Tag Archives: Development

Economic Stability Needs Free Press

Despite all the complaints about how poorly “the media” covered the Wall Street shenanigans that led to the 2008 Great Recession, people still turn to the unfettered and independent media outlets for news about stocks, bonds and the general state of the economy. In fact, the whole system of savings and investment would not work without a free press.wall_street_after_dark

The media — and this includes knowledgable bloggers — provide the public with loads of information about what is going on in the marketplace. They look at government regulations, company news and the overall status of the market.

One of the reasons there is global support for the U.S. stock markets is because there is such a strong tradition of free and unfettered media. (And perhaps, part of the trauma of the 2008 collapse was because how poorly the market was covered at the time.)

In fact, one of the most important part of any successful stock market is a free press that is allowed to dig into company records and government actions. Look at London, Paris, Tokyo and even Hong Kong.87502278_shanghai12

So is it any wonder there are uprisings and complaints about how things are going in the Chinese stock markets?

China Digital Times summarized a series of articles of how people across China are complaining about their losses in Chinese investment instruments.

According to the [Wall Street] Journal, some 1.6 million investors lost a total of at least $24.3 billion to collapsing wealth-management products over the past year. Many say they invested because of the perceived endorsement of government officials and state media, and are now demanding reimbursement from authorities.

Rather than move to make sure people got the best and most accurate information about where and how to invest their money, the Chinese government, instead, has decided to restrict even more information.

A series of leaked media directives published by CDT further illustrates efforts to manage discontent. Trying to steer a course between inciting panic and stoking further exuberance in June, the State Administration of Press, Publication, Film, Radio and Television told broadcasters not to “join the chorus of the bull or bear market. Rationally lead market expectations to prevent inappropriate reports from causing the market to spike or crash. […] Do not conduct in-depth analysis, and do not speculate on or assess the direction of the market. Do not exaggerate panic or sadness. Do not use emotionally charged words such as ‘slump,’ ‘spike,’ or ‘collapse.’”

Additional directives instruct editors to focus on “illustrative examples of steady growth,” while downplaying or holding back on anything negative about the property and stock markets.

Wall Street Journal reporter Laurie Burkitt retweeted one of the best reactions to the Chinese government actions:

And yet, the government continues to see it self as the main actor.

Why does this matter to journalists or even the people in the United States?
A great misunderstanding of how the Chinese markets work led to a global run on markets. And yet, only after the Western markets started falling because of what was happening in China, did people start figuring out the fall was an overreaction.

There is not enough foreign investment in the Chinese market for it to be a major problem. The London consultancy Capital Economics has said foreigners own just 2% of shares. — BBC  1/7/16

The smoke and mirrors situation in China built up by the ruling elite created a situation where otherwise strong Western investment instruments collapsed in just a matter of days. To be true, the collapse of the Chinese stock markets did indicate the Chinese economy was slowing. But again, had there been better reporting in China — that is had the government NOT restricted what reporters can cover — then the news about the slowing Chinese economy would not have come as such a shock.

The anti-free press fixation of the Chinese government is not just morally wrong, but it clearly also has a direct impact on U.S. investors, including a lot of retirement funds.4aa104a2bd6e75a39c9db8dad7319dbb

By the way, this has all happened before.

Back in the early 1990’s — when I lived in Shanghai — the government opened stock markets in Shanghai and Shenzhen. The party and government leaders encouraged people to invest. The people, figuring that the government has always taken care of them in the past will guarantee they will be taken care of in the future.

When the market collapsed in early 1992, millions of people lost their life savings. Men and women in their 60s discovered they had to now work many more years and save a lot more of their earnings to prevent starvation in their old age.

At that time the government did not step in to make good the losses. Deng Xiaoping was effectively in charge and forbade any bailouts. (Except for key companies, of course.) He made it clear the people will have to learn about the ups and downs of a marketplace economy with Chinese characteristics. He even allowed for and encourages small private companies to be set up.

The new leadership, however, has seem hell-bent to restore the all-pervasive nature of the Communist Party in Chinese society. They have apparently become nervous about the growing middle class. Seems once people get a taste of economic freedom, they tend to want political and social freedom as well. And that is not allowed.il_570xn-628619991_jc8m

So the government stepped up it campaign to crush freedom of speech and expression — including reminding the media their job is to represent the party — and stepped up its campaign of the government being mother and father.

The Chinese leadership claims they are concerned with preserving stability and avoiding social unrest. Yet the keep taking steps that lead to more social unrest.

By restricting the media to being only mouthpieces of the government, people will turn to rumors and whispering campaigns for information. And, as anyone who has played the “telephone game” will know, what goes in at the start is not necessarily what comes out the other end.

 

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Filed under Censorship, China, Connections, Freedom of Information, International News Coverage, Press Freedom

World Bank Supports Effort To Help Philippine Journalists Tame Big Data

Just because a government sign on to the Open Government Initiative does not mean that the information is properly being read, understood and publicized.

Knowing how to access the growing amount of information — dubbed Big Data — and understand it all takes some training.

Fortunately, many of the international development and finance organizations understand that helping journalists learn how to access and analyze big data means more transparency in government and a better informed citizenry.

