Nature and human politics have both combined to create a terrible disaster in South Africa this year ... AllAfrica.com : Famine grips southern Africa : What is taking shape across SouthernAfrica is the perfect famine, adisastrous collaboration between nature and man that has caused theregion's worst food shortage in nearly 60 years. Officials say as manyas 20-million people are suffering from hunger and malnutrition. TheUnited Nations World Food Programme is already feeding more than2,6-million people in Malawi, Zimbabwe, Zambia and other countriesin the region, and agency officials say that number will at least doublein the coming months as peasants finish off the meagre yields fromthis season's harvest.

Overall, relief workers anticipate they will need roughly 145 000 tons offood, worth about $69-million, to plug the immediate shortfall indomestic crop production in the region. So far, donors have pledgedonly about $3-million. Officials with the Southern African DevelopmentCommunity (SADC), a coalition of 14 nations, say they will need toimport 3,2-million tons of corn to offset the deficit, about double theamount imported last year.

Southern Africa has endured widespread food shortages before, butthe situation now is far worse partly because famished peasants areeating tree stems, sawdust and wild leaves, causing an increase indisease.



A story in All Africa states that Malawi sold off emergency food stocks at fire sale prices last year under mysterious circumstances. The WSWS website brings into question the role of the IMF in the decision on a couple of pages on the site, and similar concerns appear in stories on AllAfrica.com...



http://www.wsws.org/articles/2002/mar2002/mala-m14.shtml

A report by the World Food Program (WFP) points to a number of factors that have contributed to the food crisis. These are the devastating floods that hit the south of the country in early 2001, wiping out maize crops, the withholding of aid by Malawi’s main donors—the US, Britain and Denmark—and the government’s decision to sell off a large part of the national grain reserve.

According to a report on the Financial Times website, the sale of grain reserves was carried out under “unclear circumstances.” What is clear is that the price was extremely low. Maize is now being imported at three times the price for which the grain reserves were sold. The grain market was liberalised and deregulated under Muluzi’s United Democratic Front (UDF) government as part of economic directives dictated by the International Monetary Fund (IMF), and replaced with unregulated private traders. Many of these private traders have close ties to the ruling regime.



Another page on the WSWS site is more blunt and suggests that the IMF 'pressured' Malawi to sell their emergency food stocks, but whatever the case may be, we have another example here of a one size fits all policy that forbids any government intervention and forces privitization of everything under the sun in return for 'aid' that has combined with natural forces to create a disaster in Southern Africa.The same page on the WSWS site suggests that aid is being withheld to force through the remainder of the IMF policies (usually in the mainstream press you hear that aid is being withheld because of 'government corruption', which could be a buzz word for non compliance with IMF policies. However, if governments are corrupt as well, which they probably are (skimming and pick pocketing being endemic in third world dictatorships all through the last century with Mugabe raking in an estimated 100 billion, the Marcos tens of billions that are known about, Pol Pot retiring to an island, etc) still it seems to be the case that big boys are corrupt and the poorest of the poor starve to death in 'punishment' including the smallest of the small, the poorest children being the first to go. An internationally administered and distributed aid program is the solution and not this crude sounding political game that seems to be played with the poor as pawns...

The IMF also continues, according to All Africa.com to encourage donor countries to withhold aid because the government Malawi government needs to 'cut spending'. (Nothing is said about the impact of interest payments on debt as a contribution to the countries financial problems, Malawi being so dirt poor that it practically lives on aid grants...)



http://allafrica.com/stories/200204020363.html

Contrary to reports in the local media, the International Monetary Fund(IMF) has not given a 'Green Light' to donors who have so far withheldaid but has strongly cautioned the Malawi Government for itspropensity for over-expenditure which encouraged high interest ratesand crowded out the private sector ... the IMF has agreed with the Malawi Government to drasticallyreduce expenditure during the remaining 2001/2002 budget ... During the discussions Government proposed expenditure cuts bothin the recurrent and development budgets to reduce the need forfurther borrowing...'



