The International Monetary Fund (IMF) and the World Bank are considering the merits of forgiving billions of dollars in Third World debt. Cancellation of the $70 billion debt would wipe out obligations resulting from poorly run governments. But that is not all it would do. It would bury forever a legacy of failure by multilateral government agencies to raise prosperity in the Third World. Consider that many Third World nations are enjoying an economic revival now; not because of government funding, but because of capitalism. Yes, markets rather than government intervention. Of course there will always be government intervention, but there are several types:
1. Facilitator government - which allows markets to function efficiently. It generally involves protection of rights, laws which aid disclosure, facilitate government decision making.
2. Distortive government - the type of government intervention which are politically motivated. They allow governments or political parties to retain power or influence, accumulate kickbacks for personal gain, or to fund their political campaigns, to mount civil wars. It includes the debt creation process by which governments fund all their largesse, the way they prop up sectors of the economy for the sake of political allies.
3. Oppressive and coercive government - the type of government which restricts the 'effective' capacity of people to enjoy the benefits of freedom, as well as demanding unconditional submission to public policy, whether the slavery of taxation (i.e. breaches of economic rights) or political persecution (i.e. breaches of civil rights). You really can't isolate these. You are not just an idea. An idea is a value because it manifests in the material. Freedom to work is meaningless unless you have the right to collect income. A 25% tax rate makes you just a part-time slave, and your government a part-time thief. Their incompetency arises from their lack of efficacy, lack of accountability and the unconditional servitude to which you have committed your life.
So before you consider whether you support Third World debt relief....consider this:
1. The money squandered by these multilateral government agencies was your money. It was dulled out with as much accountability as the process by which it was stolen from you, or you unthinkingly surrendered it.
2. The debt is being relieved by the agencies which incompetently and gratuitously gave it away. It came easy to them, as all money derived from coercion does, and they squandered it.
3. The debt cancellation will conceal the last vestiges of government incompetency on a grand scale, embodying multiple project management teams. Why? Might the concept have been flawed from the start?
4. The cancellation of the debt will not spell the end of these institutions. They will not be wound up. In fact, the debt cancellation will in all probability allow the IMF and other such agencies to start afresh. It will allow them to start anew....to make the same mistakes. You might ask? Have they learned their lesson? The answer is clearly no. No, because they have just bailed out Greece, Portugal, Ireland, Iceland and more countries will follow.
5. The process does not effect you because you don't see it. You don't see where you tax dollars go. You don't want to see, because you are not in control of your life, as you might wish to be. You do not see the debasement of your currency, you sparingly what to see the waste. Like many other people, you would probably prefer to just any memory of such travesties of justice, and hope for the best. People have been hoping for a long time now. Some people see progress. We have more human rights now right. We have political rights. We need to worry less about political persecution. True enough, but that is because you have no political voice. You have been silenced by democracy. Drowned out. There might have been a time when your voice mattered because it was the voice of reason....no longer. Now you are a number. Others have rights too right? Rights to impose on your rights. This is the basis of rights today - not protections but impositions. The carrot of course is that they are also entitlements....which you hope you can get because others are getting them. Or maybe you are too proud? But you will lose that quality when you realise that the burden placed upon you is too much. Prosperity is increasing right? Yet the age of retirement is being delayed. Governments are debasing your money faster than can make it. It would be criminal if it was not performed by governments which make the rules.
You will here that the governments whose debts are to be forgiven are in a dire state, and these huge debts are likely to discourage them to rejoin the global economy. These are countries like Uganda, Myanmar and Mozambique. It is fair to say that the poor people of those countries had as much control over your 'gratuities' as you had over giving them. The difference between their flagrant consumption is the same as your flagrant gratuity. It was never yours, and yet they and you sanction these institutions.
Today many African indebted countries are able to restore their balance sheets, and otherwise prosper simply by governments butting out of people's lives. The process started with reform of Japan, which gave rise to the ascension of the Asian Tiger economies. These Asian tigers are resource poor, and they are demanding resources from these resource-rich African nations. This process is resulting in Third World governments accepting responsibility and accountability. It is a discipline imposed by the market. Its not perfect because the participants in the market are not perfect. They can only be as healthy as the mixed or ambivalent values which drive humanity. These issues will be resolved over time; but not until societies repudiate the institutional structures which entrench them, whether its multilateral agencies like the World Bank, public (or worse religious private) education, representative democracy (which legitimatises tyranny of the majority...sorry minority). Only when we repudiate these collectivist institutions will we have real freedom from coercion.
The debt canceling proposal has no strings demanding reform; thus, it's the same bureaucrats simply spending other people's money.
Don't allow the IMF and the World Bank to be erase their old mistakes so they can make new ones.