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| An
LDCinian Fairy Tale or How to Lose a Paradise |
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Once upon
a time, there was a lovely little country far, far away
called LDCinia. It was beautiful and full of touristic
spots, verdant mountains, shady green valleys, wild
flowers, untamed rivers and a meandering coastline,
blessed with turquoise clear waters and talcum-white
sandy beaches. The sea was rich with white fish, pearls
and wild turtles; sweet mangoes and coconuts grew wild,
while the sun shone generously on the Beach-Dwellers
and less on the Mango People, who lived uphill. As the
electricity cuts were frequent, more ''developed'' means
of entertainment were underdeveloped, the missionaries
were influential, the population growth rate was high
and, as someone had declared in a foreign language,
poverty was rampant.
Despite this seemingly bounteous wealth, things were
clearly not all well in LDCinia. In the absence of a
reliable census, a foreign NGO staffed by misty-eyed
and very kind blue eyed strangers reported that the
Beach-Dwellers were having a much better time than the
mango growers. Incomes were diverging. Typhoons were
blowing with alarming frequency, earthquakes sometimes
hit, killing far more Mango People than Beach-Dwellers,
and "stop and go" cycles grew more frequent,
so it was no longer possible to tell the difference
between a bubble and a recovery. The triple crises multiplied
and the Hysteresis effect set in some rather serious
chronic vulnerabilities.
The plight of the LDCinians caught the attention of
the distant tribe of SAPonians, who offered to help
get things back to normal in exchange for LDCinian natural
resources, cheap labour and rich lands, which would
otherwise be wasted. While the forests were indeed luscious,
the clever SAPonians realised that the root of the problem
was that the law of the jungle was not being fully applied
in poor LDCinia. The SAPonians generously offered free
policy advice calling for more law of the jungle, explained
it in simple terms referring to the free competition
between the hare and the fox in colder climates, and
rapidly filled in a template which would, magically,
conjure an investment climate so inviting that the big
corporations from all over the fair-skinned world would
come to LDCinia and invest generously to help a paradigm
shift from reproductive capacities to productive capacities.
Take-off would soon follow, and the next stages of growth
were but inevitable. In three hundred years or so, LDCinia
would surely resemble the Midwest, or, at least, West
Detroit. The LDCinians gladly took up the offer in the
name of the Mango People. Of course the corporations
would not have to pay any taxes to the government, since
otherwise they would not come. Consequently, taxes were
paid by the Mango People and the remainder was provided
by ODA, but only if the government refrained from biting
the hand that was feeding the Beach-Dwellers.
And so LDCinia grew more and more dependent on ODA and
on the corporations. But over time, it became clear
that only a very small minority of the beach growers
were benefitting from the SAPonians advice to devalue
their currency, liberalise, privatise and deregulate
in exchange for loans and the distant promise of debt
rebates in exchange for good behaviour. Easy money had
flown into LDCinia and for a while, and it had seemed
that things started to improve, at least at the top.
The Beach-Dwellers strongly supported the SAPonians
policies, because they could now afford Flat screen
TVs, IPads, fast cars, foreign holidays and had even
gained access to online gambling with their international
credit cards, while the Mango People would surely come
to benefit too, in due course. Fortunately, the missionaries
were more successful instilling the virtues of patience.
Of course, the big corporations did not care too much
for mangoes or beaches, since they could always pick
another spot next year, but they enjoyed the benefits
of extracting precious minerals and reaped sound profits
from the Free Trade Zones, which helped the promotion
of those bright young things in the head office who
had first spotted the new frontier, decamped to the
new five-star hotel while it was still under construction,
braved the local smells and bought the best tracts of
land before local bribes rose to unsupportable levels.
Surely democratic reforms in LDCinia would help to reduce
transaction costs, thought the SAPonians and their local
advisors. And their will was done.
