While the East sleeps, the West rules

My first reaction after watching Dominic Strauss Kahn affair was to ponder about a little bit and then ask myself a question, what made this ripe, old man do what he has done ? Then I realized this man could think about ... well getting away with all those since he knew he was the head of one of the biggest lending institutions in the World , thereby outside the normal course of law , unaccountable by the normal processes of the law.

The main reason that rich and powerful men like DSK could think of getting away with these kinds of crimes is… well, they are the only game in the town. The IMF and its Bretton-woods twin World Bank are the two most important lending institutions in the World, a place where everyone goes for money when their budget balance sheets are finally in red.

The normal prescription of the IMF and the World Bank to their unfortunate patients (read nations in need of balancing their budgets) is similar: cut down your expanses which often boils down to closing down schools for your children, stopping the treatment of the poor in the hospitals and throwing out the needy elderly without their pension benefits and increase taxes on your people. It is said that “a tree is known by the fruits, it bears”. Well, the IMF has a lot of fruits to its credit, the Argentine crisis, the Asean tigers’ crisis and the recent crisis in Greece , Portugal , Spain and the list can go on and on.

Even after selling so many rotten fruits to the public, the IMF can hope to get away and even the maligned DSK can hope to fight for another day is because there is no other player in the market to compete against the ideas the IMF and the World Bank represent.

Let me be very clear here my readers. The West when she is convinced that she has an idea, she would move heaven and earth to implement that idea and will do everything in her power to make the whole world accept that idea. When the West advises us non-Westerners about the virtues free-market economics, make no mistake that she is convinced about her ideas and she will use all the means at her disposal to make everyone of us adhere to those ideas. Unfortunately, we in the “East” (by “East” I mean those who happen to be outside the realm of the privileged club comprising of EU, US, Japan, Australia, Canada and Israel) have to face the consequences if we happen to be at the wrong end of the implementation of those ideas for example say when an Western World Bank economist becomes the economic advisor of an African country without ever setting foot on the soil of that nation and his policies lead to the sad demise of the economy of that country. The people in that country suffer and the World Bank economist just goes for another assignment.

Now this leads to us to the question; why are we in the “East” not doing anything to prevent all these? The historians tell us that the “East” for example China and India led the World in terms of wealth and trade during most of the times of recorded history except say may last two-three centuries of Western domination. Even now days China and India are the two fastest growing economies in the World, the fastest growing economy in Europe happens to be Turkey, in the Latin America Brazil’s economic growth surpasses that of many of her North American counterparts but still why do the global “East” have to listen to the dictates of those World Bank pundits and those IMF experts even when we know those “advises” (read dictates) have only led to ruin for many of us? The answer, in my view is simple: while we in the East look to be numero uno in terms of GDP growth rates, those in the West look to create ideas and propagate them to us. Since we in the “East” neither create any ideas of our own nor have the conviction to implement and propagate those ideas, we are left to follow what the West gives to us.

Here is my solution to it. I believe this is high time for the major economies in the “East” i.e. China, India, Russia, Brazil, Turkey, South Africa, Indonesia should come together and create an alternative global financial organization. The above list of the countries must be and should be expandable. I propose that we call this organization “global cooperative bank”. The main function of this institution will be to promote collaboration among different underprivileged (those whom the West shuns for many reasons) countries in the “East” and to help them with their finances and development without the strings and riders, the IMF and the World Bank attaches. This institution could help by investing in the much-needed infrastructure and education projects in Africa, West and Central Asia and Latin America which the West has shunned for various reasons. The fruits of the investments should be shared equally between the underprivileged countries and the investors.

I know there are serious differences between many of us in the “East” but I do believe that we need to come together on this otherwise the West will continue to follow the policy of dividing and ruling over us. And, Yes I know that it will be difficult implementing an organization such as the one I have proposed but I have full confidence if the best of minds from the “East” can come together then surely we will be able to implement alternative ideas like the one I have proposed. I have full confidence in the best of minds in the “East”. And I have strong grounds for my confidence. Last time I checked, I found many of the countries in the “East” for example China and India were running huge trade surpluses over their Western counterparts which goes to show that there are very many goods and services which we in the “East” can produce and export with much lesser cost and assured quality. So if we can do that there is no reason we can not produce ideas which present a better alternative to the World.

There will be two major benefits of the same. The “East” will be able to have her own narrative which it can propose to the West and the West will be able to understand the follies of her own ideas and correct them.

The basic axiom that the market economics fundamentalists teach us is that competition brings improvement in quality of the overall system. I believe the West needs to face some good decent competition in terms of ideas from the “East” and then only we can see a sea change in the global system as we know it. But without that it will be the status quo running on where the East sleeps and the dignity of her women gets compromised by the rich and powerful in the West.