Monthly Archives: August 2010

Towards Third World America

Arianna Huffington’s most recent book, Third World America, is generating some waves in the blogosphere. In her book, Huffington highlights the many challenges facing the United States, from crumbling infrastructure to rising inequality and declining social mobility, and argues that the global recession is not an one-off event but part of a general trend of increasing poverty and inequality in the country. As Simon Johnson argues at Baseline Scenario, this is also the theme other well-received books, including one by former IMF Chief Economist Raghu Rajan and former U.S. Labor Secretary Robert Reich. James Kwak contends that increasing inequality undermines the political institutions and social structure of the United States, effectively weakening the institutions de Tocqueville viewed as central to democracy in American.

A home in Arizona.

A home in Arizona.

Indeed, by nearly any measure, inequality in the United States is higher today than it has ever been; more unequal than even the days of the robber barons or the Great Depression. The average worker has seen their wages stagnate since the late 1970s, while the proportion of wealth controlled by the top 1 percent has increased dramatically. But does this make the United States a third world country?

A home in Burkina Faso.

A home in Burkina Faso.

The term “third world” came into popular usage during the Cold War. As originally articulated by the Non-Aligned Movement, it was intended to highlight a “third way,” an alternative to both the system of free market capitalism espoused by the United States and the socialism of the Soviet Union. Over time, the term took on additional meaning, implying a specific (low-tier) position in the global economic order. The category of “Fourth World” was also added to encompass countries like Somalia, Bangladesh, or Malawi—countries at the bottom of the global distribution of wealth.

The defining features of the third world were not just the existence of high levels of inequality, though this was certainly one feature. In addition, the term third world also implied a history of colonization and a heavy reliance on extractive industries and raw commodity exports for foreign exchange earnings.  As outlined at the 1955 Bandung Conference, the term “Third World” also implied a commitment to non-alignment, anti-imperialism, regionalism, and support for a new international economic order.

During the Cold War, the world divided into three groups. The United States and its allies were collectively referred to as the First World; the Soviet Union and its allies become the Second World. The remainder became the Third World. The end of the Cold War suggested that the categories were no longer relevant, and many scholars abandoned the term Third World in favor of new language: the global south, the developing world, the less developed world, and so on. But none of these categories accurately captured the common political agenda implied by the concept “Third World.”

The use of Third World to describe the United States today similarly ignores that history. The United States certainly faces many challenges today, including all those outlined by Huffington. The implications of these challenges are certainly dire, culminating, perhaps, with the collapse of American democracy as Kwak argues. But using the term “Third World” to describe the United States strips the countries which rightly belong to the “Third World” of their common sense of history. Perhaps we should avoid its use in this context.

Quick Updates

Duncan Green explores the four types of African economies, noting that Africa’s two most famous success stories (Botswana and Mauritius) don’t fit neatly into any of the four categories.

Michael Totten asks “What’s up with Turkey?”

Raj Patel examines who might have been responsible for Lumumba’s death.

Stephen Walt explains what he learned from Jared Diamond.

Blogging for Andrew Sullivan’s Daily Dish, Zoe Pollock reports on a South African pastor who has come under criticism for preaching AIDS awareness.

HT to Duncan Green for pointing out the new data visualization software for the World Bank’s World Development Indicators. Fun with Data!

HT to the Guardian’s Datablog  for its link to the Alphaworks site analyzing aid pledges to address the floods in Pakistan.

The Future of the British Commonwealth

Queen Elizabeth on a State Visit to Australia

Queen Elizabeth on a State Visit to Australia

With a close election battle looming in Australia on Saturday, Prime Minister Julia Gillard proposed Australia end its recognition of the British monarchy when the reign of Queen Elizabeth ends. Like sixteen other members of the Commonwealth Realms (the others being Antigua and Barbuda, the Bahamas, Barbados, Belize, Canada, Grenada, Jamaica, New Zealand, Papua New Guinea, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, the Solomon Islands, Tuvalu, and the United Kingdom), Queen Elizabeth II is the head of state for Australia. These countries divide the ceremonial post of head of state [glossary] from the formal positions of leadership held by the head of government [glossary], usually the prime minister.

The division of powers between a ceremonial head of state and a head of government with real powers is common. Indeed, there are 44 countries around the world (the majority in Europe) which maintain a monarchy vested with ceremonial authority.

