The Anti-Manichaeist

As a former economics professor in Mexico, I picked up this book around Christmas time and started browsing it. Here is an interview with the author. The man has an interesting tale to tell, and not one that is very flattering to the economics profession. He(and the CIA jackals following up on him) basically used all sorts of devious means to manipulate many countries into accepting large loans they could never repay so that they would be indebted to the US gov’t. You can read an excerpt here.

I’ve sent emails to my former students, colleagues about the book, though I’m sure many of them will probably have already heard about it by now.

This is the sort of evidence that makes many seek to cancel the debt to Highly Indebted Poor Countries(HIPCs). I say instead of cancelling the debts, we credit a combination of the gov’ts of HIPCs and NonGov’t Organizations(NGOs) with representation/say-so on the World Bank in an alteration of their principals. That way they could get better terms and gradually negotiate the equivalent of the debt-cancellation. I wrote the following suggestion to many of the debt-cancellation organizations a couple of years ago.

I would like to suggest an alternative policy objective to activists currently seeking Debt-Cancellation for the Third World. I am an USAmerican professor of Economics teaching in Mexico. In my conversations with people from the Third World, I have generally found that while yes, the debt is a problem, there is reluctance to supporting its cancellation owing to the fact that it can be counted on that the windfall will certainly not go to those who need it most.

So my suggestion is that we refocus our solidarity and political activism on the alternative route of seeking a transfer in some of the governance of the World Bank, whose influence over highly indebted poor countries(HIDPCs) has grown as a result of the debt-crisis, to its debtors and perhaps NGOs like your organizations. This would be a better long run strategy for how we could spend our political capital. Say we take the amount of money that we could have cancelled as debt and instead give regional groupings of HIDPCs a stake in the World Bank. The money would then eventually make its way to the countries, but in the mean-time, the reallocation of the principals(who ultimately controls the purse-strings) of the World-Bank would make the World Bank, perhaps, a more honest intermediary between HIDPCs and the MNCs whose investment is needed for their development.

As such, cancelling the debts is less important than providing some voice for groups of nations in different parts of the world as to how WB policies are set. Hopefully, the World Bank could then become more of an instrument through which under-developed countries can collectively seek to encourage the reformation of each others institutions, while also ensuring that measures for fighting poverty and protecting the environment are maintained or encouraged.

In addition to this, I would suggest that we consider encouraging each other to use our political capital to encourage that the US renew a commitment to rebuilding Afghanistan as part of the war on Terrorism. For a good article on how we are neglecting the rebuilding of Afghanistan, I recommend the following…
http://www.nytimes.com/2002/07/28/m…ebb1f5f3880c2c1

At any rate, I pray that your organizations will take into account my idea and remember that it isn’t so much a matter of debt but rather governance that is at the root of the problem. Globalization is best understood as the increased interdependence of our economies/polities/societies. More and more, there are political and economic externalities from decisions made in one country on another. Underdeveloped countries have only very limited recourse to the UN in seeking to get representation/voice regarding decisions that affect them which are made in another country. I believe the World Bank, or even perhaps the IMF could be partially “captured” and transformed to institutions that will provide this voice, but that this would require a transfer of governance/ownership of the assets behind the World Bank.

This also is a good reason why part of Christian Peace-Keeping would also need to be internationalism, with a move to change the nature of international governance, making the actions of the World Bank and other organizations more transparent and giving their analysts a little more breathing room as I know typically their contracts are very short-term and with pressure from upstairs to frame the issues “correctly”.

dlw