GlobLog - January 2004
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10:32 - WHY THE WASHINGTON CONSENSUS FAILED: Yesterday I debated the World Bank at a conference in the Swedish parliament. My point was this: Statistics clearly show that free markets are successful where they are practised, but the WB, despite its advocacy of market economics, can show very few successful economies among those they have advised and sent money. Why? Simply because it’s almost impossible to push averse governments into reform with aid promises. They will take the money and do minimal reforms. Kenya’s dictator Daniel Arap Moi got 19 structural adjustment loans but never reformed, Pakistan got 20 loans, all with the condition that it reduced the budget deficit, but never did, and Zaire’s dictator Mobutu got 9 loans, and the only privatisation he ever practised was when he stole all the government funds himself.

Some WB-countries really reformed and made progress, such as Uganda and Mauritius, but most corrupt regimes never consented to the “Washington Consensus”. So why did they get funds again and again? The problem is that the World Bank is a political, tax-funded institution with its own interests. The country department’s budgets, staff and career opportunities depend on how much money they can give away. Noone ever wants to close their department just because the country they advise never reforms. The only graph that makes steady progress is the one on the World Bank’s staff – from 657 people in the 1960s to more than 10 000 today. Former World Bank economist William Easterly has written a great book on this problem, The Elusive Quest for Growth, which I highly recommend.

I think my message went down relatively well, at least as a warning, but not with the Swedish Minister of International Economic Affairs, Gunnar Lund, who said he was happy that IMF and WB didn’t follow “primitive Johan Norberg ideas”...

13:52 - SOUTH KOREA – A PROTECTIONIST MIRACLE?: In Dagens Nyheter, Swedens biggest morning paper, Åke Lundqvist is currently writing a series on globalisation. This op-ed page is one of the best in Sweden, often with a classical liberal message. But Lundqvist’s series repeats the myths of Attac and the anti-globalisation movement, without really giving any arguments for them. He explains that the world’s poor are being exploited by multinationals – even though people in a low-income country earn eight times more if they work for an American company than the national average. The failed economies are those that are not "exploited" by foreign investments. He writes that we should enforce working standards (“decent wages”, social security, etc) in trade agreements – which would stop trade with poor countries because they are poor. He suggests that capitalism is good at producing growth, but not at distributing it – although evidence shows that a rising tide lifts all boats.

And in today’s article Lundqvist repeats the old myth that South Korea’s developed because of protectionism and monopolies. He ignores the fact that all poor countries were protectionist at this time. What South Korea (and Taiwan) did differently was that it reduced those barriers, that it produced in the sectors where they had comparative advantages (whereas other countries tried to be self-sufficient), and that it only supported companies that did well on the export market – which meant that they were always exposed to competition from around the world. In other words, South Korea was more globalised than almost all the other economies. In 1975 it got a rating of 6.6 in “freedom to exchange with foreigners” from the Economic Freedom of the World project, almost the only developing countries that could match that was the neighbouring economic miracles.

16:11 - 2 IN 1: Countries with open economies are nine times more likely to respect civil and political freedoms than those with closed economies. Read Dan Griswold’s excellent article and report on the correlation between trade and freedom.

14:06 - TRADE IN THE PRIMARIES: The Democratic pre-primaries were terrible for free trade. All the candidates, except Joe Lieberman, left the Clintonian pro-trade camp under pressure from the unions and ultra-protectionist Dick Gephardt. Howard Dean even said that he wanted to stop US trade “with countries that don´t have the same environmental, labour and human rights standards” – which would mean total protectionism towards all poor countries. (Look at their views.)

The last days have seen a comeback for relative free traders. Kerry, who has a pretty stable free trade voting record in the Senate, won in Iowa. Dean only finished third and Gephardt’s fiasco forced him to leave the race. This eases the protectionist pressure on other Democrats and the White House. Democrats in favour of trade and tax cuts for the middle class seem to be doing better than left-wing protectionists.

I don’t think that will change in next primary election. It’s on 27 January in New Hampshire, traditionally a fiscally conservative and socially tolerant place (in European: classical liberal), with the official motto “Live free or die”. It’s easy to understand why American libertarians want to settle there.

14:15 - TO REVIEW OR NOT TO REVIEW: Last week in the TV show Carin 21.30 the host said that neither Dagens Nyheter nor Svenska Dagbladet had written a review of my book In Defence of Global Capitalism on their cultural pages. Just then I couldn´t remember exactly, so I didn´t correct her. But actually, Marian Radetzki wrote a review in Svenska Dagbladet in July 2001, saying that it was a good book but unfortunate that it was published by pro-market institute Timbro, because fewer would read it. (He didn´t think of the fact that noone else wanted to publish a pro-market work...) But Dagens Nyheter, the most influential Swedish cultural page, and very left-wing, has - as far as I know - still not reviewed my book, or any of the other five books I have published since 1997.

13:15 - T25: Timbro´s 25th anniversary last Friday is now documented in text, sound and pictures (everything except Moore´s lecture is in Swedish). I gave a speech on entrepreneurship, creativity versus control, which can be read here.

