This does not need much explanation. This morning, as members of the Democratic caucus went up to speak in favor of the health care reform bill, Republicans responded with obstruction, something which they are very good at.
Filed under: Latin America | Tags: Bolivia, Camiri, Evo Moral, Repsol YPF, Santa Cruz, YPFB
Santa Cruz Department is the bastion of Bolivia’s hardline opposition. Since the 2005 election of Evo Morales, the Department has spearheaded a campaign for regional autonomy . A stronghold of the country’s large landowners, the Department has fought tooth and nail against Morale’s proposals. One proposal, land reform, seems particularity worrisome to wealthy Santa Cruz ranchers.
In Santa Cruz, Morales, the country’s first indigenous president, is often referred to as the “shitty little indian.” Suffice it to say that Morales is not a popular man in the Department, although he still remains a very popular leader nationwide. In fact, Santa Cruz prefect Rubén Costas has gone so far as to call Morales a “Macaco.” (Think George Allen)
But while Santa Cruz is firmly in the hands of the opposition, indigenous groups, who overwhelmingly back Morales, are playing a greater role in the internal dynamics of the Department. Traditionally suppressed, neglected or co-opted, Bolivia’s indigenous groups are producing actionable change, even in Santa Cruz. They are even challenging Morales’ government, calling for an even greater push to the left.
Via Reuters:
Civic leaders in a southeastern Bolivian city called off a strike on Friday to protest an oil exploration plan involving Spanish oil major Repsol YPF after the government agreed to review the planned investment
Civic leaders in Camiri, located in Bolivia’s Chaco province, are opposed to a $500 million plan between the Bolivian state-run energy company YPFB and Repsol YPF to develop nearby gas fields.
The leaders, who are calling for YPFB to carry out the plan without any involvement from foreign companies, said they were suspending any protests until Aug. 24 when the government will discuss the investment scheme with a regional assembly.
On Monday, MSNBC hosts David Shuster and Tamron Hall interviewed Orly Taitz, one of the leaders of the so-called “birther” movement. Taitz, a California attorney (her law degree is from an online academy) and dentist, was brought on to discuss President Obama’s supposed “Kenyan Birth Certificate“. Taitz lost her cool. What ensued was nauseating and yet, a bit magical.
"the Lewin Group is wholly owned by UnitedHealth Group, one of the nation's largest insurers."
Turns out that the Lewin Group, a Falls Church, Virginia-based consulting firm whose study on the impact of a public option has been cited by opponents of President Obama’s healthcare initiative, is in fact, owned by a health insurance company, UnitedHealth Group.
In April the group released a study in which they concluded that under the public option, “the number of people with private health insurance would decline by 119.1 million people.” Since then, the report has been cited ad nauseum in op-ed pages and Senate and House floor speeches. Time and time again, the group has been referred to as “bipartisan” and “reliable.” For example, Senator Jim DeMint (R-SC) called the study the “most comprehensive and reliable study of the public option.” While the group might very well be “bipartisan,” it’s a far stretch to call their analysis “reliable.”
I snapped this picture yesterday evening as I was on my way home from work. The opulence of the wedding entrance was a bit shocking. The actual event must have been a spectacle.
According to the Washington Business Journal:
The father of the bride put in his fair share of wedding work, filing the pile of paperwork needed to legally put on the production.
He worked directly with the Department of Homeland Security and seven other agencies to close the streets and got permits from the Department of Health and Department of Consumer Affairs.
Filed under: Washington DC | Tags: Cell Phones, Homeless, Michelle Obama, Miriam's Kitchen, Rush Limbaugh, Technology
Photo by Pablo Martinez Monsivais / AP
A few weeks ago, First Lady Michelle Obama visited Miriam’s Kitchen, a Washington, D.C. homeless shelters near the campus of The George Washington University. A photographer snapped a shot of a man who was presumably waiting in line to be served and was photographing Mrs. Obama using a cell phone. As would be expected, Conservatives reacted with dismay. The de facto head of the Republican Party, radio personality Rush Limbaugh, made light of the situation. Commenting on his syndicated radio show, Limbaugh said:
Like, you’re going to have to see the first lady behind the counter at McDonald’s when you go in there as your poverty-stricken day drags on — take a picture with your cell phone while you go in there and get your McNuggets or whatever’s being handed out that day.
But cell phones are very important to those on the street. The Washington Post ran a story on its front page today noting the increasing use of technology by homeless in D.C.
