HEALING GLOBAL ECONOMY VIA NEW FINANCIAL ARCHITECTURE

Erle Frayne D. Argonza

Magandang hapon! Good afternoon! Buenos tardes!

At this juncture, this economist, who is also a healer (pranic healer, soul healer, psychosocial counselor), will begin to articulate economic problems from a wellness vantage point. I will be calling the paradigm ‘healing economics’ as a fusion of wellness principles and economic analysis.

If we observe the ‘treatment’ applied by public policy experts on national economies today, we would see that the solutions to the problems are largely short-term ones that only mitigate economic collapse for a while. We can call them ‘band aid’ solutions to problems that are more of ‘cancerous’ in nature, and by common sense we know that band aid cannot cure cancer.

The economies of our nations have already been integrated over the last three (3) decades or so. This integration constituted the ‘global economy’ which is distinct from national economies and which manifest its own laws. National economies have become interstices or tissues of the global economy, and trying to cure ailing national economies without taking into consideration the wellness of the whole global economy will fail.

What is now urgently most needed, as a formula for enabling healthy national economies, is to put into place a new global ‘financial architecture’ as a beginning treatment. There is no way that economies can heal without the proper macro-policies and institutional frames that support them, and those policies cum institutions must be constructed at the global level.
Just by using that ‘global’ category as a yardstick, we can see that the solution of bank bailouts being rushed in the USA and echoed in Europe are not the long-term salvation to the ailment.

That bailout route was already tried in Japan in the 1990s, it was then called ‘crisis management’, and it resulted to a 12-year recession-to-low growth catastrophe. Japan became the “sick man of Asia” for a decade, which was unbelievable for observers who knew this country’s economic might all along.

If there are certain realities that we must admit as having already turned into dead carcasses, they are:

· Virtual or Bubble Economy: Economy that is founded on speculation, with values derived from out of financial values themselves and divorced from production, cannot be sustained for long. It is finally DEAD. Only fools would still think that reviving it, without regulating and/or criminalizing the economic predators that thrived on it, is the soundest healing work preferred. Nobody needs to heal a dead thing, just bury it deep below the ground, lest you create a zombie or vampire out of it.

· Free Market of Currencies. Treating currencies like commodities that are tradable without sufficient regulation, is voodoo paradigm of ‘monetarism’. This is now DEAD. It can never work, it doesn’t, and will never work under any given context. Free market doctrine (laissez faire)), in the first place, was long dead. It was a doctrine that was enforced by the British Empire, through the “power of the gun,” and supported the slave trade business. To revive such a doctrine in the current context—guiding trade and exchanges in the monetary-currency markets—is plain voodoo practice, as it fattens the purses of economic predators at the expense of national economies and marginal social sectors.

The route to strategic healing, which combines ‘preventive’ with ‘curative’ treatments, is through a new ‘global financial architecture’. This can be and should be done most urgently, as the carcasses are now spreading havoc of ailments across the planet, through a global conference of all the nation-states. Through this conference, proper diagnostics can be done, with the help of top experts, including those representing marginal sectors, and proper treatment can also be conjured.

An outline of agenda items for deep reflections in such a treaty-making conference would be as follows:

· Shift Back to Regulated Trading of Currencies/Monies. Money is the lifeblood of the economy. As such, no private group or whatsoever should be allowed to play it like gambling toys just to fatten their already fat pockets. Private stakeholders that gamble in the currency markets are like cancerous corpuscles in the blood vessel, their operations must be well regulated and certain trading activities declared as banned.

· Securitize Currencies with Precious Metals. A reconstruction of the gold standard should be done most quickly. This system was junked in 1971 yet, and look at the catastrophic result of its folding up. Not only gold, but certain other precious metals and crystals, such as diamonds, can be declared as securitization measures to guide money production within any country at any given time.

· Fixed Exchange Rates. National currencies are still around. In no way should they be forcibly junked in favor of a global currency, which is too premature a measure. Within a period of transition, of say 25 years, national currencies should be the chief legal tender, exchangeable based on fixed exchange rate policy.

· Tobin Tax on Cross-border Financial Transactions. All cross-border financial-monetary transactions, done as matter of business engagement, should be imposed a Tobin Tax, the amount of which will be defined in the conference. The revenues generated from such tax will then be used to fund the United Nations and its attached institutions (UNESCO, WHO, ILO, etc). Through this measure, all cross-border transactions can also be monitored, making it easier for international enforcers (e.g. Interpol) to counter-check sabotage and related criminal operations by predators.

