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Will Bretton Woods shock U.S. economy?
Posted By Aaron Klein On 04/04/2011 @ 8:33 pm In Front Page | Comments Disabled
Long-term and worsening unemployment, economic stagnation, labor revolt and a state of siege.
Those are just some of the descriptions of one country that received the kind of economic “shock therapy” crafted by Columbia professor Jeffrey Sachs, who sits on the board of an organization literally seeking to reorganize the entire global economic system.
That group is the Institute for New Economic Thinking, or INET.
Philanthropist George Soros is INET’s founding sponsor, with the billionaire having provided a reported $25 million over five years to support INET activities.
This Friday, INET starts its four-day economic symposium in the mountains of Bretton Woods, N.H.
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The gathering of economic giants will take place at Mount Washington Hotel, famous for hosting the original Bretton Woods economic agreements drafted in 1944. That conference’s goal was to rebuild a post-World War II international monetary system. The April gathering has a similar goal in mind – a global economic restructuring.
Reporting on last year’s event, the Business Insider related, “George Soros has brought together a crack team of the world’s top economists and financial thinkers.”
“Its aim,” continued the business newspaper, “to remake the world’s economy as they see fit.”
More than two-thirds of the slated speakers at this year’s conference have direct ties to Soros.
One of the keynotes is Sachs, who sits in INET’s advisory council.
Sachs, a special adviser to U.N. Secretary-General Ban Ki-moon, is founder and co-president of the Soros-funded Millennium Promise Alliance, a nonprofit organization that says it is dedicated to ending extreme poverty and hunger.
With $50 million in capital from Soros, Millennium promotes a global economy while urging cooperation and investment from international banks and the United Nations Development Program.
The group helped to found the United Nations Millennium Development Goal, a move that was advanced by Sachs. He served as director from 2002 to 2006.
The U.N. Millennium Development Goal has demanded the imposition of international taxes as part of a stated effort of “eradicating extreme poverty, reducing child mortality rates, fighting disease epidemics such as AIDS, and developing a global partnership for development.”
Investor’s Business Daily reported the Millennium goal called for a “currency transfer tax,” a “tax on the rental value of land and natural resources,” a “royalty on worldwide fossil energy projection — oil, natural gas, coal,” “fees for the commercial use of the oceans, fees for airplane use of the skies, fees for use of the electromagnetic spectrum, fees on foreign exchange transactions, and a tax on the carbon content of fuels.”
Indeed, last September, a group of 60 nations, including France, Britain and Japan, propose at the U.N. summit on the Millennium Development Goals that a tax be introduced on international currency transactions to raise funds for development aid.
The proposed 0.005 percent tax on currency transactions would raise as much as $35 billion a year in development aid, claimed the proponents.
Sachs, meanwhile, is a renowned international economist best known for his work as an economic adviser to governments in Latin America, Eastern Europe, and the former Soviet Union.
He directs Columbia’s Earth Institute, which promotes the theory of global warming.
Sachs has been a World Bank consultant who formerly directed Harvard’s Institute for International Development, which he turned into a major conduit advocating for World Bank and International Monetary Funds use for structural adjustment programs in the Third World and beyond.
Sachs is engineer of a “shock treatment” economic doctrine that he has applied to other countries, most notably Bolivia and Poland. In both countries, critics charge, Sach’s doctrine led to economic failure.
In 1985, Bolivia was plagued by hyperinflation and was unable to pay back its debt to the International Monetary Fund.
Sachs drew up an extensive plan for Bolivia, later known as “shock therapy,” to drastically cut inflation by scrapping all subsidies, price controls, restrictions on exports, imports and private business activity.
He also called for the linking of the Bolivian economy with a more global currency, at the time the U.S. dollar.
Sachs acknowledged that a sudden shift to a market economy would initially result in huge price rises, especially in food and energy. But he has argued prices would level off as new supplies reached the market in response to the rises.
In Bolivia, the Sachs plan did beat inflation, but the price was continuing high unemployment, economic stagnation, labor revolt, a state of siege and a deepening involvement in the international drug market, reports noted.
To beat the hyperinflation under Sach’s plan, Bolivia ensured a large number of workers were laid off while others’ salaries were slashed, leading to widespread workers strikes.
The Bolivian government imposed a state of siege in response to a wave of strikes.
Sachs attempted a similar plan in Poland in the late 1980s, including the full convertibility of the zloty, the Polish currency, to U.S. dollars, and immediate suspension of debt repayment.
Another plan was deployed in Argentina, which has been plagued by an economic meltdown.
Looking back at Sach’s effect on Poland, Jon Wiener, writing in The Nation in June 1990, charged, “Before Sachs, Poland had a problem of shortages. As soon as food and other basic goods showed up in the stores, people bought them at low, subsidized prices, so the shelves were usually empty.
“Now the shelves are full, which would seem to be evidence of prosperity. But says Marta Pretrusewicz, a Polish historian teaching at Princeton University, ‘shortages don’t exist anymore because prices are so outrageous people can’t buy anything.’”
With research by Chris Elliott
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