hidden hand

All over Latin America, there is disillusionment with the policies that the United States and the IMF had pushed. Growth under liberalisation is just over half of what it was under the old pre-reform regime... Unemployment is up 3 percentage points; poverty... is up even as a percentage of the population. Where growth has occurred, the benefits have accrued to those at the upper part of the income distribution.

During the 1980s - what was called the lost decade of development - from every $100 worth of global economic growth, around $2.20 found its way to people living below the absolute poverty line. A decade later that had shrunk to just $0.60c, and the actual mean income of those living under $1 per day in Africa also fell.

The only thing that keeps the system working at all is that the United States, the richest country in the world, has become the 'deficit of last resort'. As other countries strive to eliminate their deficits, as Japan and China continue to run huge surpluses, America is willing and able to run the huge deficits that make the global arithmetic add up. This is the ultimate irony. The financial system allows the US to live year after year far beyond its means, even as the US Treasury, year after year, lectures others on why they should not.

Subsidies for one crop alone, cotton, that went to 25,000 mostly very well off US farmers, exceeded in value the cotton that was produced, lowering the global price of cotton enormously. American farmers...gained at the expense of the 10 million African farmers who depended on cotton for their meagre livings. Several African countries lost between 1-2% of their entire income, an amount greater than what these countries received in foreign aid from the United States. Mali, for instance, received $37 million in aid but lost $43 million from depressed prices.

the statistics [in Russia] were sobering: with efficient capitalism replacing moribund and decadent communism, output was supposed to soar. In fact GDP declined 40 % and poverty increased tenfold. And the results were similar in the other economies making the transition who followed the advice of the US Treasury and the IMP.