· Ban or Criminalize Excessive Speculation. Excessive speculation of currency markets and related financial transactions must be banned and declared as crime. Those engagements of ‘currency attacks’ that have wrecked many economies are on top of the agenda for criminalization. Till these days, they remain unchecked, due to free trade principles in currency and financial trading.

· Ban Banks from Derivatives Operations. Banks should operate largely in support of developmental and re-development pursuits. In no case should any country be allowed unrestrained speculative and/or derivatives operations that leave the banks vulnerable to collapse.

· End Usury One and For All. For as long as usury remains, poverty and underdevelopment will never end, while once wealthy economies can crash back into 3rd world status. Usury must be criminalized as an evil act, thus ending once and for all a long history of predatory hoarding.

· Create New Global Financial Institution. To enforce and monitor the new financial architecture put into place, a new global financial architecture or GFI should be installed as well. The international Monetary Fund is a total failure, even as it was used as a mere tool by predatory financiers to extract usurious rents and disable national economies through immoral austerity measures. In the long run, this GFI can be considered as the infrastructure for a global central bank, should cooperating states approve it in principle.

Incidentally, the clamor for installing a new financial architecture is now getting stronger by the day. I am very optimistic that this will be concurred in due time, for failure to do so would prolong the agony of global economic collapse and decline. Let us cross our fingers that it will be called for very soon.

[Writ 28 November 2008, Quezon City, MetroManila]

IS THE WTO DEAD? WHAT SAYETH THINE PHYSIOCRATS?

Bro. Erle Frayne Argonza

The World Trade Organization may be dead in the woods. We may need to prepare dirges as a form of respect for this deadwood institution. It isn’t working at all, this idea of global trade regime galvanized as WTO and the GATT before it.

Probably the idea of ‘globalization’ as proposed by contemporary thinkers, which concretely incarnated in the institution of the WTO, may have been badly incubated. It’s like forcing antiquarian ideas of free trade—writ by physiocrats of France (Quesnay et al) and Scotland (Adam Smith, et al)—unto a context that is altogether different.

Remember that free trade could have never worked at all without imperialism, that Smith’s idea of free trade was in fact a policy project of the British East India Company which had Smith on its payroll. Without imperialism, free trade can’t be enforced.

That is why there is another section of the world population called the ‘fair traders’ who opt for another paradigm track in place of ‘free trade’. I am among these sub-population of fair traders, no matter how odd fair trade may be.

Below is a news item released by the economist Lyndon LaRouche Political Action Committee, which pronounced the death knell on the WTO.

[18 August 2008, Quezon City, MetroManila. Thanks to Executive Intelligence Review database news.]
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WTO Dies, Brits Mourn

July 30, 2008 (EIRNS)—This release was issued today by the Lyndon LaRouche Political Action Committee (LPAC).

Yet another bankrupt institution of the British imperial world order of free trade and globalization bit the dust this week, with the thunderous collapse of the Doha round of trade liberalization talks of the World Trade Organization (WTO). In mid June, the British blueprint for European fascism, the Lisbon Treaty, likewise was buried by a plebiscite in Ireland.

European Trade Commissioner Peter Mandelson, a top British imperial mouthpiece, summarized his master's voice on Doha's decease: "We missed the occasion to put into place the first world pact to redraw the world order." Visibly emotional, Mandelson added: "I'm afraid that on this subject an irresistible force met an unmovable object in the negotiating room, and the rest is history."

The "unmovable object" was the resistance of the majority of the world's population—as represented by the governments of India, China, Indonesia, and 90 other nations—as well as substantial political forces in Europe and elsewhere, that refused to go along with slitting their own economic throats in order to please London.

For example, French President Nicolas Sarkozy, according to a highly annoyed Le Monde, reached the director general of the WTO, the Frenchman Pascal Lamy, on the phone on July 28, to tell him that, "in the name of the European people, he could not give his support to the agreement as it was." Le Monde complained about Sarkozy's activism, who in three days called numerous European leaders, including German Chancellor Angela Merkel and British Prime Minister Gordon Brown, to explain his point of view. "France joined a 'coalition of the willing' whose objective was to increase the pressure on M. Mandelson," Le Monde wrote, "at the price of worsening divergences which appeared in the European camp. Along with Paris, there were eight countries, among which Italy, Ireland and Poland are members of the circle" which didn't accept the deal crafted by Mandelson.

The entourage of Mandelson, who refused to come to Paris when Sarkozy summoned him for discussions, is nagging: "France is putting into question the institutional mechanism... In the end, France will find itself alongside Cuba, Venezuela and Argentina," Le Monde sputtered, "and Germany will become the real pivot of the European Union."

