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The World Bank’s Broken Promise to the Poor (2015) (icij.org)
122 points by Geekette 123 days ago | hide | past | web | 80 comments | favorite



John Cabot, an ambassador in the 1950s, had a good quote:

"The UN is meant to prevent you from going to hell, not take you to heaven."

The IMF and the World Bank were part of the world superstructure set up alongside the UN, so this quote applies to them.

Can't speak about the World Bank, it might indeed really suck. The IMF is a good organization that tries. They've made some bad mistakes, but have learned from them. A good example of this was during the Southeast Financial Crisis that in 97-98 that toppled the Indonesian government and still to this day has left abandoned skyscrapers in Bangkok. At the beginning of the crisis the IMF had a policy against restricting investor access to banks, believing it was better to "let the market work". By the end of the crisis, after South Korea had fallen (fallen meaning they were out of foreign currency reserves), and Japan / Russia looked like it might be next, the IMF had changed positions and was fully committed to using international law to stop irrational investor panic.

People forget HOW HUGE THIS WAS. There was a Time magazine cover at the time that literally read "The Committee to Save The World" with Greenspan, Summers, and Rubin on it.

Interestingly, though this problem would later help usher in the Dot Com bubble. The regulatory agencies had to lower investor rates to calm investor nerves, even though other people were asking them to not too because of the increasingly worrying NASDAQ IPOs.

https://img.timeinc.net/time/magazine/archive/covers/1999/11...


As a Brazilian that grew up on the 90's watching this situation unwind, I'd thank a lot the IMF for helping us. They really did do good at that time.

But they seem to have changed their direction recently, and are really insisting on pushing money into unsustainable places. I don't get their new goals, they don't seem to have any stabilizing effects.


I lived in a country that recently required IMF support, Ireland, and have a positive view of the IMF as a result.

Of course, there were conditions attached to the loans but given that nobody else was willing to lend money to the state under any terms at all, it seemed fair enough. And the interest rate was nothing like "payday" rates.

The alternative (a "cold turkey" end to government payments - e.g. no salaries for police, doctors, teachers, etc.) would have caused huge long term damage to society, the economy and would have undermined the legitimacy of the state.

On a personal level, if I were lending money to a desperate down-and-out friend who had exhaused all the normal sources of credit including their family, I would probably also ask for lifestyle changes before giving them money.


> On a personal level, if I were lending money to a desperate down-and-out friend who had exhaused all the normal sources of credit including their family, I would probably also ask for lifestyle changes before giving them money.

While it might seem reasonable from a personal perspective, I don't think it really applies when you're considering an entire country (or any sovereign entity, for that matter). This mistake has been made before, and in many fields, so I don't blame you particularly (e.g. we think of personal indebtedness as "immoral" but deficit spending has largely been shown to be bountiful and a net positive when managed correctly).

I'm personally not well versed in economics or genius enough to suggest alternatives, but I just wanted to point out that kind of fallacy when thinking about these things.


Actually in this case the analogy is completely correct. The notion that government borrowing is wildly different from household or corporate borrowing is only true in a limited sense, and only if we are talking about borrowing in a currency that the government itself issues.

The IMF demands payment in Dollars/Euros, not the local currency. A country borrowing money has a hard requirement to pay back the loan in real (as opposed to nominal) terms. So it really is similar to any other lending.

Let me also address deficit spending. It isn't such a magic bullet that a government can come up with more money to repay a loan by increasing its expenditures. It's about the same idea as the Laffer Curve. Sure, if things get extreme enough, the argument is correct. But most of the time things aren't that extreme. Most of the time, when a government needs to repay loans, fiscal discipline is useful and necessary.


>The alternative ... no salaries for police, doctors,

I'm not sure that was ever really an alternative. Much more likely would have to been to default on the debts like Iceland.


Their austerity rules are perfectly right, and are necessary for the country to grow and pay back the loan.

But, specifically about Ireland, do you think you will ever pay your loans back? Looking from a distance I got the impression it's almost impossible, but you will certainly know it better.


