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Globalization and its Discontents

It’s that time of year again: the G8 is meeting, this time in Kananaskis, Canada, and the protestors are out. “Their one overriding message:” as Jon Stewart said on the Daily Show last night, “we don’t have an overriding message”.

The protestors say that the mainstream news media doesn’t take them seriously, and saddles them with labels like “anarchists” which only serve to marginalise them further. This is probably true, but the fact is that it’s hard to sum up any given protestor’s opinion in a simple-to-understand slogan, and there are in any case nearly as many opinions as there are protestors. That’s why CNN, say, will bring on a right-wing isolationist like Pat Buchanan to represent opposition to the G8/WTO/whatever: he’s not representative, but at least he’s engaged in conventional political debate.

What this means in practice is that the educated public remains decidedly unclear as to exactly who the goodies and the baddies are. They might not trust the politicians, but they certainly don’t like Pat Buchanan, and a lot of the protestors seem a lot like the hippies of the 60s and 70s: haven’t we outgrown that?

After all, while the crusties and the trade unionists make lots of noise outside, the educated men in suits seem to be trying to come up with the best way to avert and/or resolve financial crises. They speak the language of the middle classes: fiscal prudence, financial market liberalisation, wanting to ensure that their money is well spent.

And every so often the WTO or IMF will seem to make some kind of concession to the protestors: more transparency here, an official mandate to bring down poverty there. So they’re listening, right?

Wrong. For the first time, we’ve been given a book which lays out in the clearest and most authoritative of terms just how misguided and destructive these multilateral institutions can be. Globalization and its Discontents is the biggest challenge to date of the IMF's hegemony, and is required reading for anybody interested in international development, emerging markets or free trade. The author, Joe Stiglitz, needs no introduction from me: one of the world's greatest living economists (he won the Nobel Prize for his work on information asymmetries; he also wrote the standard economics undergraduate textbook), Stiglitz also had the perfect vantage point from which to observe the IMF's response to the Asian and Russian crises of 1997-8: he was chief economist of the World Bank.

Stiglitz grew increasingly frustrated at the Fund's arrogant and willful refusal to listen to basic economic common sense, and eventually, rather than shut up, resigned from the Bank. He penned an explosive article for The New Republic, which formed the basis of the new book; the difference is that the book has a lot more weight behind it, and is if anything even more powerful now for refusing to pull any of the earlier punches despite the passage of a couple of years.

I think the title of the book is a mistake: Stiglitz himself makes it very clear that he's not against globalization per se, just the selfish version of it propagated by G7 trade and finance ministers. He is an economist, after all, so he's perfectly happy extolling the virtues of free trade or privatisation, so long as they happen in the right place in the economic development of a country. But he makes a very strong case that in an imperfect world, acts like tariff reduction and market liberalisation have to be considered means to an end, and that often they're more destructive than constructive.

Yet still we get the likes of Stiglitz's Columbia University colleague, Jagdish Bhagwati, writing in the accursed Economist that it's a "misconception" to say that the rich countries have wickedly held on to their trade barriers against poor countries, while using the Bretton Woods institutions to force down the poor countries' own trade barriers. Here he is defending his case:

The great thing about the Stiglitz book is that it immediately reveals this for the sophistry that it is. Bhagwati, in concentrating only on industrial tariffs, conveniently forgets both quotas and subsidies, which rich countries use to devastating effect against poor countries. (And does he exclude non-industrial tariffs as well? It's not clear.) As for the "only a third" statistic, isn't a third quite a lot? And don't you think that the reason those exports are so low is precisely because of the tariffs aimed at them?

Bhagwati even, later on in his article, manages to condemn countries for raising tariffs when they enter an economic crisis and desperately need any funds they can get to balance their budgets andmeet the IMF's fiscal targets. What Bhagwati doesn't mention is the fact that tariffs represent a vital revenue stream for smaller countries, whereas their purpose in the richer nations is much more protectionist. If you force a poor country to give up its tariffs, you have to give it some hope of making up that revenue elsewhere.

For me, however, the real strength of Stiglitz's book lies not in its responses to the likes of Bhagwati, but rather in the way it lays bare why we hear so little on a day-to-day basis about the IMF's shortcomings. The reason is that the media loves news, and usually reports on a country's economy only when something happens there. At that point, what they need is a friendly economist they can phone up and ask whether what's going on is good or bad. And the economists who get paid to follow news on a minute-to-minute basis and form immediate opinions are not the likes of Joseph Stiglitz, Jeffrey Sachs or Paul Krugman: they're the analysts at Wall Street investment banks.

And as Stiglitz points out, the main reason that the IMF behaves so appallingly towards its member countries is that it is beholden to Wall Street. (That might be changing a little now that the IMF's biggest shareholder - the US Treasury - is no longer run by a Wall Street guy, but if it's changing it's doing so very slowly.) If the IMF forces a country to open up its financial markets before being allowed multilateral funding, that doesn't benefit the country nearly so much as it does JP Morgan.

So next time you hear a pundit praising the IMF, ask yourself who they work for. If it's a bank, take everything they say with a pinch of salt.