Other international financial media also engaged in moaning and hand-wringing over the WTO demise. The July 30 Wall Street Journal ran an article headlined "Global Trade Talks Fail As New Giants Flex Muscle," in which they confess that the failure "leaves the so-called Doha Round of talks dead in the water... The setback could also signal an end to some 60 years of continuous expansion of global free-trade deals." And the Financial Times ran an article with a headline that just as well could have applied to the Lisbon Treaty collapse six weeks ago: "Negotiatiors Sift the Debris for Signs of Hope." They confess that none could be found.

TRADE & HUNGER: SALVING HUNGER VIA TRADE POLICY

Bro. Erle Frayne Argonza

Let me continue on the issue of hunger, which many politicians are raising howls this early in time for the 2010 polls. The tendency right now, with politicians’ short-sightedness and poverty of wisdom, is that hunger will be perpetuated and sustained even long after the same politicians are all dead.

In the study on fair trade & food security I did for the national center for fair trade and food security (KAISAMPALAD), I already raised the howl about hunger and recommended policy and institutional intervention.

Since other experts, notably nutritionists, already highlighted many factors to hunger and under-nutrition, such as lifestyle problems, economics, and lack of appropriate public policy, I preferred to highlight in that study the factor of trade on food insecurity and the hunger malaise. Let me cite some cases here to show how trade and hunger are directly related:

· Immediately after the termination of the sugar quota of the USA for Philippine-sourced sugar in the early 80s, the domestic sugar industry collapsed. 500,000 hungry sugar workers and their dependents had to line up for food, a tragedy and calamity that shamed the country before the international community. Till these days, the trauma caused by that ‘line up for porridge’ solution remains among those children of those days who are now adults, one of whom became my student at the University of the Philippines Manila campus (a girl).

· Two years ago, a cargo ship carrying PETRON oil to the Visayas got struck with leaks and a tragic spillage covering wide swaths of sea waters. The island province of Guimaras suffered catastrophically from that incident, its economy was as bad as a war-torn economy for one year. Its marginal fishers couldn’t fish for at least one year as the sea spillage had to cleaned up. The hunger and under-nutrition caused by that tragedy is indubitably related to a trade activity: oil being transported to a predefined destination.

· At the instance of trade liberalization on fruits upon the implementation of a series of GATT-related and IMF-World Bank sanctioned measures that began during the Cory Aquino regime, the massive entry of apples and fruit imports immediately crashed tens of thousands of producers of local mangoes, guavas and oranges, as domestic consumers (with their colonial flair for anything imported) chose to buy fruit imports in place of local ones. Economic dislocation and hunger instantly resulted from the trade liberalization policy.

The list could go on and on, as we go from one economic and/or population to another. What is clear here is that trade measures and activities do directly lead to food insecurity and the attendant problems of malnutrition and hunger. In the case of the Guimaras oil spillage calamity, humanitarian hands such as the Visayan provinces and Manila’s mayors’ offices, added to private and NGO groups, quickly moved to help the affected residents. Of course the PETRON itself took responsibility for the spillage, clean up, and offered humanitarian help as well. But did trade stakeholders ever paid for the hunger malaise suffered by the sugar workers and families, fruit small planters, and other families in the aftermath of shifting trade policy?

A strategic solution to trade-related hunger would be to constitute a Hunger Fund, whose funds shall come from at least 0.1% of all tariffs (on imports). A 0.1% tariff alone today translates to P800 million approximately, or close to $20 Million. This can serve as an insurance of sorts for trade-induced hunger. The funds will then be administered by an appropriate body, comprising of representatives from diverse sectors and headed by a nutritional scientist of international repute (e.g Dr. Florencio) rather than by a politician or ignoramus species.

Furthermore, insurance groups here can begin to innovate on food production-related insurance to cover force majeure damages. Cyclone insurance and earthquake insurance would be strong options for agricultural producers, even as other options can be designed most urgently.

I would admit that trade-related hunger and its solutions are practicable for the productive sectors of our population. There are 2.3 million street people today who comprise the relatively ‘unproductive sectors’, who all suffer from hunger. This need to be tackled as a distinct sector and problem, and discussed separately.

[Writ 28 July 2008, Quezon City, MetroManila]

MANILA’S EMERGING OBESITY: IGNORE OR ADDRESS IT?

Bro. Erle Frayne Argonza

Nutrition-related issues and problems in the Philippines constitute a long list. Among all the related issues and problems, hunger stands out as the most highlighted today. While there is no question about highlighting hunger and addressing it with determination, over-focusing on this single issue tends to mask the other issues involved.

