Day 106: Structural Adjustment

Next we will be looking at some of the main conditions that are called for by the World Bank and IMF, These conditions have been placed in order to ‘assist’ the borrowing country in economic growth so that it will be able to pay off its debts. In many cases though, the actual results from structural adjustment report that the borrowing country is worse off after having accepted a loan from the IMF/World Bank – while the rich countries are reap the benefits.

Government Reduction

The main reason the IMF and World Bank think that a country is unable to pay its foreign debt, is the assumption that the Free Market is being obstructed by government activity. Their rationale is that if the government gets downsized, markets will function more effectively, which in turn will stimulate economic growth.

In the case of government reduction policies the government requires to abandon certain functions so that the private sector can take these functions over and optimize them. In the areas or functions that the government still retains (because it is either impossible for the private sector to do it better or those functions that are hard to impossible to capitalise from but are a necessity for society) – cutbacks in spending and staff are demanded.

In most countries (both rich and poor), the government is the largest employer. In poor countries where a strong private sector has not yet been developed, the government is most often the dominant force in the country’s economy. Sudden and extensive cuts in government spending can leave hundreds of thousands of people jobless and contribute to a massive surge in unemployment. In addition to that, because the private sector is not as developed as in other countries, frequently the functions and services the government stopped providing, do not get continued by the private sector – because there is simply no-one to take it over!

Privatization

Government reduction goes hand in hand with privatization plans. Governments agree to lay off thousands of workers to prepare the way for corporations to privatize.
This however does not leave the private sector untouched by the IMF and World Bank. Privatization is often also affected by downsizing, as well as private employer assaults on unions and demands for wage reduction.

Labour Flexibility

IMF and World Bank often demand higher labour flexibility. This concept refers to the transformation of labour to a mere commodity. This policy promotes and enables companies to hire and fire workers, and change the terms and conditions of work with only minimal regulatory restriction.

The IMF/World Bank reason that if labour is treated like a commodity, the free market system will function more efficiently and effectively, which in turn will stimulate economic growth.

The theory however does not match up with reality. Joseph Stiglitz, former World Bank chief economist shared with ‘Multinational Monitor’: “The evidence in Latin America is not supportive of those conclusions. Wage flexibility has not been associated with lower unemployment. Nor has there been more job creation in general.” Where “labor market flexibility was designed to move people from low productivity jobs to high productivity jobs, too often it moved people from low productivity jobs to unemployment, which is even lower productivity.”

Wage Decompression

Wage decompression refers to the increasing of the ratio of highest to lowest paid worker. This concept is most commonly applied within the public sector where the government has the authority to regulate wages, and is done in order to “reduce government expenditure”. However, this concept is not applied to managers where the belief is held that higher pay is needed to attract high quality employees and to provide an incentive for hard work.

Sometimes the World Bank and IMF also apply wage freezes, wage cuts and wage rollbacks in the private sector (where the minimum wage is frozen or reduced). These various policies of wage adjustment are often referred to “wage flexibility”.

Pension Reforms

Pension reforms come down to the implementation of lower benefits, provided at a later age – along with the privatization of social security

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Day 73: The Money Supply - Part 3

I forgive myself for not accepting and allowing myself to realise that the value of money is dependent upon the amount of money available in circulation and thus, that money is currently not a stable point that one can use as a foundation to build one's life upon - as the foundation of life would and does go shaking with the whims of economical forces.

I forgive myself for not accepting and allowing myself to see and realise that I cannot trust in money as it exists currently - since the value of money is not consistent ad equal to life - but keeps on changing under different conditions, at different times - and thus, I forgive myself that I have accepted and allowed myself to place my trust in an economic system that is completely untrustworthy - of which I can, in no way say, that it will always 'be there fore me', that it will always support me, that it will never let me down.

I forgive myself for not accepting and allowing myself to realise that a World of Equality - where Money is Equal to the Value of Life - is exactly that: a system that will always be there for me, a system that will upport me and a system that will never let me down

I forgive myself for not accepting and allowing myself to realise that banks have the power to make my money worthless - where, individuals that were not even elected, have the power to influence the entire economy and everyone that's a part of it.

I forgive myself for accepting and allowing myself to believe that we live in a democracy when it is so hard to actually manage this economic system and where some of the most important ways of influencing it, is carried out by individuals that are not even representatives of the general population, but just some bankers who apparently know 'what's best for us' - yet, actually, just have the power to do what's in their own personal best interest and actually use it that way.

I forgive myelf for not accepting and allowing myself to realise that any economic system where such points are left to be decided upon by the private sector, is unacceptable as 'private' means 'personal' and that basically means that some will benefit and most will lose out.

I forgive myself for not accepting and allowing myself to question how banks actually operate and how it is acceptable for banks to lend out money they don't actually have - and then charge you for their 'service' as though they deserve to be rewarded for their effort - when all they do is use other people's money to make more money for themselves - and within this process, potentially de-stabilise the entire economy and everyone' lives.

I forgive myself for not accepting and allowing myself to see and realise how screwed up it is that each country exists in a state of competition with one another, where, continuously, each country is out for other countries' money - and do everything they can to draw money towards themselves, without caring about what effects this has on other economies, or even in terms of the local economy, where prices will rise and the poorer households will simply be excluded from economic participation and are forced to live in a state of survival.

I forgive myself for not accepting and allowing myself to see and realise how powe relations among countries take advantage of the mechanism of imports and exports - where developing countries that desperately attempt to draw funds into their country, are basically ordered to import goods from a certain country, in order to obtain loans from those countries = where they have to pay for the imported goods, meaning: money leaving their country, and where they have to eventually pay back the loan with interest, meaning: more money leaving the country - and they call this 'AID'.

I forgive myself for not accepting and allowing myself to realise that the only reason that AIDs is such a problem in Africa, is because the entire continent has become dependent on foreign AID to manage their extremely weak economie -where, just like with AIDs, their economies are unable to recover on their own and any economic fluctuation is like a lethal blow - and this happens constantly - and thousands literally die each day because of it.

I forgive myself for not accepting and allowing myself to realise that the only reason why the economic system seems to be working in a fairly stable way in developed countries, is because international relations manipulated the situation to become as such that the developed world experience the 'positive' side of the coin, and the developing world experiences the 'negative' side of the coin - where in developed countries the economic system seems to be working in a fairly stable way, it is absolute chaos in the developing world - and thus, I forgive myself for not accepting and allowing myself to realie that, as with any polarities, the apparent stability of the developed world cannot exist without the chaos of the developing world - and as such, in maintaining this economic system for our own sense of security and stability, we condemn millions to a life of chaos and suffering every day.

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