I know that this is going to end up as a debate so I am posting here.
Why are so many folks so mad at these organizations. It sounds to me as if they are mad about 1) industrialization and 2) that they want their loans paid back.
Waht’s the deal?
Americans hate the IMF because they if third world countries become well off they will have no place to send donations to and make themselves feel good.
They hate the WTO because it will overthrow their economic monopoly.
I’m assuming that you forgot to include the little 
at the end of your post.
Why do people hate the IMF, it depends on who you ask. It is hated by both members of the extreme right wing, and left-wing. As well as pretty much any worker who’s been in a country that had to implement an IMF austerity program. The IMF does things like force countries to increase unemployment levels, reduce workers wages and increase retirement ages. It “forces” through witholding loans. Here are some typical conditions attatched to loans
- Currency devaluation
- Increase in interest rates
- Relaxing of barriers to foreign investment
- Restrictions on wage rises
- Higher basic cost of living, and a rise in the price of everyday goods and services
- Privatisation of nationalised industries
- Massive cuts in public services
- Large-scale lay-offs
I recieved this list from http://www.democracy.org.hk/pastweek/97_sept/wb-imf.htm a good anti IMF-World Bank webpage
Now on to the WTO. The WTO lowers trade barriers. Why do people oppose this? The WTO ruled that labeling tuna Dolphin-Safe was anti-competive,(oversimplification). The United states had to let fishermen who killed Dolphins in nets to label their tuna dolphin-safe. there are many more examples of the WTO trampling over environmental and labor concerns for the interests of big business. People are rightfully concerned about this. Hence they oppose the WTO.
There’s so much to hate and so little time…
I think it’s kind of neat that both the far left and far right on the political ‘spectrum’ hate these international organizations.
Rightists often hate them because they are percieved as a threat to nationalism and sovereigneity, possibly even the precursors to the One World Boogeym… er, Government.
Leftists often hate them because they are percieved as a threat to unionism, social and environmental programs, and possibly even the primary obstacles to their world fantas… er, utopia.
And then there’s the real failings of these organizations, which overlap somewhat with the perspectives of both extremes, and justify despising these organizations all on their own…
“Banned by the Space Pope”
re: the IMF, I am assuming that these impositions are made on left leaning (socialist)countries?
I don’t see how lowering wages and increasing unemployment would result in an inflated cost of living. Seems liek the market would respond with lowered cost of living.
AS for the WTO favoring big business…how? All I have ever heard about is environmental concerns and anger at industrialization.
And how do you lower wages and increase unemployment at the same time?
Not that hard. Look at the Great Depresion. A great example in our own back yard.
I’m going to go out on a limb and guess that Tracer meant lower wages and decrease unemployment.
The Stanley Cup: A repeat is in the STARS!
I think the WTO is like a massive Hansa League. Just your average economic empire deditcated to making MORE money off the poor. It’s a nice slick system.
“Clatu, Verrata…nector?..neck-tie?”
That’s easy too. Lower wages and companies have more money to pay more employees. * Theroeticly *
That’s easy too. Lower wages and companies have more money to pay more employees. * Theroeticly *
The main problem I have with the WTO is that it will effectively remove any sovereignty we have over our own country. The WTO will effectively allocate jobs-if China, for example, can prove that it can produce bicycles cheaper than anyone else-then China will get the world bicycle industry-then the poor Americans who worked for Schwinn will have NO RECOURSE-the US will be unable to put any tariff on the Chinese bicycles. Its basically having a supranational, UNELECTED government. BE VERY AFRAID!!
egkelly:
Economist Edward Flaherty disagrees with the notion that allowing cheaper foreign-built imports will cost us good hard-working Americans our jobs: http://www.cofc.edu/~flaherty/tariffs.html
oldscratch: Re: increasing unemployment and lowering wages at the same time:
Ah. Now I understand. I was thinking in terms of tweaking only one variable at a time. (I.e. if you just lower wages, e.g. by lowering the minimum wage, unemployment will tend to decrease; if you just force every company to fire X number of employees, they’ll tend to increase the rest of their employees’ wages to keep them on board.)
BTW, is “currency devaluation” the same thing as inflation?
Under the WTO rules, a nation 9such as China) has to prove that its cost of production includes a “fair” wage, environmental controls, etc., etc. Now, since over 40% of Chinese exports 9to the USA) are made in factories staffed with PRISON LABOR (ZERO wages!!)-how could anyone compete with this? Also, since China has such an exceptional human rights record, why would they ever cheat on such a thing?
