A Modest Proposal

Author(s): Andre Gunder Frank

Source: Economic and Political Weekly, Vol. 23, No. 6 (Feb. 6, 1988), pp. 246-247
Published by: Economic and Political Weekly
Stable URL: http://www.jstor.org/stable/4378074
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wili be final. For there is no proviso that
the report of the inquiry must be submit-
ted for public discussion before an order
is promulgated. And today especially after
the Supreme Court judgment on the
banned drug case, which has all but
disowned the court jurisdiction in matters
of policy regarding health and drugs
issues, there appear to be no forums
available for citizens' appeal.
A Modest Proposal
Andre Gunder Frank
Accentuate the Positive, Eliminate the Negative, and Don't Mess
with Mr Inbetween. We can apply the positive and negative
maxims of this American song to the world economy by following
three simple practical rules.
ACCENTUATE the Positive, Eliminate
the Negative, and Don't Mess with Mr In-
between. The New International Econo-
mic Order the third world clamoured for
in the 1970s has proven to be a chimerical
snare and delusion. So why not be prac-
tical visionaries and return to some tried
and proven ways of the Old International
Economic Order, which worked since this
American song was popular at the end of
World War II. It had shortcomings, but
many less than the (dis)order of the 1980s
so far. If the Black Monday October 19,
1987 stock market crash is a milestone
signpost to the brink, a bold step back-
ward to the known in time could save nine
in the abyss of total confusion worse
confounded.
We can apply the song's positive and
negative maxims to the world economy by
following three simple practical rules:
(1) A Stop Loss/Least Worst Rule to
eliminate the existing, and/or prevent the
possible, worst damage. (2) Permit stop
loss payments from the most damaged to
bribe those who benefit from the worst
to (agree to) eliminate the damage or pre-
vent the threatened. Domestically, bribe
or even blackmail payments can be nego-
tiated through American style log rolling
and pork barrel politics to shift distri-
butive (in)justices around. Internationally,
we can use the favourite American foreign
policy instrument of (3) linking stop loss
bribe/blackmail -payments into a multi-
lateral worldwide chain or system to
permit the operation of rules (1) and (2)
to eliminate negative damage and thereby
to maximise positive benefits all around
the world.
The result would be a worldwide
positive sum game to generate as yet in-
calculable positive gains. We could stop
loss/eliminate or contain huge negative
economic, social, and political damages
from all wasteful farm subsidies and many
arms expenditures and positively expand
exports and safeguard financial markets
in the industrial west. Burgeoning foreign
debts, economic depression, and some
hunger and political instability could be
contained in the third world south. Dis-
comforts from the still necessary econo-
mic perestroika restructuring and political
glasnost could be reduced in the socialist
east. The direct income benefits would be
more than large enough to finance a
World Bank type emergency slush fund to
compensate (buy/bribe off) any possible
transitional, sectoral or local losers. Any
administrative costs to run the game could
also be paid out of the same fund, and
besides existing institutions like the United
Nations, World Bank, International
Monetary Fund, etc, could be recycled to
offer their services for something as useful
as making this proposal work by pro-
viding places to calculate and negotiate
cost/benefit and bribe/blackmail pay-
ments. Basically, however, once set in
motion, this game would be automatically
powered by self (group) interest alone.
The game works like this. Let's start
with any major negative damages, like the
European Common Agricultural Policy
(CAP) or third world debt and ask who
suffers enough from these damages to pay
bribes to eliminate them. CAP and other
agricultural subsidy programmes in the
United States and Japan impose enor-
mous damages on western consumers, tax-
payers, governments, the EEC (tottering
on the brink of bankruptcy and break-up
from CAP costs), and competing agri-
cultural producers and their governments
in the south. All cajoling and tinkering
with CAP so far has failed to control, let
alone eliminate, the damage.
What to do? Simple. Let any of these,
but particularly the most damaged in
Argentina and elsewhere in the south,
make stop loss bribe payments to affluent
western (including Japanese) farmers to
abandon price subsidies and accept in-
come payments from the poor instead.
Indeed, recently impoverished American
farmers should also be permitted to bribe
European and Japanese ones. Stop loss
payments by poor farmers would substan-
tially reduce their poverty by eliminating
the damage of unfair and crippling com-
petition of heavily subsidised rich farmers
elsewhere.
What to do about farmers and their
votes? Simple. Encourage European and
Japanese farmers financially and other-
wise to protect the environment, provide
for garden plots and/or domestic tourism
on the land for urban yuppies, and in-
crease the supply of land for residential
construction at lower prices especially in
Japan. Let farmers receive their price: for
Germans, four Mercedes for those with
two, at least one Mercedes for those now
deprived of any; for others similar
appropriate/negotiated rewards, and for
all entitlement coupons for several months
annual vacation in the sunny south, the
latter would thereby also get some of its
foreign exchange payments back. Right
wing political parties in the west could be
compensated for possible losses of their
farm vote and/or their rural overrepresen-
tation by an automatic 5 per cent or other
equivalent addition to their counted votes.
Left parties dependent on labour votes
would be compensated through lower
food prices and higher employment and
union membership in Mercedes factories
and export industries (see below).
What to do about the poor southern
and American farmers that do not now
have the mon,y to pay off western
farmers? Simple. Let the Japanese advance
it to them out of their surplus. Why
should the Japanese wish to do so?
Because Japanese industry is more depen-
dent than anyone on exports to the south
and the US. Therefore, the Japanese (and
others) should be allowed to pay to
eliminate damages to their export markets
by permitting the south again to increase
its own foreign exchange earnings and
import capacity from farm and other
exports to the west and to stop the third
world and farm debt service drain. Trade
offs can balance costs and benefits within
Japan and other countries.