Advocates who work with the District’s homeless estimate that 30 percent to 45 percent of the people they help have cellphones. A smaller number have e-mail accounts, and some blog to chronicle their lives on the streets.
A phone, according to Gwendolyn Bell, is “the only way you can call to keep up with your food stamps, your housing application, your job.”
Some get their phones from relatives who want to know they have a way of staying in contact. Ronald Collins-El, 45, got one from his nephew. While he stays at the homeless shelter on the campus of St. Elizabeths, he uses it to keep in touch with family members and to organize his numerous medical appointments, payments and bills.
Filed under: Uncategorized | Tags: ARENA, El Salvador, FMLN, Mauricio Funes, Rodrigo Ávila
The picture, taken from The Times article on Funes' victory is titled 'Marxist Muricio Funes is new President of El Salvador'. Funes, of course, is not a Marxist but his FMLN party has a Marxist background and a Marxist wing.
With 90% of the vote in, Farabundo Marti National Liberation Front (FMLN) candidate Mauricio Funes has declared victory in El Salvador’s presidential election. Funes, the former television personality led ruling ARENA party candidate Rodrigo Ávila 51.2% to 48.7. Though a mantle of the countries political system, Ávila, in his concession speech. promised that ARENA would be “a constructive opposition.”
More from the Washington Post.
Salvadoreños head to the polls today in an election that many see as further strengthening the leftist tide in Latin America. As polls open throughout the country, voters will choose between Rodrigo Ávila of the ruling conservative ARENA party and Mauricio Funes, a more centrist member of the FMLN, the country’s main opposition group which was previously a Marxist insurgency movement comprised of the five main guerrilla groups who fought the government during the Salvadoran Civil War.
Funes, whose ascendancy into the national spotlight now leaves him poised to become the first leftist ever to be elected in the country’s history, has drawn comparisons to U.S. President Barack Obama by many Salvadoreños. But while he is on the cusp of making history, Funes has had to deal with a relentless barrage of attacks from the right, and even from some within his own party.
ARENA has compared Funes with Venezuelan President Hugo Chavez, who is a divisive character throughout Latin America and is often used as a political tool by parties on the right to discredit and bring suspicion towards leftist candidates. Most recently, it was used against Paraguayan President Fernando Lugo, who himself had to fight off accusations that he was taking orders from Caracas while trying, like Funes, to end the 61 year rule of the Colorado Party. Lugo, the former Roman Catholic bishop, was able to withstand the calumny. Mark Engler, senior editor at Foreign Policy In Focus and author of the recently published How to Rule the World: The Coming Battle Over the Global Economy (Nation Books, 2008) observes:
A key tactic of the Salvadoran right has been to paint Funes and his party as tools of Venezuelan President Hugo Chávez. Many U.S. commentators have mirrored this position by caricaturing the Latin American left as naively obedient to Chávez and encouraging Obama to craft a tougher response.
The Chicago Tribune puts it more bluntly:
Political opponents have erected billboards showing a doctored image of Chavez with his arm around front-runner Mauricio Funes. In fact, Chavez has become a wild card as Funes, a popular television journalist, fights claims that he would be another satellite in Chavez’s expanding socialist orbit.
The tactic, mirrored by conservatives here in the United States in their attempt to portray President Obama as a socialist, is a desperate attempt by ARENA to hold onto power after it’s policies have failed and the country remains one of the poorest in the hemisphere. Bankrupt with new ideas, ARENA banks its fortunes on castigating Funes rather than presenting why it has better ideas.
A reactionary editorial in today’s Washington Times goes one step further:
A pro-terrorist political party taking power in El Salvador is a grave development that underscores the need for urgent action in Latin America. Our friends in Colombia are being surrounded, and Mexico is inching toward a social meltdown that Chavez and his cronies will leap to exploit.
The fear, however baseless and contrived, is warranted. There is a reason for the right to fear a Funes victory. Conservatives have lost nearly every recent election in Latin America and only Colombia and Mexico remain on the right. Parties who had long maintained political dominance throughout the hemisphere have been tossed in the unfamiliar opposition roles while others have completely collapsed.
But not all on the left are followers of Chavez, or even aim to implement his policies. Some, including center-left Peruvian President Alan García, have at times openly battled with Chavez. In fact, Brazilian President Luiz Inácio Lula da Silva, who has also openly sparred with Chavez, is seen by many as having the most political capital in the region. The more accurate comparison of Funes would be to Lula, but that would be self-defeating for those on the right.
And yet while Funes has had to deal with these attacks from the right, more radical segments of his own party have also attacked him for being too moderate.
