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PAD6836 Lecture 8

University of North Florida Master of Public Administration program PAD 6836 Comparative public administration Economic development Internationalist of the week

photo credit * Among other things, in our discussions of corruption we’ve noted that there is a difficult cycle to break out of in terms of governance: poor countries cannot afford to pay salaries that attract competent people into public , and as a result of the corruption and inefficiency that results, citizens have little inclination to pay the taxes needed to attract and keep good people in public administration.

George’s more or less random thoughts on development

 Progress! The general idea of economic development is to increase the productivity of society so that it produces more and services.  Everyone wants it. Especially among left-wing critics, development (even ‘progress’) is often criticized as being materialistic, and/or a Western pathology acting as a siren’s song to lure traditional societies out of their Ruritanian idyls (I’m not sure if ‘idyl’ works with Ruritanian, but it sounds good – click for a discussion of Ruritania). This is probably not the case, for at least two reasons: 1. There isn’t much evidence to support this, among actually existing human societies (an exception). 2. Critics seem unable to understand that at lower levels of development, ‘more stuff’ means housing that protects one from the elements and vermin, health care, more efficient tools, etc.  Preconditions. Causes of (drawing from Parkin 2005, with many modifications)  Free markets – understood as relatively free, given what is possible in an imperfect world.  Good governance. This is the item that is especially important in a Master of Public Administration program: good governance. If the goods get to the port but are held up by

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PAD6836 Lecture 8

costly administrative delays, or the manufacturer has to bribe officials to get something cleared through customs, production suffers. This is necessary for a range of things, like:  Property -- this is especially relevant in terms of , as will be elaborated on below.  Monetary exchange. Barter is not an effective way to trade.  Human capital. There is a reason why Japan and Germany recovered so quickly from the devastation of World War II.  and investment in new capital. I’ll list this separately, as it comes from both the (factories, equipment, buildings, technology, etc.), and from government (roads, ports, rail lines, schools, etc. See the ‘Road to hell’ article from The Economist this week’s readings).  Compatible culture. In addition to encouraging (or at least not discouraging) entrepreneurship, this also might include a broader understanding of other, more cultural than governmental characteristics of the labour force:  discipline (turning up for work  distribution (mobility, for example)  Discovery (or application) of new technologies -- understood broadly  Social technology: better social organization. Especially prominent here would be good government!  Whiz bang gadget-type stuff: better mousetraps that improve productivity and/or find markets. The discovery v. application distinction is critical, too.  Application: many countries have launched themselves into sustained growth (for a decade or two) through adopting existing technologies, relying on cheap labour to launch this ‘take-off’.  Discovery: at some point, simply adopting existing technology will not be enough. Instead, new technologies need to be developed locally (example). This has especially been the case with China, for instance, as wages have risen, and some manufacturing has shifted to lower wage countries, like Vietnam, Cambodia, and India (source).  Pre-req plateau: another dimension that is hard to untangle is what I’m terming ‘plateauing’. The logic here is that a country’s level of good government, human capital, infrastructure, and such ‘caps’ the level to which the country can grow, even with cheap labour. Congo and Somalia, for instance, have to have among the cheapest wages in the world, but neither of them are growing, as government is an absolute hindrance, infrastructure all but non-existent (a Congolese example), and human capital development woeful. So while

(푐ℎ푒푎푝 푙푎푏표푢푟) + (푚푒푑𝑖표푐푟푒 𝑖푛푓푟푎푠푡푟푢푐푡푢푟푒) + (푙표푤 푠푘𝑖푙푙푒푑 푙푎푏표푟) + (푓푎𝑖푟 푔표푣푒푟푛푚푒푛푡) = 푔푟표푤푡ℎ

...there are limits to how much growth a society can achieve with those limitations (and so competitive disadvantages) in human capital, infrastructure, and government.