Austerity can only reduce growth, if you look at how sectoral balances work. You only get growth while the Government is cutting when the private sector (in aggregate) is taking on enough new debt to account both for the cuts and for the growth.

Ireland is damned if they do, damned if they don't though, given that they can't control their own currency, so they actually have a risk of default on their primary currency.


As a Brazilian that grew up on the 90's watching this situation unwind, I really hate the IMFs recessive policies that impoverished my country. Their austerity rules always increased our recessions. It always looked to me as just a instrument to maintain poor countries poor.


> The IMF and the World Bank were part of the world superstructure set up alongside the UN

It is european colonization transformed into western neocolonization. It is the bretton woods international system set up after ww2 when the british empire ceded world leadership to the US and many of the european colonial powers ( british, dutch, french, etc ) joined the US in "collective" rule of the world rather than fighting each other for colonies. The era of direct european colonization led by the british empire was fraying and starting to collapse as the soviets, chinese, germans and the japanese all exploited and made inroads against european colonization around the world. So an era of "indirect" european/western neocolonization was created to replace the direct european colonization of the past 500 years or so.

> A good example of this was during the Southeast Financial Crisis that in 97-98 that toppled the Indonesian government and still to this day has left abandoned skyscrapers in Bangkok. At the beginning of the crisis the IMF had a policy against restricting investor access to banks, believing it was better to "let the market work".

Ah... The age old question, who/what caused the asian financial crisis...

> the IMF had changed positions and was fully committed to using international law to stop irrational investor panic.

Isn't it funny how every crisis, the FED and the IMF gets stronger and stronger.

> People forget HOW HUGE THIS WAS. There was a Time magazine cover at the time that literally read "The Committee to Save The World" with Greenspan, Summers, and Rubin on it.

I really wouldn't believe much from a propaganda outfit like TIME.

> Interestingly, though this problem would later help usher in the Dot Com bubble.

That's the idea. Build bubbles, cause panic, demand more control for printing more money and bailing out institutions/etc. Of course, they themselves cause the panics, but as I said, that's for another time.

Essentially. The UN, IMF, World Bank are pillars of western neocolonialism. It's only naive people who expect "good" from these institutions. That would be as silly as an indian or a chinese expecting "good" from the british empire or the indonesians from the dutch empire or the filipinos from the spanish empire/american empire.


I remember doing a long research paper on the World Bank and IMF around 2000. They're the equivalent of "pay day loans" for 3rd world countries. It's predatory lending at its finest. For those unfamiliar, they generally only give money if countries cut spending on the people (education, health, etc) and open up natural resources for exploitation by foreign corporations.


The countries the World Bank lends to are typically spending at unsustainable levels. It's not a choice between IFC loans and high social spending. It's defaulting on lenders, who may be allies or the domestic population, cutting social spending due to not having money and/or running the presses to hyperinflation.


Yes and there's a reason why they are spending so much. It's encouraged. The developing country's elites get a big kickback, their nation gets saddled with a horrible loan, while their raw resources leave the country.

https://www.amazon.com/Confessions-Economic-Hit-John-Perkins...


The Dictator's Handbook references more reliable and comprehensive research showing the anti-democratic effects of foreign aid. That said, the counterfactual (watching and waiting) risks anarchy. The World Bank was set up, in part, from the lessons of the Weimar Republic. It's a difficult debate that escapes easy answers.


Do you know how much it costs to get your water and electricity turned back on? Not to mention that you have to toss any food you have saved and you have to find some way to live without access to toilets, etc for the duration.

Compared to that, a payday loan is cheap. Yeah being in that situation is shitty in the extreme, and no none of your options are good, so you are trading very bad for worse.


But of course the underlying forces that create the necessary conditions for payday loans (and the World Bank) aren't necessarily beyond critique.

Both critics and advocates of the World Bank claim that it's just one component of a larger international order. If that order is manufacturing the need for WB/payday loans then the WB/payday loaners could be worthy of modest praise but also extreme condemnation.

IMO the debate over the relative merits of WB/IMF is really inseparable from a larger debate about the post-WWII western political/financial system. And, unsurprisingly, I imagine ground truth isn't easily compressible into any one coherent narrative -- especially an ideological one.