As the San Francisco Chronicle puts it:
Today, Funes avoids wearing the FMLN color – red – and has adopted several positions at odds with the party. He does not support dropping the U.S. dollar as the nation’s currency nor legislation that would reverse a 1993 law granting amnesty to army officers accused of war crimes, arguing judicial and financial reforms would be a better way to address past injustices. He also says he is against big government.
El Salvador, plagued by corruption and violence, now has the attention of the world, if only for one day. Voters are expected to run ARENA out of office. If he wins, Funes will be most certainly be expected to bring the change that he has long campaigned on. He will do so and his party, once put into a power, will most certainly moderate, perhaps into some sort of Chavez/Lula hybrid.
Ojalá!
Filed under: Latin America | Tags: Bolivia, Coca, Evo Morales, State Department
President Morales holds up a coca leaf as he addresses the 61st session of the United Nations General Assembly in New York
In recent weeks, Bolivian President Evo Morales has become more vocal in his drive to change the international community’s stance vis-a-vis the legalization of coca, which serves as a vital part of the Bolivian social system. Morales, the leader of the countries coca growers association, has championed the cause of coca and has sought to bring the issue in front of the international community. His goal is to take the coca leaf off of the United Nations Single Convention on Narcotic Drugs. Morales’ somewhat defiant overtures towards Washington have complicated relations between the two countries and both have in recent months ousted each others respective diplomats.
In its 2009 International Narcotics Control Strategy Report (INCSR), the State Department lists Bolivia as one of the most important countries in the global narcotic industry. While there is no connection between the Bolivian government and the traffickers, a point which the State Department leaves no uncertainty on, there is concern that Bolivia, by promoting licit coca growing, is complicit in the illict production of cocaine, which ultimately ends up in American streets. According to State’s estimate:
The GOB faces significant challenges because its policies allow expansion of coca cultivation, limit eradication efforts, and loosen controls over the licit coca market. We are concerned about the growing influence of Colombian and Mexican cartels and the possibility of a growing number of drug-related crimes in Bolivia. We encourage the GOB to reverse its policies on expansion of coca cultivation. We also encourage the GOB to expand eradication in the Yungas, redouble its efforts in the Chapare, eliminate new coca plantings, and enhance its efforts to interdict illegal drugs and precursors throughout Bolivia. This effort should include the return of DEA to Bolivia. The U.S. also encourages the GOB to exert strict controls over the licit coca market, close illegal markets and increase cooperation with neighboring countries in counternarcotics efforts.
In response, Morales and his MAS government believe that “it is time for the international community to reverse its misguided policy toward the coca leaf.” In this commentary piece published in today’s New York Times, Morales makes his case for the decriminalization of coca.
In 1961, the United Nations Single Convention on Narcotic Drugs placed the coca leaf in the same category with cocaine – thus promoting the false notion that the coca leaf is a narcotic – and ordered that “coca leaf chewing must be abolished within 25 years from the coming into force of this convention.” Bolivia signed the convention in 1976, during the brutal dictatorship of Col. Hugo Banzer, and the 25-year deadline expired in 2001.
So for the past eight years, the millions of us who maintain the traditional practice of chewing coca have been, according to the convention, criminals who violate international law. This is an unacceptable and absurd state of affairs for Bolivians and other Andean peoples.
Many plants have small quantities of various chemical compounds called alkaloids. One common alkaloid is caffeine, which is found in more than 50 varieties of plants, from coffee to cacao, and even in the flowers of orange and lemon trees. Excessive use of caffeine can cause nervousness, elevated pulse, insomnia and other unwanted effects.
Another common alkaloid is nicotine, found in the tobacco plant. Its consumption can lead to addiction, high blood pressure and cancer; smoking causes one in five deaths in the United States. Some alkaloids have important medicinal qualities. Quinine, for example, the first known treatment for malaria, was discovered by the Quechua Indians of Peru in the bark of the cinchona tree.
Filed under: Economics | Tags: Augusto Pinochet, Franco Modigliani, Inflation, Irving Fisher, John Kenneth Galbraith, Milton Friedman, NAIRU, Paul Krugman, Robert Solow
Flicrk Photo by fratella
Generally speaking, inflation is the process of increasing prices and a decline in the value of money resulting in an ‘increase in the flow of money relative to the flow of commodities’ (Waage, 1949: 14). The only consensus within economics is that inflation has winners and losers. Winners are debtors and the losers are people on fixed incomes, savers and creditors who lose from the debtor’s fortune. When I write of inflation here, I am by no means describing the calamitous situation in places like Zimbabwe and around the third world where, because of poor government mismanagement, peoples lives have been destroyed. Rather, I am focused on the type of inflation that impacts developed economies, where undue panic is created over a problem that is not embedded in the economy. As Paul Krugman puts it, “inflation becomes a big problem if it becomes “embedded” in the economy, which makes it hard to restore more or less stable prices.”
