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Friday, May 28, 2004

Globalization Critic Greg Palast: Trustworthy?

Responding to my request for enlightenment about the crimes of the World Bank and IMF, commentator Sal Magallanez points me to the book "The Best Democracy Money Can Buy" by BBC and Guardian reporter Greg Palast.

At first, this seemed like a good tip. Palast seems to be knowledgeable: before becoming a reporter he earned a University of Chicago MBA and worked in utility regulation. Further, my very own mother has praised his journalism (about Florida's purging of black voters from the rolls in the 2000 election). But I looked at Palast's journalism and concluded that his writings are nihilistic rants that can't be trusted.

I'll reserve elaboration on why I think Palast's writings are nihilistic rants for another time, except to note one of the few positive suggestions about globalization he has to offer: "the solution to world poverty and crisis is simple: remove the bloodsuckers." "Bloodsuckers," needless to say, refers to the IMF. One could imagine that this is shorthand for some positive vision, perhaps for a world socialist revolution or something, but I couldn't find any sign of this vision in his writings. But let me say why I think his writings can't be trusted.

In an article in the Guardian, "Who Shot Argentina?" Palast describes an agreement between the IMF and Argentina, during the currency crisis of late 2001,
The IMF is never wrong without being cruel as well. And so we read, under the boldface heading, "improving the conditions of the poor," agreement to drop salaries under the government's emergency employment program by 20%, from $200 a month to $160.

Helpfully, Palast's web site provides a link to the IMF document [1.3 meg pdf]. I ask you, is Palast accurately summarizing this passage?
In the social area, the government's efforts focus on improving the conditions of the unemployed and the poor. The government has increased budget allocations under the temporary employment programs, including the Trabajar program and the Emergency Employment Program (PEL). The government is also improving the allocation of the resources under these programs by making the selection of beneficiaries more transparent and by focusing on the head of household. To broaden the scope of the programs, entitlements under the Trabajar program have been lowered from Arg$200 to Arg$160 a month." [item 24, page 8 of the pdf]

Let's leave aside how much responsibility the IMF, as opposed to the Argentinean government, bears for this policy. Palast doesn't discuss this question at all, heaping all blame on the IMF.

Is it really "cruel" to expand an emergency workfare program to cover more people, even if the amount per worker is cut? And why doesn't Palast admit that the government "increased budget allocations?" Palast leaves out this crucial fact, that spending on employment programs went up, even though it appears in the very document that he claims to be discussing.

In fact, it turns out that the Argentina's emergency employment program was hugely expanded during the crisis. Expenditures increasing by about 500% in real terms. Almost 2 million more people enrolled. In fact, the Argentinean government "cruelly" expanded overall spending on the poor during the crisis. See this World Bank report (pdf pages 39-42) [2.8 meg pdf].

I could go on. For example, compare the basically approving description of Steve Hanke that Palast presents in his article, to Paul Krugman's description of this right-wing crank who tried to export Argentina's disastrous currency peg to Indonesia. Why does Palast like Hanke, despite Hanke's strong support of the currency peg that Palast hates? Because, as a libertarian, Hanke opposes the IMF.

So, why should I read any more? Palast says aid to the unemployed was cut, when it was actually greatly increased. Palast says Hanke opposed the currency peg, when he actually was an extremely prominent supporter.

Granted, I think the IMF policy in Argentina was terrible, and Palast make some valid criticisms too. But all his valid criticisms are borrowed from Stiglitz, and I can trust Stiglitz not to distort the facts or tell me that black is white.

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