The payday loan analogy is admittedly weak. I just meant to indicate that it's a crap deal. It is actually worse than payday loans. See, with payday loans, you just pay ridiculous interest. With WB/IMF loans, it's more like "we'll loan you money to keep the lights on, but you're going to have to stop taking your blood pressure meds, and one of our friends is going to stop by and eat some of your dinner every night".


Okay, that makes more sense.

I just get tired of people constantly harping on payday loans without considering the alternatives available. Also I was kinda shocked how much an effect it had when a collegue got his power turned of (he forgot the pay his bills).


This characterization misses the bigger picture. Governments know what they are getting when they ask for these loans, and they want it! They are in financial trouble and need to cut spending on education, health, gas and bread subsidies, etc., but politically this is impossible. Their solution: Blame the big bad bank. The government gets what it wants and the bank agrees to play the bad guy.


There is likely corruption throughout these governments too. They're getting loans at the expense of their citizens, often hurting the poorest the most. I'm not saying it's all the WB/IMF's fault, but helpful loans shouldn't carry conditions like these:

- Cutting expenditures, also known as austerity.

- Focusing economic output on direct export and resource extraction,

- Devaluation of currencies,

- Trade liberalisation, or lifting import and export restrictions,

- Increasing the stability of investment (by supplementing foreign direct investment with the opening of domestic stock markets),

- Balancing budgets and not overspending,

- Removing price controls and state subsidies,

- Privatization, or divestiture of all or part of state-owned enterprises,

- Enhancing the rights of foreign investors vis-a-vis national laws,

Source: https://en.wikipedia.org/wiki/International_Monetary_Fund#Co...



As I said in another comment, the IMF and world bank were created after ww2 when european colonial powers decided to "band together" rather than fight each other.

The IMF and World Bank are neocolonial institutions. The brits, dutch, french, etc decided to pool their resources together to exploit the world rather than fighting each other to exploit the world.

It's just colonization 2.0. Instead of invading nations, they destabilize them via economic warfare and then "buy/exploit" these nations. It's far more cost effective and effective.


The World Bank is an organization to steal public and natural resources for private banks and corporations, and alongside the IMF one of the biggest generator of poverty. But I guess we can keep pretending they try to help to Third World countries.


It sounds like ridiculous hyperbole, but sadly that is literally how it's turned out. Start by offering development loans to build infrastructure like ports, mines, etc., but then all the proceeds from the resource extraction or agriculture or whatever go back to paying off the loan. Often that's not enough, so the IMF imposes conditions like services to the local population being cut or infrastructure being privatised (usually to foreign companies) to pay back the debt.


Not just banks and corporations, but statists and politicians too. Each require this symbiosis.

How it always starts: "Yay, justice! Let's collect a bunch of money from rich people and distribute it to poor people."

Then it's like: "We need to create a bureaucracy to allocate funds efficiently."

...

How it always ends: Graft.


The article definitely points out the wrongs done by IMF/World bank. Are there any resources you can point me to, such as data / financial reports which highlight how the resources are misused / mishandled?


"On private water: The case for the World Bank to divest" https://www.stopcorporateabuse.org/sites/default/files/resou...

"Impoverishing a Continent: The World Bank and the IMF in Africa" http://www.halifaxinitiative.org/updir/ImpoverishingAContine...

"Dismantling The World Bank’s Myths on Agriculture and Development" https://www.oaklandinstitute.org/sites/oaklandinstitute.org/...


What is the alternative for the nations that engage them?


Based on selectorate theory [1, lending to broken governments promotes cronies over the general population. Unfortunately, the alternative (waiting and watching) involves risking complete state collapse. Weighing the evils of the latter, i.e. the lessons from World War II, against the evils of the former, i.e. our present condition of sclerotic autocrats propped up by outsiders fearing outright anarchy, is tricky.

This analysis does not appear to do that. Instead, it just measures the cost of being conservative with anarchy risk. The counterfactual (letting those governments collapse through hyperinflation, foreign and/or domestic default and/or austerity and the resulting civil strife) could be better or could be worse, and estimating it will involve lots of speculation. But it deserves to be explored.

