“Reforming” means finding ways to increase government revenues while decreasing government spending. It’s unpopular because it usually means raising taxes, selling off nationalized industries and cutting social spending.
“Moral hazard.” Moral hazard?? Moral hazard???
The Duvaliers stole 100’s of millions of dollars from banks and the Haitian people, and Haitians, many living on $1 a day, must pay this back so that … so that what exactly? So that if someone like the Duvaliers takes over again, Western banks will finance the new dictator’s yachts and private jets??
I can’t point you to a specific webpage right now, but many claim that during Asia’s 1990’s crisis, countries that rejected IMF regulation recovered more quickly (and repaid their debts). Anyone reading this thread who has not read a Naomi Klein book, stop whatever you’re doing and go to a bookstore immediately. Yes, she’s “extreme”, but she writes much truth.
And let’s not hear defenders of Wall Street dare speak of “moral hazard”. Wall Street knows all about moral hazard now: make the stupidest investments you can think of, and as long as the investments are big enough, it’s “heads we win, tails the taxpayer loses.”
Moral hazard indeed. :mad: :smack:
There’s a perfectly good argument to be made that Haiti shouldn’t have to pay back money the Duvaliers stole. But that’s an argument to be made on a case by case basis. That isn’t what the OP was asking, nor was the “moral hazard” point that seemed to upset you so much being made about Haiti in particular.
And of course, Haiti already had much of its debt forgiven before the earthquake. So why complain about Haiti? They’ve gotten exactly what the OP asks for.
I used an easy example to illustrate principle, rather than handling case by case. But please note that many cases would have strong similarities to Haiti, though much less egregious.
And by the way, is it not true that the “debt forgiveness before the earthquake” you refer to was in late 2009, 23 years after the end of Duvalier rule? (And, moreover, not all debt was forgiven.)
Some of it, IIRC. But surely it’s fair for the lenders to ensure the new Haitian government isn’t, you know, corrupt? What’s the first thing Haiti did after having its debt forgiven?
They asked to borrow more money.
It’s not only fair, but frankly the only sane course of action to arrive at a reasonably safe conclusion that a country is actually stable and not run by kleptocrats before handing them another bag of money. Wouldn’t it be nuts to do otherwise? Haiti had for some time been denied foreign aid for the simple reason that there was no expectation that the money would, in fact, be used to help anyone. Once a modicum of political stability was restored - and in the case of Haiti, they were frankly pretty generous in defining “political stability” - Haiti began receiving substantial amounts of aid.
For all the complaining one hears about the IMF and how horrible they are, many of the conditions they place on loans are conditions designed* to prevent the Duvaliers of the world from simply spiriting away all the money.* Repeating the same errors is stupidity, not charity.
Accidental double post deleted.
Your points have much validity. I still think Naomi Klein should be required reading, however.
And it absolutely infuriates me to hear “American banks” and “moral hazard” used in the same sentence when the finger of “morality” is pointed not at the Wall Street maniacs who brought us to the brink of ruin, but rather at destitute third-world nations.
Hmmm … maybe the excesses of modern American klepto-capitalism have finally turned me into a leftist. :dubious:
I’ve read her work. With due respect, she doesn’t impress me at all. Lots of sizzle, no steak. Her grasp of economics is horrifically ignorant, she’s prone to serious truth-bending, and she’s an activist, not a scientist. But to each his own.
I recommended it in the other thread, but for a nice breakdown of modern right wing AND left wing economic fallacies, you can’t go wrong with Joseph Heath’s Filthy Lucre: Economics for People Who Hate Capitalism. Heath’s a Canadian, like Klein, so I like the examples he uses, and he’s ten times smarter.
That’s quite understandable.
Third World debt relief is a legitimate problem, but we’ve got about a century of experience and trillions of wasted dollars to prove that just giving money from one state to another doesn’t work. And it doesn’t work, in part, (though not entirely) due to moral hazard. The facts are what the are. We could talk about this all day, about the leftovers of colonialism, about support of friendly dictatorships as Cold War proxy fiefdoms, corruption, kickbacks to domestic arms industries, so on and so forth.
What’s certain is that when you pour money into an undemocratic kleptocracy what you generally get is nothing. Almost every penny raised for African famine relief in the 1980s, all that Live Aid effort and whatnot, might as well have been thrown into the sea. Haiti has received more money in foreign aid per capita than its average per capite GDP. Just giving people money in huge swaths absolutely does have a moral hazard associated with it, and generally speaking that moral hazard is increased proportional to
- The amount per person, and
- The opportunity for individuals to steal it instead of distributing it to the needy.
That’s why ordinary welfare’s moral hazard is demonstrably quite low - it certainly exists but efforts to measure it have shown it’s not as big a problem as conservatives would have you believe. Welfare checks are just too small to make a big difference in people’s behaviour, and there’s very little opportunity for someone to get rich ripping the system off.
As to what the solution to this sort of thing is, unfortunately, I don’t know. If I did I’d be doing it and winning Nobel Prizes. What I DO know is that piling up bricks of cash in big piles and setting it on fire won’t help.