It's a tough job, but someone's got to do it. Today, Thomas Friedman tells us about the squandered opportunities around the world.

Someone else can straighten him out on China and the Arab world (the U.S. government's fondness for hereditary monarchies and autocratic regimes clearly is part of this story), but I'll pick up Europe and the United States. In the case of the former, Friedman joins German Chancellor Angela Merkel in lecturing the peripheral countries on their failure to take advantage of low interest rates in the last decade to modernize their economies.

While there is considerable truth to the complaint about the failure to modernize their economies, there is an important piece missing in the chain of causation here. The housing bubbles in Spain and Ireland and the excessive spending in Greece were financed by banks in the core countries, most notably Germany.

While these banks were happy to finance endless construction projects in Spain, it is not clear that they would have been willing to also put up money to support improved education or modernized infrastructure. The decision of banks in Germany to finance certain paths of development and not others helped push the peripheral countries to follow those paths. In short, the governments in the peripheral countries deserve considerable blame, but the banks in the core countries were essential enablers who pushed them down this path.

In the case of the United States, Friedman complains that:

"in the 1990s we enjoyed a peace dividend, a dot-com dividend and a low-oil-price dividend, which combined to sharply reduce the federal deficit. But 9/11, two wars accompanied by tax cuts, not tax increases, a Medicare prescription drug plan and a necessary bailout to prevent a potential depression put us more in debt than ever."

Ha-Joon Chang
The Guardian Unlimited, June 4, 2012

The Miami Herald’s Jacqueline Charles reports on the planned Caracol Industrial Park in Haiti today, noting that while the project’s funders tout it as “the most visible symbol of post-quake progress”, it remains a source of controversy. Charles writes:

Desperate for any good news after the devastating January 2010 earthquake, the Haitian government signed off on the 600-acre industrial park in this remote rural village without preparing for how the region should eventually look — or absorb the promised jobs. Only now is a zoning plan being developed, but residents and Haiti watchers wonder if it’s coming too late.

Their anxiety is fueled by Haiti’s historically weak institutions and the rush by the international community and Haiti’s leaders to show progress. It is also a reflection of the challenges of working in Haiti where there is continuous friction between need-to-spend foreign aid agencies, which are often perceived as arrogant, and a weak central government.

As a result, Haiti analysts say, projects are often haphazardly started with too little preliminary planning, lopsided consultation and inadequate environmental impact studies.

“The international community has been under immense pressure to show movement and this is the closest they’ve come to have something significantly positive to say about Haiti, investments and jobs,” said Carlo Dade, a senior fellow at the University of Ottawa’s School of International Development and Global Studies. “But on the other hand, this is really one case where there is no excuse for not getting it done right.”

A major issue is what the effect will be of an estimated influx of 300,000 people into the area, where town populations range from 1,500 to 25,000. Charles reports:

“When you look at the social problems that Cité Soleil poses today, you have to ask, did it have to be that way?” said Michèle Oriol, executive secretary of Haiti’s Inter-ministerial Commission on Territorial Planning, which has objected to the park’s location, and that of a U.S.-financed housing development just off the main commercial corridor.

Alex Dupuy, Haiti-born sociology professor at Wesleyan University, comments:

“It’s about tapping a source of cheap labor…They did the same thing in Port-au-Prince, which had people leaving the countryside because of the free-trade policies that have devastated the Haitian agriculture sector. So the fear that the region will be flooded is very real.”

Dupuy adds that the push to support the garment manufacturing industry “has absolutely nothing to do with creating a sustainable growth economy in Haiti.”

June 5, 2012

June 5, 2012 (Housing Market Monitor)

Mark WeisbrotThe Guardian Unlimited, 30 de mayo, 2012En Inglés

Dean Baker
Truthout, June 4, 2012

Dean Baker
The Guardian Unlimited, June 4, 2012