IN THIS MESSAGE: ANALYSIS--Labor/inflation theory nears last breath; 3rd World Must Do With Less; Undemocratic Regimes Get Billions; Nicaraguan Police/Army Called Out Against Strikers Monday May 3, 3:15 pm Eastern Time ANALYSIS--Labor/inflation theory nears last breath By Isabelle Clary NEW YORK, May 3 (Reuters) - It seems like just about everyone is working in the United States, except the Phillips Curve -- a once-popular economic theory that could have cost millions of Americans jobs if Federal Reserve Chairman Alan Greenspan did not have his doubts about it. The Phillips Curve theory, named after British economist A.W. Phillips, holds that wages rise faster when demand for labor is strong -- as should be the case in America where the jobless rate today is at a 29-year low of 4.2 percent. However, unemployment and inflation have steadily fallen hand in hand over the past four years. ``I must say, I'm blown away by the last two ECI reports,'' admitted former Fed Vice Chairman Alan Blinder, commenting on the broad measure of U.S. labor costs known as the Employment Cost Index. The ECI report issued last week provided further evidence that life does not imitate theory. U.S. wages and benefits edged up by 0.4 percent in January-March, the smallest increase since the series started in 1982. Over the past six months, the ECI rose at an annualized rate of just 2.2 percent. ``That 2.2 percent nominal increase, that's really extraordinary, very surprising. To say the Phillips Curve is dead is too strong, but it certainly took a serious wound,'' said Blinder, once a hard-core Phillips Curve believer, who now teaches economics at Princeton University. ``The Phillips Curve certainly is bed-ridden. If we have another year of these kind of numbers, we'll go to the funerals,'' Blinder added. David Resler, a managing director at Nomura Securities International and a former Fed economist, stressed Phillips himself never made the leap of faith between unemployment and inflation -- let alone said a central bank should raise interest rates solely to put people out of work. ``Phillips basically observed an inverse correlation between the unemployment rate and wages acceleration when he studied in the 1950s nearly a century worth of wages and employment data going back to 1861,'' Resler said. ``Phillips himself did not offer any theory about broad inflation, others did.'' Some experts, like Nobel-Prize winner Milton Friedman, drew from Phillips's observations the notion of a natural rate of unemployment -- meaning that, for one reason or another, there always are people who are unemployed. ``From there, others inferred it's possible to identify an unemployment rate level that would predict future inflation because all goods and services prices would go up from there. They were proven wrong in the recent years,'' Resler added. The U.S. central bank never endorsed any economic theory, and certainly not one that is running counter to its dual mandate for stable prices and maximum employment. In fact, simultaneous dips in inflation and unemployment rates have allowed the Fed to lower the federal funds rate six times and raise it only once since early 1995. New York Fed President William McDonough has said that lowering interest rates and giving growth a chance required courage among U.S. policymakers because this flew in the face of theories staunchly supported in academia. ``Tight labor markets'' remains the buzz words for a Fed that professes caution about inflation. Financial markets, at times, equate this with threats of higher interest rates but, as one trader put it, ``the Fed is not about what they say, but what they do and they don't raise rates unless needed.'' William Dudley, director of economic research at Goldman, Sachs and Co., warned that favorable factors that helped push U.S. inflation lower -- such as the slide in commodities prices last year -- may reverse themselves and revive theories that link low unemployment and inflation pressure. ``The bad news is that the best of the inflation story is behind us. The good news is that things will get worse very slowly and give Greenspan plenty of time to react,'' Dudley said. ``Greenspan is not tied down to any kind of economic model; he's very data-driven. Only when the data change will he think this is the right model and do something.'' ============================================= /* Written 2:40 PM Apr 29, 1999 by newsdesk in igc:ips.english */ /* ---------- "ECONOMY: Third World Must Make Do W" ---------- */ Copyright 1999 InterPress Service, all rights reserved. Worldwide distribution via the APC networks. *** 26-Apr-99 *** Title: ECONOMY: Third World Must Make Do With Less By Abid Aslam WASHINGTON, Apr 26 (IPS) - Relief and lowered expectations are written all over this week's Spring Meetings of the World Bank and International Monetary Fund (IMF). Relief that the worst appears to be over for world financial markets but lowered expectations because aid and investment remain at depressed levels, pushing back the prospect of recovery. This is the message from the Bretton Woods institutions and the Washington-based Institute of International Finance (IIF), an association of some 300 leading international banks and finance companies. World economic growth should hold at about 2.3 percent this year and hopefully will begin to pick up next year, the IMF says. It will take longer for recovery to trickle down from financial markets to the one-third of the globe that has been pushed into recession since financial centres began to quake in mid-1997. The World Bank says that, if all goes well, world growth should recover to around 4.5 to 5 percent by the year 2001 but developing countries will have to contend with less investment, weak commodity prices and the lowest levels of official development aid since the Bank began keeping records. Oil prices have broken their long fall because of reduced production but prices of so-called 'soft' commodities such as coffee and cocoa show no sign of perking up, according to the latest market reports. The private-sector IIF, in its latest projections of capital flows to the developing world's privileged 'emerging markets', actually forecasts ''a significant decline in official flows'' this year. At the same time, the Institute says private investment in these 29 Southern and former Soviet countries will amount to about 140 billion dollars in 1999 - about the same as last year but less than half the 1996 high mark of nearly 330 billion dollars. Relatively long-term foreign direct investment in emerging markets remains strong while more short-term portfolio equity flows show signs of recovery, says IIF director John Bond. For now, those signs of a turn-around reflect not so much real expansion as asset seizures at bargain prices. ''Some of this recovery represents asset values having been sharply depressed by the crises, which has created strong investment opportunities,'' Bond acknowledges. What's more, the Institute's generally benign aggregate projections gloss over some stark differences in regional prospects. Net private flows to Latin America are forecast to fall by about 20 billion dollars, to 66 billion dollars this year. Flows to the Asia-Pacific region are expected to rise by about as much, to 29 billion dollars. Indonesia, Korea, Malaysia, the Philippines and Thailand will see zero net flows this year after foreign investors pulled out 28 billion dollars in 1998. The World Bank, citing signs that the financial crisis is subsiding, says it is worried about the lingering social costs. ''A year ago we confidently predicted that the international development goals of halving poverty, cutting infant mortality by two-thirds, and enrolling all children in primary education could be met,'' says World Bank President James Wolfensohn. ''Now those goals are at risk.'' ''All developing regions have lost momentum in achieving their poverty reduction goals,'' the Bank says in its latest annual compilation of 'World Development Indicators', released here Monday. The most dramatic losses have been in East Asia, a region once leading the race to halve poverty by the year 2015. Economic turmoil has thrown off that goal by at least two years in Indonesia and 10 years in the Philippines, according to the Bank. For many countries, however, the malaise predates the financial 'contagion' of the past 20 months. In Eastern Europe and the former Soviet Union, for example, ''millions of people have seen their living standards deteriorate sharply during their difficult move towards establishing modern market economies,'' the Bank reports. The number of people in transition economies living below the poverty line of four dollars per day swelled from 14 million in 1989 to 147 - or one out of every three people - by the mid-1990s. In addition, adult mortality is increasing in these countries ''due to factors such as smoking, high-fat diet, excessive alcohol use and the stressful psychological conditions of economic transition,'' the Bank says. Inequality also worsened elsewhere. The Bank lists 34 developing countries - including Jordan, Malaysia, Russia, Peru, South Africa, Ukraine, Venezuela, and Zambia - in which the richest 20 percent of the population has come to receive more than half the country's income, while the poorest 20 percent gets less than five percent. ''There is still some good news to report,'' says World Bank Chief Economist Joseph Stiglitz. ''Over the last 25 years we can see how living standards have risen dramatically,'' he says. ''Since 1970, food production has outpaced the population growth of nearly two billion and 70 percent of adults in the developing world can read today.'' ''We are only beginning to measure the effects'' of financial crisis on long-term development, says Shaida Badiee, director of the World Bank's 'Data Group', which produced the report. ''What is clear is that the world cannot afford another 'lost decade' like the one Latin America endured after the debt crisis of the 1980s.'' (END/IPS/aa/mk/99) Origin: ROMAWAS/ECONOMY/ ---- [c] 1999, InterPress Third World News Agency (IPS) All rights reserved May not be reproduced, reprinted or posted to any system or service outside