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Business-Managed Democracy » Government » International Coercion » Washington Consensus » Golden Straitjacket |
Thomas Friedman refers to the Washington Consensus prescription as the ‘Golden Straitjacket’. He argues that ‘As your country puts on the Golden Straitjacket, two things tend to happen: your economy grows and your politics shrinks.’ It is a straitjacket because it ‘narrows the political and economic policy choices of those in power to relatively tight parameters. That is why it is increasingly difficult these days to find any real differences between ruling and opposition parties in those countries that have put on the golden Straitjacket.’
Governments – be they led by Democrats or Republicans, Conservatives or Laborites, Gaullists or Socialists, Christian Democrats or Social Democrats – which deviate too far from the core rules will see their investors stampede away, interest rates rise and market valuations fall. The only way to get more room to maneuver in the Golden Straitjacket is by growing it, and the only way to grow it is by keeping it on tight. That’s its one virtue: the tighter you wear it, the more gold it produces and the more padding you can then put into it for your society.
If a country subscribes to the free-market formula, the ‘Golden Straitjacket’, then it is rewarded by investment capital from the international financial markets. But if they decide a country is not conforming, then they flee taking their capital with them: ‘Moody’s Investors Service and Standard & Poor’s are the bloodhounds for the Electronic Herd. These credit-ratings agencies prowl the world, constantly sniffing over countries’ and identifying those that are slipping out of the Straitjacket.
Lee Hong Koo, Prime Minister of South Korea in the mid 1990s sees it differently: ‘We didn’t realize that the victory of the Cold War was a victory for market forces above politics… politics becomes just political engineering to implement decisions in the narrow space allowed you within this system.’
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