In regards to the causes, most people lament greedy people, or what Robert Shiller calls the ‘bad-actor-sticky-price model’ (1997:57). Fundamentally, inflation is about economic stability and while macroeconomics is put in charge of creating stability, there is a lively debate surrounding the issue. Keynesians stress the role of fiscal policy while monetarists put the onus on monetary policy, for as Milton Friedman argued, ‘inflation is always and everywhere a phenomenon’ (1963: 17). Yet, what is missing in the debate is whether inflation should be the economic priority that it is. Increasingly, economies have adopted to make inflation public enemy #1, but is the focus warranted?
Keynesians believed that economic growth would come about by increasing government purchases, thereby rising the economy’s planned expenditure, or by cutting taxes, which would promote greater consumption. Freidman and his disciples saw things differently. What was essential was to expand the money supply at a steady rate of growth. Simply put, Friedman believed heavenly in Irving Fisher’s Quantity Theory of Money MV= PY, or that the amount of money * the velocity of money equaled the general price level times the output. The difference between monetarists and Keynesians has never been about whether the money supply matters but rather about the extent to which it matters. Even Keynes was a monetarist in that he believed the supply of money to be important.1 As put it:
Non-monetarists accept what I regard to be the fundamentally practical message of the General Theory: that a private enterprise economy using an intangible money needs to be stabilized, can be stabilized, and therefore should be stabilized by appropriate monetary policies. Monetarists by contrast take the view that there is no serious need to stabilize the economy; that even if there were a need, it could not be done, for stabilization polices would be more likely to increase than to decrease instability. (1977:1)
To counter Friedman’s observation that inflation was a monetary phenomenon, R.C. Leffingwell reminded us that ‘cheap money does not operate in a vacuum’ (Waage, 1949:3). There are a myriad of factors at play, including unions, wages, the profits of firms, government policy (monetary and fiscal), the handing the public debt. For example, the crop failure in the United States immediately after the Second World War created a shortage of animal feed. The shortage put upward pressure on the prices of grains, meat and poultry.
Supply shocks such as these, that create inflation, highlight the oversimplification inherent in monetarism, an oversimplification to a complex problem. How much of the rise in prices, in say pharmaceuticals, is caused by the desire of corporations to increase profits, specifically when demand is high (perhaps because of an epidemic) and supply is limited. Although inflation is an increase in the general price level, the actions of key sectors of the economy are likely to put considerable pressure on the inflationary process.
Political developments in the 60s and 70 allowed monetarists the chance to put their theories to the test. If economies suffered from high inflation, Freidmanites posited that it was because of misguided government policy that allowed too much money into the system. Since the market was self-regulating, what was needed was to allow the market to operate free of outside interference. The problem of course was that there was little in history to prove Freidman’s utopian economy would operate as he predicted. Since all economies are mixed (with a few command economies) and have always been so, there weren’t any examples to prove Friedman’s laissez-faire assertions.
Friedman employed econometrics to prove quantitatively what could not be proven qualitatively. One of Freidman’s Chicago Boy’s, known as the economic advisors to Chile’s Augusto Pinochet, put it adeptly, ‘to act against nature is counter-productive’ (Klein, 2007: 79) If economies that had adopted free market reform suffered inflation or a myriad of other possible economic ills, the reason was not liberalization but rather that the economy was not free enough and the government could not escape the urge to turn on the presses. Since the prospects of complete free-markets are socially and politically unpalatable, the monetarist, in theory, could never be proven wrong.
In Chile, where monetarism was best tested, unemployment rate went from 3 per cent under Salvador Allende to 20 per cent within the first year under the monetarists. By 1982, the figure had reached 30 per cent. One of the first actions of Pinochet was to free prices, which caused inflation to skyrocket to 605.9 per cent (Fortin, 1984: 312), the highest rate in the world at the time (Edwards, 1986: 535).
The government attempted to allay the problem with a cut in government spending and the contraction of demand. Within a year, inflation had dropped to the still unbearable level of 369.2 per cent. In the early 80’s, the Chilean economy was in a terrible state, in debt and facing hyperinflation. At this period in time, Pinochet began to reverse course and started the process of renationalization. The Chilean economic boom, which monetarism takes credit for, happened not under the tutelage of Freidman but as a consequence of policies diametrically opposed to those of Freidman.
