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World Government: please comment on my paragraph for the Köhler volume

by Emilio José Chaves

10 October 2000 21:44 UTC


Dear Arno,
I am not so familiar with EU trends of thought for the future. In general I 
understand and sympathize with the good intentions of your scenario 2. I 
also see some contradictions in your argumentations. For example,
1) In several moments you criticize high government spending as something 
negative. At the same time you propose a progressive taxation system 
according to quintils income (I do not understand why you call it a 
regressive one). The case is that such a decision will increase the 
government income and at the same time the government budget. As far as such 
a bigger budget is used to help the lower quintils and to stimulate 
innovation in really needed fields (not in war, not subsidizing monopolies), 
then it is a good policy.
One thing is the taxation to people, which is fine in your example, and 
another one is the taxation on firms (the big problem is here). From my 
numbers and research I believe that the taxation per sector should be a 
flexible one and proportional to the average markup of each sector, in order 
to get a decent social Gini's Index. This is a topic to discuss at large in 
another moment.
2) In another moment you say: " Our analysis shows that the European Union 
repeats the errors of the import-substitution policies like those in Latin 
America in
the late 1950s and early 1960s, so well known to dependencia theory, and 
becomes - like Brazil at that time - a technologically very dependent zone 
of the world economy."
Let me remind you that the protectionist policies practiced, let's say until 
1970, were much better for Latinoamerican workers than todays open and 
privatizing economies. Our industrialization was made from old and obsolete 
machines discarded mainly from US, proportional to our consumption capacity. 
Many of them had a a big share of foreign property. Of course that growth 
was based on workers and resources exploitation, as it is normal under any 
capitalist economy. Today under neo-liberalism and their IMF, WB, WTO we are 
depleting resources faster, unemployement has increased, bad working 
conditions increased and we have more poors and less growth, less 
independence (political and technological), and a renewal of the aggresive 
attacks from the imperial boss.
It is very hard for EU to keep their traditional better social conditions 
for their people (lower ginis, and lower wages-shares on product, etc) and 
to compete commercialy with US, without keeping paying low prices to 
peripheric products. Look at the increasing unequal conditions in trade 
between the center and the periphery.
3) I like the orientation of your analysis, but not so much the reasons you 
give to support them, and think that we need a better understanding of the 
current theories of world economics and trade. The idea of world government 
is very important for us in the periphery, but it can not be born from 
mainstream economic analysis mainly provided by elite's academies. It must 
also consider peripheric and disident points of view.

I hope this contributes to the interesting points provided by you..
Thanks, Emilio

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