Dear RN, July 26
Two postings, one to remind us of what our economic system means for many of
the world's people. It means, if you are an adult, being helpless to prevent
the children around you from succumbing to hunger and disease. And if you
are a child, it means, sometimes, being sold or living on the streets...
The other posting reminds us of what Hanah Arendt called "the banality of
evil" (when she wrote about Eichmann). Jeffrey Sachs apparently seems like
someone we could easily relate to. But his "economic medicine" is poison.
all the best, Jan
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From: •••@••.•••
Date: Thu, 22 Jul 1999 23:02:42 -0300
Subject: (en) Debt killing kids in Africa
Not only in Africa! From Russia to Argentina !
Date: Thu, 22 Jul 1999 Reply-To: •••@••.•••
From: Robert Weissman <•••@••.•••>
To: Multiple recipients of list STOP-IMF <•••@••.•••>
Subject: Debt killing kids in Africa
>From the BBC:
Thursday, July 22, 1999 Published at 13:13 GMT 14:13 UK
Debt 'killing children'
Children's health is suffering as governments struggle to
pay debts
Mortality rates among mothers and children are rising as a
result of the crippling cost of debt in the world's poorest countries, says
a United Nations report.
Unicef says women and children are bearing
the brunt of the debt crisis, especially in Africa, where many governments
are diverting resources away from health and education.
As a result, hundreds of millions of people
are suffering from ill health, and children are being condemned to a life
without schooling, says the annual Progress of Nations report.
The report draws up a league table of
countries where children are most at risk.
Angola comes out as as the worst country
for a child to live in.
It also assesses the progress being made in
the battle against polio, and the impact of
Aids on children.
Following Angola, the organisation ranks
Sierra Leone, Afghanistan and Somalia as
the next most dangerous places to grow
up.
In Angola, the continuing civil war, the
virtual collapse of the health system, a
lack of basic education and nationwide
food shortages combine to make it the
worst place for children.
See: Angola - no place for a child
The quality of life indicators chosen by
Unicef are
Mortality rates for under-fives
The percentage of underweight
children
Primary school attendance
Risk from armed conflict
The prevalence of Aids.
Not surprisingly, advanced western countries do best.
New call for debt relief
The UN children's organisation calls for the outright
cancellation of all debt.
It says the present scheme to offer debt
relief to the world's 41 poorest and most
heavily-indebted countries is too rigid and
too slow.
Countries have to wait six years before
becoming eligible and so far only three -
Uganda, Bolivia and Guyana - have
benefited.
Its executive director, Carole Bellamy,
says sub-Saharan Africa is the worst
affected.
"Sub-Saharan Africa alone is caught in a
debt trap. The governments spend more on
servicing their more than $300bn debt
than on the health and education of their
children "
Far from rewarding irresponsibility, Unicef believes debt
relief is an essential
weapon in the fight against poverty.
Without it, the agency says, the goal of cutting world
poverty by half by 2015 is
unattainable.
*********************************************************
Date: Mon, 26 Jul 1999 00:13:17 +0600
From: "wendell w. solomons" <•••@••.•••>
<snip>
For the last 20 years the theory has been 'privatization.'
Apparently, a mother will look after meals better if her
child pays for it.
This 'privatization' theory entered all the Western text
books since 1976 (Reagan and Milton Friedman.)
History is different. When the U.S. wanted to consolidate,
Lincoln took business to school. He focused attention on
railways. Through that state focus, business developed tracks,
engines, steel and machine building. In 50 years time, U.S.
GNP was twice that of Britain's. Germany and Japan chose this
path of development themselves.
Small countries have to focus on something or they get ruined
and end up at the pawnshop. The pawnshop today is hidden behind
the IMF. Big banks collect on the loans to poor countries.
These same banks and funds control the main Western TV stations.
So any rationality gets lost. This confused Western Rightists
and Leftists; 'privatization' has degraded many to self-centred
anarchism.
The only purposeful Western group I have so far come across is
Canada based. They have proposed that a tax be collected on all
mega fund transactions and distributed to poor countries. The
party leading this is the Canada Action Party (CAP).
An associated group is the coalition against the Multilateral Agree-
ment on Investment. Then we see important posts from Janet Eaton,
again Canadian.
Today I find that it is rather a waste of my time to be on lists
when Americans or Brits try to discuss economics because it often
just boils down to the theory that a mother must collect pennies
from her child to give good food.
