By Daniel Siegeltuch
Dr. Mark Weisbrot, co-director of the Center for Economic and Policy Research, and the president of Just Foreign Policy, joined the World Affairs Council-Washington, DC on September 24, 2015 for an Author Series event. His new book, Failed: What Experts Got Wrong About the Global Economy, examines the factors that have contributed to financial crises throughout the world, and investigates how developing regions once mired in financial crisis have forged pathways toward sustainable growth.
The recent financial crisis in Greece, Dr. Weisbrot argued, exemplifies failed economic policy. Dr. Weisbrot explained that in the most recent Greek elections, which returned Prime Minister Alexis Tsipras’ left-wing SYRIZA party to power, a sense that “the future had already been decided before the first ballot was cast” pervaded Greek voters. Most striking about the SYRIZA party’s return to power, stated Dr. Weisbrot, is the way in which Tsprias’ successful campaign of blaming European economic authorities for Greece’s financial woes reflected the strongly held belief in Greece that economic self-determination is essentially gone. With the country already languishing in six years of recession, with another two more projected, Greek voters ultimately capitulated to the austerity imposed by Eurozone authorities and the European Central Bank. This surrender, and the consequent sense of blame among Greek citizens, has created the illusion of helplessness; yet, as Dr. Weisbrot insisted, this attitude belies the fact that there are choices that can propel an economy forward.
The obstacles in the way of economic self-determination are high, Dr. Weisbrot emphasized. Since the 1980s, the ascendancy of neoliberal economic policies set forth by global institutions such as the International Monetary Fund, the World Bank, and the World Trade Organization have resulted in worldwide growth failure for developing nations. The principle guiding these institutions, that developing nations sacrifice their sovereignty for the promise of economic growth in return, has largely defined global economic policy in the late 20th century. Dr. Weisbrot stressed that the IMF essentially operates as a “creditor’s cartel”; developing countries that refused to sign agreements with the IMF were also denied loans from the World Bank, regional banks, and the private sector. Conversely, in some regions such as Latin America where countries did sign IMF agreements, the signatory nations spent as much as 7% of annual GDP toward debt repayment beginning in the 1980s, an economic Catch-22 that hindered growth and impeded development.
Dr. Weisbrot then turned the audience’s attention to developing regions that in the 21st century have successfully navigated their way out of this neoliberal regime. New economic policies in Latin America and China illustrate how reasserting national sovereignty and reducing dependence on global institutions can elicit positive change. Brazil in the 21st century, he explained, doubled the minimum wage, increased anti-poverty programs, and reduced unemployment. Similarly, Bolivia doubled public investment and instituted land reforms, redistributing over 5 million hectares of land. China, another region that experienced significant economic growth in the 21st century, achieved this progress through state-led economic and development policies which independently controlled investment. The common thread guiding these regions’ economic successes, Dr. Weisbrot concluded, represents the key to sustainable economic development: nations must reject the neoliberal development approach of dependency on global economic institutions and instead must return economic decision-making to national governments, an act he argues will pave the way for stronger economies across the globe.