Dear RN list, There are three messages in this posting, the first two with stats and analysis of the US economy (and the growing rich/poor disparity) and the last a Zednet commentary outlining how the South Korean people have been plundered. all the best, Jan ******************************************************************** From: •••@••.••• Date: Sat, 22 May 1999 02:07:13 -0300 To: •••@••.••• Subject: US Standard of Living These two intersting messages came from the discussion list of the University of Colorado, whose Wallersteinian name (WSO) is akin to the themes of Attac. Both of them focuse one of the "strongest" arguments of worldwide neoliberalism: the efficiency of contemporary US economy in the attainment of a situation of near full employment. By the way, enthusiasts forget the rest of the world. Regards, R. Magellan ###################################### Date: Thu, 20 May 1999 From: "elson" <•••@••.•••> To: WORLD SYSTEMS NETWORK <•••@••.•••> Subject: US Standard of Living Here are some fact on US inequality. I apologize for focusing on a core state, when the more important issue is the core-periphery gap. But, this is a response to claims to the contrary regarding the US. The facts for the US are, as of 1996: % US pop/ %national wealth top 20% 75% second 20% 16.6 third 20% 7.1 fourth 20% 2% fifth 20% (-0.7%) ! (US Bureau of the Census, cited in Pearlstein, 1995) This is easily the worst distribution of wealth in the core, and is comparable to that of many peripheral states. As for growing inequality (the shrinking middle class ): In the 1980s, more households fell below the middle class than the converse. For seven households that moved up into the middle class, nine fell below it (Bradsher, 1995). The number of people who fell below the poverty line increased to 38 million in 1994, higher than the number in 1964, higher than ever in fact. More US workers became 'contingency workers,'-- those with part time jobs that pay no basic benefits, such health care, retirement, vacation, etc. Throughout the 1980-90s, the percentage of US workers has grown from about 1/4 to about 1/2 by next year. Moreover, this kind of work spread from fast food/retail sales, etc. to all industries. It has naturally followed from "downsizing" that when labor is needed, it's hired part time and temporary, greatly reducing costs. Also, it now takes more people working full time per household to achieve the same standard of living achieved thirty years ago by a single full time worker per household. More work, less pay. The cliche that "the rich get richer and poor get poorer" is a definite fact in the US, as reported to us by the US government. One will find similar changes on a systemic scale. ################################# Date: Sun, 20 Jun 1999 (??) From: "spectors" <•••@••.•••> To: WORLD SYSTEMS NETWORK <•••@••.•••> Subject: statistics Looking at statistics Statistics often leave out context. For example, the unemployment rate seems lower. Besides the obvious criticism of how the data are collected, ignoring the "discouraged workers" for example, and besides the obvious flaw in thinking that two part-time jobs waiting tables for a yearly income of 17,000 dollars is somehow equivalent to two lost steel worker jobs with combined incomes of 60,000 dollars, there is also, among other things, the issue of incarceration. If the 1.5- 2 million people in jail were out on the street, the unemployment rate would be much higher. The slow down in the decline of "Western" capitalism happened because the collapse of Eastern European regimes gave some capitalist countries some new opportunities to invest. But, like the economic boom that comes after a war, this will only ease the pressure for a limited time. Maybe central planners are insensitive, or worse, corrupt in how they plan the economy. Maybe it is idealistic to think that they can ever be a reflection of the aspirations of the great majority. But isn't it MORE IDEALISTIC to think that allowing unbridled greed to run society, supposedly kept in check by the magical hand of "supply and demand" will prevent corporations from taking advantage of the population. Of course those same "anti-big government" corporations and mouthpieces have NO PROBLEM USING BIG GOVERNMENT WHEN THEY WANT TO. Hence the rise in prison population, hence the military build up, school uniforms, metal detectors, Identification cards, drug testing, increased police powers, etc. They like "free enterprise" when it allows them to grab what they can. They love big government when they want to protect their interests. Taken to its extreme, it becomes fascism. Alan Spector *************************************************************** Date: Thu, 15 Apr 1999 11:18:58 -0400 From: Eric Fawcett <•••@••.