--- -- -
So you see I have come rather close to your view that we are in a
dangerous situation.
No one else's calamity matters so it seems that the USA must fall
into isolation and under economic siege among a 100 poor countries
for Americans to wake up and understand that they have provided the
lair for the beast. It is indeed great to find that a small number
of Canadians are alert to the danger and taking action.
Rgds
'
---- -
From: Jonathan Larson
web page at:
http://clear.lakes.com/~eltechno/
For Jeff Sach to criticize the IMF for its failings is a little like a hog
criticizing someone for their foul odor.
I am including a piece of an essay written in 1993 called "The Rot at the
Top" about J. Sachs. For those who do not know the man and his work, I
hope this is a helpful primer.
**************************
"In this case, the Ugly
American had been replaced by the Utterly Ignorant
American. Sadly, the damage done may last a
generation. And if the historic opportunity of 1989
is lost in Russia and the world becomes more
dangerous, the ignorance of Jeffery Sachs must be
considered a significant reason."
* Ignorance is Dangerous *
Jeffery Sachs must be considered, quite
legitimately, as representative of Harvard
University. In fact, he is a Harvard hotshot who was
granted a full professorship with tenure at the
still-tender age of 36. He is such a star in their
intellectual firmament that they regularly give him
time off from his other duties to advise foreign
governments on matters of public policy.
Sachs is an economist. Modern economists are ranked
by their ability to mathematically model human
behavior with highly complex equations. Modeling
specialists are called "quant jocks" for their
dedication to the highly specialized gymnastics of
advanced math. Make no mistake, if mathematic
modeling were an Olympic sport, Sachs would be a
medal contender.
For an economist, Sachs borders on hip. His writing
is not exactly exciting, but unlike most of his
peers', it can be read by the general public. He
wears his hair in the mop-top style of the 1964
Beatles and projects the persona of a caring
individual who is at ease with the responsibilities
of a public intellectual. Coming from a distinctly
middle-class background, Sachs has none of the
clenched-teeth snobbery usually associated with Ivy
League schools. He is even good on television-that
ultimate litmus test in American culture. There is
no reason to believe that he is not loved and
admired by his wife, children, students, or dog.
In spite of this, Jeffery Sachs has become one of
the most hated Americans around the world. Because
he is obviously not evil, stupid, lazy, or socially
inept, the only option for this seemingly bizarre
outcome is ignorance. And if Sachs is ignorant,
there is rot at the top of the American educational
system. Obviously, this transformation from
respected academic superstar to a person considered
to be an enemy of humanity is a case worth studying.
Sachs' first foreign adventure in public policy
formation took place in Bolivia in 1984. Bolivia was
an economic basket case caught in a debt spiral
caused by corrupt overborrowing by a succession of
military juntas. American banks had loaned billions
that had been spent on weapons or simply squandered
on payoffs that had increased the numbered bank
accounts of anyone who could get their hands on the
money.
All of this lending was based on the shaky
assumption of former Citibank Chairman Walter
Wriston who made famous the saying, "Countries do
not go bankrupt." Besides, Bolivia was a prime
source of vital natural resource-tin. Tin is used
for food packaging and electronic circuits. But in
the go-go lending days of the 1970s, so many banks
simultaneously took Wriston's advice seriously,
Bolivia's income from tin was borrowed against many
times over. Then the worst happened, the
international price of tin collapsed as consumers
around the world found substitutes-especially for
food packaging.
By 1983, it was obvious that there was no way that
Bolivia could even pay a fraction of the interest it
owed on the money it had borrowed. Not only had the
price of tin collapsed, but none of the money
borrowed had been used to create alternative sources
of income. The money had been spent or stolen-not
invested.
With money over committed for debt service,
virtually none remained to import anything. Severe
shortages of goods triggered an outbreak of
hyperinflation sometimes running as high as 1600% a
month.
Sachs' job was to bring some order out of this
chaos. His recommendations followed essentially
standard practices for such situations. In return
for modest debt restructuring, Bolivia was forced to
"rationalize" the tin mines, sell off their
publicly-owned companies, severely restrict the
money supply, and embark on a course of fiscal
austerity. By forcing the banks to take a small
"haircut" in the deal, Sachs even gained a
reputation for innovative and enlightened behavior
in the eyes of the major Western business presses.