In the meantime, the LDCinian current account deficit
continued to rise, and a shift in external circumstances
meant that the capital and financial account of their
balance of payments was a bit on the low side, so the
country was paralysed by a debt crisis. These crises
had happened before, but now the LDCinian economy was
fully open, and the corporations did not like it when
they were told there was no money to send abroad, and
the banks did not like it when they were told that LDCinia
was broke and could not help pay the bonuses of young
currency dealers based in distant lands. (This was so
unfair, since the brokers were late paying the mortgages
on their McMansions in Connecticut.) These tragic events
showed that in a free market system hardship is blind,
just like rain falls on everyone regardless of the propensity
of their dwellings to be destroyed by the next mudslide.
In fact, an economic model showed that, since the Mango
People were statistically more frequent in the population,
and had more children, it was simply fair that their
share of misfortune should be higher too, and the rest
could be explained by natural variations due to their
stubborn, innate propensity to live in dangerous places.
Imminent Foreclosure of LDCinia
After the debt crisis, things began to fall apart. One
by one, the big corporations left LDCinia in search
of lower wage frontiers and new bonuses elsewhere. Meanwhile,
the LDCinian debt obligations stymied any possibility
of recovery; the Mango People grew increasingly hungry,
diseased, marginalised and desperate, but they could
not voice their grievances in any of the official languages
of the United Nations. Quickly the peoples of LDCinia
lost faith in their government, run by the corrupt and
greedy beach-dwellers who did not care for the Mango
People. Instead, the Beach-Dwellers had made close alliances
with the SAPonians and adopted their dress, drinks and
way of life, including an obsessive regard for celebrity
antics and tattoos written in funny languages. The beach-dwellers
grew rich and tanned at the expense of the Mango People,
who had stopped producing mangoes and, instead, dug
themselves into the earth and dug out precious minerals
that were used to pay for the Beach-Dwellers expensive
habits. But despite the natural order of things, mother
earth kept rebelling and frequent droughts, floods and
tsunamis hit LDCinia, soaking the clothes of the Beach-Dwellers
when their maids failed to collect them in time, as
well as killing off the idle Mango People, yet this
did not make the headlines at home or abroad. After
the debt crisis, LDCinia even had to stop temporarily
importing SAPonians food and flat-screen TVs, but a
new government was soon elected and, with fresh external
credits, it soon resolved these difficulties. Nevertheless,
one crisis followed another so that it was no longer
possible to tell which crisis was responsible for what
misery and despair. Then one day, the LDCinians decided
to kick out the SAPonians, since the only good thing
they had brought them was the iPhone, which was nice,
but their development policies had failed to deliver
iPods, iPads and prosperity for all and guide the way
to equitable and sustainable development.
When even the iPhones disappeared from the shops altogether,
it was decided that the peoples of LDCinia would convene
a public dialogue launched by the coordinating council,
in order to mobilise their limited domestic resources
and address their long term, externally-generated, structural
and endemic vulnerabilities through a national development
plan called the PISPs or Poverty Increase Strategy Papers.
So they convened a big meeting and invited all the stakeholders,
civil society, international experts from two Cambridges
and from SOAS too, and even invited some SAPonians to
the spanking-new Canadian-owned hotel at the beautiful
(but very dangerous at night) beach that was to be the
venue of the PISP consultations. The deliberations were
held through the night; yet no agreed conclusions could
be reached, there were too many groups fighting and
the stalemate could not be resolved. It was decided
to ask the UN to help resolve this quandary.
The UN, with its uniquely depleted core competencies
in policy advice and technical assistance was called
upon to help provide the missing iPods and iPads to
all. The UN recommended the adoption of an integrated
framework approach to deal with commodities, trade,
customs clearance, port facilities, technology, finance,
investment, exchange rates and capital flows (largely
drawing upon somebody else’s expertise and financial
support, since the UN itself was a bit skint). It offered
a myriad of capacity building micro projects, especially
in the area of gender and entrepreneurship to fill the
gaping gap in development financing left by diminished
state capacities following 30 years of SAPonians rule.