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PAD6836 Lecture 8

The Australian auto industry

One illustration of the complexity of economic development is reflected in the collapse of the Australian auto industry. To give my answer, up front, to the question posed in the title of the Dowling article: consumers killed the Australian auto industry. As I put it in our first lecture: Jobs do not get shipped overseas. Just to get this on the table: no ship has ever left a US port with jobs in it. Indeed, rather than being driven by corporate masters, globalization is driven by freely made purchasing decisions of US (and other) consumers at their local Wal Mart. For my entire life products have been labeled with country of origin, so every consumer has been able to make her/his own free decision whether to choose to purchase $10 an hour labour from an American textile worker in North Carolina, or 50 cent an hour labour from a Honduran textile worker in San Pedro Sula. More and more, we are deciding not to employ our fellow Americans to make our shirts, and are choosing the Hondurans instead. More recently, Chinese labour has become all the rage, it seems everyone has to have it. This is a critical point: jobs do not get shipped overseas by US corporations. Rather, what happens is that Americans and other global consumers no longer buy American products, American employers no longer have anything to do for the workers who make these products, and so the workers get fired. If the employer seeks to stay in that line of work, s/he moves to where s/he can obtain the sort of labour US and global consumers are willing to purchase: Honduras, China, Bangladesh, etc. The same applies to communities: no one is out to get us, China is not out-negotiating us, we just have to compete on price and/or quality.

There was also probably more than a little government/industry collaboration that helped spur the demise of the Australian auto industry. When I lived there in the 1980s to early 90s, the country had five (count ‘em: five) domestic auto manufacturers, in a country with 1/15th the population of the US (which had three auto makers at the time).

India

India is the 'I' in the awkward 'BRIC' acronym that is meant to identify the four major emerging , and so we will look briefly at the recent economic reforms and economic performance of India, just by way of comparative contrast with (mostly to show that Brazil has not been unique) for insights into the process of development that has contributed to the progress these two societies have made toward entering the group of 'advanced industrial societies'.

This political-economic link is especially evident in a recent book by Alfred Monteiro. He refers to reforms that are heavily economic in nature, in that human experience has shown that, as a recent publication put it: "An effective state is vital for the provision of the -- and the rules and institutions -- that allow markets to flourish and people to lead healthier, happier lives. Without it, sustainable development, both economic and social, is impossible." -- World Development Report 1997, p. 1 Keep in mind that the World Bank is widely (and unfairly) derided by lefties as some sort of tool of the capitalist class, and is generally skeptical of government. So for an organization like this to

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PAD6836 Lecture 8 assert the importance of government is especially telling. As for the 'without it' proviso at the end of the statement above: "Nothing is more damaging to successful development than incompetent, irresponsible and corrupt government..." -- John Kenneth Galbraith (1994), A Journey Through Economic Time. Keep in mind, too, that Galbraith is widely (and unfairly) derided by conservatives as some sort of communist, and is generally supportive of government. So for someone like him to assert the potentially debilitating nature of government is especially telling.

India and economic reform

The Indian story is much like that of Brazil, except that its history is much different:  Long history. Rather than a 'settler society', Indian history goes back millennia. Especially under Ashoka, an Emperor who ruled most of what is India over 2200 years ago, India brought in what were probably the most progressive policies of any society to that date.  Like Brazil, though, it developed a culture characterized by rigid hierarchy (the famous 'caste' system), formalism, and a strong state role. India's government has generally been more effective than Brazil's, about as regulatory as Brazil's, and just as dishonest.  On culture and development, it was long argued that there was a 'Hindu rate of growth'. What especially debunked this belief that economic growth was prevented by something inherent in India's dominant Hindu culture, was the observation that Hindus who had left India almost invariably outperformed folks in the countries to which they moved, even when the Hindu's arrived as penniless farm labourers.  Elite advantage. India’s political and government bureaucratic elite favoured this status quo. The bureaucratic elite, of course, benefitted from these prominent, well paid jobs, while political elites both used government jobs to reward supporters, and many also tended to share a leaning toward socialism. o This was very common among the immediate post-independence elites around the world, perhaps because of the link between and colonialism.  Breaking this culture proved very difficult, but the breakthrough is generally credited with Manmohan Singh, possibly the greatest national leader of any country over the past 20-30 years. India has since, painfully, sought to roll back some of the restrictions that stifle innovation.  Growth! The result: dramatic growth rates, among the highest in the world, for close to two decades (source below: various World Development Reports): o 2000-07: 7.8% o 1990-99: 6.1% o 1980-90: 5.8% o 1965-80: 3.7%  As with Brazil, note the incongruity of all of this: government is large, has a role in many parts of India's ... yet is both ineffective at best and corrupt at worse. o This is not a good combination, and points to some important lessons about the role of government in society: . Government is good, good government is better. . Markets are good, adequately and honestly regulated markets are better.

