Accessibility links

Western Press Review: International Economics Looked At

  • Don Hill

Prague, 6 April 2000 (RFE/RL) -- Nine years ago in the United States, communication advisers to presidential candidate Bill Clinton focused on his message by continually reminding each other, "It's the economy, stupid." Something like that is going on now internationally. Whatever the topic -- e-mail, Microsoft, European Union, developing nations, even farming -- press commentary is focusing on international economics.

WALL STREET JOURNAL EUROPE: The IMF is pretty much impervious to experience

The Wall Street Journal Europe focuses today editorially on a coming World Economic Report of the IMF, the International Monetary Fund. The editorial condemns the institution with this simple sentence: "The IMF, it seems, is pretty much impervious to experience." The editorial says this: "Today no single discipline is more badly in need of a paradigm shift than economics, and no single institution more so than the International Monetary Fund. As has become habitual, copies of its World Economic Outlook have leaked out ahead of schedule. And while last-minute changes are always possible, reports from Reuters and other news agencies that have obtained the document aren't encouraging."

The editorial says that the IMF will advise the United States to chill its economy to keep its growth rate at what the IMF calls a "sustainable" level. It continues with this: "Here in Europe, we can't help but note that having the Fed raise rates again will leave the Eurozone with the unpalatable alternatives of choking off growth or sliding further against the dollar. What this will do for sustainable growth is anybody's guess. Actually, the very concept of 'sustainable' levels of growth in an age of rapid technological advance is problematic and certainly impossible to quantify with any precision."

WALL STREET JOURNAL EUROPE: The EU cannot afford any longer to coddle its rich peasants

Commentator Julian Morris, a fellow at London's Institute of Economic Affairs, writes in the same Wall Street Journal Europe issue that the EU eventually will have to take rich farmers off its dole. Morris writes: "The talk at last month's summit of European Union leaders in Lisbon was all dot-com." The writer says the talk showed that the coming world economy will be dominated by electronic communication. He says Europe must face a difficult choice, in his words, "between dot-com and CAP." CAP is the EU's Common Agricultural Policy, its subsidies for farmers.

Morris writes: "The Common Agriculture Policy accounts for more than 50 percent of the EU's budget, but agriculture represents barely 2 percent of EU gross domestic product. Moreover, approximately 80 percent of CAP subsidies go to a mere 20 percent of farmers. In the New Europe, supposedly so concerned about both economic efficiency and employment, it hardly seems justifiable to slow down growth in order to keep a few rich farmers happy." He goes on: "If the EU is to enlarge, as it repeatedly has committed itself to doing, it either will have to expand the CAP everywhere or forego it totally."

There's a danger, the writer says, that the politicians just won't be able to stand up to the powerful farmers. But, Morris concludes, as he puts it: "The EU cannot afford any longer to coddle its rich peasants at the expense of its poor entrepreneurs. If it is to allow the new economy to flourish, it has to scrap CAP."

WALL STREET JOURNAL EUROPE: The high-tech boom environment is changing profoundly

The U.S. stock markets' resounding, but ultra-temporary crash yesterday in history's most volatile financial day, is only a foretaste, writes economist-columnist James K. Glassman -- also in the Wall Street Journal Europe. Glassman's analysis finds that the government's assault on Microsoft's alleged monopoly is likely to result in iatrogenic pathology, that is, a disease that is caused by the doctor.

In Glassman's words: "The rout in NASDAQ stocks -- which only began to bounce back a little Wednesday -- has been broad and deep. The breakdown of settlement talks in the Microsoft case was only the catalyst. What investors are realizing is that the environment that helped produce the high-tech boom -- low regulation, low taxes, minimal government intervention and a low level of corporate rent-seeking -- is changing profoundly."

