Ec Dev

This is boring post, where Bronwyn writes vague things about economics.

I am the kind of idiot who gets a Masters Degree in “international development” before travelling to the “developing world.” I don’t like the term “developing world” because it presumes the value of economic development to be paramount, and it sort of implies that the various societies not included in the North/West hadn’t been developing their own complex economies, trade networks, state formation, religions, art, etc. since, I don’t know…maybe several thousand years ago. A more honest term would be, those economies which have not enjoyed several hundred years of economic extraction, backed by more effective weaponry.

A lot of my thoughts in Nepal turn to economics. However, I now think I understand even less about this sphere than I did before. I wonder what “economic development policy” is, exactly? It seems like the real driver is financial development, whereby, people can make and break rules – my impression is that it is easier to work within a defined legal structure to make money, regardless of the structure, than to create/delete policies to increase overall wealth. Maybe it is because, on one hand, you have intellectually clever people who are interested in milking wealth for themselves and who are very good at outsmarting rules-based systems, and other people who are broad-minded, often ideologically driven, who usually have political psychologies which crave control over others as a projection of their own unfulfilled self-mastery (Okay, so I read a book on Politics, Power and Change by Osho while I was in Pokhara, and can’t decide if I love or hate him – but I kind of agree that most people who seek political power are psychologically unfulfilled in some way which caused them to externalize their need for control).

Nepal is one of the poorest countries in the world, by GDP per capita measurement. It’s also a highly commercial society. There are shops everywhere – clothing, shoes, paints, bricks, motorbikes, food, construction, garages, souvenir shops. A nepali friend pointed out that people in the cities often do quite well for themselves, but people in rural areas are very poor. Maybe this is obvious, but it’s worth noting that not everyone in Nepal is poor. Also, ne noted that the government is chronically poor, and even if there were wealth to tax, there’s no organized system of addresses and people can avoid them easily. Government officials are corrupt, and pocket wealth from all kinds of projects and investments. The municipal infrastructure is almost non-existant in comparison to the North/West – limited roads, sewers, garbage disposal, electricity.

Inflation is at 9.5%, an increase about twice GDP growth, which means, I suspect, people at the poorest end of the spectrum may face growing income inequality as is happening in Canada and elsewhere.

Money should be a public good – a useful tool for material growth and diversity – I think. But, apparently, most financial wonks see the system as it is as being too entrenched to change…and money seems to be increasingly a private good, with vast amounts of imaginary wealth controlled by private institutions, at the cost of real wealth for some. In cases like Nepal, it’s hard to tell whether economic growth means qualitative growth because as with Canada, right now is a time of concurrent massive wealth and increasing inequality in income.

There’s this incredible wealth, but at the highest level, much of it is controlled by super-rich international banks/banking institutions which are beyond democratic oversight, and some people are participating and doing well financial (and thus politcally content) while others are not, but have no idea why and have no access to the centres of power. It’s bizzare. Or maybe I am selectively portraying the situation. Finance is like magic. I have this question about government created money, versus money borrowed from private banks…in the post WWII period, the Bretton Wood Institutions, as an extension of American foreign policy, loaned “developing” nations a lot of money. John Perkins explains this in colourful terms in Confessions of an Economic Hitman. If a country did not openly accept the loan, political pressure was placed on them, if that did not work, US military/CIA thugs would step in and aid in ousting or killing the reluctant leader and replacing him/her with a leader more amenable to accepting financial aid. How does this system now function? The World Bank seems such a clean institution, what with all it’s development projects and focus on accountability and impressive metrics and data. But are the current loans still fundamentally intended as political control? Why should a national government take loans anyway, isn’t the point of having a government that it creates money? I know, these are very gauche questions and stupid to ask, and ideological, since evrything is all set in the system. People in international development have been pointing at the loans for a long time, are they still an issue? I don’t know.

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