Bush: Pillaging the People for Fun and Profit

Perhaps misunderstanding conservative Grover Norquist's recommedation to get government "down to the size where we can drown it in the bathtub," the Bush administration has been working hard to drown the American people in a sea of red ink.

Maybe they're just doing now to the U.S. poor what the enforcers of U.S. global economic policy, the IMF, the World Bank, ECAs and commercial banks have been doing in poor nations for years: sucking out their lifeblood for transfusion to the wealthy, and leaving in return the tell-tale sea of red ink.

Below is my review of THE DEBT THREAT by Noreena Hertz (photo above). See what you think...

The Plague, February 21, 2005

Back in the good old days of Western imperialism, Western powers used the same tried and true approach over and over again to extract wealth from and subdue non-Western peoples: invasion and/or colonization, and/or enslavement. This method was effective for a few hundred years, until subjugated populations after living in close quarters with their masters and learning their weaknesses, mounted various successful forms of resistance against them, e.g., the Algerians' violent resistance of the French, or Gandhi's non-violent resistance of the British. After the First World War, the Western powers (although with much backsliding, evident now in Iraq), began to withdraw their armies and close up their colonial shops. After the great bloodbath of WWI the old cover stories -- "The White Man's Burden" - were so threadbare that the average Westerner could at last see imperialism for the nasty racket it was.

But wait. It turns out that was just the opening chapter of imperialism. There's a new chapter, or in business-speak a "new paradigm." Through the relatively abstract miracle of debt, rich countries since WWII have been able to reclaim their hegemony. The beauty part for the West has been that invasion through debt does not require much in the way of armies and colonists. In fact, what is really sweet about the new way of doing business is that invaders get to dictate terms to poor countries and don't usually have to back up their threats with armies. Instead there's the threat that global traders will lower poor nations' bond ratings, squeeze their economies, and, by extension, their people, until they see the light. Kind of like loan sharking when you think about it.

Loan sharks, contrary to the stories told in movies and books, generally like to keep their customers alive, because after all, they want to get their money back. In this new form of colonialism that's pretty much true, too. But still, people do get killed like they did during the traditional imperialist paradigm. Hertz shows in chilling detail, for instance, how a cholera epidemic swept through Peru because Alberto Fujimori, following the dictates of the IMF and World Bank, sent every nickel he could get his hands on to pay the interest on Peru's national debt so Peru would get back into the good graces of the financial markets. Healthcare services, welfare and other human services were curtailed or cut to pay the debt. When Peru and opened up its economy to the international market as per the IMF just as commodity prices dropped, unemployment and poverty rates went through the roof. Rural dwellers moved to the city seeking work. Work was not available; unsanitary conditions were. So desperate was their poverty that these Peruvians couldn't afford soap to wash their hands or kerosene to boil their water. And so cholera killed nearly 4,000 in less than a year.

Ms. Hertz provides much needed insight into the history of the debt threat. It began in the Cold War - the era of the "chessboard and the checkbook" in Thomas Friedman's phrase - when the U.S. and the Soviets were buying allies. Few restrictions applied to these loans. Dictators and oligarchs could spend it any way they wanted as long as they remained friends. Then in the 70s came the commercial U.S. banks, awash in petrodollars, making loans and betting that Uncle Sam would reach into the pockets of the U.S. taxpayer to bail them out if necessary. After the Soviet collapse ended the era of checkbook diplomacy, a newly invigorated IMF and World Bank began its recent career as a lender of last resort. Their one size fits all free market approach placed the same onerous restrictions on every nation they did business with. Debt enslaved nations meekly agreed to more enslavement lest these agencies tighten the screws further.

Ms. Hertz takes us through this history at a brisk pace and shows through examples that though the approach may have changed, the result is the same: poor countries in thrall to rich countries. She shows with gripping examples not only how the racket works but, more importantly, how these practices put the West in danger by promoting dangerous conditions around the world. For instance, disease can now board an airplane and land in any Western nation in a matter of hours. Poor people grown even poorer because of their nations cannot afford basic health services and so grow weaker, more susceptible. Their afflictions mutate and metastasize, and soon the entire body of humanity is at risk. Then, of course, there is the wholesale destruction of the environment as poor countries rip up their forests and sell their oil to the West so it may be burned or turned into toxins. And, of course, there are terrorists who find an ever expanding pool of ready recruits among the poor, a whole new class of young men who are boiling with resentment and rage. Tragically, in the narrow Western ethos of profit and loss, payment of debt must override all other concerns, because profit-making is the only goal, and capitalism the best of all possible alternatives.

With THE DEBT THREAT, Ms. Hertz's continues to demonstrate how the forces of global hypercapitalism that she explored in her first book ("The Silent Takeover") put the lives of everyone in physical, and at the very least, moral jeopardy. As in that book, her personal story gives one hope: an economist trained at Wharton (she was there to help "jump start" the Soviet economy in the early 90s and was witness first hand to the anti-human ethos of the free-market fabulists), she has switched her allegiance to the other side of the barricades. On a positive note, global protests and activism has managed to arrest some of the worst abuses of the World Bank and IMF, the commercial banks and ECAs. One can only hope that this cogently argued work will awaken more and more people to this latest, and perhaps even more deadly strain of imperialism.