported from emerging economies into the G-7 nations. If American policy makers encourage simpler service jobs, manufacturing industries in America might have to close down. Soon after the North American Free Trade Agreement (NAFTA) was executed, nearly half a million manufacturing jobs in America vanished. In addition, the trade deficits with Canada and Mexico tripled. Typically, trade deficits seem to originate from products not generally manufactured in America. For instance, the American appetite for clothing merchandise and toys generate considerable trade deficits with China. Large quantities of toys and clothing are imported into America from China where the average wage hovers around $ 3 per hour. In America, the wages for the same category of jobs hover around $ 15 per hour. While factory workers in China are underpaid, factory workers in America are overpaid. However, the most interesting fact is that the Chinese people are being underpaid by American companies engaging in trade with Chinese companies. Capitalists, politicians, and bureaucrats who aggressively endorse free trade are also likely to endorse warfare and military posturing when trade barriers are put in place by developing nations. Many poor nations in Asia practice protectionism to encourage local industry. Developing nations that are trying hard to become self sufficient in industrial capability have to erect trade barriers. At one time in industrial history, even America had erected trade barriers. However, many capitalists in America and Europe do not want developing nations in Asia and Africa to obstruct free trade with barriers and high tariffs. Free trade, as desired by American and European capitalists might threaten world peace. For an American politician, it is very hard to fight multinational corporations or special interest groups. Therefore, most 3
  4. 4. American politicians quickly come to realize that the best thing to do is tow the line of special interest groups and global corporations. In other words, politicians who wish to remain in office would have to abandon their social responsibilities and join the special interest groups. America needs a new breed of politicians who can maintain high ethical standards, challenge capitalistic avarice, and allow some elbow room for third world nations to reorganize themselves and attain self sufficiency. While capitalists are not overly concerned about the plight of poor nations, responsible politicians in America and Europe must show concern. Politicians must learn to see themselves as citizens of the world and discourage the plunder of third world economies through free trade. Japan had the opportunity to form important trade connections with her neighboring nations and help South East Asia build a strong economy. Instead, Japanese politicians aligned the nation with America and exhibited a self centered approach to trade and commerce. Japan began fostering a rival business relationship with her poor trade neighbors. The Japanese also destroyed their own social fabric when they began embracing Americanism. Many Asian and African cultures fail to instill social consciousness in their citizens. Therefore, wealthy Asians and Africans are unwilling to invest in civil projects required to build a nation. The European nations decided to come together and form an European Union to gently counterbalance the influence of America and Asia in global politics and trade. This put Great Britain in a tight spot. She did not want to give up her allegiance to America and join a group of nations with many of whom she had a history of military and cultural hostilities. Therefore, Tony Blain wanted to build new alliances with America. Middle East politics provided a window of opportunity to Tony Blair. Rice is not an important part of American diet. However, American farmers with mechanized harvesters grow rice for export. Farmers and agro businesses have their government assist them in exporting grains to Asia and Africa. The poor farmers in Asia and Africa face grinding poverty when American and European agro products are dumped in their local markets. The political leaders of the third world nations representing the famished farmers are unable to stand up and effectively confront the stubborn political club of the G-7 nations. In America’s industrial economy during the first half of the twentieth century, American business executives were culturally insular. They did not attempt to aggressively explore markets in Asia and Africa. Though America was an industrialized nation, it was not exporting industrial goods in sufficient quantities. Instead, America began exporting large quantities of agricultural products for balancing trade. This has caused great hardship to developing countries in Africa and Asia whose forte is agricultural produce. The powerful supermarket chains in America were able to bargain aggressively with the American farmers and push them to the brink of bankruptcy. Also, the American farmers were not practicing crop rotation like their counterparts in Europe and Asia. The government had to intervene and establish a practice of providing subsidies to farmers. Therefore, the American subsidies to farmers were indirectly subsidizing the wealthy supermarket capitalists. These capitalists could also devise ways to dump agro-products in third world nations. Incidentally, supermarket chains often hired citizens at nearly minimum wage. Over a period of three decades, the supermarkets have wiped out the corner grocery stores and small retail businesses in the neighborhood. American agro-businesses want developing nations to remove trade barriers to facilitate export of genetically 4
