Jagdish Bhagwati: They would have to be radically redone in some respects. Like take the World Bank. Particularly now with Robert ________, who is a trade guy. Trade is something which they push, they endorse. But what have they done in order to help?
Now let me talk about the poor countries which lack funds. They finally __________ come around; not their NGOs necessarily. Because they also have people who, some of the old leftists, and some populists, and some generally misguided NGOs. And people are inflecting their own little experience; objecting to this and saying it will lead to unemployment. It will lead to all kinds of problems. What have they done to help the poor countries build up the institutional system from which they can now proceed from an earlier attitude of anti-globalization to a current attitude of pro-globalization?
We are now trying to __________ like the Soviet system which was broken up from a completely controlled system with a little bit of black market activity into a modern system where suddenly you didn’t have the institutional support for it.
So my friend Jeffrey Sachs, who is a technocrat and who writes. I’m afraid he’s going to do for Africa what he did for Russia. Because technocracy is the big bane of many economists who simply feel they don’t understand the reality, the institutional context within which you want to place these things. So even advocated shock therapy.
And of course it cost Russia quite a bit. And the reason why you could not go straight into markets like that that fast, as he was advocating, was because the whole system was built up around everything education, security, etc. being around enterprises – big enterprise.
Now you say big enterprise is going to be allowed to fail like in a market system of the United States type. You don’t have a Chapter 11 there, which is the bankruptcy law. You don’t have ___________ people getting into unemployment. They don’t have educational support. They don’t have medical support because they revolve around the factories. So that was a case; it’s a most dramatic example of how a system which went very much too rapidly from the traditional “no change” system to a modern, “change all the time” system. So they didn’t evolve.
So in the same way the developing countries were readily-sheltered. They were not getting into international trade in a big way. Now they want to because they buy the idea which people like myself and others have propagated – that trade is good for them. They’ve seen it actually work for many countries like the far eastern countries and so on. So they want to join in but they’re afraid. Because they don’t have any of the institutional systems.
Do you know that we in the United States in 1962 had our first adjustment assistance program? That’s 45 years ago. And that was during the time of the President Kennedy’s regime. And Kennedy __________ trade negotiations under ____________ auspices. And George ______ of the AFL-CIO and he, President Kennedy, jointly ____________ to buy the support of the unions and the working class – the adjustment assistance program.
So as you got into this system of international trade and more intensively, you had to put up an institutional system to assist people who might be laid off.
Now we don’t have that in the developing countries. So the World Bank should have been writing for years, and you know those guys would never listen. Finally they are beginning to think in terms of providing the technical assistance and the funds to be able to get people to come out and to venture forth, because otherwise they hesitate.
I think one of the remarkable things which just happened in the 20th century is really the growth of the NGOs [nongovernmental organizations] or the civil society. And you see that particularly in democratic countries. Like in India, there are three million non-governmental organizations, many of them mom and pop. We have 45,000, I’m told, in Russia itself.
So while they __________ throw our Carnegie and Ford Foundation and so on, the big guys, which doesn’t bother me very much, their own indigenous people are very important like they are in our own country.
To me good governance is really essential for prosperity, for a sense of belonging to the community and so on. You can belong to a community which is led by a corrupt government for example and so on.
So I think for all of that, it is very important that we have this civil society. Even if the government wants to do good things, it has no way of knowing what the problems at the ground level are. And the NGOs, a civil society provides you with the eyes and ears of good governance.
You have to pay a tax. But if you don’t know that evolution is occurring; your law is sitting on the books in New Delhi where the capital of the country. And it’s happening somewhere 50 miles from Bangalore. How are we going to find it out unless there is a little NGO or a democratic system where this is allowed to function, and so on. So I think the civil society is so important.
And we often make this point. On the right wing, the right would say, leave things to the private sector because they are close to the ground, and they have a profit motive. So they really should be left to do things. Bureaucrats don’t ever have that.
So I’m making a similar point on the side of the left, as it were, which is to say they have the altruistic motive to do good, which is to correspond to the profit motive and the right wing argument for not intervening. And they have the political; to work with local knowledge.
I think the most important thing for us is to encourage the civil society, and to support it everywhere. But this doesn’t mean that we must have Oxfam. These are gigantic businesses today. It’s worth billions of dollars being spent. Oxfam is half the size of the World Bank, believe it or not. They get into everything. They should just stick to famines and flood relief and so on. But they’re fantastic. But this is the trouble.
I would say I’m against big size, let me put it this way. Both in NGOs and people getting too big and leading to monopolistic practices and so on.
Strengthening media, democracies, and so on, that’s the only way to get good governance. And I think this is where we ought to encourage, increase activity by our system. And preferably through NGOs themselves. Because if governments get involved, immediately it creates problems.
Recorded On: Aug 14, 2007