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November 29, 2009, Stabroek News, The political economy of the Low Carbon Development Strategy (LCDS), by Dr. Clive Thomas,

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November 29, 2009, Stabroek News, The political economy of the Low Carbon Development Strategy (LCDS), by Dr. Clive Thomas,

 

Last week I concluded my rather extended discussion on the current global economic crisis and the lessons to be learnt from this. I trust readers would not infer from this that I believe the global crisis is over and we can safely return to business as usual. Far from it, while this is an appropriate point to introduce other topics to the discussion, I promise I will return to the global crisis if there are significant untoward developments in the coming weeks as we close out 2009 and enter into the New Year, 2010.

 

 

Readers would recall that, at their urging, a couple of months ago I had promised to engage two topics. One is the Low Carbon Development Strategy (LCDS). The draft LCDS was released for consultations by the government last June (2009). The other topic is to revisit my rather extended elaboration of the thesis regarding the "criminalization of the state in Guyana." This was represented more than six years ago in these Sunday Stabroek columns (March 2003 to September 2003). Both topics are now extremely timely.

 

In regard to the first, the United Nations Climate Change Conference (UN-CCC) known as the Copenhagen Summit will be on us in less than a fortnight’s time. It has been planned to replace the Kyoto Protocol, which comes to an end in 2012 with a planned successor agreement (Copenhagen Protocol!) to avoid global catastrophe due to climate change and global warming.

 

In regard to the latter, the Joint Opposition Political Parties (JOPP) have issued a dossier calling for an international inquiry into human rights abuses in Guyana. As a consequence issues pertaining to the criminalization of the state are right now leading public political discussions.

 

The problem that I face, however, is that the promised revision of the draft LCDS is not yet available on the website of the Office of the President. The government promise reported in the media as recently as mid-October this year is that the revised LCDS will be taken to the National Assembly before the summit. The most recent substantial addition to the website has been the Memorandum of Understanding between the Government of the Cooperative Republic of Guyana and the Government of the Kingdom of Norway regarding cooperation on "Issues related to the Fight against Climate Change, the Protection of Biodiversity and the Enhancement of Sustainable Development," signed on November 9, 2009, and the accompanying Joint Concept Note on REDD+ cooperation between the Governments of Guyana and Norway.

 

Despite the absence of the final LCDS document at this late stage, I shall start my assessment of the draft LCDS, hoping the revised version will be as expected, made available in time for the Copenhagen Summit. What I intend to do is to develop an assessment of the LCDS from the perspective of what is termed a 'political economy approach.' To avoid confusion, I shall make clear for the remainder of this article what exactly is meant when I refer to a 'political economy approach to the LCDS.'

 

What is meant by political economy

 

To begin with, this approach implies that my evaluation of the LCDS will be from a multi-disciplinary perspective. That is, it will encompass a range of disciplines, utilized in an integrated way, but with primary emphasis on the politics and economics of the LCDS.

 

The other disciplines involved include, but do not exhaust, the following: international relations, human ecology, history, geography, anthropology, culture and communications, as well as individual and social psychology and behaviour. As I shall demonstrate, such a broad inter-disciplinary approach is in fact dictated by the subject matter under consideration. There is no other approach logically possible.

 

Second, the special emphasis on politics and economics explicitly refers to the interaction between on the one hand, the state and the political environment, and on the other, the economic system. In the case of the economic system the main sub-disciplines utilized are resource economics, development economics, environmental economics and international development policy and institutions. In the case of the state and the political environment, these will be looked at separately and together in their international, regional and domestic contexts.

 

Third, and of equal importance to the others, this perspective locates the LCDS in a dynamic, fluid, process-oriented field of inquiry. The emphasis is going to be on explaining/revealing the determining factors (that is, ideas, beliefs, actions and behaviour) in the LCDS. These, I shall argue, define the particular rhythm which governs the economic and political policies and outcomes expected of the LCDS.

 

Empowered not intimidated

 

By establishing these issues up front, I do not intend to intimidate readers. On the contrary, my hope is to encourage readers to be empowered with some insights into what the LCDS (draft) holds forth for our country and its future development.

 

To make all this clearer, I will have to devote some time to a concise and focused presentation of the key elements in the structure of the draft LCDS. In that presentation it will be seen that the draft LCDS purports to be a dynamic structural-transformational and paradigm-shifting formulation of a strategy designed to put Guyana onto a low-carbon development path.

