Thursday, April 10, 2014

The New Shock Doctrine - DIY

One of the problems with neoliberal economic policy is that it’s tough to get countries to agree to it; especially democratic ones. It has often required quite extreme measures, such as invasion – the classic example being the US-backed coup against Chile’s democratically elected president – or debt bondage and structural adjustment led by the International Monetary Fund (IMF). Both are effective ways of forcing countries to deregulate their markets.

But neither of these methods has been very popular. It turns out that most people don’t like it when sovereign nations are invaded for corporate gain, as the global protests against the Iraq war made clear. And structural adjustment proved to be so damaging and inspired so many riots that the IMF was forced to step back from it – at least ostensibly – in the early 2000s.
To avoid these messy PR nightmares, the latest approach has been to get countries to impose neoliberalism on themselves.

Enter the World Bank. In 2003 the World Bank published the first Doing Business Report, which ranks the world’s countries based on the “ease of doing business” in them. For the most part, the fewer regulations a country has, the higher they score. The report has become the Bank’s most influential publication, and the ranking system is recognised as a powerful tool for compelling countries to initiate regulatory reforms, driving a quarter of the 2,100 policy changes recorded since it was launched.

Investors and CEOs use the rankings to decide where to move their money or headquarter their businesses for maximum profit. There’s even a handy iPhone app that jet-setting capitalists can use to redirect their investments on the fly. A new minimum wage law was just passed in Haiti? Better move your sweatshop to Cambodia! Higher taxes on the rich in Sweden? Time to shift accounts to Kenya’s new tax haven!

By providing a panopticon of knowledge about regulatory policies all over the world, the Doing Business rankings give investors an incredible amount of power. Countries are forced to respond by cutting regulations to make themselves more attractive to the barons of global capital, setting off a sort of global race to the bottom. A special “reform simulator” shows how each country can improve their ranking by, say, cutting corporate taxes or legalising land grabs.

Read the rest here

No comments: