Corporations Are Not Humans : Not Even Close---Episode 30

                             WHEN THE BILL COLLECTOR CALLS 

   Lending from the World Bank and its sister regional banks was a fairly orderly process until the late 1970s, when the rise in oil prices effected by the OPEC countries caused the foreign debt of Southern countries to skyrocket. From 1970 to 1980, the long-term external debt of low-income countries increased from $21 billion to $110 billion. As real interest rates soared, it became evident that the borrowing countries were so seriously overextended that default was imminent, leading potentially to a collapse of the whole system. The World Bank and the IMF, acing as overseers of the global financial system, stepped in --- much as court-appointed receivers in bankruptcy cases --- to set the terms of financial settlements between virtually bankrupt countries and the international lenders.
   In their capacity as international receivers, the World Bank and the IMF imposed packages of policy prescriptions on indebted nations under the rubric of structural adjustment. Each structural adjustment package called for sweeping economic policy reforms intended to channel more of the adjusted country's resources and productive activity toward debt repayment, privatize public assets and services,  and further open national economies to the global economy. Restrictions and tariffs on both imports and exports were reduced, and subsidies were offered to attract foreign investors. 
   Some of the reforms, such as a reduction of subsidies to the rich, were long overdue. However, others provided new subsidies for exporters and foreign investors. Government spending on social services for the poor was reduced to free more funds for loan repayment. In adjusted countries in Africa and Latin America aggregate governmental spending per person declined between 1980 and 1987, while the share of the total budget devoted to interest payments increased. The share of all other budget categories ---including defense---decreased. In Latin America, the portions of government budgets allocated to interest payments increased from 9 percent to 19.3 percent. In Africa, it rose from 7.7 percent to 12.5 percent. 
   The World Bank and the IMF proclaimed their structural adjustment programs to be a resounding success and declared the debt crisis resolved. They pointed to the fact that many of the adjusted countries subsequently experienced higher growth rates, expanded their export sectors, increased the total value of their exports, attracted new foreign investment, and became current on their debt repayments. Yet international debts and trade deficits increased and social conditions deteriorated.
   To attract foreign investors, adjusted governments suppress union organizing to hold down wages, benefits, and labor standards. They give special tax breaks and subsidies to foreign corporations and cut corners on environmental regulations. The fact that dozens of countries seek to increase foreign exchange earnings by increasing the export of natural resources and agricultural commodities drives down the prices of their export goods in international markets, creating pressures to extract and export even more to maintain foreign exchange earnings. Falling prices for export commodities, profit repatriation by foreign investors, and increased demand for manufactured imports stimulated by the reduction of tariff barriers result in continuing trade deficits for most countries. FROM 1980 ( the beginning of the World Bank -IMF decade of structural adjustment) TO 1992, THE AGGREGATE TRADE DEFICIT OF LOW-INCOME COUNTRIES INCREASED FROM $6.5 BILLION TO $34.7 BILLION.  
   The Bank and the IMF responded with more loans to cover the growing trade deficits as a reward for carrying out structural adjustment . As a result, the international indebtedness of low-income countries increased from $134 billion in 1980 to $473 billion in 1992. Annual interest payments on this debt increased from $6.4 billion to $18.3 billion. Rather than increasing their self-reliance, the world's low-income countries, under the guidance of the World Bank and the IMF, mortgage yet more of their futures to the international system each year.
   We may infer from the programs and policies of the World Bank and the IMF that they favor a world in which all goods for domestic consumption are imported from abroad and paid for with money borrowed from foreign banks. All domestic productive assets and natural resources are owned by foreign corporations and devoted to export production to repay the foreign loans. AND ALL PUBLIC SERVICES ARE OPERATED BY FOREIGN CORPORATIONS ON A FOR-PROFIT BASIS.  It makes no sense if the goal is help the poor. IT MAKES PERFECT SENSE IF THE GOAL IS TO INCREASE THE POWER AND PROFITS OF GLOBAL CORPORATIONS.