In fact, some thought he had given the Bolivians too
good a deal.
From the point of view of the Bolivians, their chaos
was replaced by utter desperation. This is one of
the world's poorest countries. Che Guevarra was
killed in Bolivia where he had gone to export the
Cuban revolution. He had selected Bolivia precisely
because he considered social conditions so desperate
that the country was ripe for a revolution.
Fighting inflation by restricting the supply of
money obviously did nothing to increase the supply
of goods. To the average citizen of La Paz, rapidly
inflating money was better than having no money at
all.
The thousands of tin miners who lost their jobs were
forced into an economy with few alternatives. Of the
ways to survive, only one held any realistic
possibilities-coca farming ...
But such were the sordid details. Sachs was a hero
who had protected the income stream of the banks by
demonstrating that the calls for economic structural
adjustments could be flexibly applied in even the
worst-case scenario. The fact that he, an author of
an agreement that would help swamp American cities
with cheap crack, probably never even entered his
head. No economic model demonstrates a link between
tin mining and drug addiction so for Sachs, it
didn't exist as a possibility.
Flush with his "triumph" in Bolivia, Sachs would
take his traveling economic salvation show to
Poland. This was uncharted waters. No one had ever
converted a Communist state-run economy to a
Capitalist one before. But Sachs seemed not to have
any doubts about his prescriptions that were called
"Shock Therapy." Poland was to make its currency
convertible so that they would become part of the
international system of trade, deregulate prices and
otherwise relax state controls, privatize
state-owned industries, and close down inefficient
operations. Any or all of these suggestions sounded
perfectly logical on the face of things.
Sachs, however, insisted that all of these things
must happen together. Again, he offered the
incentive of debt restructuring and since Poland was
also so deeply in debt that even interest payments
were impossible, this convinced the otherwise
skeptical Poles who, in any case, had few
alternatives. "Shock Therapy" was implemented to the
cheers of the western financial press. And again,
the results were utter chaos.
Rents and food prices skyrocketed. Poland's shops
filled with shiny western goods but people could not
afford them. Government services that held together
the social fabric like day-care were eliminated.
Many Polish cities relied on a single industry. If
they were deemed "inefficient" and closed, whole
cities lost their very reason to exist. Forty
percent unemployment rates became common in such
areas. Massive unemployment drove people to
flee-causing immigration problems in the rest of
Western Europe. The unemployed who stayed behind
were forced to become petty black marketers or
worse. Crime became an epidemic.
None of this seemed to trouble Sachs-if he had any
awareness of the problems he had caused. More
likely, he dismissed the cries of pain boiling up
from the population as merely a sort of birth trauma
for the new order. Sachs would tell whoever would
listen that his prescriptions would lead to the
prosperity of the West. For a while, the Poles
believed him. But as the birth trauma disintegrated
into social chaos, the rumblings of discontent began
to sound pre-revolutionary. In 1992, a parliamentary
election was held and the largest party turned out
to be the Communists. Sachs' prescriptions had been
so absurd that after 44 years of Stalinist misrule,
Poland was ready to return to the "good old days."
Sachs was on a roll. By 1989 he and his advice formed
a corporation with offices in Helsinki. Yeltsin
assumed power and Sachs became an official advisor
to the fledgling Russian government. The results
were even more devastating than in Poland.
Opposition to Sachs' ideas began to solidify in the
Parliament. In 1993, Yeltsin dissolved the
Parliament and attacked his opposition with tanks.
Elections were held and the biggest vote-getter was
a 1930s-style Fascist named Vladimir Zhiranovsky. In
fact, Yeltsin's "reformers" got less than 15% of the
total vote.
Sachs was a campaign issue in this election because,
almost incredibly, he appeared on Russian television
to sell the Yeltsin version of economic reform. His
Russian counterpart, an economist named Yegor
Gaidar, was blamed for the social disintegration of
a country that had been a superpower. Following the
elections, Gaidar was forced to resign as Yeltsin's
chief economic advisor and Sachs quit his job
shortly thereafter. He went home to the USA to write
his own account of the Russian debacle in The New
Republic. He was utterly unrepentant for causing the
chaos that literally put a Hitler in line to run a
country with over 10,000 nuclear weapons. His advice
was sound, he maintained steadfastly, the only
problem was that the Russians had not acted on his
ideas quickly enough ...