As Joshua Keating notes in his post on the Australian debate, the current generation of monarchs, which includes Queen Elizabeth II as well as King Juan Carlos I of Spain, Queen Beatrix of the Netherlands, and King Carl Gustav XVI of Sweden), retains a good deal of popularity. But future Kings and Queens will likely face a great deal of public skepticism about their relevance and cost.

Australia rejected a proposal to establish a republic [glossary] in a previous referendum in 1999. But the prospect of King Charles appears to be lending a renewed impetus for reconsidering the previous proposal.

But is there still a need for a ceremonial head of state? In most presidential systems, the elected president performs both the day-to-day functions of the head of government as well as the ceremonial duties of the head of state. For its detractors, though, such a system lacks the stability guaranteed by a (presumably) non-partisan ceremonial head of state. Australian Prime Minister Julia Gillard’s current proposal may be nothing more than simple electioneering. But it does raise some interesting questions about the viability of the next generation of European monarchs.

Quick Updates

In an article for the Atlantic, Jeffrey Goldberg puts the odds that Israel will attack Iranian nuclear facilities in the next twelve months above 50:50, and John Bolton is encouraging them to do it sooner rather than later.

Chris Blatman comments on the challenges of authoritarian development, noting that for every Lee Kuan Yew of Singapore, there’s several Mobutu Sese Sekos in the Congo. He also offers some good foreign policy advice.

At Due South, Abbi Buxton calls fair trade the new gold standard.

Duncan Green discusses the future of the world over the next generation—and, as he notes, it’s pretty scary.

Robert Reich discusses the challenges of China’s rise as an economic superpower.

Stephen Walt offers some good news in international relations.

Quick Updates

Fareed Zakaria‘s lastest analysis confirms my assessment of Gates’ proposed Pentagon reforms. His analysis was posted today to the CNN website, and makes for interesting reading. Among the highlights:

Gates is trying to get the Pentagon to understand that it’s going to have to do more with less, which is frankly both brave and intelligent of him. It is absolutely necessary, it’s intellectually right and it’s politically brave, which is something you can’t often say about something coming out of Washington.


People don’t realize this, but now, in constant dollars, the defense budget is 30 percent higher than in 1968, the peak of the Vietnam War. It’s higher than at any point in American postwar history in real dollars. It has also created a mismatch, a misalignment of American foreign policy. The defense budget is 13 times larger than all civilian foreign policy budgets combined; that is, the State Department, USAID, the Commerce Department, everything put together. There are more members of the military in marching bands than there are foreign service officers in the United States government. The Defense Department spends more money on fuel than the State Department’s entire operating cost.

The brief interview is definitely worth a read. You can find the whole interview on the CNN website.

Why the Gates Military Reforms are Necessary…And Why They Probably Won’t Happen

F-22 Raptor

The F-22 Raptor

Military budgets in the United States have long been sacrosanct. Even while funding for social programs is cut, military spending has generally been safe. There are lots of reasons for this. Republicans generally favor higher military spending, so are loathe to cut defense spending. Democrats are perpetually fearful that Republicans will paint them as soft on defense, so they similarly don’t generally want to cut military spending. On top of that, defense programs Consequently, defense spending has historically been a bipartisan issue, one of the few areas where Congressional Republicans and Democrats agree. Indeed, they agree so much, that they often overspend. The 2010 defense budget, for example, was $680 billion (not including “emergency” allocations for ongoing wars in Iraq and Afghanistan. The $680 billion base budget was $16 billion more than the Defense Department requested… In other words, the Department of Defense—the military itself—said we need $664 billion to do our job (and anyone who’s ever studied the politics of the budget…or made a budget themselves…knows that this figure likely included padding to ensure the real amount they needed would be allocated even if trimmed a bit) and Congress said, no, we think you need more…how about $680 billion instead? The net effect of this trend is a huge defense budget. In 2009, the United States accounted for 46.5 percent of all military spending worldwide. In other words, the United States spends about as much on its defense as all other countries in the world combined. It spends six times as much on its national defense as the second-ranked country (China, which spends approximately $100 billion per year on national defense). Unfortunately much of this spending is directed towards threats from the Soviet Union. Ballistic missile defense programs, stealth fighter programs, and the like are all intended to address a threat which no longer exists. Bill Gates’ proposed changes to the Pentagon’s budget are intended not to cut defense spending but to shift priorities. These reforms include cutting the number of flag officers (generals and admirals), reducing the number of civilian contractors, and asking the armed services to look for internal savings which they will be able to keep and reinvest in other priorities. Gates hopes, for example, to allocate spending away from the F-22 Raptor program, which the Pentagon has long asked to eliminate, and shift it towards drone procurement. But Gates faces an uphill battle. Despite calls from the Pentagon to cut the F-22 program, Congress has insisted on increased procurements and expanded funding for the program. Does Congress fear a Soviet invasion? Is Red October just around the corner? No. While members of Congress couch their allocations to the F-22 program in terms of national defense, the real issue is likely pork-barrel politics. Components of the F-22 are produced in 44 states, providing high paying jobs in Congressional districts across the country. Other big-ticket defense projects have been difficult to kill for similar reasons. So while Gates may make some progress in restructuring defense spending, it’s unlikely that real shifts in defense spending intended to address the needs of the twenty-first century will take place. In critiquing the F-22 program, Gates noted that the fighter had not been used in a single operation in Iraq or Afghanistan. Indeed, the fighter jet had yet to see combat operations anywhere. Why let that get in the way? In 2004, then Secretary of Defense Don Rumsfeld, responding to criticism from soldiers in Iraq complaining about poor or missing combat equipment famously responded, “As you know, you go to war with the Army you have. They’re not the Army you might want or wish to have at a later time.” But as long as the politics of defense spending continue to be guided as they have, we will never have the army we want. The defense challenges faced by the United States in the twenty-first century do not require expensive fighter jets designed to fight the Soviet Union. It requires more flexible forces working in conjunction with humanitarian, educational, and diplomatic initiatives.