The World Bank is helping finance a training program in the Philippines by the Open Knowledge Foundation and the Philippine Center for Investigative Journalism to train journalists and citizen media how to produce high-quality, data-driven stories.

In the past 10-15 years, The World Bank, the IMF and national development agencies (such as USAID) have begun to understand the close connection between development and free media.

The linkage is really pretty obvious once you look at the big picture.

  • Development programs are supposed to end poverty
  • Poverty comes from unequal distribution of opportunities
  • Free media exposes that injustice
  • Poverty is exacerbated by corruption
  • Free media exposes corruption
  • Free media can only exist in democratic states
  • Therefore, to promote economic development, political development leading to democracy and freedom of speech and press must be part of any development activity.
  • Well-trained and ethical journalists provide vital information to the public that helps build and maintain democracy

There it is: Helping develop free press helps build democracy.

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Anniversary of Marshall Plan and lessons for the 21st Century

Today (4/2) is the 67th anniversary of Pres. Truman signing into law what became known as The Marshall Plan.

The idea was pretty simple: Rebuild Europe so it can be economically and politically stable.

The plan was the complete opposite of what happened after World War I and from what a lot of Americans wanted to happen after World War II.

After World War I the Allies destroyed the industrial base of Germany, imposed massive reparations penalties and basically humiliated the Germans. After World War II there was a strong movement to do exactly the same thing one more time. In fact, Stalin did do that in the Soviet controlled areas. Whole factories from East Germany were dismantled and sent to the Soviet Union.

George C. Marshall, Pres. Truman’s Secretary of State, outlined a program to keep the peace by building strong trading partners with the United States. The idea was simple: by providing support to rebuild the industries of Europe, the United States would help stabilize the political and social situation in the region as well. Along the way democracy would strengthen in the region. Allies would rebuild their industrial base and re-establish their democratic institutions. Germany would rebuild under democratic principles, while its industries were rebuilt with safeguards to protect workers and the new democratic institutions. In the end, the whole plane would turn a former enemy into a political and economic partner and strengthen the hands of our Allies.

Needless to say, the Soviet Union did not like the idea. Stalin wanted a weak, divided and chaotic Europe. So much the easier to extend his influence through the local communist parties. (So yes, the Marshall Plan did have the overt purpose of countering communist influences in the area.)

Stalin forced the countries under Soviet control to reject the Marshall Plan help. The communist-controlled unions in Western Europe were ordered to strike at the ports and rail depots to prevent the unloading of Marshall Plan goods. Fortunately for the democracies, pro-democratic unions in those same countries stepped forward — often in pitched battles with the communist unions — to unload and help distribute the goods.

Fast forward to the 21st century and the battle is still the same. This time, instead of providing help and assistance to prevent communist domination of Europe, the battle is to prevent chaos and anarchy in the developing world.

Foreign assistance programs for the developing world have the intent of supporting democratic institutions and of bringing the poor in the world into the middle class. Again, the same idea as in 1948: Promote/Support democratic elements and democracy and help develop new and stronger trading partners.

There is one vital difference between what the Marshall Plan was all about and current development programs.

The Marshall Plan was rebuilding industrial societies. The European countries already had begun the shift from an agrarian society to an industrial one.

Today’s development programs are geared to helping the developing world move from inefficient, small-plot farming to a more efficient and wealthier society.

The Europeans in 1948 already had a high rate of education and educated leaders ready to step up to rebuild their countries.

The developing world today is faced with poorly educated people because of failures by their governments to provide decent education. These countries do not have generations of traditions of democratic institutions. In short, the development programs today have to start by dealing very basic problems of poverty, lack of education and lack of a history of self-rule.

When people call for a Marshall Plan for the developing world, they exhibit their basic lack of understanding what the Marshall Plan was. It is easier to rebuild societies and industries if the traditions of plurality and industrial labor relations are already built into the people. When those factors are missing, the path to development and growth is different and longer.

Just because the battle for development is harder now than it was in 1948 does not mean it should be abandoned or that it should be cut. Growth of the industrial economies depends on finding new markets. Unless the developed world helps the developing world grow, existing industries will have a hard time growing.

So one way to look at support for development programs is straight forward greed. If the U.S. and Europe help other countries out of poverty, that means more potential customers for goods and services.

Another way to look at why support for development programs is important is security. Growing pluralistic economies mean more people have a greater stake in the stability of that economy and society. Increased wealth is one of the surest ways to fight terrorism and violent crime,  as long as everyone has a fair shot at the wealth.

It has always struck me that supporting democratic institutions, economic growth and equitable wealth distribution are the surest paths to global security and economic prosperity.

Lastly, the budget for the US Agency for International Development — long a target of deficit hawks in the GOP — is less than 0.5 percent of the federal budget. With less than a half-penny on the dollar, this agency provides programs and training that helps bring hope to people that they too may soon enjoy the benefits of a growing economy. Cutting this budget will hurt efforts to provide stability and growth to the poorest countries in the world and do little to affect the actual U.S. budget. (I think it was Neil deGrasse Tyson who said of the NASA budget — also just less than 1 percent of the budget — that cutting the NASA budget was like trying to empty space on your computer hard drive by eliminating Wordpad documents instead of all the duplicate videos and JPG files.)

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