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. If government is bad, markets are almost invariably a better option for social decision-making.

Pragmatic reforms?

Fernando Henrique Cardoso. A good portion of Brazil’s reforms were commenced by Fernando Henrique Cardoso, President from 1995 to 2003. Cardoso is an interesting fellow, as someone who was once seen as a 'neo-Marxist' sociologist, and who eventually became what has been widely seen as a 'neo-liberal -- i.e. pro-capitalist -- President. I've argued, in a series of unpublished papers (for one of these, see the link, if interested), that Cardoso nicely reflects the way in which reform has often been interpreted in ideological terms. You can also see this in the earlier parts of the interview you were not asked to read (requires too much local knowledge).

Ideology and development. The left, especially, see 'neo-' (conservative market-based policies, or our ‘new public management’) in much of the open trade and public sector reform policies discussed in this class. This is perhaps most evident in criticisms of Cardoso. For instance, some argue that in rethinking his attitude toward markets, Cardoso had chosen “a new ethical and political option by abandoning his reformist idealism to embrace the position of his former object of study, the Brazilian business class” (Fiori 1995: 19-20), while Nelson Werneck Sodre has termed Cardoso’s policies “opportunistic idealism by convenience” (1995: 8).

Other observers have been more charitable.1 Hoge refers to the “former Marxist whose thinking has evolved from socialism to his current approach, which couples liberal, market-based economics with strong anti- measures” (1995: 63). Cardoso and ally Luiz Carlos Bresser Pereira have both rejected ideological interpretations of these policies. Bresser Pereira has characterized the government’s policies as a Brazilian manifestation of the same, pragmatic ‘new public management’ adopted by governments as ideologically diverse as Margaret Thatcher’s British Conservatives and Roger Lange’s New Zealand Labour Party (Bresser Pereira 1998a: 18-20, 52-58; see also 1997: 16; 1998b); while Cardoso (1993) has likewise rejected ideological interpretations, and referred instead to the imperatives of reform: “In Brazil, this business of a liberal government is an empty discussion. The problem is to reform the structure of the state to live with the actual globalized productive system” (p. 23).

Cardoso on democracy and capitalism  Epistemic colonialism. There is also an interesting passage from that earlier section, in which he describes his recognition (while in exile in Chile, which he discusses on pages 179- 81) that he had been epistemically colonized: “In 1964, when I went to Chile, I came in contact with from all over Latin America -- Mexico, Bolivia, Argentina, Uruguay, and Peru -- many of whom had been exiled. You could say that's when I woke up to the reality of Latin America for the first time; prior to that, my reality had been that of Brazil in contrast with the world, and the world meant France or the . I had already done some research in Argentina, Mexico, and Chile, but my view of Latin America was limited -- I knew about Brazil. In Chile, I saw

1 See also Tavares de Almeida 1996, p. 226; Fiori 1995, p. 8-10; Hirschman 1995, p. 8; Baer and Maloney 1997, p. 324; Diniz 1997, p. 27