Glassman continues: "In the past, no one told the entrepreneurs in the garages of Silicon Valley what products to invent, how to sell them, what prices to charge or what deals to offer. Now, the new economy is beginning to look more like the old -- an environment in which the winners are not necessarily the companies that please customers the most but the companies that do best at keeping government at bay -- or, better yet, at using government to thwart competitors. Stock prices are falling because [government-induced] risks to real innovators are rising."

AFTENPOSTEN: The EU continues to manifest unwillingness to accept new members fast

Norwegian analyst and commentator Gunnar Johnsen marvels in today's Aftenposten at the EU's multiple personality disorder that permits the "good" EU -- in the personality of its governing body -- to offer enlargement to Central European countries while "bad" EU members withhold enlargement. He writes from Norway, a member of NATO but not of the EU: "As negotiations with the first wave of applicant states for EU membership (Poland, Hungary, the Czech Republic, Slovenia, Estonia, and Cyprus) resumes today, the EU continues to manifest unwillingness to accept new members fast and to reform itself to allow for its own enlargement. The expectations are high on one side of the negotiating table. However, on the other side, it is only the European Commission that has shown some cautious willingness to set a date for the enlargement. The member states, on whom the enlargement timetable really turns, keep quiet."

CHRISTIAN SCIENCE MONITOR: The Annan report is a handy search engine for anyone looking to tackle the world's biggest problems

The Christian Science Monitor looks with benign acceptance today on UN Secretary-General Kofi Annan's Millennium Report. The newspaper's editorial says this: "Just when many Americans are wincing over gyrating stock markets, the United Nations secretary-general has set out a plan of action for the world well into the 21st century. Kofi Annan's plan, a 57-page Millennium Report, looks mainly at that half of humanity which worries about its next meal, and not about the NASDAQ, the Internet, or HMOs [that is, health management organizations]. It is aimed at stirring the thinking of an estimated 130 world leaders who will gather in New York this September to plot out the UN's and the world's future. But the report is a handy search engine for anyone looking to tackle the world's biggest problems."

The CSM says: "One of his innovative plans is to help the poor leapfrog out of poverty by bringing them the knowledge available on the Web. He proposes a Peace Corps-like group of volunteers to bring the Internet to the poorest nations. That's a call for Americans, who have more computers than the rest of the world combined. [And] as for the UN itself, Annan criticizes the Security Council's use of economic sanctions that fail to punish dictators but hurt innocent civilians. And he asks the council to update its post-World War Two membership structure."

INTERNATIONAL HERALD TRIBUNE: We are in danger of squandering an extraordinary opportunity for change

Analyst Stephen S. Roach writes today in the International Herald Tribune that the next international economic crisis is preparing to blossom. As Roach puts it: "[With the financial] markets in a new state of exuberance, and global economic recovery more vigorous than at any point in the past 13 years, the urgency for post-crisis reforms has subsided. We are in danger of squandering an extraordinary opportunity for change. Out of such complacency the next crisis is invariably born, usually hitting where and when it is least expected. That is one of the very painful lessons of recent history."

GUARDIAN: There is a black hole in government policy

British commentator Hugo Young writes today in The Guardian, London, that the pound inevitably must bow to the euro. In his words: "The strength of the pound is the biggest problem facing the British economy." The writer asks: "Why are the great men and women who run the British economy so reluctant to look this combination of downside prospects in the eye? The reason is simple. The scenario invites them to consider the policy that has become once again undiscussable in high political circles, the case for joining the euro."

Young writes also: "Short of a total market collapse, a convincing statement that Britain now intended to join the euro has become the only policy likely to bring sterling down. Perceiving that sterling could not enter at its present rate, the markets would assist the lowering of it. Perception is how markets work. But how could they be sure? That is the question. Plainly they do not believe it at the moment, even though entry is the government's stated intention."

The writer concludes: "Here we have an economic trend, a negative development of the utmost gravity to investment and jobs, which politics prevents from being addressed. There is a black hole in government policy, shaped by genuine economic tensions -- but also by a willful and craven blindness."