March 16, 2003

Morris Goldstein Is a Very Good Economist

Morris Goldstein is a very good economist. The latest thing from him to land on my desk is his look at "Debt Sustainability, Brazil, and the IMF." After reflecting on Morris's take, I find myself a little bit less optimistic about Lula and Brazil than I used to be...

Posted by DeLong at March 16, 2003 07:41 AM | TrackBack


After nearly two decades on the margins of Brazilian life, the armed forces have been thrust back into the center of things. Since taking office on Jan. 1, the left-wing government here has increasingly been looking to the 185,000 members of the military to perform tasks to advance President Luiz Inácio Lula da Silva's ambitious social development agenda.

Posted by: rm on March 16, 2003 08:39 AM

Mexico to Argentina, growth has slowed or stopped country on country. We are seemingly too preoccupied to attend to a serious decline in world economic growth, even to the decline in growth in our Latin American neighbors. We have been the overarching engine of world growth since 1998, and we are struggling with growth at present. Argentina might have been taken as a significant warning, but we turned from Argentina blaming and thinking there was no relation to other Latin American economies. We have even turned from the deepening agricultural problems in Mexico and from helping to stabilize agriculture exports from Brazil.

Posted by: anne on March 16, 2003 09:00 AM


There will probably to be debt restructuring by Brazil. Also, Brazil has vainly sought trade liberalization, especially for agricultural products, with America. America has also not been sympathetic to further development of a generic drug industry in Brazil, and this is a significant impediment not just to development in Brazil but to southern African economies. Brazil could purchase drug licenses and manufacture and export generic durgs to Africa. Such drug trade could be of major importance.

Posted by: anne on March 16, 2003 10:37 AM

Brazil is truly a model in AIDS prevention and treatment, and we should be encouraging generic and even patent drug trade between Brazil and southern Africa. Somehow we notice the African AIDS problem now and again, pledge to help, and time passes and passes and passes and to what avail? Darn.

Posted by: anne on March 16, 2003 10:43 AM

Brad DeLong - Why so silent on AIDS and economics? Yes you have mentioned the issue, but quite seldom.

Posted by: anne on March 16, 2003 10:46 AM

Most of all, 50 million dying people do not have time for governments and drug companies to battle endlessly over patent rights and who can manufacture generic versions of life-saving drugs. In the 1940's, streptomycin was the first antibiotic to be effective against tuberculosis. Merck owned exclusive rights to the drug, which meant it could profit mightily from it. But George W. Merck, the company's head and the son of its founder, released its hold on the patent, thus allowing any company to manufacture streptomycin and effectively keeping its cost minimal and hundreds of thousands of people alive. George Merck was on the cover of Time in 1952 above a caption of his own words: "Medicine is for people not for profits."

It is impossible to imagine today's Merck or any other pharmaceutical manufacturer being so humane. GlaxoSmithKline, which controls most of the drugs people with H.I.V. must take, refused for years to provide AZT at a reasonable price to poor countries. Only after a publicized dispute did it hand over rights to its AIDS medicines to a local generic drug company in South Africa. AZT was developed to treat H.I.V. at the National Institutes of Health — financed by taxpayer money — in collaboration with Burroughs Wellcome, now GlaxoSmithKline. The most recent anti-H.I.V. drug, Fuzeon, also developed in part with taxpayer money, has been priced at $21,000 a year in Europe by its manufacturer, Roche. (It is feared it will cost even more in America.) For one person. That works out to more than $57 a day.

Posted by: anne on March 16, 2003 11:13 AM

Funny... The article does not mention defense spending at all, except this one phrase: "At first, the government can try to satisfy demands from its supporters for greater social expenditures by redistributing expenditures from lower-priority categories, for example, canceling orders for military aircraft and using the funds for hunger programs." What about battle tanks and light armored vehicles that Brazil not only manufactures, but continues to develop? This is a luxury a much wealthier Sweden decided to abandon in favor of imports and licensing in the 1980s and yet wealthier Switzerland didn't even try...