[1] https://en.wikipedia.org/wiki/Selectorate_theory


Just to play devil's advocate, I've been told that in a negotiation, it's always important to know what your best alternative is (e.g., https://ocw.mit.edu/courses/sloan-school-of-management/15-66... ; "I've been told" because I'm terrible at negotiating).

When a country starts to negotiate with the World Bank, generally speaking, their best alternative is to print money; cause hyperinflation; and then pay off their existing debts with the new, worthless, money. It seems to me that the World Bank's terms are better for the poor than that.


It's hard to tell because the World Bank is so young in the history of nations. Certainly in the short term things are less painful, but having your country's natural wealth siphoned off by other countries (or in many cases absurdly wealthy individuals/companies) has the potential to create real and systematic harms.

We could imagine, for example, a United States that became and remained very poor after having all its natural wealth siphoned off by European firms under predatory terms during the Great Depression. It's hard to tell if the world would've been a better or worse place (maybe the profits would've been reinvested into stabilizing Germany's internal politics), but certainly US citizens would be much worse off today.

On the other hand, could a World Bank have saved Germany from Nazism and ended the world wars after episode I? Probably. Who really knows.


This is a good point. In general, predatory lending has been a favorite tool of imperialism, and it continues to sort of be that way even though you don't see explicit imperialism anymore.

The crux of the problem is that non-developed nations still have something that developed countries want: either natural resources, or human resources. The IMF is basically a modern version of the Paris Club, and is a tool used to make it cheap and easy to extract these resources/make them available to the global economy, without the explicit threat of military invasion.

I don't really see a good solution for "Poor" countries. You can't have people dependent forever on foreign aid. But perhaps the developed part of the world becomes so productive that at least the necessities for productive lives, such as basic education and healthcare, can be provided to "poor" nations. This is what I view the Gates foundational work as doing.

It is in the interests of the global community to have stable and safe economies all around the globe. I really hope we can reach that goal sometime in my lifetime....


"Predatory" lending is only possible in the presence of coercion.

If Party A is such a bad credit risk that the only loan they can get is from Party B at a high interest rate, and that requires them to dramatically change the behavior that created the cash crisis in the first place, Party B is not a predator.

If Party B is charging too much for the loan, surely another "greedy" party will undercut them and offer better terms to Party A.

If Party A accepts the debt on the same conditions, but then fails to dramatically change their behavior such that they insist the terms of the original deal be modified or else they'll default, Party A is acting like the predator.


> If Party B is charging too much for the loan, surely another "greedy" party will undercut them and offer better terms to Party A.

You are assuming perfect competition in the area of loans to nation-states: this is certainly not the case. There are only a handful of lenders playing at this level, and they are mostly driven by politics, not profit.


"Only a handful of lenders playing at this level"

There are many lenders playing at "this level," presuming that by "this level" you're referring to the market for sovereign debt.

The area where there are only a handful of "players" is lending to countries that are very high credit risks. And for good reason. What rational investor would lend money to a party clearly unable to pay it back? None. That's a death wish.

Except of course when governments guarantee that party's credit for political reasons. Usually the arguments for such "support" include precepts that the free market leaves some nations behind, and so intervention is justified.

But the intervention, as we have seen quite often with the IMF itself, can do more harm than good.

And by the way, many "undeveloped" countries have respectable credit ratings (http://www.oecd.org/trade/xcred/cre-crc-current-english.pdf).


The tone of your comment suggests disagreement, but the meat of it is in full agreement with my earlier comment, so much so that yours can be thought of as a more fleshed-out version of mine.

>> There are only a handful of lenders playing at this level...

> The area where there are only a handful of "players" is lending to countries that are very high credit risks. And for good reason. What rational investor would lend money to a party clearly unable to pay it back? None. That's a death wish...

>> ...and they are mostly driven by politics, not profit.

> Except of course when governments guarantee that party's credit for political reasons


Your reference to lenders began with: "You are assuming perfect competition in the area of loans to nation-states," and you said "there are only a handful of lenders playing at this level." I disagreed because this is untrue, and suggested your comment may only be accurate in reference to countries representing very high credit risks.