Do Democracies Grow Faster?

Meeting of the Chinese Communist Party

Meeting of the Chinese Communist Party

In the 1980s, there was considerable debate about whether authoritarian or democratic governments were better for economic development. The discussion centered on the economic performance of authoritarian states in the developing world, including countries like South Korea and Argentina, which seemed to experience a far faster pace of economic growth than democratic counterparts like India. Indeed, this observation led some to conclude that rapid economic development necessitated authoritarianism, as democratic governments lacked the popular independence necessary to enact dramatic economic reforms. 

The debate over authoritarian development re-entered the spotlight yesterday, when Dani Rodrik posted an article questioning the link in Russia. According to Rodik, Vladimir Putin’s policies in Russia undermine prospects for economic growth. Rodrik observers that, contrary to the literature that emerged in the 1980s,

Democracies not only out-perform dictatorships when it comes to long-term economic growth, but also outdo them in several other important respects. They provide much greater economic stability, measured by the ups and downs of the business cycle. They are better at adjusting to external economic shocks (such as terms-of-trade declines or sudden stops in capital inflows). They generate more investment in human capital – health and education. And they produce more equitable societies.

Authoritarian regimes, by contrast, ultimately produce economies that are as fragile as their political systems. Their economic potency, when it exists, rests on the strength of individual leaders, or on favorable but temporary circumstances. They cannot aspire to continued economic innovation or to global economic leadership.”

But the prospects of rapid economic growth—a la the Chinese model—are often hard to ignore. Still, it is possible to envision different paths. The story of Kerala State in India represents one such alternative. In Kerala, a strong emphasis on the provision of basic needs has led to a prolonged period of economic stagnation, but has also led to dramatic improvements in literacy, nutrition, health care access, and declining child mortality. More recently, according to Duncan Green, Venezuela has successfully reduced inequality, While Rodrik may be correct to conclude that democratic developers like Brazil, South Africa, and India are likely to outpace authoritarian developers like China and Russia, the political benefits of calling on people to sacrifice a little freedom for a little prosperity are clear, if not just.

Quick Updates

Robert Reich worries about the declining middle class in the United States.

Steven Walt argues that nation building should begin at home.

Brian Fung at Foreign Policy notes that North Korea now hopes to pay its debts in ginseng.

Daniel Drezner wonders if there is any conspiracy theory that doesn’t involve George Soros?

Duncan Green rightly asks if the global economic crisis will undermine the Millennium Development Goals.

Raj Patel wonders what the real cost of the Gulf oil spill will be.

The Challenge of Dumping

Cotton Production

Cotton Production

In international trade law, dumping is defined as selling goods below the cost of production plus transportation and handling. Under World Trade Organization rules, dumping is illegal. But countries continue to engage in the process, as demonstrated by the large number of cases involving accusations of dumping heard by the WTO’s dispute resolution panels.