Posted by: Nikolai Chuvakhin on March 16, 2003 04:52 PM

Unfortunately Anne, it is not fair to compare tuberculosis to AIDS. The current treatments for AIDS are not even close to being cures. Expensive testing is needed just to find out which drug is currently working on a patient. The treatment regimens are very hard to follow even for Americans with expert supervision, and many patients discontinue use due to side effects. The hard to manufacture Fuzeon would be very expensive even if it were to be licensed for free, is very difficult to administer, and also leads to resistance "[in] some after only weeks or months". So one could spend billions building Fuzeon factories which might turn out to be useless, or those billions could be spent on continued research and prevention, and perhaps wider access to the older AIDS drugs which might give some relief at reasonable cost.

Posted by: snsterling on March 16, 2003 08:42 PM

Topic drift once again rears its ugly head. Anyway, I'll play along. What I'm really interested in finding out, uninformed that I am about AIDS, is why there has been not even a glimmer of success in coming up with an AIDS vaccine, and why relatively few resources have been devoted in trying to come up with one as opposed to promoting new anti-retroviral drugs. If anyone can direct me to a web site or article on this question, I'd be grateful.

Posted by: andres on March 16, 2003 09:23 PM

I'd also remind readers that the Institute for International Economics is often considered to be the "plausibly deniable" wing of the IMF, and that it is unlikely to be a coincidence that Goldstein has written precisely this paper at precisely this time.

I've had a lot of serious issues with IIE papers in general and Morris Goldstein in particular in the past, some of which have been catalogued on my own weblog, but I must enthusiastically second Brad's recommendation of the linked working paper. It's very good indeed.

Posted by: dsquared on March 17, 2003 03:31 AM
more technical:

Apparently the standard vaccine approaches were ineffective, so researchers are inventing entirely new vaccination approaches. I suppose the quantity of various types of research is determined by how successfully each has progressed.

Posted by: snsterling on March 17, 2003 06:59 AM


Thank you for the important posts.

I do not think this is topic drift at all. Attending to health care in developing economies is both critically important in the development process and offers a fine chance to lauch and nuture domestic helath care companies. Thailand is becoming a health care destination for many in Asia. Generic drug companies in India are an important development component. Attending to AIDS in Brazil, has been a wonderful economic development protection....

Posted by: anne on March 17, 2003 10:17 AM

Of course a vaccine is the ultimate answer for AIDS. Though there is much research going on, the development of a vaccine is a most difficult problem. Awareness and behavior change are also important answers. But, there are many drugs that can be readily and effectively used against HIV/AIDS in Africa. The need is for resources. What Brazil has done to prevent mother to child transmission can be done through southern Africa, and more and more.

Posted by: anne on March 17, 2003 10:37 AM

March 17, 2003

Lawmakers Agree on AIDS Bill Details

After weeks of wrangling over President Bush's global AIDS initiative, lawmakers in the House say they will introduce legislation on Monday that would far exceed the president's spending request for a global fund to fight the disease.

Mr. Bush asked for $15 billion over the next five years to fight AIDS, including only $200 million for the two-year-old global fund, which he has said has not proven itself. The House measure, drafted by members from both parties, authorizes the $15 billion, at $3 billion a year for five years, but earmarks more of it for the global fund, up to $1 billion in 2004 alone....

Posted by: anne on March 17, 2003 10:39 AM

"I'd also remind readers that the Institute for International Economics is often considered to be the "plausibly deniable" wing of the IMF, and that it is unlikely to be a coincidence that Goldstein has written precisely this paper at precisely this time."

DD - Please exaplin a bit more. I read the paper thoroughly.

Posted by: jd on March 17, 2003 11:05 AM

Sterling: very good links. Thanks.

Posted by: andres on March 17, 2003 11:11 AM

Thanks Anne, Sterling, DD, Andres -

Brazil is a tough bargainer, and may become tougher. What occurs to me is that the IMF is trying to exert pressure on Brazil to support a firm stance on debt payment. Interesting.

Posted by: jd on March 17, 2003 12:43 PM
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