19:44 - ON BERT: I just watched the interview with me on Kulturnyheterna in Swedish television. I was discussing Bert Karlsson, popular producer of lame hit songs and reality-TV, and also founder of a short-lived Swedish anti-immigrant party, Ny demokrati. I said several negative things about Karlsson, his populism and bad tase. That is part of the truth. What didn´t make it into the show was what I said about Karlsson being a fascinating and productive entrepreneur, and despite all his faults and his lack of style, you have to admit that he is a pretty cool guy, who doesn´t care about what anybody else thinks. I don´t mind the edit, you can´t include everything. But I think it´s important to clarify here that when I said that Bert Karlsson is the worst nightmare of the cultural establishment, I didn´t side with the establishment... ;-)

11:18 - WORLD SOCIAL EXPLOITERS: Here is a great story about the World Social Forum in Bombay, that I picked up in Sydsvenska Dagbladet. Swedish radio talked to an Indian carpenter who built a podium for the forum. He wasn´t very happy about the global justice movement, because they only paid him $4 a day. When he is working for the globalised, profit-driven movie industry, Bollywood, they pay him twice as much...

19:31 - SCHYMAN: Last Thursday I debated globalisation with Gudrun Schyman, former leader of the Swedish post-communist party, in the Swedish television show Carin 21.30. For a few days you can see it on the web. Notice the astonishing fact that she denies that equality between the sexes has gone further in Western, capitalist countries, than in the rest of the world - but is unable to mention a single example. Notice also the interesting fact that she is very hostile to my ideas in the first half of the show, and slowly becomes much more sympathetic, and actually agrees with me on the fact that developing countries need more trade and property rights.

13:18 - THE POOR SUPPORT GLOBALISATION: A few days ago I published an article in Svenska Dagbladet (In Swedish) on the interesting fact that trade, globalisation and multinational corporations are most popular in poor countries. The Pew Global Attitude Survey shows that Asians and Africans are much more pro-globalisation than wealthy, well-educated people in the West - who take their living standards for granted. Today another big Swedish daily, Sydsvenskan, writes a kind article about the article and me.

11:18 - 25 AND COUNTING: On Friday, Timbro – the think-tank where I work – celebrated its 25th anniversary with a big symposium and a party. In 25 years Timbro has fought against anti-democrats, anti-capitalists and anti-globalists. And that fight has been pretty successful. Sweden is now a fairly normal country and the social democrats are now pragmatists, not socialists. But as we say, normality is not sufficient and pragmatism doesn’t work. So now is the time to go on the offensive, and start to implement our own ideas, not merely fight for the status quo. Here is the book about Timbro that we published for the occasion (in Swedish). 

Former WTO-boss Mike Moore was a great key-note speaker and legendary Swedish foreign correspondent Staffan Heimerson a hilarious dinner speaker. We read classical liberal texts by Bastiat, Paine, Moberg and others, and music that has been important in the history of freedom (by Beethoven, Chopin etc) was played during the intermissions. It was a fantastic party with about 300 people, and it went on all through the night. I can’t wait until the 50th anniversary.

09:32 - BUSH GOES TO MARS: So now President Bush has announced that America will return to the moon, and build a base there which will be used as a launch pad for journeys to Mars and beyond. As a space- and science fiction-fan it’s difficult not to become enthusiastic when you see the potential for human beings to leave our own planet, and explore the universe. I love the space project. But the test of your belief in freedom is whether you want to force other people to pay for your pet projects or not. I don’t. This will become a multi-billion dollar project, and will exceed the budget - big time. People who have a hard time paying the mortgage, will be forced to finance housing on the moon. Now isn’t that bizarre? Furthermore, space exploration generally has been delayed because of the public monopoly, and its insistence to send people back and forth, as a publicity stunt, instead of using cheap, efficient automated spacecrafts. Space should be a free-market frontier. Read Ronald Bailey on the subject.

23:43 - SANITY COMES TO BRUSSELS: Today the European Commission decided to take the Ecofin Council to the European Court of Justice, because of the council´s decision 25 November to let France and Germany break the rules of the Stability and Growth Pact without a penalty. This is a victory for the rule of law. I never thought the commission would dare to do this, and it gives me a new respect for the institution. I don´t believe the court will enforce the pact, but it´s worth the attempt. Without a legally binding process, the pact is dead, and without the pact´s restrictions on deficits and debt, the euro will endanger the European economies. Tomorrow I will continue to attack the commission´s policies, but today Prodi, Solbes and the rest are heroes.

18:57 - GLOBAL CAPITALISM COMES TO FRANCE: Last year my In Defence of Global Capitalism was translated into French by Martin Masse, and published in Quebec, Canada, as Plaidoyer pour la mondialisation capitaliste. Now it has also been published and distributed in France, by Plon. Let’s hope Bové, Chirac, Le Pen, Cassen and all the other protectionists find time to read it. Here they can buy it.

11:59 - GLOBALISATION AND LIBERATION: Singapore will abolish a law prohibiting oral sex, according to the minister of the interior. This is another good sign that Singapore, one of the world’s freest economies, is shedding some of its authoritarian social policies. Last year the government removed a law against the hiring of gays within the civil service, and bans on bungee jumping and chewing gum have recently been lifted as well, and the sale of the magazine Cosmopolitan is now legal. One of the most important reasons is that Singapore wants to attract foreign experts to its labour market, and that’s difficult with the harsh social restrictions of the country. Another proof of the liberating effects of globalisation!

10:38 - FORBES GLOBAL: Here is a portrait of me, published in Forbes, appropriately titled Capitalism for radicals.

10:22 - FIRST THING AFTER HOLIDAY: Now I am back after a great holiday. Among other things I read Steven Pinker´s The Blank Slate, which is a very insightful and convincing book on how evolution has formed human nature. Especially he describes how people in the humanities, like myself, deny the influence of biology, without ever examining the evidence. And Pinker explains how this anti-intellectual attitude halts progress and sometimes cause horrors. Everybody interested in human behaviour should read it. I am still extremely busy with the next Timbro event and a few other things, so don´t expect me to reply to e-mails in a few weeks. Sorry!