Elimination of farm subsidies in the
west would remove one major constraint
on production, exports and earnings in the
south; and elimination of the third world
(and perhaps American farm) debt service
would remove the other. It would be
wasteful to use Japanese surplus transfers
to the third world, as oft proposed, only
to permit the latter to service their foreign
debts. By invoking our multilateral rule
we can eliminate third world debt service
altogether (instead of just financing it
differently) and wa can eliminate the
damages from CAP and other farm sub-
sidies to boot as we have seen at the same
time. Who then would service the interest
payments on the third world (and farm)
debt to the western banks? Simple: Those
who have the greatest interest in keeping
the banks from going belly up and the
ItA -
greatest fear of any negative threat of
possible worldwide financial instability.
Their respective governments and/or
central banks would wish to do so,
especially in the United States, whose
banks are the most exposed. Of course,
government/central bank pay offs would
use the magic of the market discounted
rates on the banks' paper; and they would
finance them with part of their budgetary
savings from the elimination of farm sub-
sidies. That way, the western governments
and central banks will count double
positive gains on payments for both farm
and bank finance.
Our positive sum game would benefit
hundreds of millions around the world by
eliminating the millstone of third world
debt and farm subsidies, and their threats
to the world financial system, the survival
of the EEC common market and to liveli-
hood in Japan to boot. Indeed, the
jackpot opportunities in this game would
be so great that others may wish to play
an active hand as well. For instance, dear
Margaret Thatcher would give almost
anything to get rid of British CAP
payments and import restrictions. In our
game, she might well find advantage in
trading her Falklands card to Argentina
for a Malvinas one, which would in turn
give the latter additional capital, perhaps
irrational but psychological, to pay off
Europe's common market farmers. The
other European governments and the
EEC Commission, of course, would also
wish to support Argentina's wishes the
next time around.
Our three rules to accentuate the
positive and eliminate the negative can be
applied ever further to expand the positive
sum game. Existing western mountains of
powdered milk and butter, grains and
other agricultural stocks can be sent gratis
without spoiling the market to forcstall
immediate starvation in Asia and Africa
and improve diets in eastern Europe and
the Soviet Union. Present beneficiaries of
storage, processing, transport and other
expenditures on surplus farm products
can be compensated by payments to ship
this stuff to the south and east instead.
It should be possible to arrange other
multilateral payments to permit the real
or potentially damaged to pay bribes to
beneficiaries to eliminate damages or
dangers.
The same principle can be extended to
international politics and the elimination
of other damages and fears, rational or
irrational. The Soviet Union fears SDI
Star Wars; let them pay to have it neutra-
lised. The west fears Soviet nuclear and
conventional military strength; let them
pay to have the Soviet Union reduce it.
The United States can share their SDI
research and even deployment with its
allies and (they) with the Soviet Union.
Western Europe can send capital and
technology to eastern Europe, which can
use it to produce cheap manufactures for
the Soviet Union, which can pay for the
lot with increased thermal and reduced
military energy. The French. (and others)
are petrified by fear of a reunited Germany
and/or a new Germano-Soviet Rappallo
Rapprochement? So let the French pay to
re-establish their pre-World War I favoured
relations with Russia and interwar rela-
tions with Poland. The Balkan peoples are
most scared of the Russians and the
Balkanisation of each other? Let them
figuratively resurrect poor Archduke
Ferdinand and functionally reconstitute
the old order of the Austro-Hungarian
Empire (how many million lives would its
survival have saved?). The Greeks and
Turks feel most threatened by each other?
Let them make multilateral bargains also
involving ethnic Greeks and real Turks in
Cypress and nominal ones in Bulgaria,
not to mention ties with Russians,
Americans, Germans, Arabs and others.
The more interest groups play this
multilateral game of barter/blackmail
payments, the better is the damage con-
trol; because more interests are mobilised
and interrelated to stop loss eliminate the
negative. NIEO would remain as illusory
as ever. However, we would at least have
taken practical steps (back) toward an
(old) economic (and political?) order,
which we know from experience to work.
We would have effected an enormous
positive increase in world real income
(through lower agricultural, food, defence
and other costs and increased agricultural
and industrial production, employment,
income and exports). We could positively
increase economic and political security
in the face of threatening international
economic breakdowns, especially sincethe
Black Monday stock market crashes.
Thus,,by elimninating these new negatives
we would be accentuating the old (relative)
positives, albeit without Pax Americana.
Not even this modest proposal can offer
heaven on earth or salvation for its
poorest inhabitants. Moreover, to imple-
ment our modest proposal, we must of
course stop messing about as heretofore
with the half way houses of Mr Inbetween.
INSTITUTE OF ECONOMIC GROWTH
announces
DIPLOMA COURSE
in
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Ist August-15th December 1988
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Eligibility Officers of the Central, State/UT governments and of
Autonomous public institutions, nationalised banks,
NABARD, RBI, Public undertakings are eligible to apply.
An applicant should be a graduate; should not be more
than 40 years of age on 1st August 1988; should have
at least 2 years' experience of working in developmental
or planning capacity.
Sponsorship Governments and eligible public institutions can directly
sponsor
their officers for the course.
Seats Available 20 of which 10 are residential.
Course Fee Rs. 4500/- inclusive of computer time use.
Boarding & Lodging Rs. 4000/- (approximate): optional.
Charges
Note that the last date for receiving application including that for the sponsored
candidates is 31st March, 1988.
Prospectus of the Diploma Course available on request. Write to the Course
Director, Diploma Programme, Institute of Economic Growth, University Enclave,
Delhi-110 007.
Address the application to the Director, Institute of Economic Growth, University
Enclave, Delhi-110
007.
247