So the IMF is making money by asking for lower wage for the workers that don’t work for it?
I would think that the left would like the ide fo a global body that takes money from successful country’s and dumps it into poor countries.
It seems to me that the problem is that they wnat the money back and that they want the borrower to take steps to reach self sufficiency. Althoug, I can’t see how higher inflation would achive this goal.
Are you suggesting that the IMF gives billions to a country and then insists that it throw itself into a depression?
The IMF is making money off of loans that it extends to countries. If lower wages are paid, the government would have more money to pay off the loan, or invest in paying off stock holders.
Sure, most of the left would. That’s not what the IMF does, or even tries to do. Dumping money into poor countries is what the WorldBank supposedly does * oversimplification alert *.
What the IMF does is provide loans to countries in return for them agreeing to certain conditions. What these conditions have always done is increase common poverty and hardship in that particular country.
Neither can I. No one ever said they ask for an increase in inflation.
Not exactly, what I’m saying is what I posted earlier. THat it extends a loan with the following conditions attatched
- Currency devaluation
- Increase in interest rates
- Relaxing of barriers to foreign investment
- Restrictions on wage rises
- Higher basic cost of living, and a rise in the price of everyday goods and services
- Privatisation of nationalised industries
- Massive cuts in public services
- Large-scale lay-offs
If you see that as asking someone to throw themselves into a depression so be it. For more information I would suggest you check out my previous link and read the section on India.
This is a timely question! For a detailed discussion of leftist objections to IMF and WTO policies, see this week’s issue of The Nation, online at
http://www.thenation.com/home.shtml#thisweek
Many of oldscratch’s points are made there, along with some food for thought about the concept of “odious debt”, a technical term for indebtedness originally assumed by individuals who place the repayment responsibilities upon others who had no power to control or influence the assumption of debt and no benefit from the borrowed money. It’s been argued that much of the Third World debt burden falls into the category of “odious debt.”
That said, I’m not sure that opposition to IFIs (international financial institutions) is simply a matter of being ticked at the IMF and WTO; rather, many are in favor of changing their rules. The problem isn’t so much that these organizations have been doing things wrong according to the existing rules: they’ve been making money for the interests they serve, which is what they’re set up to do. What opponents argue is that world finance would work better for all if the current rules were different. An example: “Jubilee 2000” is a movement simply to strike most existing IMF debt off the books, on the grounds that the debtor nations’ economies will become stronger without the burden of costly debt repayments, and that the creditor nations will actually get more money out of subsequent trade opportunities than they would from the repayments themselves. The Jubilee 2000 position is not “We’re mad at the IMF because they’re so mean to poor countries,” but “We have a better idea to increase wealth for everybody.” In other words, “taking steps
to reach self-sufficiency” can actually be done better without IMF involvement, according to these arguments. You can dispute the arguments on their merits, of course, but you can’t just make them disappear by hauling out tired old invective against “bleeding-heart liberals.”
Kimstu
egkelly wrote:
So you’re saying that China is breaking the WTO’s rules by using free labor (not paid a fair wage) in its production? Well, then, that means the WTO can impose sanctions on them or kick them out for breaking the rules, right?
I think that some clarification is needed reguarding IMF loan conditions:
1 Currency devaluation. Stop blowing your currency reserves trying to artificially prop up the value of your money. Let it float to the market rate.
2 Increase interest rates. I’m not sure about this one, unless the rates were kept artificially low with government subsidies.
3 Relaxing barriers to foreign investment. Pretty much the only way an undeveloped country can become developed.
4 Restrict wage increases. The IMF wouldn’t have anything to say about private sector wages. When it comes to big unions in government owned industries, it’s often easy for governments to buy votes and labor peace with big wage increases that they can’t afford. If you give the unions all your money, how are you going to pay us back?
5 Increase prices of everyday goods and services. The old Soviet Union used to subsidize the price of bread. Sometimes it was cheaper to feed the bread to your pigs than grain. Not very efficient. Subsidized goods will become wasted goods and a big drain on the budget.
6 Privatize industries. Do you want your economy to work like General Electric or the US Postal Service?
7 Cuts in public services. In most of these countries the public payroll is heavily padded to reward supporters and in a misguided attempt to cut unemployment. In the long run, make work jobs don’t help anybody.
8 Large scale lay offs. See number 7.
Considering that the Postal Service hasn’t been supported with tax money for about 20 years now, is completely self-funding through the sale of stamps and services, and turns a profit; while GE has a wildly inflated P/E of over 40, I’ll take the Postal Service.