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the differences and similarities within Latin America, and this had a great impact on me; it relativized me; it relativized by view of Brazil and Brazilian exceptionalism” (p. 178).  US as bad global actor. In most of my classes, when discussing the ‘global context’, I discuss America-as-superpower (as in our lecture one). I then follow this with ‘America as bad global actor’, following this with a very partial list of dictatorships that the US supported and helped create through much of the 20th century. Brazil was one of these, and Cardoso’s exile in Chile was due to the 1964 coup. On the US role, though, as I (2006, p. 554) put it in an earlier article: “Elio Gaspari, in a widely lauded, four volume history of the 1964-85 military government in Brazil, notes that while the U.S. was not responsible for the 1964 coup it was aware that it was likely to take place, encouraged it rather than tried to stop it, and certainly supported the subsequent military government. According to Gaspari, ‘press censorship and torture of political prisoners’ were pillars of this regime that exiled Alberto Guerreiro Ramos. Despite this, American public administrators continued to work on technical assistance projects in the country.”  ‘Nation statism’. This reference is to what is he later refers to with the more commonly used term ‘statism’, which is more or less the ‘strong state’ tradition that (week one readings) heavily criticized among the ‘Asian values’ advocates. The idea was that global capitalism made it impossible for countries on ‘the periphery’ to grow, and so instead it was best for countries to develop under the firm hand of the government, generally, too, behind high tariff walls to protect local industry (p. 182-3).  Democracy valued. Earlier (in the more Brazil-specific part I did not ask you to read) Cardoso mentions that many Brazilian intellectuals (p. 169-70) saw themselves as an intellectual elite with a duty to transform their country, with this elitism implicitly trumping democracy. After the 1964 coup, they (and he) could see the importance of democracy.  Logic flaw of the strong state and development: the skills needed to rule with an iron fist (force, even brutality) did not necessarily correlate with the skills needed to develop a productive economy and dynamic society.  The rise of civil society. As we read last week, civil society (and NPOs) in Brazil long pre-dated the 1960s. However, one of the ironies of the ditadura (dictatorship) was that the armed forces took power to (to put it colloquially) crush uppity citizens who sought to, well, have a say in the governing of their society.2 Ironically, citizens organized, largely through existing nonprofit organizations, to push the military back into the barracks.  A challenge for these two, related movements. Again, to quote myself, at right (1999, p. 250):  Social scientists in the administration! This is a

2 It is a little more complicated than this, but this works for our purposes.

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PAD6836 Lecture 8 key issue surrounding many of the pro-market reforms that these countries have put in place. In short:  Statism by necessity. On independence, many of these new societies were attracted to the ‘state-led’, planned approach to development. Given (perhaps) the low level of sophistication of many of their fellow citizens (due to the inexplicable lack of investment in education by the colonial powers, given their self-styled ‘civilizing mission’), better to leave development to the country’s small cadre of technocrats. As well…  Capitalism = exploitation. …it was also believed by many that international capitalism was a system rigged to impoverish poor countries. Castor (p. 111) refers to perceptions that trade reform -- opening Brazilian markets to foreign goods -- results in the 'destruction' of Brazilian capital. With foreign investment, Brazilians (middle-class Brazilians, again the richest 20% or so!) find that they are now working for foreign corporations, owned by pension funds, the rich, and myriad small investors often on the other side of the world, who have little personal concern for the well-being of their Brazilian employees beyond that necessary to keep them from quitting. Before, on the other hand, Brazilians were working for the slavocratic heirs to Brazil's feudal caste system, who had little personal concern for the well-being of their Brazilian employees beyond that necessary to keep them from quitting (unless, of course, violence was used to keep the labour force docile). So how does foreign trade differ?  So: technocrat-led statism. But…  It didn’t work. With the exception of the ‘Asian Tigers’ (Japan, Taiwan, Korea, Singapore, and later arguably Thailand, Malaysia and Indonesia) that led to the ‘strong state’/ Asian Values development hypothesis that Amartya Sen criticizes in our week one reading, and later Chile was added to this list of economic success stories under authoritarian rule; for every authoritarian success story there are 10-20 failures.  Limits of government. A number of dimensions of this exist. A first is that, as discussed in Figure 4 in lecture four, the worst of all worlds is a large, ineffective (in part due to corruption) state. Castor (p. 73-80) refers to this as formalism and jeitinho (we discussed this in week five, p. 8): Brazil is the land of persnickety bureaucrats, and the often necessity of personal influence to overcome these hurdles. If you don’t have someone who can do a ‘work-around’, you lose. As one classic Brazilian text (Leal 1948) put it: "Para os amigos pão, para os inimigos pau." Translation: for friends bread, for enemies a club (a beating).  Local exploitation behind tariff walls. A second reason is that, as Castor (p. 83-99) notes, government long protected Brazilian firms from foreign . However: o 'Protection' comes at a cost to poor Brazilians, who pay more for inferior products than they'd be able to purchase on international markets. Further, it is well-paid (middle class) jobs that are protected, so the poor Brazilians who live on the fringes of the modern economy pay above market rates to subsidize the lifestyles of the fewer, better off (mostly) whites who live in the wealthier 20% parts of the country. o Investment decisions therefore get distorted. Brazil produces stuff that it could buy cheaper elsewhere, and doesn't shift resources into those areas that it does (or could) produce comparatively well, and so sell on global markets. o Further, given that jeitinho is necessary to maintain these trade protections; firms, owners and trade unions expend enormous resources making sure these protections