 

Paradoxically, and therefore ultimately illogically, this is presented within a simple, non-dynamic comparative static framework based on conventional and naïve neoclassical marginal economic analysis. Such poverty of method has underlain many failed conventional economic approaches to policy formulation in poor developing countries.

 

As I shall argue in this instance, it stems from the fact that the key intellectual ideas and indeed the intellectual authorship of the draft LCDS derive from the naïve adoption of the model presented in the McKinsey Report on Creating Incentives to Avoid Deforestation prepared for the Government of Guyana.

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McKinsey also cooked the study results for the city after September 11, 2001. As this article tells us "McKinsey took heat for its closeness to Enron, which the consulting firm had advised for eighteen years. Former Enron CEO Jeff Skilling was a McKinsey alumnus..." If any one firm can be said to have laid the corrupt groundwork for plundering the energy sector, including the newest trick of global carbon-trading, it would have to be a tossup between McKinsey and Cantor-Fitzgerald.

 

July 26, 2009, New York Times, The Answer Men, by Duff McDonald,

 

(Photo: Mark Horn/Getty Images)

 

McKinsey & Co. are supposed to know it all. They’re business consultants who travel the world and charge corporations top dollar to help them run with state-of-the-art efficiency. McKinsey gets called in when things are good (time to expand!) or, like now, bad (to give bosses cover to make bloody-minded decisions). Known as “the Firm,” McKinsey has consultants in 90 offices in 50 countries. They hire the best-credentialed people, and they pay them well. By their own count, they serve 80 of the Fortune 100, though who, precisely, retains them, they try to keep confidential. Last week, they were hired to try to fix the fabulously free-spending Condé Nast.

 

Origins

 

The firm was founded in 1926 by James O. McKinsey. Born in 1889 and raised in a three-room house in the Ozarks, the ambitious McKinsey was a professor and consultant, and an early practitioner of the principles of "scientific management," or the detailed study of work flow and the division of labor. The company not only survived the Depression, it thrived, until the untimely death of McKinsey in 1937. His disciple Marvin Bower took the firm to consulting glory over the next 30 years, in part through an obsession with being "professional"—in appearance, tone, and conduct. Bower once forbade all junior consultants from wearing argyle socks because he thought they would distract clients. And the firm’s consultants were required to wear fedoras until President Kennedy stopped wearing them.

 

The Product

 

McKinsey is brought in to let companies in on the latest in global management fads (a few years back, McKinsey reportedly evangelized about “the war for talent,” which meant "promote stars," even if they don’t have experience), or to target workers for layoffs (e.g., "streamlining," "downsizing"). McKinsey consultants Tom Peters and Robert Waterman pretty much invented the notion of "corporate culture" in their book In Search of Excellence, which sold 6 million copies.

 

School Ties

 

McKinsey hired its first Harvard M.B.A. in 1953 and continues to cherry-pick from the school's Baker Scholars—the top 5 percent of the graduating class. At one point, more than a third of the firm's consultants held a Harvard M.B.A.

 

Bloomberg Ties

 

Mayor Bloomberg has used McKinsey repeatedly since he’s been in office. Sometimes McKinsey did it for free (troubleshooting the Police and Fire Departments’ responses to 9/11) and sometimes for pay (a report on how the city could stand its ground in high finance against London). The Department of Education has also used them, and PlaNYC was based on McKinsey data-crunching.

 

Problem Child

 

McKinsey took heat for its closeness to Enron, which the consulting firm had advised for eighteen years. Former Enron CEO Jeff Skilling was a McKinsey alumnus, and consultants had endorsed Enron's "asset-light" strategy; it was reportedly very much in thrall to the "war for talent" theories, too.

 

Overage

 

McKinsey reportedly earned $96 million from AT&T between 1989 and 1996, including $30 million in 1992 alone.

 

Alumni News

 

More CEOs of Fortune 500 companies have been McKinsey alumni than from anywhere else, including Lou Gerstner (IBM, Carlyle Group), Harvey Golub (American Express, Campbell Soup), and Michael Jordan (Westinghouse).Louisiana governor and Republican in a hurry Bobby Jindal? He's McKinsey, too. McKinsey alumna Nancy Killefer is Obama's "chief performance officer." The firm has 19,000 alumni around the world.

 

CEO Training Camp

 

A 2008 study by USA Today calculated that the odds of a McKinsey employee's becoming CEO at a public company were the best in the world, at 1 in 690.

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