I did want to pick up on one single fragment, as it still seems the main reproach against Lula your propose that he scared the investors off:
Craven de Kere wrote:Foreign investors who are not partisan were the ones who found Lula too extreme to be worth Brazil's risk.
Foreign investors are not impartisan, nowhere. They are partisan in two ways.
One, their professional mission is exclusively about the interests of their businesses. Sometimes the interest of business and the country as a whole overlap, in overcoming hyperinflation, for example. But it's no equation. Every tax cut is good for business; not every tax cut is good for the country, or even for the economy. Some tax cuts have failed to reinvigorate the economy while still draining resources for education, healthcare and social services. Only the most far-sighted investors note that in the end, underbudgetting for education is to their disadvantage as well: most "business analysts" will simply decry every postponement of more tax cuts. Environmental regulation measures are good for the country as a whole, but not one business analyst welcomes them, and the very reason many investors have shifted capital from the North to Latin-America or Asia is because life's still easy for them in that respect.
Two, even investors are only human. They, too, can be prejudiced, think in stereotyped formats. Within limits, of course - should they be too prejudiced it would impact their business decisions and hurt their wallets, so it's curbed in that way - but I've read many an interview in which a banker or industrialist spouted the coarsest prejudices. Finally, sometimes investors just get it wrong. Asian Tigers. Dotcom. They do tend in increasing measure to rush to and fro in hype-like enthusiasms and hysterias. That just to remind us that it might not be necessarily wise to take the judgement of foreign investors as the be all and end all of the truth.
nimh wrote:
Foreign investors are not impartisan, nowhere. They are partisan in two ways.
Partial does not mean partisan, my point was that Brazil is not a politically polarized country. I did not meet a single person in Brazil who claimed to support a specific political party (not a single person, nobody says "I support this party or that party"). The Brazilians often can't remember the names of the parties (they are usually acronyms) so foreigners are even less likely to have a partisan opinion.
This does not mean they are impartial. Just that this is not a partisan conflict for the sake of partisanship. Businesses have a decided interest in the outcome of elections. But not because they care about the politics, they just acre about the results.
It's a no-brainer to say that businesses can be wrong. In the case of Lula their fears are exagerrated. In most cases 1st world businesses overestimate third world risk.
But whether they are right or wrong is absolutely pointless. It simply does not matter.
It's like saying a judge can be wrong when he sentences you to death. True but the relevant factor is that you are scheduled to die. Once you are executed the relevant factor to you is that you are dead. Whether it was just or not means nothing to you at the time.
Whether the business people are right or wrong they have pulled their capital. This hurts Brazil.
I'm not here to argue whether they were right or wrong, the fact that Lula's candidacy and election devastated Brazil is fact. Right or wrong is a nice notion that has nothing to do with facts on the ground in this case.
Wholly apart from the Lula issue, though still not quite on-topic, is another question you raise, though, which I think is crucial and rather disturbing in its implications for us all. It's like you write:
Craven de Kere wrote:It's a no-brainer to say that businesses can be wrong. [..] But whether they are right or wrong is absolutely pointless. It simply does not matter.
It's like saying a judge can be wrong when he sentences you to death. True but the relevant factor is that you are scheduled to die. Once you are executed the relevant factor to you is that you are dead. Whether it was just or not means nothing to you at the time. [..]
I'm not here to argue whether they were right or wrong, the fact that Lula's candidacy and election devastated Brazil is fact. Right or wrong is a nice notion that has nothing to do with facts on the ground in this case.
I mean, that's absolutely true. But frightening in its consequences. Back in the days of national economies, if some radical became PM, a few millionaires would cross the border into a tax haven - and that was it. I mean - he might still, err, "adversely influence" the economy with his actual policies, but not because capital could be boomed in or zipped out at the moment's political shock of his mere appearance (just to give it some rhetoric flourish).
Now, should you be the kind of voter - and again I'm not talking Brazil anymore here (but overall it does probably hold true in particular for developing countries) - who wouldnt mind a bit of a drastic shift from the neo-liberal standard, you're faced with two choices: go with your convictions and vote in the man who propagates that shift, but know that the investors will react by letting the guillotine blade of the market fall down on your country and make him unable to do anything anymore; or "adapt to reality" and vote in the man who doesnt even want to effect that shift. You can't win. At the bottom line, it's the principle of democracy subverted: you've just been robbed of the possibility to freely choose what course you would like the country to take. Anything the majority might like to happen will already in advance have to be adapted to what a certain minority considers right.