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remain. The potential for corruption is also high, as literally billions of dollars are often at stake in these decisions.  Montero (pp. 39-42) then goes on to write about deregulation more broadly. As indicated above: corruption is greatly facilitated by lots of , which the public official is able to interpret.  …and so, a pragmatic turn to markets, rather than government. As Indian economist notes: “We must improve the poor's access to investment by making sure that bureaucrats are replaced by markets wherever possible. As I remarked earlier, the anti-market protestors do not adequately appreciate that... far too many bureaucrats impose senseless restrictions just to collect bribes or to exercise power. Letting markets function is therefore often an egalitarian allocation mechanism” (Bhagwati, p. 58).  But technocrats at the core. Also as indicated in our lecture four, page 8, rather than a large, ineffective state, a “viable option is a small, ineffective state: if government is ineffective, make it small, focus whatever competence it does have on the most basic of services and regulatory functions.” This was the strategy utilized.  Leftist academics. But note the reference to gnarly leftist academics (p. 189) who reflexively opposed his government.  ! Here Cardoso discusses what he describes as (and I agree is) his pragmatic approach to reform. As discussed above, critics (of the political left) accused him of being a ‘neo-liberal’ which again, everywhere in the world but the US, means one who wants to reduce the size of government, and introduce business techniques to what remains.  Many of the pragmatic decisions he took were likely driven by ‘pragmatismo por necessidade’3. There are at least four ways to look at this: 1. Capitalism is superior to socialism or, more realistically in the Brazilian context: markets are better than government as a way of governing society. 2. Brazil (in terms of Figure 1, Lecture 5, reproduced at right) had generally gotten above the trend line in terms of how much government was appropriate, given its level of development. 3. The above was especially the case give the relatively low level of state integrity and competence or, put differently, the only excuse for being above that trend line is exceptionally good government, and Brazil does not have that. 4. On a case-by-case basis, Brazil had (as hopefully illustrated in Figure 2, on the next page) been using government to do too many things for which government was not an efficient organizational form. This is Cardoso’s argument.

3 ‘Pragmatism by necessity’, the title of an article by Maria Hermínia Tavares de Almeida. The link isn’t to the article, but it is in Portuguese, anyhow.

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Figure 2 What government should, and should not do

Only It depends!* Never government government e.g.: defense, , justice e.g.: education, child care, roads, electric e.g.: Shoes, apples, steel, haircuts

* It depends, given the competence of government (and private alternatives), community values, and no doubt other things.