Regarding politics and profit, we disagree here as well. Yes, I referenced political reasons as motives for lending to these very high credit risk countries, but it's not mutually exclusive. I believe if you dig into that political motive you will find a strong profit motive. Maybe the "State" isn't motivated by profit, but often the people who exert power over the State are. What else would they be motivated by? Doing good for humanity? Please...


In the case of the World Bank this is not a compelling argument.

Both critics and advocates claim that WB does not exist in a vacuum -- it is part of the larger post-WW2 western world order. Critics claim the coercion happens decades before WB offers the loan.


> "Predatory" lending is only possible in the presence of coercion.

Most certainly not true. It can also be caused by lack options, or awareness of options.

e.g. The US overwhelmingly opposed the creation Asian Development Bank, funded by China, precisely because of the leverage that it would lose over the ability to make loans through a proxy (World Bank) and dictate strict conditions around those loans.


> Over the last decade, projects funded by the World Bank have physically or economically displaced an estimated 3.4 million people, forcing them from their homes, taking their land or damaging their livelihoods.

And we're finding out about this only now?


The World Bank specifically and the neo-colonialist world-view it embodies have both been severely criticised in pretty much this vein since not too long after the bank was founded.


So what's the moral of the story, practically speaking?

If you drill a hole in the bottom of your boat; Be selective about whom you let save you?


You seem to have a prevailing view of undeveloped counties as being there fundamentally because of their "own fault". This is very much akin to blaming the poor to being lazy or incompetent or stupid.

While its certainly true that a lot of countries don't have their shit together now, its also true that most undeveloped countries were either under foreign domination (e.g. Indian Subcontinent, most of Africa) or domination by proxy (e.g. China).

The moral of the story is: don't accept the propaganda of "International Financial Institutions" as existing strictly for the assistance of developing countries (their stated goal) but rather as a continuation of exertion of power over developing counties through financial means.


Not at all.

Greece is not an "undeveloped" country. Their people simply supported social policies that resulted in more expenses than revenues.


Lots of people have known this and other things for a very long time, occasionally it leaks into the mainstream media.


According to the ProPublica podcast[1] (published this past week, so probably the catalyst for this 2015 article on HN), The World Bank was collecting data for decades on displacements, but wasn't consuming it for anything useful. The ICIJ + ProPublica FOIAed the data and painstakingly assembled it.

[1] https://www.propublica.org/podcast/item/the-breakthrough-how...


This data isn't in context, it's not fair to take data like the negative impact of resettlement on its own without also looking at the benefit provided by the projects to the poor.


If there is a full-text article on the page, I am not seeing it. Page appears I be for a project and link to a number of other pages.

Anyone able to find a better link?


The link is to a project by the ICIJ title "Evicted and Abandoned" which consists of a series of articles


Anyone have a link to the paper by I think, the IMF or World Bank describing how a cryptocurrency (like Bitcoin) could be created? From the ~70s.


This page links to a portal looking landing page; is there supposed to be an accompanying article?


It's a collection of articles, but this one appears to be the most relevant to the title: http://projects.huffingtonpost.com/worldbank-evicted-abandon...


If you want to understand libertarians read: The Creature of Jekyll Island. This goes into the function of the World Bank.


Central banks create poverty and maintain power structures; this isn't news.


The World Bank and IMF aren't central banks.


I think it's news to (or at least poorly understood by) 99% of people.


Capitalism: "lol sux 2 be them"


The world bank (and central banks in general) are extremely antithetical to the central ideas of capitalism.


The World Bank pushes privatization of infrastructure, natural resource extraction, agricultural resources, etc.

the IBRD's Articles of Agreement explicitly identify "promoting private investment by private investors" as a goal. If that's not part and parcel with capitalism, I'm not really sure what is.

