Fickle Cycle

The G20 announced their plans of a one trillion dollar deal to combat the global recession today and I’m not too pleased with it. The bulk of the plan (around three quarters of it) is aimed at the IMF and thus dramatically increases their already very large influence on the world. In fact the entire plan seems to be built on the idea of having money available to give to countries with struggling economies. For these reasons it is not some “new world deal” as some people would claim. All the money is just going to be used to “balance” economies back to their normal ways and for this reason it’s not going to lead to any long term gain. In terms of getting the world “out” of the recession the plan is a plaster and nothing else beneficial.

As well as just a “negator” this plan has very probable negative effects on the future also. Since its creation at the Bretton Woods Conference in 1944, the IMF have given thousands of loans to struggling countries with the condition that they, in most cases, reform their economic policy to be largely in-line with neo-liberal systems of privatisation, little regulation, and other economic policies that have destroyed the hopes of these countries as well as the lives of millions. Countless examples can be given where the IMF has given out a loan on the condition of “structural adjustment programmes”, especially in South America during the 1970s, Eastern European nations in the 1990s, and African countries right from the IMF’s beginning. I don’t have time to get into the details (studies have been done that find the IMF is responsible for problems as far reaching as tuberculosis in countries they’ve lent money to) but my main point is that I find it troubling that the IMF has been given so much more money to influence the world in such negative ways.

Of course it is also worth noting that most countries the IMF lends money to are nations that have no part to play in the institutions and are certainly not as well off as the G20. I don’t see how lending more money to struggling countries to help them now is any benefit in the long run when the cash has to be paid back – an impossible task in most cases, meaning countries are further compromised by “structural adjustments” that send more wealth to corporations in the Western world. There’s a lot of information available on this broad topic; I recommend starting with the books Bad Samaritans and The Shock Doctrine or the film Apology of an Economic Hit Man.

There’s certainly some good things to come out of the G20 plan, including greater regulation of hedge funds and methods being set up to act before a crisis instead of after – although we don’t know many specifics about these yet. These steps are decent but much more needs to be done and it shouldn’t involve the IMF and the World Bank that are so heavily focused on Western interests. The recession is largely being blamed on uncontrolled big business by the mainstream medial. The problems go deeper than that.