 Consider, for instance, the various functions that Cardoso’s government considered moving (or did move) from the public sector:  An iron ore mine (Companhia Vale de Rio Doce, a subsidiary of which was apparently responsible for the horrific recent dam collapse).  telephone services (Telebras).  An oil company (Petrobras).  The national bank (Banco do Brasil – the most reliable bank to use American cash cards today!).  An electricity generator (Furnas). Are these appropriate functions for government?  Won the war… Cardoso’s government largely won the war. As he points out, the Worker’s Party (supported by a substantial portion of the academic left) argued that Cardoso was selling out, that there was an alternative to opening to international markets, and there was an alternative to privatization and deeper economic reforms, not least reducing the “pillage of the state” that Cardoso argues took place within too many of the state owned firms (p. 186).  PT did the same. As he argues, while the Worker’s Party (PT) of Lula da Silva criticized his policies during the elections, they continued them on entering government. As well…  …global imperative. As he put it in 2001: “Therefore, we all are no longer talking about the South that was on the periphery of the capitalist core and was tied to it in a classical relationship of dependence. Nor are we speaking of the phenomenon, described some twenty-five years ago by Enzo Faletto and myself in our book Dependency and Development in Latin America, whereby multinational companies transfer parts of the productive system and the local producers are tied to foreign capital in the 'dependant-associated' development model. We are dealing, in truth, with a crueler phenomenon: either the South (or a portion of it) enters the democratic-technological-scientific race, invests heavily in R&D, and endures the ‘information technology’ metamorphosis, or it becomes unimportant, unexploited, and unexploitable” (p. 276).  But lost the (political) battle. His social democratic party (PSDB – Brazilian Social Democratic Party) remains a force in Brazilian politics, but the relative success of his governments have not resulted in political dominance, or even hegemony. Indeed, the Worker’s Party has won four consecutive Presidential elections since Cardoso was term-limited out. Two other (vaguely relevant, and my translations) Cardoso (2006) quotes:  “In essence the real problem is that in the system in which we live, the capitalist (and, at least for now, there is no other), the markets not only exist and have much power but they always contain an element of irrationality, "the herd behavior", that disturbs the

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assumption of rational calculation. More, the system also includes in its functioning an inherent and necessary element of speculation” (p. 346).  “Ah, the market, that terrible master, faceless and heartless, so irrationally rational or vice-versa, capable of ruining in a few days the work of so many years. And still there are those who idolize it” (p. 385).  Looking toward the future. Lots of good stuff here:  On the logic of the social sciences (and governance!): “The social sciences don’t abide by the same logic as the natural sciences. They’re not completely written, like the universe, in a mathematical language” (p. 191).  Particularism v. universalism This is related to our first paper in this class: “Ideas of particularism and the universal have been deeply changed because of globalization” (p. 191).  Further implications of globalization: “We are already participating in globalization, everyone is, some more, others less. The question is whether you participate actively or passively. Brazil is starting to participate actively, though not completely, because there's still a lot of trash to be dealt with. But businesses are participating, individuals are participating. The general outlook is framed by participation in global networks. This is a force for transformation and progress, not underdevelopment” (p. 191).  On self-identity! We’ll discuss this more in week 10. “I remember that in a presentation I gave at the School of Philosophy during a moment of great agitation (it was 1968), I said that in Brazil if we didn't assert ourselves as Westerners we would never be anything. This statement shocked many of my colleagues. The fact is that both indigenous and black culture have been assimilated here -- we don't have an African culture. Here, as in the United States, black culture is Western culture. Furthermore, say what you will, black Americans have little in common with African culture. They've been Westernized. And so have we. We are dark-skinned (morenos), and culturally we belong to the "far West," but we are still Westerners.”  On global identity:  South American. “During my administration -- and this was already clear to me when I was chancellor -- I insisted that Brazil had to become organized, in particular, within South America, not Latin America but South America; not to isolate ourselves within this context but rather to use it as a basis for intensifying our external relations.”  Global player... “If I could sum things up I would say that Brazil is Latin American, specifically South American, specifically Southern Cone, and is connected with both the United States and Europe but also with Asia and part of Africa. We should define ourselves not in Third World terms but from a position as a global player.”  …under construction. “Now, becoming a global player entails a building process; it doesn't happen all at once. We are becoming global players. And this has nothing to do with being a member of the UN Security Council. The Security Council may be more of a problem than a solution. It has to do with our self-representation (and therefore it's also cultural) and with our future ability