of the APC networks, without specific permission from IPS. This limitation includes distribution via Usenet News, bulletin board systems, mailing lists, print media and broadcast. For information about cross- posting, send a message to <[EMAIL PROTECTED]>. For information about print or broadcast reproduction please contact the IPS coordinator at <[EMAIL PROTECTED]>. ============================================= From: Neil Lahaie <[EMAIL PROTECTED]> (by way of Labor Calendar <[EMAIL PROTECTED]>) Subject: RIGHTS: Undemocratic Regimes get Billions from US Mime-Version: 1.0 /* Written 8:39 PM Apr 29, 1999 by newsdesk in igc:ips.english */ /* ---------- "RIGHTS: Undemocratic Regimes get Bi" ---------- */ Copyright 1999 InterPress Service, all rights reserved. Worldwide distribution via the APC networks. *** 28-Apr-99 *** Title: RIGHTS: Undemocratic Regimes get Billions from US By Jim Lobe WASHINGTON, Apr 28 (IPS) - The United States provided a record 8.3 billion dollars in military support to undemocratic regimes in 1997 - the latest year for which statistics are available - according to a report released here Wednesday. The assistance ranged from arms sales to training programmes and joint exercises and constituted almost 40 percent of all US military transfers abroad, and more than 50 percent of transfers made to all developing countries in 1997, the report said. The report was the fourth in an annual series compiled by the Washington arms-control group, Demilitarization for Democracy (DfD). ''U.S. foreign policy promises a new era of democracy and human rights, but this promise is subjugated to the demands of arms- exporting corporations,'' according to an introduction by Oscar Arias and Jan Willem Bertens. Arias, the former president of Costa Rica, is the author of the Nobel Laureates' Code of Conduct on Arms Transfers, an international effort to reduce arms sales. Bertens, the Dutch chairman of the European Parliament's Committee on Security and Disarmament, played a key role in the adoption last year of a arms- sales code of conduct for the European Union (EU). That code - politically but not yet legally binding on the 15 EU states - called on governments to forbid arms sales to governments which were likely to use them against other countries, or for internal repression. DfD and a number of other arms-control and human-rights groups in the United States have backed a similar code, now pending in the US Congress. The bill, which passed the House of Representatives in 1997 before stalling in the Senate, would ban US arms exports to governments not democratically elected who abused human rights or did not participate in the U.N. Register of Conventional Arms. A related but substantially weaker bill, approved last month by the House International Relations Committee, called on US President Bill Clinton Clinton to enter negotiations with US allies on an agreement to block arms exports to abusive or undemocratic governments. ''Europe alone cannot deliver the international code for which we are all working,'' Bertens said Wednesday. To become effective, the United States and the EU should coordinate their efforts, according to Michael Butcher of the British-American Security Information Council (BASIC). He added that the issue should be included on the agenda of the semi-annual summit meetings of US and EU leaders. >From 1991 through 1997, the United States was by far the world's biggest arms dealer. It was the source of more than one- third of the dollar value of all major weapons transferred worldwide - three times more than its closest competitors: Russia, Britain, and France. About 68 percent of US exports went to developing countries, according to the Congressional Research Service. In 1997, the United States provided a total of 21.3 billion dollars in some form of military support to 168 nations worldwide - of which 123 nations were developing countries - according to the report, entitled 'Arms Un-Control'. Of these countries, 52 were led by undemocratic regimes, according to DfD's criteria, which were weighted heavily to whether or not citizens enjoyed the right to change their government. The judgment had its critics. For example, Zimbabwe was labeled ''non-democratic,'' while Peru and Turkey - considered by some independent analysts to be undemocratic - were listed in the ''democratic'' category. On the other hand, three East Asian countries - Thailand, Malaysia, and Singapore which, before the recent financial crisis, had become increasingly important arms buyers - were listed as ''non-democratic.'' In 1997, according to the report, five nations - Taiwan (6 billion dollars), Saudi Arabia (4.7 billion dollars), Kuwait (1.4 billion dollars), Turkey (1.3 billion dollars), and Egypt (1.2 billion dollars) - received more than one billion dollars worth of US military support. Of these, the report said only Taiwan and Turkey could be considered ''democratic.'' Sixteen more countries received more than 100 million dollars in military support. Of those, four fell into the non-democratic category: Thailand, Pakistan, Singapore, and