•••> Subject: Report on the other, Economic War: why the Dow Index keeps rising Here is today's ZNet Commentary Delivery from Robin Hahnel. To pass this comment along to friends, relatives, etc. please note that the Commentaries are a premium sent to monthly donors to Z/ZNet and that to learn more about the project folks can consult ZNet (http://www.zmag.org) and specifically the Commentary Page (http://www.zmag.org/donorform.htm). Our address for submitting checks is 18 Millfield St. Woods Hole, MA 02543, though we much prefer credit card arrangements via the site. ------------------------------------------ The Conquest of South Korea by Robin Hahnel If the Democratic Republic of North Korea ever had designs on the South Korean economy, it is too late now. The US Department of Treasury, with an assist from the IMF, has just "scooped" the North Koreans - and the Japanese, Chinese, or anyone else who had an eye on picking up the pieces of the South Korean economic "miracle" in the aftermath of the recent economic "crisis." For three decades South Korea had the highest rate of growth of GDP per capita of any country in the world. South Korea achieved these high rates of growth while preserving domestic ownership over its "world class" international business conglomerates known as "chaebols." At the core of the highly successful "Korean model" were the ownership and financial links between large, modern industrial enterprises and Korean banks, and between Korean banks and various Korean government ministries. This is not to say that all benefitted equally from the economic success, nor that economic decision making was democratic. Authoritarian regimes repressed South Korean labor unions keeping wage increases well below increases in labor productivity, and a large gender wage gap excluded women workers from achieving significant benefits. Moreover, Korean economic decision making was confined to a tiny corporate and government elite. Nor was the "Korean model" particularly unique - in most respects it was similar to the Japanese model that was equally successful in the 1950s, 1960s and 1970s, and to the models of other successful Asian "tigers" in the 1980s and 1990s. Moreover, even before the crisis hit in the fall of 1997 and a newly elected South Korean government found itself at the mercy of the IMF, South Korea had begun to succumb to U.S. pressure to liberalize its financial sector. But in the summer of 1996 the US Treasury orchestrated a successful carrot-and-stick strategy to penetrate the South Korean economy that is proving successful beyond even the plotters wildest expectations. This is Nicholas Kristol's account of the details published in the New York Times: "In South Korea, as a direct result of the crisis, the government is talking about selling two of the biggest banks to foreigners, and teetering local securities firms are searching for foreign companies to take them over. Under an agreement with the monetary fund, foreign banks will be able to compete in Korea beginning this year, and the government is considering ways to ease the restrictions that prevent foreigners from buying Korean land. Walmart is studying whether to open outlets in the country. After interagency discussions, the Administration dangled an attractive bait: if Korea gave in, it would be allowed to join the Organization for Economic Cooperation and Development, the club of industrialized nations. 'To enter the OECD,' recalled a senior official of the organization, 'the Koreans agreed to liberalize faster than they had originally planned. They were concerned that if they went too fast, a number of their financial institutions would be unable to adapt.' The pressure on them is reflected in an internal three-page Treasury Department memorandum dated June 20, 1996. The memo lays out Treasury's negotiating position, listing 'priority areas where Treasury is seeking further liberalization.' These included letting foreigners buy domestic Korean bonds; letting Korean companies borrow abroad both short term and long term, and letting foreigners buy Korean stocks more easily. Such steps would help Korean companies gain more access to foreign loans and investment, but they would also make Korea more vulnerable to precisely the kind of panicky outflow of capital that unfolded at the end of 1997. Moreover, for all Washington's insistence that it emphasized building financial oversight, nowhere in the memo's three pages is there a hint that South Korea should improve its bank regulation or legal institutions. Rather, the goal is clearly to use the OECD as a way of prying open Korean markets -- in part to win business for American banks and brokerages. 