Development Administration - Term Paper Example

«Development Administration» Populism is a political and social ideology that encourages the common man to confront the elite. It stands for political and social change. Cambridge dictionary defines it as political ideas and activities that represent an ordinary man’s needs and aspirations. The term populism in used loosely and is often inconsistent in undefined ways. Academic and scholarly definitions also vary. Margaret Canova distinguishes populism from other ideologies by terming it as ‘conservative’ and ‘socialist’. Contemporary populists denounce the term populist and do not consider themselves as such. The United States has been the scene for many populist movements. The New Deal reform movements, civil rights movement and the farmers’ movement were all populist movements that took place in the United States. They are considered populist by many supporters although this may be due to the linguistic co-relation of the word populism and popular. (Mathur) A great deal of attention has been given to this term in academia, causing many scholars to establish the term’s meaning to help distinguish between movements which are populist and those that simply borrow populist ideals. According to Danielle Alberazzi and Duncan Mc Donnel, in their volume of Twenty-First Century populism; populism is defined as an ideology which puts the public against a set of elites and powerful people that are depriving or attempting to deprive the public of their rights, values and voice. Basically populism is the fight against the exploitation of the majority poor class by the minority upper class that holds all the power. (Mathur) Critics Perspective of Populism: Populism is sometimes considered to be based on social ideas, economic programs and right wing issues but it is more than an appendage of an ideology such as nationalism or neo liberalism. It is an ideology and movement in its own right and many scholars have focused on it solely thus increasing its stature and importance. (Graig) Populism can be reflected in democracy as democracy is the pure and undiluted will of the people. IT can be related with the ideologies of both the right as well as the left. While in recent times, leaders of populist movements have claimed to be either on the right or on the left side of the political spectrum; most populists claim to belong to neither left, nor right or centre. Some scholars argue that the populist economy represents the revival of medieval Aristotelian politics which focuses on equality for problem solving. Populism has taken three forms; left wing, right wing and centrist. These three forms of politics bring together various groups and individuals of diverse view. Most politicians view populism as a democratic and positive force imbedded in society and are staunch advocates of the ideology. Although some views of political science consider populist mass movements to be irrational, impulsive and give rise to instability in the political process. According to Margaret Canova, both views are unsound. They fall under the two main branches of populism; agrarian and political. Critics have often claimed populism to be a dismissive, demeaning and derogatory term for responding to voters in a pure democracy. Politicians are a part of the powerful elite and their usage of the term is sometimes dismissive and demeaning. For instance; Sarah Palin asserts that simplicity and virtue are the two biggest blessing of rural living and wage work. Both assertions are fake and slanderous. Populism calls for governments to intervene in favor of one class while disregarding the rights of the other class. This can be seen when considering the populist movement in America. The movement began when the dollar was inflated, this was to assist the debtor but it was done at the expense of creditors. Thus one class was supported whereas the rights of the other were undermined. Producers enjoy the perks of protectionist laws and the consumers suffer because of lack of competition. Even in campaign promotions, populist rhetoric can be seen. For instance, Obama’s ads claimed John McCain supported transferring American jobs overseas. But the reality is that workers are most likely to lose their share of trade and become bankrupt when jobs can be done more productively anywhere else in the world, regardless of who is president. Similarly, Americans who cannot afford their homes will lose them. Government can only create conditions and circumstances for general prosperity but it cannot enforce them. (Allen). Critics of populism argue that mobilization and participation in rallies are not a correct measure of autonomy. Gino Germani was of the view that autonomous collective action and populist heteronymous collective actions are distinct and incomparable. Other critics are of the view that populist redemption is greatly dependent on the authoritarian approach of the will of the people. (Huque) Neo-liberalism: Neo-liberalism is an approach to economic and social policies based on neo-classical theories of economics. Neo liberalism advocates the free market mechanism, and the importance of the private sector in policy decision making. Neo liberalism opposes government intervention in the economy. The theory proposes that there be no limitations on property rights and market demand and supply be the main determinants of how businesses operate. The theory favors free trade and comparative advantage. Neo liberalists believe that all markets in the world should be open, and there should be no barriers to trade. They believe that any action such as political pressure, economic pressure and even military action is justifiable to enforce free markets in countries. Neo liberalists are active supporters of international organizations and treaties such as the WTO, IMF, World Bank and the African Development Bank. These organizations have great influence on developing and other countries due to their