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to define, through trade and production, our economic, political, and cultural in this globalized world, including in the realm of ideas.”

One person‘s pragmatist is another’s ideologue

John Ralston Saul is a Canadian intellectual of note4. Fernando Henrique Cardoso would be considered an ideologue by Saul, a “functionally illiterate…” member of “the fools, the weak, the degenerate civilisations.” More or less random thoughts on Saul:  His anti-austerity jihad. He argues for renouncing debts, as paying them back becomes too onerous. The analysis here is at the national level: so Greece, for instance, had run up huge international debts because it was spending far more than it was bringing in. So Saul wants to just renounce the debts, let the rest of the world should bail out the Greeks. Problems:  It’ll be back. At the height of the Greek crisis, even if all of Greece’s debts had been renounced (and so no debt payments would have been necessary), Greece would have run a deficit, and needed to borrow, resuming the cycle.  Internal inequality. Worse, Greece (and Spain and Portugal, for Saul fellow victims of the debt fetishism) did not run up those debts looking after the little guy. Too many government jobs were patronage driven, the pension system favoured the middle class at the expense of the poor, and retirement ages have been absurdly low (source).  No one is forcing Greece… Greece (and most creditor nations who submit to ‘austerity’ plans) do so because they can borrow money from no one other than the International Monetary Fund. The IMF (like other lenders who have declined to make further loans to Greece) is reluctant to pour money into a bucket with holes in it, especially when the bucket’s owners make no effort to patch it.  The logic of austerity… is relatively simple: a country is spending more money than it is raising. It therefore needs to either raise more revenue, reduce spending, or both.  A hypothetical exception… would be a case in which the deficit spending was poured in to long term : education, infrastructure, things like that.  An empirical reality… is that this is rarely the case. Brazil, too, has struggled with unsustainable debt, and entered ‘restructuring’ (see source for 1983, source for 1998). At the time a great hue and cry was raised about how the poor would suffer. Yet don’t forget the table at right, from page 8 of lecture five. Just what were the poor going to be losing if government spending was cut?  No austerity successes? Saul states this especially forcefully. “is there a single example in Western civilization over the past 2500 years when a broad policy of austerity has pulled a civilization out of crisis and set

4 For the biography on his website, click here.

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it on the road to wellbeing, prosperity and growth? No.” Consider:  Basket cases, often refusing to reform. As indicated above, countries agreeing to IMF loans conditional on ‘austerity’ programs have serious financial problems, and reluctant to change.  It takes time, even with rebalancing. Note the problems indicated above. Growth, especially, will be hit, hard, with all of the government demand, and government- funded (pensions) demand sucked out of the economy. Keynes would agree with this. Yet that demand was unsustainable!  Austerity success? Various examples have been offered, for example Turkey, Ireland and Estonia, Spain, and a more general discussion. Fair people can disagree, but don’t forget the suggestion above that these may have been lousy patients, as well.  We don’t distribute goods fairly… This can also be applied to the benefits of growth, and on this Saul is probably on firmer ground. The US is the most unequal rich country in the world, while also (paradoxically) close enough to the richest. The moral case for capitalism, made in ’s The Wealth of Nations, was that capitalism (a word he did not use) harnessed self- to the public interest. In the US over the past 30 years, inequality has increased while the median family income has stagnated at best (source).  What’s fair? Fair question! Keep in mind that, though it is an old cliché that there is no such thing as a , it is certainly true that the rules of the economic game get written to favour those with more influence (the rich) than they do those with little influence (the poor). Two vaguely related quotes (from , a 19th century English economist):  “The social arrangements of modern Europe commenced from a distribution of property which was the result, not of just partition, or acquisition by industry, but of conquest and violence: and notwithstanding what industry has been doing for many centuries to modify the work of force, the system still retains many and large traces of its origin.”  “Unlike the laws of Production, those of Distribution are partly of human institution: since the manner in which wealth is distributed in any given society, depends on the statutes or usages therein obtaining” (Mill 1848).

