By Andrew Gavin
Marshall. Cross-Posted from www.Occupy.com Posted
on December 12, 2013 by WashingtonsBlog
The Group of Thirty, a preeminent think tank
that brings together dozens of the world’s most influential policy makers,
central bankers, financiers and academics, has been the focus of two recent
reports for Occupy.com’s Global Power Project. In studying this
group, I compiled CVs of the G30′s current and senior members: a total of 34
individuals. The first report looked at the origins of the G30, while the
second examined some of the current projects and reports emanating from the
group. In this installment, I take a look at some specific members of the G30
and their roles in justifying and implementing austerity measures.
CENTRAL BANKERS, MARKETS AND
AUSTERITY
For the current members of the Group
of Thirty who are sitting or recently-sitting central bankers, their roles in
the financial and economic turmoil of recent years is well-known and, most
especially, their role in bailing out banks, providing long-term subsidies and
support mechanisms for financial markets, and forcing governments to implement
austerity and “structural reform” policies, notably in the European Union. With
both the former European Central Bank (ECB) President Jean-Claude Trichet and
current ECB President Mario Draghi serving as members of the G30, austerity
measures have become a clearly favored policy of the G30.
In a January 2010 interview with the
Wall Street Journal, Jean-Claude Trichet explained that he had been “involved
personally in numerous financial crises since the beginning of the 1980s,” in
Latin America, Africa, the Middle East and Soviet Union, having been previously
the president of the Paris Club – an “informal” grouping that handles debt
crisis and restructuring issues on behalf the world’s major creditor nations.
In this capacity, Trichet “had to deal with around 55 countries that
were in bankruptcy.”
In July of 2010, Trichet wrote in
the Financial Times that “now is the time to restore fiscal sustainability,”
noting that “consolidation is a must,” which is a different way of saying
austerity. In each of E.U.
government bailouts – of which the ECB acted as one of the
three central institutions responsible for negotiating and providing the deal,
alongside the European Commission and the IMF, forming the so-called Troika –
austerity measures were always a required ingredient, which subsequently
plunged those countries into even deeper economic, social and political crises
(Spain and Greece come to mind).
The same was true under the
subsequent ECB president and G30 member, Draghi, who has continued to demand
austerity measures, structural reforms (notably in dismantling the protections
for labor), and extended support to the banking system, even to a greater
degree than his predecessor. In a February 2012 interview with the Wall Street
Journal, Draghi stated that “the European social model has already gone,”
noting that countries of the Eurozone would have “to make labour markets more
flexible.” He meant, of course, that they must have worker protections and benefits dismantled to make
them more “flexible” to the demands of corporate and financial interests who
can more easily and cheaply exploit that labor.
In a 2012 interview with Der
Spiegel, Draghi noted that European governments will have to “transfer part of
their sovereignty to the European level” and recommended that the European
Commission be given the supranational authority to have a direct say in the
budgets of E.U. nations, adding that “a lot of governments have yet to realize
that they lost their national sovereignty a long time ago.” He further
explained, incredibly, that since those governments let their debts pile up they
must now rely on
“the goodwill of the financial markets.”
Another notable member of the Group
of Thirty who has been a powerful figure among the world’s oligarchs of
austerity is Jaime Caruana, the General Manager of the Bank for International
Settlements (BIS), which serves as the bank for the central banks of the world.
Caruana was previously Governor of the Bank of Spain, from 2000 to 2006, during
which time Spain experienced its massive housing bubble that led directly to
the country’s debt crisis amid the global recession. In 2006, a team of
inspectors within the Bank of Spain sent a letter to the Spanish government
criticizing then-Governor Caruana for his “passive attitude” toward the massive
bubble he was helping
to facilitate.
As head of the BIS, Caruana
delivered a speech in June of 2011 to the assembled central bankers at an
annual general meeting in Basel, Switzerland, in which he gave his full
endorsement of the austerity agenda across Europe, noting that “the need for
fiscal consolidation [austerity] is even more urgent” than during the previous
year. He added, “There is no
easy way out, no shortcut, no painless solution – that is, no alternative to
the rigorous implementation of comprehensive country packages including strict
fiscal consolidation and structural reforms.”
At the 2013 annual general meeting
of the BIS, Caruana again warned that attempts by governments “at fiscal
consolidation need to be more ambitious,” and warned that if financial markets
view a government’s debt as unsustainable, “bond investors can and do punish
governments hard and fast.” If governments continue to delay austerity, he
said, the markets will have to use “market discipline” to force governments to
act, “and then the pain will be large indeed.” In further recommending
“structural reforms” to labor and service markets,Caruana noted that “the
reforms are critical to attaining and preserving confidence,” by which, of
course, he meant the confidence of markets.