international clout and backing from the G-8 countries. They can put greater pressure on countries to minimize the role of government and open their markets. Neo liberalism favors privatization over nationalization. The theory strongly opposes socialism and protectionism. Neo liberalists believe that an increase in efficiency and employment can result from discarding labor policies such as minimum wage and collective bargaining. Opponents of fair trade criticize neo liberalism as favoring international relations and economics over labor rights and social justice. They believe that this approach would increase exploitation of labor and worsen working conditions. Neo-liberalism in the United States takes a slightly different approach. It supports free trade and welfare reform but does not oppose Keynesian theories and environmentalism. United States economist Brad DeLong is Keynesian and a vocal supporter of neo liberalism as well. He supports income redistribution and was a fierce critic of the Bush Administration. Neo liberalism in America is linked with the Third Way; which is social democracy under the New Public Management movement. Supporters promote it as a pragmatic approach to identifying what works and what doesn’t. This concept emerged in the 1980’s as an alternative to the intervention approach of Democrats and the anti-intervention, private business approach of the Republicans. In the United States; leading advocates of neo liberalism are the Republican Party and Ronald Reagan is considered as a leading figure of this theory internationally. (Minogue) Studies on Neo-liberalism: In cultural studies, Neo liberalism is an ideology that moves social, cultural and political practices and policies towards the free interaction of markets, importance of consumer choices and efficiency. The roots of neo liberalism started in Chile and then spread to Britain during Margaret Thatcher’s tenure and to the United States at the time of Ronald Reagan’s presidency. During the 1970’s, Latin American reforms that moved the focus from centralization to markets was claimed as neo liberalism. In the 1990’s, the term neo liberalism faced major criticism from liberal analysts. It was considered as a catchphrase coined by academic radicals to disparage the ideas of Milton Friedmon and Friedrich Von Hayek. Neo liberalism theory aims to transfer the control of resources within the economy from the private sector to the public sector. This will increase the efficient utilization of resources, decrease costs and increase profits, as a result the economy will become prosperous and the growth rate will increase. According to Williamson, governments’ fiscal policies usually result in large budget deficits that have to be paid back by future generations. The deficits result in a short term spike in employment but the long term effect is debt burden. As the deficits continue to grow, there will be higher inflation and a decrease in productivity. The purpose of fiscal budgets should be to stabilize economic situations not create them. Increase in public spending is a detriment to the long term growth of the country and services such as primary education, health and infrastructure are more efficiently provided by the private sector. Williamson put forth a list of ten points that discussed these policies advocated by neo liberalists. Neo liberalists also advocate tax reforms in the economy. They believe that the tax base should be broadened and marginal tax should be adopted to increase innovation and efficiency. With regards to interest rates and exchange rates, they advocate the market mechanism to determine their values. They believe economies should have floating exchange rates. As mentioned before, neo liberalists are promoters of trade liberalization and oppose protectionism. They believe that imports should be liberalized and free trade should exist. This will increase competition thus making resource allocation more efficient leading to sustainable growth in the long run. Economists have differing opinions about trade liberalization. Many economists support the liberalization of trade as they believe it will lead to greater economic growth. Lowering of trade restrictions should enable economies to export goods that they have a comparative advantage in and devote more resources to them. On the other hand commodities that are cheaper internationally and costly to produce at home can be imported. Thus free trade should be mutually beneficial to all countries. Neo liberalists believe that trade protectionism do not benefit in the social context. They diminish the competitiveness of trade and negate any simulative effects in the process. These policies focus on the consumption of domestic resources rather than improving productivity and efficiency. In order to gain benefits from trade, liberalization and trade reform is vital. A ‘positive agenda’ is required for trade policy which means working on and building the private sector, promoting enterprise, developing human resources, streamlining legal processes, and developing transportation and communications infrastructure as well as increasing openness to international trade and development. However, there are many criticisms of this theory. The biggest limitation of this theory is that it lies on the assumption of perfect competition between the countries. Perfect competition is an economic theory which is rare to find in the real world economies. The theory also assumes that there are stable and constant returns to the scale of production. It is difficult to apply these assumptions the real world especially in cases of developing countries. It is believed that trade liberalization imposes adjustments costs but has a highly favorable impact on output. But at the same time it can also have a devastating effect on output if the country is unable to gain a competitive advantage. It can result in large trade deficits and high unemployment if the economy is