Among the emerging issues and problems in nutrition, I would handily pinpoint obesity as the most focal. Needless to say, it challenges development stakeholders to highlight the issue as well, and address it on the same level as hunger is being addressed today. Addressing it would mean resorting to public policy tools, strategies and programs at a national level, and creating necessary institutional frames to accelerate the problem’s solution.

While doing the study on fair trade & food security for the KAISAMPALAD in 2005 (this NGO is a national center for fair trade & food security), I stumbled upon both problems of hunger and obesity. At that time, the latest data from the Social Weather Stations regarding hunger indicated a 12% incidence, a figure that I found alarming as anything past the 8.5% index is considered significant. So I included the hunger issue among those food insecurity ailments that must be salved pronto, recommended policy measures, and even recommended the formation of a Hunger Fund as the multi-stakeholder executor of the anti-hunger mission.

The same study made me stumble upon the findings of nutritionists of the state’s Food and Nutrition Research Institute, which indicated a 25% obesity at the turn of the millennium. That average had its expressed distribution among age groups, with varying indices per age bracket. What was alarming at that time was the 25% Phliippine obesity rate was already 5% above the global average of 20% (the USA’s was 66%).

While I was aghast at the obesity incidence, admittedly I wasn’t prepared to tackle it then, and so I remained silent about the matter in the final research report, save for citing indices of over-weight across age brackets. Today the obesity incidence had risen well above the previous 25%, and certain popular media estimates indicate well pass the 30% mark already (we still need some more update nutrition research on the subject).

Obesity is markedly higher than hunger in the Philippines, surpassing the latter by over double the incidence. The problem with hunger studies is that the methodology is often subjective, since they employ surveys (e.g. asking the informant if s/he has been eating sufficiently or not. In contrast, obesity measures are objective and very exact, as calibration entails the use of weighing scales administered by licensed nutritionists.

I admit that I still am relatively unprepared to tackle the issue as of this day, that is as a development issue. I can only think now of the typical lifestyle intervention to address it, such as combining physical regimen with diet program and a total lifestyle change. Being athletic and a health buff (I was formerly Silver Medalist in national powerlifting –middleweight division), I often offer myself as a prototype of an optimally balanced physical-nutritional wellness person, even as I can easily lecture on lifestyle change and personal intervention to address obesity.

I would end this piece by tossing the query to my fellow Filipinos in the country and to friends overseas: will Manila continue to ignore obesity altogether?

[Writ 28 July 2008, Quezon City, MetroManila]

US WATCH: AGRICULTURE DECAYS, BIOFUEL MATTERS MOST!

Bro. Erle Frayne Argonza

Agriculture remains to be among the most protected sectors of the US economy. Enough to cause ceaseless chagrin on the members of the WTO, who have been demanding that the EU-USA-Japan trilateral belt better play by the rules and remove the trade barriers in agriculture.

But the overall alarming trend in America’s agriculture is the rapid shrinking of arable lands altogether. Lucky enough that America is blessed with millions of acres of arable land, but the liberalization of land use conversions affected this mighty economy strongly like in other countries. Prime agricultural lands are being transformed into commercial and residential lands, most specially those southern regions that practically fed the whole America for nigh centuries long.

Agriculture is following a general trend of economic decay. The historic practice of mono-cropping alone had already created havoc on the soil quality in many places across the US. Compounding the decay problem is the pressure by WTO members for the sector to bring down the trade barrier, thus possibly bringing in floods of cheap food imports from Europe and the south.

Just recently, the inflated marketability of biofuels led many a planter to shift to massive corn production, for the sole purpose of raking profits on alternative fuels. Of course, many hedge funds and enthused investors had cashed in on the biofuels craze, and news came out that even Bill Gates had invested in this ‘greenfield’ energy source.

Estimates put the amount of corn planted to biofuels as more than enough to feed over 110 million people. That’s a lot of mouths to feed for sure! But feeding mouths is hardly the priority in the US agriculture today, the core focus being the next round of looting on the consumers’ purse by driving food prices upwards both due to the biofuels craze and speculation on food stocks.

So, what say you, voters of America? Let’s just hope the political bigwigs contesting the presidency will indeed take the interest of ‘food security’ at its core. Failing to do so, America itself might end up with inflated food prices in the couples of years ahead, and believe it or not, the Depression era of seeing people without food on their plates may come back. The difference being that the Great Depression was only quite temporary, while this coming ‘food insecurity’ will be around for a very long time.

This brings to mind what the late John Meynard Keynes declared cryptically, “in the long run, we shall all be dead!”

[Writ 06 June 2008, Quezon City, MeroManila]