the United Arab Emirates. Other important non-democratic recipients included Bahrain, Jordan, Malaysia, Lebanon, Indonesia, and Tunisia. US Special Operations Forces trained 9,100 foreign soldiers in more than 200 combat exercises under the Joint Combined Exchange Training (JCET) programme whose existence came to light only last year. Among the biggest beneficiaries of this controversial programme were the ''non-democratic'' nations of Indonesia, Thailand, Malaysia, Cambodia, Kuwait, Bahrain, Eritrea, and Zimbabwe. JCET has become a major target of human-rights groups and received Congressional attention because the Pentagon used it to carry out joint operations with militaries which Congress had banned from participating other US training programmes for human rights reasons. ''It offers prestige value for these armies,'' said Paul Alweny, the report's chief author, who added that four out of five African armies, most of which served non-democratic governments, took part in JCET exercises during 1997. Washington spent more than half a billion dollars on JCET operations that year. Another 3,454 foreign soldiers were enrolled in the more conventional International Military Education and Training (IMET) programme in 1997. Unlike JCET, IMET ferried officers to the United States mainly for courses in military doctrine. Of the total of 12,554 troops trained under both programmes, nearly 90 percent came from developing countries and some 35 percent of those served in non-democratic countries. The administration has argued that training foreign officers increased Washington's influence that could be used to improve respect for human rights and help resolve conflicts. But the study pointed out that Washington provided arms and training to a number of countries - including Algeria, Indonesia, Kenya, Uganda, and Turkey - experiencing civil conflict and whose governments were accused of serious rights abuses. It also noted that, of the 11 nations that had intervened in the civil war in the Democratic Republic of Congo since 1998, nine received US arms and training in 1997. Meanwhile, Eritrea and Ethiopia - both recipients of US military support in 1997 - have been fighting a bloody border war since last year. (END/IPS/jl/mk/99) Origin: ROMAWAS/RIGHTS/ ---- [c] 1999, InterPress Third World News Agency (IPS) All rights reserved May not be reproduced, reprinted or posted to any system or service outside of the APC networks, without specific permission from IPS. This limitation includes distribution via Usenet News, bulletin board systems, mailing lists, print media and broadcast. For information about cross- posting, send a message to <[EMAIL PROTECTED]>. For information about print or broadcast reproduction please contact the IPS coordinator at <[EMAIL PROTECTED]>. ============================================= /* Written 7:10 PM Apr 30, 1999 by newsdesk in igc:ips.english */ /* ---------- "LABOUR-NICARAGUA: Police, Army Call" ---------- */ Copyright 1999 InterPress Service, all rights reserved. Worldwide distribution via the APC networks. *** 30-Apr-99 *** Title: LABOUR-NICARAGUA: Police, Army Called Out Against Strikers By William Grigsby MANAGUA, Apr 30 (IPS) - Nicaraguan President Arnoldo Aleman called out the army and police to crack down on growing social unrest and disturbances and keep a public transport strike from obstructing normal economic activity. A strike by some 100 public transport cooperatives and groups of bus, taxi and truck owners demanding that fuel prices be slashed followed last week's protests by university students, in which a young law student was killed during a police crackdown. In a message to the nation Thursday evening, Aleman maintained that the current climate of unrest in Nicaragua was the result of a ''synchronised escalation of violence'' that began with the student protests. On Thursday, hundreds of people took to the streets, and armed with stones defended roadblocks set up at key points around Managua, home to one million of Nicaragua's four million inhabitants. Cooperatives and owners of just one or a few vehicles account for 95 percent of urban and interurban public transport in Nicaragua. This week, Aleman announced the liberalisation of the public transport sector in order to pave the way for ''free competition, allowing businesses to improve services and enabling rates to be set by the law of supply and demand.'' Transport workers are demanding that the 65 cent tax on diesel fuel be slashed to 20 cents of a dollar, which they say should be compensated for by a reduction of the ''luxury expenses of the president and his ministers.'' The Popular Coordinator Against Government Corruption (CPCC), comprised of 25 social and student organisations and trade unions, joined the public transport strike and took part in the disturbances in the capital. CPCC leader Orlando Baltodano said his organisation backed the demands by public transport workers and wanted increased funding for public universities - six percent of the budget - reduced prices for basic products and a freeze on public utility rates. According to