Perhaps the most high-profile dispute in recent years has been the dispute between Brazil and the United States over U.S. cotton subsidies. Brazil contends (and the WTO panels have upheld twice, first in 2005 and again in 2008) that U.S. cotton subsidies are illegal under WTO rules because the sale of such subsidized cotton represents dumping. The cotton dispute is one of the key sticking points in current Doha Round of WTO talks, as a number of developing countries, including Brazil, have demanded the elimination of U.S. cotton subsidies which depress global cotton prices. According to a report prepared by the International Centre for Trade and Sustainable Development, global cotton prices would be 6 percent higher absent U.S. subsidies. This represents a significant increase in the livelihoods of poor cotton producers in the global south.

A new study, prepared by Timothy Wise for Woodrow Wilson Center, analyzes the impact of agricultural dumping on Mexican farmers under NAFTA.  Looking at agricultural production and trade from 1997 to 2005,Wise concludes that Mexican producers suffered across a number of agricultural sectors, losing some $1.4 billion per year over the course of the study. According to Wise, this represents more than 10 percent of the value of all Mexican agricultural exports to the United States.  Maize production was particularly hard hit, as maize imports from the United States were priced, on average, 19 percent below production costs, leading to a 66 percent decline in real producer prices for maize during the time under study.  Wise concludes that

Mexico certainly serves as a warning to developing countries considering agricultural trade liberalization. The case also highlights the weakness of international rules for defining and disciplining agricultural dumping. That weakness, and the vulnerability of developing-country farmers to import surges, makes all the more reasonable developing-country demands in the stalled Doha Round negotiations for strong Special Product measures to protect key food crops and effective Special Safeguard Measures to protect against import surges. Until agricultural dumping can be disciplined effectively, developing countries must retain the policy space to defend themselves. Mexico gave up most of its defenses under NAFTA. Farmers are paying a high price.

Dumping—or more generally agricultural subsidies and trade—represents one of the key barriers to the conclusion of the Doha Round of international trade talks. Intended to address some of the major imbalances in international trade, the Doha Round was intended to be the first round of international trade talks focused squarely on international development. But differences between the developed world, led primarily by the European Union, the United Sates, and Japan, and the developing world, led by China, Brazil, India, and South Africa, have paralyzed talks since 2008, and the prospect of rekindling talks appears dim. The major outstanding issues remain:

  • Agriculture, especially agricultural subsidies and dumping: Massive subsidies by the United States, Japan and the European Union continue to depress global agricultural prices, undermining production in the global south.
  • Access to essential medicines: Establishing conditions under which developing countries can reconcile meting public health needs with the strong system of intellectual property protections afforded under World Trade Organization rules.
  • Special and Differential Treatment: Determining if developing countries will be afforded different treatment under some WTO rules.

Wise’s full report, Agricultural Dumping Under NAFTA is available online.

The Power of Norms

Unexploded Cluster Munitions

Unexploded Cluster Munitions

The Convention on Cluster Munitions, which has now been adopted by 108 states, officially came into force on August 1. The Convention bans the stockpiling, use and transfer of most cluster bombs, and provides a mechanism for clearing unexploded cluster munitions.

Cluster munitions have long been the target of humanitarian organizations. Because cluster munitions release a large number of (often brightly-colored) bomblets scattered across a large area, many of which remain unexploded for long periods of time, cluster munitions often wind up affecting civilians. Indeed, according to Handicap International, 98 percent of people injured by cluster munitions are civilians, and nearly one-third are children.

Although the Convention will not enter into force, many of the world’s largest military powers, including eh United States, Russia, and China, have refused to sign the treaty. The United States maintains that cluster munitions are “legitimate weapons” with “a clear military utility in combat.” But despite U.S. resistance, Anna MacDonald, the head of Oxfam’s Control Arms Campaign, asserts that the convention will be important in limiting the use of cluster munitions in conflict. According to MacDonald, “it’s instructive to look at the 1997 Ottawa Treaty banning anti-personnel landmines. The United States didn’t sign up for that either but it hasn’t produced or used landmines since the treaty came into force.”

This is an interesting assertion. What MacDonald and other campaigners are hoping for is that the United States and other non-signatories comply with emerging international norms limiting the use of cluster munitions even if they refuse to sign the treaty enforcing their ban. There is some evidence to suggest states behave in this manner. The landmine treaty, as MacDonald suggests, provides one (admittedly limited) example. States also regularly behave this way with respect to international human rights law, as the extensive literature from the field of new institutionalism demonstrates. The real question is whether or not states will comply with informal (and non-binding) norms in the context of national security.