fragile. Relatively older theories on trade focus on the impact on overall profitability of trade activities. More recent theories stress more on the dynamic impact of trade liberalization in advancing technical knowledge and processes through access to new capital and manufactured goods. Neo liberals also advocate the liberalization of the capital account. They propose that private units should be given the opportunity to invest in funds overseas and foreign funds should be allowed to be invested in the home country. This will lead to higher profits, rents, interests and dividends gained from the investments and the influx of foreign investment for the country. Neo liberalism also limits the role of the state. It proposes that the government should not interfere in the economy and should not be involved in the provision of goods and services that are better provided by private enterprises. Public companies are usually inefficient as their objectives do not include profit maximization or cost minimization it is better to hand these units over to the private sector which will utilize resources more efficiently. Neo liberalism is an avid supporter of deregulation and advocates the abolishment of regulations that hinder market entry and competition. However, it provides exception for government involvement in safety, environment and consumer protection policies as well as legislation for property rights. My choice: When comparing the two ideologies, it can be said the neo liberalism is a more defined model for poverty alleviation and accelerated development in politically ravaged economies. Neo liberalism focuses on more that ending government intervention. It is a developed economic theory that channels resources towards efficient utilization through empowerment of projects, de-regulation, reduction of tariffs, trade liberalization, and privatization. Neo liberalism advocates free trade and ensures that profits and returns are attained in return for effort and investment. According to Lebowitz, the free market ensures that everyone gets the benefits of free exchange. There are no restrictions and individuals will chose efforts that will yield the best outcomes. Intrusion by the state will lead to unfavorable results and losses will exceed profits due to low productivity. According to him the only answer is to remove government intervention and promote unrestricted and unprotected trade. Neo-liberalism revolves around the following main points: 1. The rule of the market 2. Cutting public expenditure for social services 3. Deregulation 4. Privatization 5. Eliminating the concept of “the public good” or community This means that under neo-liberalism, private enterprises are liberated from the restrictions imposed by the government irrespective of the amount of social damage they will causes. In neo-liberalism expenditure on various social services like education and health care is cut and brought down. Neo-liberalism is strictly output oriented. The concept of greater public good or community is completely eliminated and replaced with individual responsibility in neo-liberalism. Even the poor people are pressurized by the society into finding solutions to overcome their lack of education, health care and social security. Neo-liberalism is currently in use by different financial institutions all over the world. These include the International Monetary Fund(IMF), the World Bank and the Asian Development Bank. It is in use all over Latin America. Chile implemented neo-liberalism for the first time. It was then followed and implemented by various other countries. (Smith The market needs to be liberated from all constraints but this does not mean the state has no role. The government must exist to ensure that markets are business friendly, and workers and police are given the means to maintain infrastructure. Since the 1980’s almost all US presidents have advocated the role of free trade and taken steps to promote it. However, neo liberalism has drawbacks as it benefits the elite and powerful to a greater extent. As in a free economy there will be income inequality and those with greater resources will be able to earn greater profits. Some developing countries are unable to compete in the international market and their economies may suffer due to an influx of cheap imports and stagnating exports. But it may also be said that a healthy profit and healthy industries will lead to more jobs and alleviate poverty by increasing employment and opportunities. Populism on the other hand focuses on equality rather than efficient utilization of resources. Poverty cannot be alleviated where there is no incentive for entrepreneurship, to make profit and gain benefits. Neo liberalism gives incentives for growth and progress. It is vital that developed countries also reduce their protectionist policies towards agriculture to maintain a level playing field in international trade and help alleviate poverty. Conclusion: Thus, between the two models, neo-liberalism stands out as a better more lucrative choice. It is a better model for poverty alleviation and development in economies which are politically ravaged. While populism is more promising on democratic grounds, it cant help developing economies snap out of their problems that easily. Works Cited Allen, T. and A. Thomas. Poverty and Development in the 21st Century, . Oxford: Oxford University Press, 2000. Graig, A., D. Hulme and M. Turner, Challenging Global Inequality: Theory and Practice of Development in 21st Century, Basingstoke: Palgrave, 2006. Hettne, B. Development Theory and the Three Worlds, London: Longman, 1990. Kothari, U. and M. Minogue (eds.), Development Theory and Practice: Critical Perspectives, Palgrave, 2002. Mathur, H.M. Administering Development in Third World, Sage Publications, 1986. Smith, B.C. Progress in Development Administration, London: RIPA, 1992. Webster, A. Introduction to the Sociology of Development, Macmillan, 1990. Read More