Last Updated: Friday - 09/24/2010
March 29, 1999
Deck stacked against poor nations
Why do I keep hammering away at this debt issue? First of all because man-made poverty is an immense injustice affecting millions of lives. It has gone on for too long almost unnoticed.
Second, the churches have made a commitment to work together towards a just transformation of the structures which deprive people of the most basic human rights such as food and shelter. This is not so much about money as it is about people.
For the cost of three Stealth bombers, the debt of Third World countries could be forgiven. It could be done with the stroke of a pen and there isn't a sane person in the world who would miss the flying death machines.
It is however going to take a massive effort, a conversion of sorts, a holy resistance if you will, to stop the ongoing pauperization which led to the debt to begin with.
That's why we need to educate ourselves so that we can join hands and take a stand against an assault on the earth, the common good and the lives of the majority of the world's people.
Let's examine how poverty is created under the supervision of Western institutions like the International Monetary Fund. The underdeveloped world suffers a chronic shortage on the balance of payments. The short-term loans of the IMF will not remedy the problem but are designed only to pay off previous loans.
The two principle strategies of the IMF structural adjustment program are devaluation of the currency (which is to bring about an increase in exports and a decrease in imports) and high interest rates (to encourage investors to buy public bonds).
The local economy stagnates because of incentives to speculate in emerging markets instead of in labour-intensive, income-producing activities.
The effort of the underdeveloped world to increase its exports is hindered by the dominance of European and American industry. Western industry has the advantage of a prosperous domestic consumer market combined with street smarts about the world market.
It boasts highly-qualified personnel, advanced research and production processes, and a virtual monopoly in high technology. The only advantage the underdeveloped world can offer is extremely low wages.
Due to low wages and high unemployment, the local market is very small and it is difficult for these nations to launch their own mass production. Because the health and education budgets are slashed by an austerity plan, the low-paid labour force is physically and educationally disadvantaged.
Besides, the move to mechanization and cybernation has made wages less of a factor. Industrialized countries with higher wages can thus outperform the underdeveloped world in certain sectors.
Where there is cheap labour, transnational corporations have swooped in to take advantage of the absence of labour laws and strict codes of conduct.
Union busting is a way to maximize profits so the poor wage earner cannot even properly organize to negotiate for better working conditions or equitable pay.
Only a few OPEC countries and some highly industrialized countries show a surplus on their balance of payments. The rest of the world struggles with a shortage which it tries to overcome by the IMF recipe of increased exports and decreased imports.
Since every potential trading partner is striving for that objective, the result is a fierce competition in which only the most powerful are victorious.
It is impossible for all countries to increase exports and lower imports at the same time.
In the end the underdeveloped world loses while multinational corporations benefit from the free flow of trade and money. Capital export from poor to rich countries is big business.
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