Aleman, the current unrest and recent rash of student protests are all part of a plan against the government, ''activated by a smear campaign early this year'' - a reference to reports by the local press on alleged corruption at the highest levels of government. Aleman said the strike was part of a ''destabilising plan...orchestrated by leaders lacking a conscience and patriotism, who have personally profited from violence and vandalism by gangs.'' He announced the creation of a ''crisis and security cabinet,'' which immediately approved a plan designed to bring the situation under control. The ''crisis cabinet'' decided ''to instruct army and police chiefs...to implement a plan of coordination of joint operations aimed at restoring public order and national security.'' Unspecified ''preventive and protective measures'' were also taken, and the Attorney-General's Office and the Legal Department of the President were instructed to take legal actions considered ''necessary to guarantee institutionality and a state of law.'' The government-affiliated radio station 'Radio Corporacion' reported that in northern Nicaragua, armed groups of men wearing military fatigues were ''blocking traffic and burning public transport vehicles that have not joined'' the strike. Public transport trade unionist Rolando Chavez announced that ''no public transport vehicle will be allowed to circulate in the country.'' By noon Thursday, pickets had begun to make good on the threat, destroying taxis that refused to join the strike. Chavez also denounced a ''government plan to destabilise the strike.'' Aleman, meanwhile, pointed to ''clear signs'' of a ''riot'' triggered by ''interests'' other than the transport workers. Labour Minister Wilfredo Navarro accused the leftist Sandinista National Liberation Front (FSLN), the main opposition party, and its secretary-general Daniel Ortega of spearheading a campaign to overthrow the Aleman administration. In the wake of last week's protests, in which students clashed with police, Ortega said ''the situation of the country is rapidly deteriorating due to the fault of the government, which refuses to comply with the laws, respect the democratic functioning of institutions and modify its economic policies, which are strangling the poor.'' Nicaragua is one of the poorest countries in the Americas. Ortega, president of Nicaragua from 1984 to 1990, said that if the street protests expanded and took an even more radical shift, the situation ''could lead to something similar to what occurred in Paraguay, Ecuador, Venezuela, Brazil or Guatemala, where the people expelled corrupt leaders from power.'' On Apr 20, 21-year-old law student Roberto Gonzalez was killed by a rubber bullet - only used by anti-riot agents - during a demonstration. After the funeral-cum-protest took place without incidents on Apr 21, police released 69 students taken into custody during the previous day's demonstrations. The police set up a special commission to investigate Gonzalez's death, and invited human rights groups and university authorities to participate in the commission. Student protests have become frequent since 1991. In the past month, each time parliament has met to discuss the 1999 budget law, students have held demonstrations demanding increased funds. On three occasions, the protests led to clashes with the police. Gonzalez was the third student killed in demonstrations in the past four years. The other two deaths occurred when police opened fire on protesters on Dec 13, 1995. Archbishop of Managua, Cardinal Miguel Obando y Bravo, who has close ties to the conservative Aleman administration, called on Ortega ''to curb the violence and the anarchy reigning in the country.'' Last week Obando y Bravo said there were political sectors interested in ''weakening or toppling'' the government, or in ''forcing it to make concessions.'' Obando y Bravo lamented the death of Gonzalez and the violent incidents ''which project a bad image of the country'' and could stand in the way of international assistance to help Nicaragua recover from the damages caused by hurricane Mitch in late October. Nicaragua hopes to secure around 1.3 billion dollars at a meeting in Stockholm of donor countries participating in Central America's recovery efforts. The Aleman administration argues that yielding to the demands of students and transport workers would seriously compromise its economic plans. ''I am committed'' to the continuity of such plans ''in order to secure the cancellation of the foreign debt,'' the president reiterated Thursday evening. (END/IPS/tra-so/wg/mj/sw/99) Origin: Montevideo/LABOUR-NICARAGUA/ ---- [c] 1999, InterPress Third World News Agency (IPS) All rights reserved May not be reproduced, reprinted or posted to any system or service outside of the APC networks, without specific permission from IPS. This limitation includes distribution via Usenet News, bulletin board systems, mailing lists, print media and broadcast. For information about cross- posting, send a message to <[EMAIL PROTECTED]>. 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