Maxim

David Brock, meet Dave Itzkoff. Dave is a bit like you: he used to be blind, but now he sees! Except he hasn’t changed his political allegiance, he’s just quit his job at Maxim. And written a piece for the New York Press excoriating his former employer.

I didn’t quite understand Itzkoff’s article, so I went out and bought a copy of the magazine, to see if I could work out what he was talking about. I hadn’t read it since its launch, when it was basically recycled material from the UK version which didn’t really work over here. Now, the US version is an excellent magazine in its own right.

So, am I saying that Itzkoff, who ought to know what he’s talking about, is wrong? Yes and no. I certainly hate the faux-naïveté with which he writes that “I would also like to believe that someday, someone is going to publish an intelligent men’s magazine that speaks to today’s generation of twenty- and thirtysomethings without pandering to them or making excessive use of the word "dude."” Dave Itzkoff, meet Details.

The problem is that Maxim is a much better magazine than Details, and for many of the reasons that Itzkoff glosses. His main complaint is that Maxim is “one of the most slickly cynical products you’ll find on a newsstand, a continued testament to the fact that good window-dressing is all that’s needed to bring a customer into the shop, even if there’s no merchandise to be found inside.”

He then develops this observation in excruciating detail, explaining that Maxim doesn’t go in for standard magazine fare like long puffy profiles, and rather sticks with a tried-and-tested formula which is heavily reliant on spending a lot of effort on cover lines.

But actually he undersells his former self. The cover lines aren’t all that: the top one on the June issue is “SEX at first sight! Doltproof pickup tips women wish you knew” – which is a bit of a syntactic mess, really, requiring a couple of readings to understand, and in any case not likely to prompt mass buying of the magazine. Given that the word “sex” has to appear on the cover somewhere, that’s probably one of the less intelligent uses of the word: a bit like using up your S in scrabble on an 18-pointer.

Meanwhile, the content of the magazine is actually excellent. The front of the book rips along nicely, with fun, nugget-sized articles and pictures which are enjoyable to read yet at the same time light and fluffy enough that you’re happy reading on. (Advertisers in the middle of the magazine don’t want you giving up at the beginning, daunted by something large and worthy.)

There’s a lot of gratuitous babeage, of course: photos of underdressed girls which barely even pretend to illustrate the articles. But I’m not complaining, and neither are the 12 million other readers of the magazine. Loaded, which started the lad mag industry, has as its slogan “for men who should know better”, which nicely encapsulates the combination of lewdness and irony which makes these magazines work. The fact is that guys like being guys, and no one’s ever been in any doubt as to what it is that guys want.

The thing is that Itzkoff isn't even complaining about the objectification of women. Hear him cry:

Dave Itzkoff, meet Planet Earth. You want Maxim – Maxim – to “engage, enlighten and edify”? Those million people who bought Maxim at the newsstand this month because of the cover lines or perhaps the picture of that girl off the telly – you think they want edification and enlightenment? Who do you think you are, Lord Reith? Who do you think Felix Dennis is, a public servant dedicated to the education of the American male? He’s a businessman, out to make money, and he makes money by selling ads.

I was reading two magazines yesterday – Maxim and the New Yorker. I was entertained by the former, and edified by the latter. But the last thing I want is for Maxim to run 22,000-word articles on newspaper editors, or, on the other hand, for the New Yorker to run cover stories filled with juvenile double-entendres of the lowest order, such as “SAT scores aren’t the only thing on the rise at fictitious Winslow High”. Oh, wait, that cover story was by one Dave Itzkoff.

The point is that the magazine market is about filling niches. Maxim, it turns out, fills a very big niche indeed (oo-er), and I’m completely at a loss as to why Itzkoff considers this such a dreadful state of affairs.

What he wants, he says, is “a publication with content that’s challenging, that people might want to read, and if it connects with your audience, they’ll buy the magazine of their own volition, without having to be tricked into it.” (His emphasis.) What he doesn’t seem to realise is that Maxim fulfills two of his three criteria: people want to read it, and they buy it of their own volition. You can’t trick a million people into buying a magazine, and if you do, and if they’re disappointed, then they’re not going to buy it again. Maxim’s newsstand sales, however, continue to rise.

Itzkoff seems to think that Maxim’s readers are looking for “issue-oriented news features or authoritative first-person narratives,” and must therefore be disappointed every time they buy the magazine: the fact that such things aren’t found in Maxim is proof enough for him that they were tricked into buying it. After all, who would knowingly buy a magazine without an authoritative first-person narrative?

Well, I would, Mr Itzkoff, and I’ll do it again. I like a mixture of high and low in my life: I’m happy putting down a heavy political biography in order to watch Britney Spears Live from Las Vegas. What I don’t want is Britney suddenly putting on a sober suit and lecturing me on international geopolitics.

What would be the purpose of running longer features in Maxim? Could Maxim do them better than anybody else? Maxim is, at the moment, the best magazine at what it does in America. If you don’t like doing that thing, then, fine, quit to join Spin instead. But don’t try to spin your own preference in magazines as an industry-threatening dilemma.