Is bankrupting and forced privatization of countries good foreign policy?

[yurbud]

If you haven't heard of this, it's a foreign/economic policy called neoliberalism.

It's why populists in South America are winning elections with anti-American rhetoric, and why the Third World is wracked with debt.

Essentially, it works like this, as the guy who used to set up these kinds of deals, John Perkins, wrote in his book, http://www.democracynow.org/article.pl?sid=04/11/09/1526251">Confessions of an Economic Hitman:

You go to the leader of a country and ask him to take out loans his country can never repay, and use it on overpriced public works contracts with companies like Bechtel. When the country defaults on the loans, the country is essentially repossessed--an economic austerity program is imposed and everything is privatized and sold at bargain basement prices. It also means the leader will generally not support labor rights because corporations like the cheapest labor possible.

If the deal is accepted, the people of the country will be screwed, but the leader and his family will be rich beyond their wild dreams and kept in power by the US.

If the deal is refused, we will go through a series of escalating steps:


1. We will support your political opponents in elections
   
   
2. We will support a coup.
   
   
3. We will support assassination.
   
   
4. We will invade your country.
   
   


Most leaders take the deal.

Hugo Chavez didn't and has already gotten the first two steps and withstood them. Aristide in Haiti got the first two steps and was escorted by American troops to a plane to Africa.

Saddam Hussein didn't take the deal, and got the full treatment. The plan the neocons had for post-invasion Iraq was for privatization of EVERYTHING, including oil. http://www.gregpalast.com/detail.cfm?artid=383&row=2

Is this the way we should run our foreign policy, and take care of American corporations?







The main points of neo-liberalism include:





1. THE RULE OF THE MARKET. Liberating "free" enterprise or private enterprise from any bonds imposed by the government (the state) no matter how much social damage this causes. Greater openness to international trade and investment, as in NAFTA. Reduce wages by de-unionizing workers and eliminating workers' rights that had been won over many years of struggle. No more price controls. All in all, total freedom of movement for capital, goods and services. To convince us this is good for us, they say "an unregulated market is the best way to increase economic growth, which will ultimately benefit everyone." It's like Reagan's "supply-side" and "trickle-down" economics -- but somehow the wealth didn't trickle down very much.
   
   
   
2. CUTTING PUBLIC EXPENDITURE FOR SOCIAL SERVICES like education and health care.
   
   
3. REDUCING THE SAFETY-NET FOR THE POOR, and even maintenance of roads, bridges, water supply -- again in the name of reducing government's role. Of course, they don't oppose government subsidies and tax benefits for business.
   
   
   
4. DEREGULATION. Reduce government regulation of everything that could diminsh profits, including protecting the environmentand safety on the job.
   
   
5. PRIVATIZATION. Sell state-owned enterprises, goods and services to private investors. This includes banks, key industries, railroads, toll highways, electricity, schools, hospitals and even fresh water. Although usually done in the name of greater efficiency, which is often needed, privatization has mainly had the effect of concentrating wealth even more in a few hands and making the public pay even more for its needs.
   
   
   
6. ELIMINATING THE CONCEPT OF "THE PUBLIC GOOD" or "COMMUNITY" and replacing it with "individual responsibility." Pressuring the poorest people in a society to find solutions to their lack of health care, education and social security all by themselves -- then blaming them, if they fail, as "lazy."
   


http://www.corpwatch.org/article.php?id=376

[MSgt213]

1. Funny thing is these populists don't even have to make things up now

about evil America. Our dear leader is spoon feeding it to them.

[yurbud]

2. it used to be done more subtly

[ieoeja]

3. NO - Other

I should have probably answered "NO - it causes illegal immigration, etc". My reasoning is about the same.

While this policy helps a teeny, tiny percentage of American investors overseas, it hurts the other 99.999% of us. Whether the work is in-sourced (illegal immigrants) or out-sourced, the result is the same: depressed wages. For the vast majority of us who work for a living, the affect of depressed wages is obvious.

But wage increases help investors as well over time. I purchased an apartment building last year and am rehabbing a portion of it. So right at this moment I would benefit greatly from reduced wages among construction workers. However, even before borrowing the extra money for rehabbing, I was already losing money on this investment. The only way I will ever make a profit is if rental prices increase. And rental prices will only increase when people are able to afford higher rents.

In other words, I will only see a profit when wages have increased enough for the worker to give this investor enough of those wages.

Even when I am making a profit, even when my capital investment is completely paid for so that labor becomes my primary cost (loss), I would still be surprised to see a situation in which increases in labor costs outbreast increases in consumer prices. But where capital investment is concerned, future increases in wages is an absolute must for any investor.

What I can't figure out is how so many business owners are able to do the risk analysis required to take the gamble on mortgaging everything they own, yet are incapable of seeing that wage increases across the economy will maximize their profits.