Well, thats great for the concept of minority rights, of course. And I just almost arrived at some vulgar marxist notion about how liberal democracy wont really allow you to change anything, and therefore the overthrow of the system itself is the only real choice - didnt I? <grins>
One for the "discontents of globalisation" thread that should have been started up somewhere around here a week or so ago, anyway ;-).
NIMH - I share your concerns about the enormous globalization and swift-movingness of capital.
It is fashionable in some parts of the left to see the results of this as a vast conspiracy - but I think, as Craven says, that they just respond to reality as they see it - which is, as you say, a very non-impartial and actually, I think, very emotional view - I see the movements of the market and, often, of international capital, as mimicking the motion of herds of skittish antelope or darting schools of fish - often starting at shadows.
Craven says it IS reality - and so it is - but a lot of this "reality" is created in the context of a herd mentality - or so I think - though I do not deny that there are conditions that go well generally for capitalists, and that some of their reaction is perfectly rational if they consider their own financial interests as paramount. Which they do.
Part of the problem, as I see it (with NO pretensions to understanding economics, I assure you!) is that, prior to the rise of the seriously supra-national financial system, many countries had developed a series of checks and balances on the power of capital - so that there was some balancing in the equation. With money being moved in and out of economies at the rate it is today, and with money having no loyalty to any country, I see no real force to balance the power of capital - especially for poor countries or countries with small economies - who must dance to the tune of foreign investors, or be punished in the form of high interest rates for the money they have borrowed, or the flight of momey from their economies - thus fulfilling the very prophecies that made the skittish herd run in the first place., and causing them to run harder and faster next time.
Craven - even you acknowledge that Lula is not so "insane" as the big money paints him - and while I get your point about this being "reality" whatever one likes to say about it - I think it is important to actually maintain a POV separate from that of global capital by which one can judge it, critique its effects and begin to think of ways to ameliorate some of the most negative ones.
There IS rising a new (old) way of thinking about all this - looking at social capital, critiquing the holy commandments of low tax, small public sector, "trickle-down" (been waiting for a ferking long time to see THAT - what I see is trickle-up!), untramelled markets etc etc.
My country has faithfully followed all the holy writ of economic rationalism - what has happened? Huge rise in people living below the poverty line - no observable trickle down - hollowing out of middle class - much longer hours and poorer working conditions for those in work - larger pool of unemployed - slightly bigger, much richer rich - lousy services - loss of educational, scientific, health and infrastructure excellence - oh - but the ECONOMY is very well, thank you - doing better than most countries including the USA - it is just the country that is stuffed! I also SEE the results of the erosion in supports for families and parenting - and it is very scary - I have never seen such a lot of seriously stuffed kids as I am seeing these last few years. I think the economics are insane.
I recognize, as you do, that governments must operate within the real world - and not destroy their countries - but I would also hope that governments will slowly be challenging the current status quo in pursuit of better conditions for their people - and hence gradually making it harder for international money to play one economy off against another - or that SOME structures will be created to balance competing powers and interests.......and I would see maintaining an awareness separate from that of the market as being an important thing to do - particularly in what I see as the quasi-religious international money theocracy operating today!
Prolly just fitting wings to pigs, I guess...sigh...
<quote from nimh's last post>
Very valid points, but I posit that investors are interested in money and that they would only abandon their investments if they thought them in danger.
Deb, me is gonna rant a bit. Quite a bit.
dlowan wrote:NIMH - I share your concerns about the enormous globalization and swift-movingness of capital.
It is fashionable in some parts of the left to see the results of this as a vast conspiracy - but I think, as Craven says, that they just respond to reality as they see it - which is, as you say, a very non-impartial and actually, I think, very emotional view - I see the movements of the market and, often, of international capital, as mimicking the motion of herds of skittish antelope or darting schools of fish - often starting at shadows.
I could not disagree more. Moving capital at the amounts I'm talking about (I am not talking Joe Blow moving his life savings to the Caymans, I'm talking Ford moving their factory to another country) is nt a whimsical decision.
It took years of one administration's policies to coax the investments in, when a man who has
a) advocated that the Brazilian government take ownership of a private business
b) complained about the open market and made suggestions to the effect that Brazil should do an about face with their markets
c) railed against the US and the economic bloc that Brazil is already signatory to
d) threateed to default on debts
.. is elected the concerns are hardly frivolous. An about face in the Brazilian economic policy would remove the very motivations the investors had in placing their money there in the first place.
Not paying back loans is not something that inspires people to loan more.
Threatening to take your business when it is sucessful makes success lose appeal.
These are not frivolous fears. And even if one were to disregard all of them the bottom line is that the capital fled because it was bleeding. Not because of the treat of danger. It was there already. To keep money in Brazil at the time was to devalue it several times over.