THE ‘ACADEMIC’ OF AUSTERITY: KENNETH
ROGOFF
Kenneth Rogoff is an influential
academic economist and a member of the Group of Thirty. Rogoff currently hold a
position as professor at Harvard University and as a member of the Council on
Foreign Relations. He sits on the Economic Advisory Panel to the Federal
Reserve Bank of New York, and previously Rogoff spent time as the chief
economist of the IMF as well serving as an adviser to the executive board of
the Central Bank of Sweden. Rogoff is these days most famous – or infamous –
for co-authoring (with Carmen Reinhart) a study published in 2010 that made the
case for austerity measures to become the favored policy of nations around the
world.
The study, entitled, “Growth in a Time of Debt,” appeared in
the American Economic Review in 2010 to great acclaim within high-level circles.
One of the main conclusions of the paper held that when a country’s debt-to-GDP
ratio hits 90%, “they reach a tipping point after which they’ll start
experiencing serious growth slowdowns.” The paper was cited by the U.S.
Congress as well as by Olli Rehn, the European Commissioner for Economic and
Monetary Affairs and one of Europe’s stalwart defenders of austerity, who has
demanded themeasures
be instituted on multiple countries in the E.U. in return for
bailout funds.
A Google
Scholar search for the terms “Growth in a Time of Debt” and
“Rogoff” turned up approximately 828 results. In 2013, Forbesreferred
to the paper as “perhaps the most quoted but least read economic
publication of recent years.” The paper was also cited in
dozens of media outlets around the world, multiple times, especially by
influential players in the financial press.
In 2012, Gideon Rachman, writing in
the Financial Times, said Rogoff was “much in demand to advise world leaders on
how to counter the financial crisis,” and noted that while the economist had
been attending the World Economic Forum meetings for a decade, he had become
“more in demand than ever” after having “written the definitive history of
financial crises over the centuries” alongside Carmen Reinhart. Rogoff was
consulted by Barack Obama, “and is known to have spent many hours with George
Osborne, Britain’s chancellor,” wrote Rachman, noting that Rogoff advised government’s
“to get serious about cutting their deficits, [which] strongly influenced the
British government’s decision to make controlling spending its priority.”
The praise became all the more
noteworthy in April of 2013 when researchers at the University of
Massachusetts, Amherst, published a paper accusing Rogoff and Reinhart of
“sloppy statistical analysis” while documenting several key mistakes that
undermined the conclusions of the original 2010 paper. The report from Amherst
exploded across global media, immediately forcing Rogoff and Reinhart on the
defensive. The New
Yorker noted that “the attack from Amherst has done enormous
damage to Reinhart and Rogoff’s credibility, and to the intellectual
underpinnings of the austerity policies with which they are
associated.”
As New York Times columnist and
fellow G30 member Paul Krugman noted, the original 2010 paper by Reinhart and
Rogoff “may have had more immediate influence on public debate than any
previous paper in the history of economics.” After the Amherst paper, he added,
“The revelation that the supposed 90 percent threshold was an artifact of
programming mistakes, data omissions, and peculiar statistical techniques
suddenly made a remarkable number of prominent people look foolish.” Krugman,
who had firmly opposed austerity policies long before Rogoff’s paper, suggested that “the
case for austerity was and is one that many powerful people want to believe,
leading them to seize on anything that looks like a justification.”
Indeed, many of those “powerful
people” happen to be members of the Group of Thirty who are, with the notable
exception of Krugman, largely in favor of austerity measures. Krugman himself
tends to represent the limits of acceptable dissent within the G30, criticizing
policies and policy makers while accepting the fundamental concepts of the global
financial and economic system. He commented that he had been a member of the
G30 since 1988 and referred to it as a “talk shop” where he gets “a chance to
hear what people like Trichet and Draghi have to say in an informal
setting,” adding, “while
I’ve heard some smart things from people with a role in real-world decisions,
I’ve also heard a lot of very foolish things said by alleged wise men.”
-------------------
Andrew Gavin Marshall is a 26-year
old researcher and writer based in Montreal, Canada. He is Project Manager
of The People’s Book
Project, chair of the Geopolitics Division of The Hampton Institute,
research director for Occupy.com’s Global Power Project and World of Resistance
(WOR) Report, and hosts a weekly podcast show with BoilingFrogsPost.
No hay comentarios:
Publicar un comentario