Perhaps you protest the other investments WB makes, which fall under its goal of producing "suitable conditions" for private investment (in practice, that means sucking governments dry until/unless they agree to privatization and occasionally ousting non-capitalist leaders from power.) But saying that capitalism stops being capitalism as soon as private investment starts controlling governmental decisions is just defining your way out of a very real and substantive critique of capitalism. Reality and real problems don't go away just because you're being pedantic about the definition of capitalism.

The World Bank may not embody "your" capitalism. But by any reasonable definition that avoids this sort of No-True-Scotsman distinction, the World Bank is aggressively capitalist. And certainly the bankers describe themselves (earnestly!) as capitalists.

So instead of saying "that's not capitalism", we should discuss whether any system which deifies private investment will eventually end up with organizations like the World Bank. And how to curb those excesses.

(Also, the world bank is not really a central bank. If the World Bank is a central bank then we might as well call any very large bank a central bank as well. In both cases, there are analogies but also important distinctions.)


Would you not agree that distinguishing between free-market capitalism and crony-capitalism brings important value to the discussion?

The inclusion of government force or government collusion is hardly a secondary consideration. The ability to wield what is essentially a monopoly on force, is THE most important factor when discussing capitalism vs cronyism. The world bank is the physical embodiment of cronyism, and I maintain, not capitalism.

I think it's kind of BS that you can point to THE distinguishing factor between something I argue for and something I argue againsts and say "pedantics"...


> Would you not agree that distinguishing between free-market capitalism and crony-capitalism brings important value to the discussion?

As I said,

>> saying that capitalism stops being capitalism as soon as private investment starts controlling governmental decisions is just defining your way out of a very real and substantive critique of capitalism

Money can buy political power, and in a system that incentivizes profiteering, that political power will eventually be used to generate profit.

You call that cronyism. I claim it's the logical conclusion of human nature unfolding within an unabashed free market.

You're more than free to re-define terms, but it doesn't change the reality that free market systems invariably cycle through periods of cronyism.

Playing around with the definition of capitalism is terminally non-responsive to the claim that free markets, given enough time, invariably breed this style of cronyism.

It's like claiming that sugary/fatty foods can't cause coronary artery disease because heart disease is caused by plaque. Technically true, but literally everyone's response is going to be an eye-roll.

> The ability to wield what is essentially a monopoly on force

Ugh. There's no such thing as a "monopoly on force". It's literally the great equalizer among not just humans but all organisms.

You're more than free to go out and build an unbeatable military and take down the evil crony-(not?)-capitalist world order. Who's gonna stop you? If you can't or won't build up the resources and mind share to do so, well, welcome to reality.


Completely illogical...

> You call that cronyism. I claim it's the logical conclusion of human nature unfolding within an unabashed free market.

A free-market is reliant on government power to protect/enforce property rights. You claiming a system which strictly enforces property rights always leads to a system which disregards property rights is absurd.

Are you arguing that in order to keep people from wielding governmental power against others, we need to strengthen government? Really? Why not make it so government power being wielded is a non-issue?

> It's like claiming that sugary/fatty foods can't cause coronary artery disease because heart disease is caused by plaque. Technically true, but literally everyone's response is going to be an eye-roll.

A terrible analogy... What you're arguing is that a diet that avoids sugary/fatty foods will cause heart disease because people end up ignoring diets. That's not a good argument against dieting...


> Completely illogical...

Agreed.

Your argument is logical but vacuous[1]. Mine is logical, and what's more, proceeds from assumptions that aren't oblivious to empirical observation.

> You claiming a system which strictly enforces property rights always leads to a system which disregards property rights is absurd.

My claim is that political power is dynamically allocated, not statically allocated. In free markets, money buys power. Power is then abused to rig the rules of the game.

So even if you start in an ideal free market state, you'll quickly converge to cronyism. in this sense, opposition to "crony-capitalism" and advocacy for "free market capitalism" is an inconsistent position. Again, not as a matter of your definitions and logical derivations. But as a matter of observed reality!!! If you definitions and derivations contradict reality, the problem is not with reality but with your model of reality.

> Are you arguing that in order to keep people from wielding governmental power against others, we need to strengthen government? Really?

No. Where do you find me advocating for "strengthen[ing] government" in this thread? In fact, I think my critique of the World Bank is most commonly read as a critique of how strong (certain) governments have become. But actually I don't have any strong ideological advocacy, and even the World Bank/IMF have benefits and drawbacks that aren't so easy to categorically praise or condemn in broad strokes (see: various other threads).

I'm not the one claiming a theory of utopia. I'm just pointing out the absurdity of make such a claim by carving out increasingly arbitrary and anti-empirical definitional distinctions.

> What you're arguing is...

What I'm arguing is that definitions and logical derivations exist in service to describing reality. You have these two things -- reality and the tools we use to model reality -- the wrong way around.

Again, stop arguing about definitions and logical derivations stemming from those definitions. Answer the claim that free markets beget cronyism as a matter of empirically observable fact. Anything else is vacuous.

[1] in the sense of https://en.wikipedia.org/wiki/Vacuous_truth


hmmm...

> No. Where do you find me advocating for "strengthen[ing] government" in this thread?

Everytime you say "free markets beget cronyism" you're implying a less free-market would beget less cronyism. That claim strongly suggests a less free-market is preferable; the only way to regulate interpersonal cooperation is through growing government.

> Power is then abused to rig the rules of the game.

Then why is it vacuous to argue for limiting said power? You are correct, people will always work in their own self interest. If there is some super powerful tool for them to increase their fortune/profit/power of course they will use it. That's entirely the point.

Saying free-markets become less free overtime and eventually foster cronyism isn't an argument against free-markets; it's an illustration of their importance. Healthy eating and its advocates aren't less important because unhealthy people exist.


> Everytime you say "free markets beget cronyism" you're implying a less free-market would beget less cronyism

No, I'm not. I'm claiming that free markets sans cronyism aren't a steady state (or even exist), so distinguishing between "free market capitalism" and "crony capitalism" is anti-empirical.

> the only way to regulate interpersonal cooperation is through growing government

Ideology, marketing, religion, and non-state violence, for example, are all also powerful mechanisms.

Also, limiting government might actually INCREASE the power of government... and what's worse, someone else's government! This is particularly relevant in the case of the World Bank.

> Then why is it vacuous to argue for limiting said power?

See above. The choice might be between US gov't/corporate power and local governance. Limiting the power of local governments in the face of extremely powerful foreign governments and corporations doesn't actually reduce the power of government writ large.

> Saying free-markets become less free overtime and eventually foster cronyism

No, and if you re-read the thread, you'll notice that I'm not even making an argument against free markets. I'm making an argument against your distinction between "free market capitalism" and "crony capitalism". Again, the central claim from my original reply was:

>>>>> The World Bank may not embody "your" capitalism. But by any reasonable definition that avoids this sort of No-True-Scotsman distinction, the World Bank is aggressively capitalist.

I think you're now violently agreeing -- or at least you've stopped making any sort of coherent argument that crony capitalism is "not capitalism" in anything but a sort of vacuous sense.

As for the rest of your post, I don't get it. You're still just playing with definitions! Free markets aren't a cure-all for corruption, and your approach to corruption seems to be using definitions to bury your head in the sand. Seems dangerous.

If you're opposed to the World Bank, then you're opposed to an artifact of free market capitalism. It's that simple.


No, I'm not agreeing. The distinction between cronyism and free-market capitalism is important. You're claiming it isn't - I'm claiming it is. Simply:

Property rights = Free-market =/= Cronyism

It's like if I commented on an article about sodium and water exploding saying "water is generally pretty great, don't mix it with sodium though" then you respond with "don't be pedantic, water explodes."

Semantics are extremely important, especially in this arena. Never would have thought I'd get into an argument today with someone arguing against distinguishing between free-markets and cronyism... wow.

Acknowledging the presence of a force is not "playing with definitions"... unbelievable...


> Property rights = Free-market =/= Cronyism

Free-markets without Cronyism doesn't actually exist in the real world... no matter how cute your definitions and logical derivations are, they're also vacuous.

If we're going to advocate for impossibilities, why not skip the free market middle man and simply advocate for universal happiness? Empirically dubious and we have no idea how to actually implement it in reality, but apparently that doesn't matter.

