China seems to have the ultimate answer to corruption

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May 24

News of corruption in developing countries with resources can be seen every day. Stiglitz explains the cycle political corruption has in resource rich countries (use power to control resource, use resource to control power). The corruption has a direct effect on the regime depending on the value of the resources present. Bribery is a big problem in government with resources not as valuable as others as seen in the example of Brazil. Government officials can see their incentive in accepting assets from MNCs and providing them with more benefit over the resources than the country will. As the value of the resources increases the likelihood of an undemocratic regime and conflict seems to increase, as the people with power will not hesitate to use the resources to gain and keep their power. Patronage, kickbacks, extortion and bribery seem
Stiglitz later tries to show incentives to not be corrupt, which fail to impress me. The only way to eliminate corruption seems development, providing less means and reasons for corruption. Which takes us back to where we started, without helping much.
Legal immunity of officials is one of the main problems causing more incentive for corruption in developing countries, resource rich or not. Transparency is not enough without more democratization and legal improvements.
Besides, we learned that even the -ex-World Bank president(whom we expected to deal with the corruption issues) was not immune to corruption himself

Would you accept financial aid from someone who won't spend 3 dollars on a new pair of socks?

I don't know if anybody remembers the unlucky moment Wolfowitz had in Turkey couple months ago

"February 2, 2007

Turkish manufacturers rushed to supply World Bank president Paul Wolfowitz with new socks this week after he revealed two large holes in his socks during a visit to an Ottoman-era mosque in Turkey.

'If he had bought from our high-quality socks, he would not have had such troubles. The quality of Turkish socks has been proved by the amounts we export to the EU,' said Umit Ozuren, the deputy head of the Socks Producers' Association.

The association, he added, was sending Wolfowitz 12 pairs of new socks.
Wolfowitz made headlines in Turkey at the weekend when, obeying Muslim customs, he took off his shoes as he visited the 16th-century Selimiye Mosque in the western city of Edirne, revealing two big holes on each of his grey socks with his toes peeking through.

The Washington Post asked: 'Would you accept financial aid from someone who won't spend three dollars on a new pair of socks?'"

http://www.milenio.com/guadalajara/milenio/nota.asp?id=472846#

May 15

The third proposition of Susan Strange describes something that is not as new as we think. In the past examples such as the British East India Company owned most of what is India, Pakistan and Bangladesh today, with its whole population, larger than most states in the world at that point. The company came from the first world, and played a key role in colonization. Today many MNCs seem to be acting as imperial forces, using finances as tools of influence . Strange is very right about the dependency of developing countries to the investments. As MNCs have a lot of potential to help developing countries. Their investments create economic growth and dependence at the same time. In such cases countries with weak economies accepting indirect foreign investment can suffer severely as the investment can be pulled out before they can react.
This imperial system is very different than state imperialism. It's wrong to say that MNCs are agents of the First World and are benefiting states. In fact, states are losing power rapidly against corporations as Economic well being becomes more and more important to the world than concepts of sovereignty and nationalism. It is capital that benefits. After all the economic growth ends up creating buying power and new markets.
The main difference in what Stiglitz and Wolf say seems to be their views on sovereignty. Stiglitz believes that the economic dependency created by foreign investment can cause states to lose sovereignty over issues such as labor laws or environmental issues etc. but as Wolf explains interdependency is requisite for free trade. Sovereignty does not seem to have a place in globalism.

May 10

Stiglitz's arguments about debt is thought provoking. Maybe a bit at variance, he makes an argument supporting the free flow of money to developing countries, then makes an argument against overlending. Overborrowing is very common amongst developing countries, mostly in dictatorships and undemocratic governments with no future vision. How the money is spent is not in the hands of the people in such an environment and the examples in the past must have created a picture in the heads of the lenders, causing them to better control how the money is spent. But then again, too many controls on spending give an advantage to the lenders as they can plan the development of the borrowers according to their own goals. The situation seems to put a "burden" on one of the players no matter what. Stiglitz is right saying that the risk of borrowing should be reduced, but the risk of lending should also be reduced. The odious debt situations create a risk to lenders, as it is very abusable. Recurrence of such, and overlending in order to control others are examples of abuses, the "moral hazards". Debt clearing should only be discussed in cases where the country is unable to pay the interest of the debt, let alone the debt itself.

May 03

I was really impressed by Rogowski's model. Although I do believe that there are other factors than trade that effect political alignments in states, I find his examples quite accurate, and it is apparent that trade has a very big role in political alignments. We can assume that the capital and land abundant states (upper left cell in the model:socialist in expanding trade environment) is most likely to invest and have trade relationships with the labor abundant states which lack capital (bottom right cell:capitalist in expanding trade environment). As the relationship between U.S. and China. Yet in India, which shares similar characteristics to China in their capital, land and labor, socialism has greatly failed. Other factors are necessary for prediction.

soros says revolutions don't build democracies

It is very important know the individuals who have large effects on the free market and domestic economies as well. Such as Nathan Rothschild who turned the British stock market upside down during battle in Waterloo, causing the bank of England to be established under his control. Or George Soros, as he talks about his effects on the world events in the article.