A days wages for a loaf of bread, if you are the very poorest of the poor, 'but do not touch the olive and the wine'. In previous postings on my site I have protested against the policies of the IMF which ignore the income disparities in the poorest countries of the world, leaving and even ensuring the income of the wealthy at the expense of the poorest of the poor, who are the ones who suffer from the one size fits all economic policies of budget cutting and 'fiscal restraint' imposed by the IMF and World Bank on poor countries. In a typical scenario 70 or 80 per cent of the land belong to land lords and the income disparities in poor countries can be even more severe, but on the grounds that they are 'encouraging investors' (by allowing them to accumulate and keep wealth) the IMF opposes redistribution of wealth, land reform, and other policies that would benefit the poor, policies that would be socialist or even a 'mixed economy', which the IMF and World Bank have steadily destroying for decades, and instead force through 'pure capitalist policies' with an almost fundamentalist religious zeal. It will be suggested that it worked in the North, and thus, even if it is extremely painful, this is required in the south to 'promote development'. Such a narrow argument ignores a history of colonialism and the previous century of exploitation, which moves wealth from the south to the north and certainly has something to do with the income disparities between north and south. Both organizations also ignore cultural differences (is the western model the only way to live?) as well as the principles of Keynesian economics (wealth redistribution and land reform would probably spur the economy more than simply encouraging aquisition, northern capitalist style.) However, economies in poor nations cannot be dealt with in isolation since the wealthy as well as the consumers in Northern nations are complicit in IMF policies, still extracting resources and cheap labor, which would mean that allowing any other development model in the south would have an impact on the Northern countries, which also explains the resistance of the IMF and World Bank to any other economic model (self serving economic rationalizations since it is impossible to allow reformist policies in the south without having it impact the North, which, we are told, is supposedly the model that poor countries must emulate, even though, reason and common sense tell us that poor countries would have no other poor countries to piggy back on to emulate the North, the supposed model economic systems. The great economic disparities in the North also come into play, for as Einstein put it, huge concentrations of capital capsize the economy and create recessions and depressions, as income loss causes economic slow downs due to reduced spending by the majority of the population, once again not a principle poor countries need to emulate as though it were the one true faith...



It just occured to me that another rationalization used to support without question the current one size fits all economic system, is that 'human beings are sinful and greedy - that' s just the way things are.' Usually you will get this one if you propose reforms or difference. This is my thumbnail sketch of 'pure capitalist philosophy'. People are just to sinful, the philosopher states. This is quite the justification for the current world system, that it is based on sin, and when push comes to shove, even its proponents will agree that, yes, it is a sinful system, but people are sinful and thus they require this sinful system because no other one will work. Interesting justification, but at least such things are honest.

It should be pointed out that as rigid as the current system is, with its intolerance for anything not sinful enough to be 'realistic', given its sinful nature, exceptions can be made, but only if it is for sinful reasons, and not good ones, which would not be supported by the sinful planet. For example Pakistan, as its bribe and reward for supporting the 'war on terrorism' got its debts forgiven, and Egypt got the same deal during the war in the gulf. As for the rest of the poor countries of the world, they need their debts forgiven for reasons of goodness, and not sinfulness, and so naturally it just doesn't happen.

Another thing you will hear is that 'other systems are failures'. Actually other systems have not been tried, with that Animal house style thing in Russia and China hardly qualifying, just being more of the same old same old. Furthermore, if a country dares to experiment with some other way to live they get crushed and once crushed it can then be said 'see, it doesn't work' a pretty transparently obvious scam by the way, but people fall for such stupid spinning. Of course they fail. They were crushed. But this takes us back to that other 'sinful' rationalization which lies at the core of the present system. Its a sinful system, as even its proponents will agree, created for sinful people, so naturally one must expect any country that drops out of line to be crushed.



Now the above justifications are offered for the almost religious fervor of the IMF and World Bank in promoting unbridled capitalism, and opposing all other systems (philosophical justification - everyone is sinful and require sinful systems or they will reject them - economic justifications 'no other system works' for the sinful reasons mentioned above or 'look how well that works' etc...) However Albert Einstein put his considerable mathematical talent to work and analyzed the failures of unbridled capitalism in his famous essay, Albert Einstein - Why socialism : a few quotes from Einstein's essay - "I shall call "workers" all those who do not share in theownership of the means of production ... the worker produces new goods which become the property of the capitalist ... Private capital tends to become concentrated in few hands ... The result of these developments is an oligarchy ofprivate capital the enormous power of which cannot be effectively checked even by a democratically organizedpolitical society. This is true since the members of legislative bodies are selected by political parties, largelyfinanced or otherwise influenced by private capitalists ... an "army of unemployed" almost always exists. The worker isconstantly in fear of losing his job ... unemployed and poorly paid workers do not provide a profitablemarket ... Theprofit motive, in conjunction with competition among capitalists, is responsible for an instability in theaccumulation and utilization of capital which leads to increasingly severe depressions ... This crippling of individuals I consider the worst evil of capitalism. Our whole educational system suffers fromthis evil. An exaggerated competitive attitude is inculcated into the student, who is trained to worship acquisitivesuccess as a preparation for his future career ... "


More discussion of the same theme introduced by Einstein above can be found on the page The Cause of the Great Depression