References

Ascher, William (1986). “The Evolution of the Policy Sciences: Understanding the Rise and Avoiding the Fall.” Journal of Policy Analysis and Management, 5(2), p. 365-73.

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Baer, Werner and William Maloney (1997). “Neoliberalism and Income Distribution in Latin America.” World Development, 25(3), p. 311-27. Bhagwati, Jagdish (2004). In Defense of Globalization. New York: Oxford University Press. Bresser Pereira, Luiz Carlos (1997a). Economia Brasileira: Uma Introdução Crítica. São Paulo: Editora 34. Bresser Pereira, Luiz Carlos (1998a). Reforma do Estado para a Cidadania. São Paulo: ENAP. Bresser Pereira, Luiz Carlos (1998b). ‘Gestão do setor público: estratégia e estrutura para um novo Estado.’ Bresser Pereira and Peter Spink, Reforma do Estado e Administração Pública Gerencial. São Paulo: Fundação Getúlio Vargas. Candler, GG (1999). “Interest groups and social movements: self or public interested? Insights from the Brazilian third sector literature.” Voluntas 10(3), JSTOR link. Candler, GG (2006). "Linguistic diglossia and parochialism in American public administration: The missing half of Guerreiro Ramos’s Redução Sociológica." Administrative Theory & Praxis 28(4). Available online. Cardoso, Fernando Henrique (1997a). Interview in Veja, 10 September, p. 22-33. Cardoso, Fernando Henrique (1997b). Interview in Conjuntura Econômica, December, p. 3-8. Cardoso, Fernando Henrique (1998). ‘Prefácio.’ Luiz Carlos Bresser Pereira, Reforma do Estado para a Cidadania. São Paulo: ENAP. Cardoso, Fernando Henrique (2001). Charting a New Course. Lanham: Rowan & Littlefield. Cardoso, Fernando Henrique (2006). A Arte da Política. Rio de Janeiro: Civilização Brasileira. Castor, Belmiro Valverde Jobim (2002). Brazil is not for amateurs: Patterns of Governance in the land of "jeitinho". XLibris. Fiori, J. L. (1995). ‘Cardoso Among the Technopols.’ NACLA Report on the Americas 28(6): 17-22. Hirschman, Albert (1995). ‘ Moves South.’ Dissent (Spring): 20-24. Hoge, J. (1995). ‘Fulfilling Brazil’s Promise.’ Foreign Affairs 74(4): 62-75. Lasswell, Harold and Abraham Kaplan (1950). Power and Society. New Have: Yale University Press. Leal, Victor Nunes (1948). Coronelismo, Enxada e Voto: O município e o regime representative no Brasil, Rio de Janeiro. Mill, John Stuart (2008). Principles of with some of their Applications to Social Philosophy. Monteiro, Alfred (2005). Brazilian Politics, Cambridge: Polity Press. Parkin, Michael (2005). Economics, Boston: Addison Wesley. Peters, Guy (2001). The Future of Governing. University of Kansas Press. Sodre, Nelson Werneck (1995). Interview in Veja, 27 September, p. 8-10. Tavares de Almeida, Hermínia (1996). ‘Pragmatismo por Necessidade: Os Rumos da Reforma Econômica no Brasil’, Dados, 39(2): 213-34

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