  5. 5. modified (GM) agricultural products. As European laws do not allow the introduction of GM agro-products, many American companies want to dump these products in the poor Asian nations. American agro-business companies are lobbying hard to have laws in Asian nations changed. Big businesses often resort to high pressure tactics and intimidation to make Asian governments change policies. These new policies will squash the rights of Asian farmers. Hundreds of Asian farmers who have been denied fair trade and driven to bankruptcy have committed suicide. Incidentally, this explains why the Soviets and Chinese had developed a dislike for Western capitalists. The G-7 once represented the seven most industrialized nations of the world. The G-7 included America, Canada, Germany, Italy, France, United Kingdom, and Japan. In the twenty first century, these nations may not accurately represent the greatest economies in the world, but their historical status has granted them high status in international commerce. Governments of G-7 nations are often compelled by big businesses and capitalists to allow the skillful exploitation of poor nations. When developing nations disagree on terms relating to imports from the Western nations, they are slapped with economic sanctions. Therefore, the cycle of exploitation of the developing economies by the industrialized nations continue. Sometimes, incompetent political leaders in third world nations allow such exploitation to continue. Most citizens of the G-7 nations are not aware of the designs of their capitalists and big businesses. A particularly disheartening problem in modern times is that the voters and citizens in industrial nations are ignorant of the unfair trade practices encouraged by their politicians and capitalists. The newspapers and the TV media do not report news in this category. When the British were colonizing India, the British capitalists forcibly bought raw cotton from Indian farmers, while the British government prevented Indian factories from weaving cloth. Instead, cloth from Indian cotton was produced in Manchester and shipped back to India. The ordinary citizens of Britain were probably unaware of the unethical conduct of their capitalists. Franklin Delano Roosevelt believed that free trade between countries would eventually lead to peace. He was of the view that trade barriers erected during and after the industrial revolution had resulted in wars which had endangered the lives of millions of innocent people. According to Roosevelt, trade barriers could eventually lead to hostilities and warfare. Roosevelt conveniently disregarded the popular economic hypothesis that free trade could only function well between equally developed or equally under-developed nations. American and European trade diplomats also managed to create an impression that free trade is defined as transfer of goods under the rules conceived by capitalists from America and Europe. In recent decades, European nations have been plagued with high unemployment and under-employment. We must further acknowledge that most of the industrially advanced nations of the world seem to be facing a new generation of social and economic problems. These industrialized nations are exhibiting an inadequate growth rate of about 2 percent. Germany and France have been coping with the problems of unemployed youth engaging in systematic rioting. Under such circumstances, it would be outlandish for industrial nations to be willing to allow liberal imports of textiles, electronic goods, hardware, automobiles, and agro-products from the developing countries. Without serious consequences, America and Europe can no longer welcome unlimited imports from Asian countries. For hundreds of years, racketeering, swindling, and deception have been a part of international trade. Incidentally, in earlier decades, colonist governments had engaged in state sponsored swindling. In the twentieth century, swindling had to be legitimized. It seems as if modern institutions such as the World Bank, International Monetary Fund (IMF), U.S. Treasury, and the World Trade Organization have borrowed many 5
  6. 6. ingenious ideas and ideologies from traders of the nineteenth century. In those days, trade occurred between less civilized societies. In the nineteenth century, there were no systems in place to ensure ethical business practices. History repeats itself. The murky methods of trade of the nineteenth century have now been refined, perfected, and put in practice for controlling international money markets, regional politics, trade, and commerce. The IMF, WTO, and World Bank are multi-layered organizations where the top layer has a vital hidden agenda which the bottom layer is completely unaware of. Many economists working in the second layer for the IMF might naively believe that the organization has been set up to offer assistance to stabilize economies of developing nations. On the other hand, the top layer bureaucrats at IMF know that their primary goal is to assist the financial communities in America, Canada, France, Germany, Italy, and the United Kingdom in maintaining supremacy. The World Bank appears to be an organization with sophisticated political agendas. The World Bank was also interested in encouraging the developed countries to move their toxic waste producing industries to the least developed economies. Any organization claiming to be for the benefit of the world community would not be suggesting that pollution be moved to third world countries. Incidentally, the World Bank wants water distribution in developing countries to be privatized. This is another odd agenda, as there is big money to be made in the water distribution business. Many European countries want the water distribution in developing countries to be privatized. The Western companies want to bid for the water distribution projects in third world nations. The integrative role of the WTO, World Bank, and the IMF maybe to protect American and European economies by putting them on a new path of growth by stimulating exports. We notice that the IMF prefers to give the top executive power to European citizens. The World Bank prefers to give top executive powers to American citizens. Perhaps, as an organization largely controlled by Western interests, even the WTO could covertly provide a legitimate facade to carefully mislead the developing nations into believing that a level playing field for free trade can be created. Then, the objective of the WTO could be to rope in the poor nations into a net and force them to cut tariffs, remove trade barriers, and increase their imports from the G-7 nations. This would help the G-7 nations temporarily combat unemployment and poor growth rates until better economic structures are put in place. In the meantime, the free trade might end up generating enormous inequalities and disparities between the developed and developing economies. The developing nations could get locked in a downward spiral. Mexico and Argentina experimented with free trade and ran into serious economic problems. Most usually, the concept of free trade works well between nations whose industrial development is at the same level. Therefore, when the concept of free trade is applied across nations with different levels of industrial development, the less developed nations could get pushed further into impoverishment. It is conceivable that artful economists at the WTO or World Bank are in a position to easily concoct new theories and steer their economic analysis to suit the economic agenda of the G-7 nations. Using the faulty analysis they could even try to produce a document that looks credible enough to direct a new policy. In other words, economists in these organizations run the risk of being bought by European and American special interest groups. Furthermore, the skillful economists could try to make their analysis complex enough to be beyond the comprehending ability of political leaders of the developing nations. Many nations in Africa and Asia are run by political leaders who have close connections with opportunists. Quite often, free trade has been observed to result in job losses in nations that participate. However, the rich 6
