The Activist

I’ll be the first to admit, this title is a little optimistic. However, recent events have, at the least, damaged the mainstream image of the current habits of the World Bank and IMF as actions that will save Latin America from crippling debt, poverty, and economic backwardness. Since the rise of the Friedmanite-branch of libertarian economics in the 1970s, governmental talk on developing economies has moved away from the old Keynesian and developmental economic model, that of spending first and foremost on social welfare to provide a healthy base for a population to then go about working to take its place in the global economy, or in some cases strategically investing or even nationalizing to give programs, institutions, and businesses the time and shelter to develop to meet the needs of the nation’s population first. In its place came the Washington Consensus model we’ve become accustom to. Led by academics like Milton Friendman and championed by sympathetic moneyed interests in government and business, this model said that the only way for a nation to be successful was to tighten its spending, restrict monetary supply, stop protecting any and all industries, and open up domestic markets to unfettered foreign investment. These were the conditions by which countries had to operate in order to obtain loans for development.

But why should any country listen to this advice when the people advocating it refuse to abide by it? With banks collapsing in the past weeks, we have seen the Bush Administration act in a very Keynesian manner. Sure, they haven’t increased spending on welfare, but they have poured large sums of money into Wall Street to prop up a failing model. The government has taken a large role in business. What does this say to those nations which have been pushed into following the opposite model, that of tightening spending in economic downturns? I think the best quote on this came from the leader of the Congressional Sandinista (FSLN) majority in Nicaragua, Edwin Castro, who stated that “We think the Bush administration should follow the same policies that they and the International Monetary Fund have always told us to follow when we have economic problems - a structural adjustment that requires cutting government spending and reducing the role of government.” We have seen a government which has been the dominating voice for structural readjustment in this form engage in “socialism for the wealthy” in the past few weeks. Indeed, the hypocrisy is obvious and would be laughable if the result of all of this wasn’t so dire.

Sadly, all this money they are spending has gone straight to those who can handle the collapse the best. We haven’t seen the sort of actions that countries used (with some success) during the late 90s crisis in Asia, that being increasing benefits for the unemployed and impoverished. If we have 700 billion to pay to banks, and billions more to fight an endless war, surely we have a few billion for emergency welfare. It’s time for those who advocate a more just world to maturely and forcefully support an end to the dangerous and hypocritical policies associated with the Washington Consensus. I applaud the Latin American nations who have already neglected the advice forced on them in the past and look forward to models like the Bolivarian Alternative for the Americas and the Banco del Sur which build on respect for governmental interests in welfare to provide mutual aid in a number of sectors It is my dream that we see this become the model for international development for our generation.