Railing against globalization is a nice notion, millions of dollars in losses is a reality.
dlowan wrote:
Craven says it IS reality - and so it is - but a lot of this "reality" is created in the context of a herd mentality - or so I think - though I do not deny that there are conditions that go well generally for capitalists, and that some of their reaction is perfectly rational if they consider their own financial interests as paramount. Which they do.
The "herd mentality" you speak of can also be called human nature. As I argued in one of our chats human fallacies are stupid yet real in a world dominated by humans.
dlowan wrote:Part of the problem, as I see it (with NO pretensions to understanding economics, I assure you!) is that, prior to the rise of the seriously supra-national financial system, many countries had developed a series of checks and balances on the power of capital - so that there was some balancing in the equation. With money being moved in and out of economies at the rate it is today, and with money having no loyalty to any country, I see no real force to balance the power of capital - especially for poor countries or countries with small economies - who must dance to the tune of foreign investors, or be punished in the form of high interest rates for the money they have borrowed, or the flight of momey from their economies - thus fulfilling the very prophecies that made the skittish herd run in the first place., and causing them to run harder and faster next time.
Sigh. Lemme try:
a) For the money to leave it first had to enter. The entry is vital to a developing country's success. Complaining about it leaving without consideration to the benefit of its entry is like complaining that food is evacuated without mentioning the nice part about it being ingested.
b) In the past developing countries did not float. The globalization boogymonsteres lefties rail against long cautioned those who pegged that it was a bankrupt policy. Floating has its drawbacks (instability) but floating follows natural laws. Not floating means stagnation ina predominantly capitalist world.
If your complaint is that this is a capitalist world then this is pointless. Humans are a capitalist race.
dlowan wrote:
Craven - even you acknowledge that Lula is not so "insane" as the big money paints him - and while I get your point about this being "reality" whatever one likes to say about it - I think it is important to actually maintain a POV separate from that of global capital by which one can judge it, critique its effects and begin to think of ways to ameliorate some of the most negative ones.
I never said that. The investors did not paint him as anything. They just took a look at polls and pulled the money. The recipients of the investments and the middle and upper class vilified him.
They needed little help, he is less educated than you are and he was prone to extremities. Picture someone with less than half the education that you have running a country in a delicate moment. Isthat not a risk?
And no, Brazil, did not go into chaos, Brazil did not pull an Argentina. But that is not the only negative possibility. Brazil had been progressing, the progress made the market a more attractive investment. When the progress ceased, which it did, the allure of investment waned. Regardless of the fact that the worst case scenario not happening (not once in history has the worst case scenario happen) there were very real and very valid reasons for the investments to be withdrawn.
If you started paying a drunk money to help him get sober and then if he decides to shun sobriety would it be reasonable for you to stop paying him? Even if the worst case scenario in his life is not realized?
dlowan wrote:
My country has faithfully followed all the holy writ of economic rationalism - what has happened? Huge rise in people living below the poverty line - no observable trickle down - hollowing out of middle class - much longer hours and poorer working conditions for those in work - larger pool of unemployed - slightly bigger, much richer rich - lousy services - loss of educational, scientific, health and infrastructure excellence - oh - but the ECONOMY is very well, thank you - doing better than most countries including the USA - it is just the country that is stuffed! I also SEE the results of the erosion in supports for families and parenting - and it is very scary - I have never seen such a lot of seriously stuffed kids as I am seeing these last few years. I think the economics are insane.
Deb, I've long told you how distasteful I find it for someone in a first world country to whine about their national economic problems. The economic policies you criticize make your nation a firts world country, should you prefer a more socialist variety there are plenty of poor countries you can live in. You can even pretend like the economic laws are different there.
In coutries whose economic policies differ from Oz the poor are poorer and the rich richer. A downturn in your economy is exactly that, a downturn. To whine about a downturn and fault economic policy while living in AMAZING (in comparison with nations with differing economic policy) conditions that are a direct result of the economic policies is, frankly, ridiculous.
Do you want a "trickle down"? How about accepting a reduction in the quality of yours and your compatriot's lives to ameliorate the lives of others?
It never ceases to amaze me that people can both complain that other nations are poor and that their affluent country suffered a downturn.
You can't have both, you can't be a rich country then cry about others being poor while at the same time decrying any change in the quality of life you enjoy.