  7. 7. capitalists are never overly concerned about jobless growth and wage less growth. Industrial nations are generally satisfied at keeping the unemployment rate at about 4 percent. This scheme ensures that the pathetically indolent and incompetent citizens of a nation, who fall in the bottom 4 percent, are eliminated from the industrial workforce. However, in mature industrial economies, under-employment hovers around 25 percent. As a classic case of under-employment, a college degree is now required to earn a high school graduate's salary. In industrialized economies, when women entered the nations workforce in large numbers, the wage levels fell significantly. At a great economic and social cost, the American nation has stationed battle ready aircraft carriers, submarines, and aircrafts at strategic locations on the globe. To defend weak nations from communist threats, the American policing scheme with dependable European alliances has a fairly extensive footprint. The Soviet Union might have been dismantled, but there are many nations in Latin America and Asia which continue to have faith in communism. While China is experimenting with free market economics and communism, Cuba is experimenting with socialism. As private policing does not come for free, many nations in the world have chosen to ignore the issue of America’s economic and political agendas. American policing brings enormous benefits to poor countries with untapped mineral resources. Impoverished nations that sign up for American policing services need not invest heavily in military infrastructure. In the event of a sudden crisis, just a ten dollar phone call to the White House administration will bring American aircraft carriers and submarines into attack position. Like an insurance policy with a modest premium, this certainly is a great military luxury for impoverished nations whose political leaders have faith in American capitalism. While eagerly volunteering to organize policing activities, American politicians and capitalists are willing to sacrifice the lives of able bodied men and women in uniform. They are also willing to take flak for their decisions. This in itself is very honorable. Incidentally, it may be hard to place an exact economic value on human lives of the soldiers in the front lines, and incorporate this value into the social cost of protection. As America has a relatively small contingent of infantrymen, the world policing job might drive America into a situation of conscription if wars have to be fought simultaneously in several theaters. It costs a lot of money to maintain space satellites, aircraft carriers, missile defense systems, and nuclear submarines for worldwide policing. Perhaps, the nations in the world have an obligation to foot the bill required for the policing infrastructure. Within an international monetary system, the cost of global policing could have been recovered elegantly through a global police protection tax. However, the brazen unconventionality of collecting protection money for American world policing might have invited harsh criticism from nations in Europe. In fact, the French intelligentsia would have equated this practice to the Sicilian Mafia’s scheme of extorting protection money. America is in a position to recover a modest amount of protection money in a camouflaged way through unfair trade practices. For instance, unfair trade through farm subsidies is a good way of covertly recovering the costs of policing. Unfair trade with wealthier European nations could help fund the policing costs incurred on poorer Asian nations. To America, it would not matter where the money came from, as long as policing expenses were covered. Incidentally, the European nations might feel morally justified in establishing unfair trade practices with Asian nations. Later, concealed profits through unfair trade can be diverted into the American treasury for police expenditure. The WTO is an organization that can legitimize unfair trade to help Europe and America raise money for 7
  8. 8. protecting Asian nations from communistic threats. Perhaps, the secret agenda of the WTO extends beyond dealing with simple trade issues and commerce. At the WTO, the leaders of the G-7 nations probably have to work out the financing methods that support international policing. These plans might constitute classified information, that cannot be made public. For instance, these plans might require the close scrutiny of geopolitical objectives of Chinese communists. A culture of compulsive consumerism makes America the biggest consumer of merchandise. America buys cars from Japan and toys from China. Consumer spending in America drives the Asian economy. At present, emerging economies of the world account for nearly 40 percent of world business in terms of exports. The leaders of Asian nations feel that emerging economies should have a greater level of participation in official domains of the WTO, IMF, and the World Bank. India, China, and Brazil are seeking organizational changes to attract greater attention. Perhaps, the changes are not forthcoming because of a second agenda involving international policing. Because of the potential role of the WTO in indirectly funding policing operations of the future, the top executive positions in these organizations have to be held by Americans and Europeans. It would be imprudent to allow executives from South America and Asia into the planning domain. It is a well known fact that several socialist and communist groups are active in South America and Asia. 8

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