(Also, I've heard water does in fact exist without sodium. So, not analogous.)


Crony-capitalism is literally the opposite of a free-market! So, you think property rights are a made up impossibility? Advocating for them is a waste of time? Nothing lives on a spectrum? Don't care how you answer. This is a waste of my time.


> Crony-capitalism is literally the opposite of a free-market!

But it's what the capitalist system of property rights consistently produces in the real world.

> So, you think property rights are a made up impossibility?

No, they are made up but quite possible. The idealized free market the capitalist model of property rights is supposed to deliver is, OTOH, an impossibility (or, at any rate, an unstable condition unlikely to ever be achieved which would decay immediately if it was.)


> But it's what the capitalist system of property rights consistently produces in the real world.

No... ignoring property rights consistently produces crony-capitalism.

> they are made up

as are ethics and morality. Doesn't mean they aren't endlessly important.

> be achieved which would decay immediately if it was

As in, property rights are pointless because people ignore them. Got it. What do you propose?


> No... ignoring property rights consistently produces crony-capitalism.

No, the original capitalist system (that is, the dominant system of the mid-19th century system developed West for which critics coined the name “capitalism”) fully embraced the capitalist model of property rights—again, the capitalist model of such rights was defined by what was observed in that system as distinct from a other historical systems—and was deeply and pervasively characterizes by cronyism.

Now, if you have some other model of property rights in mind other than that embodied in the real historical system for which “capitalism” was coined as a label, you might argue have an argument that deviation from that model, such as the deviation seen in capitalism, produces cronyism. But you shouldn't confuse that model with capitalism.


I would be careful of suggesting the idea of property you're referring to is somehow "the original capitalist system". Many economic and political theorists in the mid 19th century and earlier talked about property rights in the terms I'm referring to - these were also capitalists.

“Propriété et loi.” Originally published in the 15 May 1848 issue of "Le Journal des économistes", Frederic Bastiat (hardly some obscure, sideline thinker) wrote:

> Economists consider that property, like the person, is a providential fact. The law does not give existence to one any more than to the other. Property is a necessary consequence of the constitution of man.

He continues:

> It is so true that property predates the law that it is acknowledged even by primitive people who have no laws or at least no written laws. When a savage has devoted his work to building himself a hut, no one disputes his possession or ownership of it. Doubtless another savage who is stronger than he can drive him out but not without angering and alarming the entire tribe. It is actually this abuse of strength that gives rise to association, agreement, and the law, which places public force in the service of property. Therefore the law arises out of property, a far cry from property arising from law.

Point being, the property rights I'm referring to - the property rights that the vast majority of free-market advocates speak about - have been considered and thought about for ages. I'm not coining a new label.

http://oll.libertyfund.org/titles/bastiat-the-collected-work...


> Property rights = Free-market =/= Cronyism

More accurately, the capitalist system of property rights (not the only structure of property rights imaginable) is included in (but not equivalent to) the capitalist concept of a “free market”; that system of rights (even without the other components of a “free market”) also naturally (when combined, as it always is with real societies, with self-interest) produces (among other problems) cronyism.



Perhaps you mean anarchocapitalism or some libertarian strain of capitalism, because, otherwise, this is straight out of the modern capitalism playbook.


Nope, I mean capitalism. Not going to change the definition because cronyism is an easy target to criticize. Crony-capitalism =/= capitalism.


Are there good examples of non-crony capitalism, when we're discussing markets and populations at this scale? This sounds an awful lot like "authoritarian communism =/= communism".


Are you talking currently or historically? Historically, TONS. America was for quite a while (still is in some cases, others not at all).

Currently, Hong Kong is a great example of a largely free economy.

https://www.fraserinstitute.org/economic-freedom/dataset?yea...


I'm curious to see some of the historical examples in America, especially if there are TONS of them. Because when I think of "American capitalism at scale" in the old days the only thing I picture are the robber barons.


I said there were tons of examples historically and that America was one of them (and obviously not in every aspect... these types of things are always on spectrums and not devoid of anomalies)




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