Your economic difficulty is another person's economic relief. It's confounding logic to ask for all. Resources are finite.
dlowan wrote:
I recognize, as you do, that governments must operate within the real world - and not destroy their countries - but I would also hope that governments will slowly be challenging the current status quo in pursuit of better conditions for their people - and hence gradually making it harder for international money to play one economy off against another - or that SOME structures will be created to balance competing powers and interests.......and I would see maintaining an awareness separate from that of the market as being an important thing to do - particularly in what I see as the quasi-religious international money theocracy operating today!
I find it had to believe that we share the same reality. Better conditions for one people means worse conditions for others. Competition is life. It's the height of naivete to want better conditions for others and still cry about a slight change in the conditions of the nation that you live in, a nation with a quality of life that others can only dream about. I posit that the problem is not the economic realities you find so untoward but rather the naive notion that everyone can be rich. Idealists often want the poor to become wealthy without the wealthy becoming poor.
Right, Craven. Rant away - but please rant about what I have said - not what I haven't.
" Moving capital at the amounts I'm talking about (I am not talking Joe Blow moving his life savings to the Caymans, I'm talking Ford moving their factory to another country) is not a whimsical decision. "
I never said whimsical, or, indeed, frivolous - what I said was that movement of MONEY (and I grant that moving a Ford factory is a more onerous thing to do) is the result not only of rational decision making, but also of very emotional and herd-related factors.
"The "herd mentality" you speak of can also be called human nature. As I argued in one of our chats human fallacies are stupid yet real in a world dominated by humans."
We have no disagreement there - why do you see one? Of course they are real - we have systems of laws and custom to ameliorate them in all human settings.
"If your complaint is that this is a capitalist world then this is pointless. Humans are a capitalist race."
Hmm - I won't go into an argument about whether we are a capitalist race or not - but my argument was about the need to ameliorate the actions of capitalism, not to deny their existence.
You used the word insane - I understood you to mean that this was the view of big money - if it is not fine - but it does appear to be your view.
"Deb, I've long told you how distasteful I find it for someone in a first world country to whine about their national economic problems. The economic policies you criticize make your nation a firts world country, should you prefer a more socialist variety there are plenty of poor countries you can live in. You can even pretend like the economic laws are different there. "
Whether you care to label it whining or not, I believe that first worlders ARE entitled to actually comment about our countries! Are you advocating that we must remain silent about these things lest it offend you?
Excuse me, but my country is, as you say, a wealthy one - this makes it the more appalling in my view that our homelessness rate is rising, that poor families - even those earning, are overwhelming charities with demands for food parcels, that many aboriginal people live in third world conditions. I could go on and on about this - this is not about an economic downturn - this is about a clear trend here for over 20 years - and it is about fair sharing of wealth, not about claiming the country is poor. I do not NEED to look to "third world Socialistic countries" to look at fairer sharing - I need only look at western Europe.
I will address some of your other points later.
I prefer to remain civil, and I am at risk of not doing so.
Right, Craven. Rant away - but please rant about what I have said - not what I haven't.
I never said whimsical, or, indeed, frivolous - what I said was that movement of MONEY (and I grant that moving a Ford factory is a more onerous thing to do) is the result not only of rational decision making, but also of very emotional and herd-related factors.
We have no disagreement there - why do you see one? Of course they are real - we have systems of laws and custom to ameliorate them in all human settings.
Hmm - I won't go into an argument about whether we are a capitalist race or not - but my argument was about the need to ameliorate the actions of capitalism, not to deny their existence.
You used the word insane - I understood you to mean that this was the view of big money - if it is not fine - but it does appear to be your view.
Whether you care to label it whining or not, I believe that first worlders ARE entitled to actually comment about our countries! Are you advocating that we must remain silent about these things lest it offend you?
Excuse me, but my country is, as you say, a wealthy one - this makes it the more appalling in my view that our homelessness rate is rising, that poor families - even those earning, are overwhelming charities with demands for food parcels, that many aboriginal people live in third world conditions. I could go on and on about this - this is not about an economic downturn - this is about a clear trend here for over 20 years - and it is about fair sharing of wealth, not about claiming the country is poor. I do not NEED to look to "third world Socialistic countries" to look at fairer sharing - I need only look at western Europe.
I will address some of your other points later.
I prefer to remain civil, and I am at risk of not doing so.
SÃO PAULO, Brazil, April 9 As the government of President Luiz Inácio Lula da Silva passed its 100th day in office this week, the specters of economic calamity that his election had raised for foreign investors debt default, a sinking currency and economic mismanagement seemed to be just that, shadows.
Mr. da Silva and his team could and did congratulate themselves that, because they committed themselves to a policy of tight money and painful spending cuts after taking office on Jan. 1, the economic signs are mainly pointing in positive directions.