It also recommended that the LDCinians immediately start
to build up their capital goods sector and set up a
lively intra-industry trade, for all to be well.
Despite these generous offerings the LDCinians were
fascinated by the lure of South-South solutions, so
they called upon the Confucians to help build their
country through ancient wisdom and American dollars
obtained in exchange for iPods and iPads. No shorter
route to bliss could be found, and multitudes of Confucians
soon descended upon LDCinia, much to the chagrin of
the SAPonians who preferred to do things their own way.
LDCinian women were instantaneously attracted by the
hardworking, wise and vivacious Confucians, regardless
of their inability to say anything that the women could
understand. But they were sweet and always brought cookies,
and this seemed enough, at least for a while. Unfortunately,
the Confucians had some nasty habits, like beating their
women when they were drunk, which sadly reminded the
women of their old partners. Nor was there much enthusiasm
for a big development drive of the Confucian type. The
Confucians it seemed, worked too hard, and had too little
fun. Therefore, the East Asian model held little interest
for LDCinia, and no matter how bad, it was deemed preferable
to rely on external aid and traditional donors. The
problem was that this aid was shrinking as their economies
stopped growing and aid dried up. So what's a country
what to do?
Thus, LDCinia again found itself in a bind, having rejected
the SAPonians and suffered repeated disappointments
at the hands of the Confucians, who were just as interested
in precious metals, timber and virgin land as their
economic predecessors. They decided, then, to turn to
the Samba People, who had rhythm and were fronted, first,
by a sage statesman sporting a beard, and then by a
woman who was said to be firm when firmness was required.
Unfortunately the Samba People had little money and
even less vision, and all they could come up with was
the idea for some minor road works which they could
fund in generous conditions and a couple of bikini shacks,
which the Beach-Dwellers strongly supported because
they were as pretty as they were revealing. Although
they could give a marginal contribution to social harmony,
the Samba People were clearly unfit for global leadership,
and that same year they were denied, again, their dream
of a permanent seat in the UN Security Council.
That left two alternatives, the People from the Tip
of the Darkest Continent, which sounds far more ominous
than it should, and the Gentle People From Below the
Mightiest Mountains. But neither would serve the LDCinian
in the way they expected; they would bring little money,
create few jobs, mumble a few embarrassed words when
asked for policy advice, and run for cover when challenged
by the SAPonian Resident Commissioner, even though he
lived off borrowed money while the newcomers had sound
bank balances.
At the end of the day, the LDCinian preferred south-south
based solutions, so they went back to the wise Confucians
to help build their country through ancient wisdom and
new Friendship bridges and railroads. Over time, the
mango people and the beach dwellers grew further and
further apart, especially in incomes and IPads, leading
to a revolution and eventually a civil war. Then the
mango peoples kicked out the beach dwellers and their
SAPonians advisors. They looked for alternative development
strategies, based on human rights AND IPads for all.
They decided to upgrade their natural resources, increase
value added domestically and hence tried to integrate
into the global economy in other ways than trade. For
example, they tried to participate in the more dynamic
IPNs (international production networks) but that did
not really work either as there was nothing to link
up to other than cheap labour and land.
Over time, the LDCinians grew fatigued and disillusioned,
leaving the running of the LDCinian economy in the able
hands of the rich investors from Confucia, and went
back to creative activities and cultural expressions
in which they excelled. But like commodities, the big
entertainment companies harvested the best fruits from
the local pickings and appropriated most of the benefits.
Yet even limited labour mobility did help to increase
remittances, feed the hungriest and somehow get through
another night. After all, tomorrow is another day.
Meanwhile, the UN was very busily preparing yet another
international conference on the imminent LDCinian graduation,
spearheaded by the earnest civil society, and soon to
be celebrated by the entire international community.
Consensus ruled that minor every day contradictions
were not of importance. What was of importance was keeping
one’s eyes on the prize.
March 15, 2012. |
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