In 1958, economist A. W. Phillips wrote about the inverse relationship between unemployment and the inflation of wages. His famous Phillips curve showed that there was a negative relationship between the two vital economic indicators. What explained this? Essentially, as unemployment fell, workers attained more bargaining power allowing them to push for higher wages. This invariably caused a rise in the general price level as firms passed the costs onto consumers. The trade-off suggested by the Phillips curve implied that policymakers could target low inflation or low unemployment, but not both simultaneously.
For ideological reasons, Keynesians emphasized unemployment and monetarists emphasized inflation going back to the fiscal vs. monetary argument. If there was a trade off, than it would be true that there could not exist a condition of both high inflation and high unemployment. Unfortunately, the economic downturn of the 1970’s put the curve into question. NAIRU, or the Non-Accelerating Inflation Rate of Unemployment, first put forth by Friedman and Edmund Phelps posited that there was a ‘natural rate’ of unemployment’ for which policy makers should aim for.
NAIRU explained that all economies have a natural rate of unemployment and that trying to go below that level would ostensibly cause inflation. Because the unemployed at the natural rate would only work at a certain wage above the prevailing wage levels, any fiscal or monetary policy aimed at getting raising employment would put upward pressure on the general price levels. Why was this rate ‘non-accelerating’? Because if broken, higher wages would cause higher prices, labor would pressure for more wage increases and this had the potential of going out of control. Institutional economist John Kenneth Galbraith, in his paper Time to Ditch the NAIRU asserted:
The concept of a natural rate of unemployment, or nonaccelerating inflation rate of unemployment (NAIRU), remains controversial after twenty-five years…First, the theoretical case for the natural rate is not compelling. Second, the evidence for a vertical Phillips curve and the associated accelerationist hypothesis that lowering unemployment past the NAIRU leads to unacceptable acceleration of inflation is weak. Third, economists have failed to reach professional consensus on estimating the NAIRU. Fourth, adherence to the concept as a guide to policy has major social costs but negligible benefits.
As Galbraith argued, the evidence for NAIRU was at best flimsy. NAIRI advocates never have presented historical data or studies to back up there postulation.
Inflation is not a monetary problem, rather is the product of social conflict that arises from the distribution of income. More so than money supply, it is the nation’s labor situation that is the impetus for price stability and inflation. Thus, as Robert Solow argued, inflation ‘is endemic to modern mixed capitalist societies’. Government action is not the key cause of inflation, and the idea that printing money is the cause of inflation is questionable. As students learn fairly early on, banks are the greatest source of making new money, primarily by taking liabilities in the form of loans.
The monetarist controversy was an attempt by free-market advocates to bring inflation to the forefront and put the onus on government to ‘keep-out’ as a means of achieving goals that had very little to do with inflation. In countries where stabilization occurred, poor nations with runaway inflation were forced, at the advice of Friedman and later Jeff Sachs, to sell their public companies. Inflation was a convenient excuse for the wealthy to put unemployment in the backseat.
Works Cited
Congdon, Tim. Keynes, the Keynians and Monetarism. Northhampton, MA: Edward Elgar, 2007.
Edwards, Sebastian. “Monetarism in Chile, 1973-1983: Some Economic Puzzles.” Economic Development and Cultural Change, Vol. 34, No. 3, Apr., 1986: 535-559.
Fisher, Irving. The Purchasing Power of Money: Its determination and Relation to Credit Interest. Norwood, MA: Norwood Press, 1911.
Fortin, Carlos. “The Failure of Repressive Monetarism: Chile, 1973-83.” Third World Quarterly, Vol. 6, No. 2., Apr., 1984: 310-326.
Friedman, Milton. Inflation: Caues and Consequences. New York: Asia Publishing House, 1963.
Galbraith, James K. “Time to Ditch the NAIRU.” The Journal of Economic Perspectives, Vol. 11, No. 1, Winter, 1997: 93-108.
Klein, Naomi. The Shock Doctrine: The Rise of Disaster Capitalism. New York: Metropolitan Books, 2007.
Shiller, Robert J. “Why Do People Dislike Inflation.” In Reducing Inflation: Motivation and Strategy, by Christina D. Romer and David H. Romer eds., 13-65. Chicago: University of Chicago Press, 1997.
Waage, Thomas O. Inflation: Causes and Cures. New York: The H.W. Wilson Company, 1949.