'These areas are all of interest to the US financial services community,' the memo reads." But after the crisis hit, the IMF upped the ante and the struggle was over in weeks. The IMF simply insisted that remaining restrictions on foreign ownership be rescinded and that the government take active steps to dismantle the chaebols as a condition of its bailout. As Sandra Sugawara explained in the Washington Post: "In return for a massive rescue package, Korea's newly elected president, former dissident Kim Dae Jung, agreed to restructure the nation's closed and debt-ridden economy and embrace the free market. A key target of economic reform are the business groups, known as chaebols. The top five chaebols - Hyundai, Samsung, Daewoo, LG Group and SK Group -- account for more than one-third of the country's gross economic output. Kim Dae Jung's new government launched a campaign to convince the nation that the chaebols, not foreign investors, were to blame for Korea's woes. John J. Lee, a Korean- born American and senior vice president of New York based Scudder Kemper Investments Inc. who manages the Korea fund, one of the largest and oldest mutual funds to invest solely in Korea, said 'A year ago, I was cynical, quite pessimistic about the reforms the government was promising. But now I'm quite impressed.'" Frustrated with chaebol foot dragging, the government demanded that chaebols swap companies, an effort known as the 'big deals.' The big deals have drawn substantial criticism, especially after the government threatened to cut off bank credit to LG Group unless it agreed to sell its semiconductor subsidiary to Hyundai. 'The big deals are idiotic. They will fail, because neither party wants to participate in these absurd arrangements, and in failing they will inflict considerable damage on the economy,' said Stephen E. Marvin, head of research at Jardine Fleming Securities in Seoul. If there is a czar of the South Korean reform effort, it is Lee Hun Jai, chairman of the Financial Supervisory Commission. The 55 year old Lee, who has a master's degree in economics from Boston University, moved quickly after taking the reins of the commission last spring. Under Lee, the government seized a number of insolvent banks, closed five, and more significantly, agreed to sell Seoulbank to the London-based HSBC Holdings PLC and Korea First Bank to a US investment group led by Newbridge Capital Ltd. The government sought foreign buyers for these nationalized banks in hopes the newcomers would spur reforms. The same reasoning led the government to hire foreign fund managers to run a new Korean Development Bank. Also, Scudder, Kemper, Rothschild Inc., State Street Bank & Trust Co., and Templeton Asset Management Ltd. Were chosen to manage the new $1.4 billion Corporate Restructuring Fund. Government officials contend this will force chaebols to reform. 'The government will no longer be able to bail out the chaebols,' declared Lee Hun Jai." Many companies newly available for foreign purchase are very attractive to international investors not only because their stocks are depressed and the won is cheap, but because South Korean labor has been severely chastised. One can only wonder how South Korean workers who demonstrated and occupied plants in their attempts to avoid massive layoffs at the hands of their fellow South Korean employers at the outset of the crisis may react to going back to work for Western owners who flaunt their scorn for the South Korean system of "life time employment." Choo Won Suh, chairman of the Korean Federation of Bank and Financial Labor Unions is clearly apprehensive: "I hope that US banks that acquire Korean banks will respect the culture and practices of Korean banks. I do not wish to speculate on how many Korean bank workers may be laid off after being taken over by a US bank, but I am aware of the fact that layoffs will occur." In the New York Times Kristof worries about how Asians will react to an avalanche of American corporate take overs: "One central question is whether an increasing American presence will spark antagonism toward the United States and the way it is seen as pushing its commercial interests as the price for throwing a lifeline to Asian economies.... The changes may set off alarm bells about economic colonialism." He goes on to dutifully report the standard excuse offered by every empire, noblese oblige: "The United States insists that the main beneficiaries of open markets will be local residents - who will probably get new kinds of insurance and banks that offer better service. The US government insists that it is not a predatory beast forcing its companies on Asia, and many officials and outside economists alike argue that the policies of greater openness advocated by Washington are good for the countries on the receiving end. Although Washington pushed for more open markets, American officials say, that effort has been secondary to the effort to bail those countries out. "Narrow self-interest was not a major element in our approach,' said Stephen Bosworth, the American ambassador to South Korea." But Kristof admits: "Not everyone agrees, and a US business expansion in Asia has long been regarded as a nightmare by many nationalists in the region. Thus, for some nations trying to preserve their identity and autonomy, the American market-opening pressures smack of economic colonialism. "We must realize the great danger facing our country,' Prime Minister Mahathir Mohamad of Malaysia declared in a televised speech a few days ago. "If we are not careful we will be recolonized.'" Robin Hahnel teaches economics at American University. This fall South End Press will publish his new book on capitalist globalism in crisis, Panic Rules!