The depression began in late 1929 andlasted for about a decade. Many factors played a role in bringing about the depression;however, the main cause for the Great Depression was the combination of the greatlyunequal distribution of wealth throughout the 1920's, and the extensive stock marketspeculation that took place during the latter part that same decade. The maldistribution ofwealth in the 1920's existed on many levels. Money was distributed disparately between therich and the middle-class, between industry and agriculture within the United States, andbetween the U.S. and Europe. This imbalance of wealth created an unstable economy. Theexcessive speculation in the late 1920's kept the stock market artificially high, buteventually lead to large market crashes. These market crashes, combined with themaldistribution of wealth, caused the American economy to capsize ... the rewards of the "Coolidge Prosperity" of the 1920's were not shared evenly among allAmericans. According to a study done by the Brookings Institute, in 1929 the top 0.1% ofAmericans had a combined income equal to the bottom 42%. That same top 0.1% ofAmericans in 1929 controlled 34% of all savings, while 80% of Americans had no savingsat all...In the 1923 case Adkins v. Children's Hospital, theSupreme Court ruled minimum-wage legislation unconstitutional ...

Essentially what happened in the1920's was that there was an oversupply of goods. It was not that the surplus products ofindustrialized society were not wanted, but rather that those whose needs were not satiatedcould not afford more, whereas the wealthy were satiated by spending only a small portionof their income. A 1932 article in Current History articulates the problems of thismaldistribution of wealth ... One obvious solution to the problem of the vast majority of the population not havingenough money to satisfy all their needs was to let those who wanted goods buy products oncredit. The concept of buying now and paying later caught on quickly. By the end of the1920's 60% of cars and 80% of radios were bought on installment credit. Between 1925and 1929 the total amount of outstanding installment credit more than doubled from $1.38billion to around $3 billion. Installment credit allowed one to "telescope the future intothe present", as the President's Committee on Social Trends noted. This strategy createdartificial demand for products which people could not ordinarily afford. It put off the day ofreckoning, but it made the downfall worse when it came.

Mass speculation went on throughout the late 1920's. In 1929 alone, a record volume of1,124,800,410 shares were traded on the New York Stock Exchange. From early 1928 toSeptember 1929 the Dow Jones Industrial Average rose from 191 to 381. This sort ofprofit was irresistible to investors. Company earnings became of little interest; as long asstock prices continued to rise huge profits could be made.

Prices had been drifting downward since September 3, but generally people whereoptimistic. Speculators continued to flock to the market ... Once enough investors haddecided the boom was over, it was over. Partial recovery was achieved on Friday andSaturday when a group of leading bankers stepped in to try to stop the crash. But then onMonday the 28th prices started dropping again. By the end of the day the market had fallen13%. The next day, Black Tuesday an unprecedented 16.4 million shares changedhands. Stocks fell so much, that at many times during the day no buyers were available atany price.

More jobs were lost, more stores wereclosed, more banks went under, and more factories closed. Unemployment grew to fivemillion in 1930, and up to thirteen million in 1932. The country spiraled quickly intocatastrophe. The Great Depression had begun.



Even those who most support the 'sinful human nature' philisophical justification for the current system can sometimes find that there is such a thing as too much sinfulness, thus bringing in the need for at least a touch of socialism (actually even America is a socialist country, with its large keynesian welfare project known as the department of defense...) Just when you thought it couldn't possibly get worse, in come the Vulture funds...

According to a page on the BBC site : Vulture Funds, have been accused of preying on the world's most heavily indebted countries ... the funds - buy up countries' debt at a knockdown prices and then take them to court to recover the full amount ... Aid experts fear the funds could undermine long-term debt relief efforts, enmeshing some of the world's poorest in costly court cases ... "Whenever a country has to defend a legal case it has to divert considerable time, attention and resources away from focusing on poverty reduction, health and education..." recent test cases have opened up the possibility of private financial institutions in rich countries making huge profits by suing poverty-stricken nations. In one recent case, a company received $58m from Peru after successfully suing for full repayment - plus interest - of a $20m debt which it had acquired for just $11m in 1996 ... "Vulture funds are in clear breach of international debt cancellation agreements. "By feeding off the debt burdens of poor countries with high rates of infant and maternal mortality, they are literally the carrion-eaters of the international financial system."

Vulture funds hover over poor countries
The Jubilee 2000 anti-debt coalition has condemned the practice of “vulture funds”, private hedge funds which buy Third World countries' debt cheap and then sue for full repayment, after one such fund received a one-off $58 million payment from Peru to settle a debt. Hedge fund Elliott Associates L.P. paid $11 million in 1996 on the secondary debt market to buy $20 million of Peru's sovereign debt and then sued for full repayment plus capitalised interest. The US Federal Court of Appeal ruled in its favour and it received $58 million from the impoverished South American country on October 7, a $47 million profit.

The individuals involved in the case have conducted similar actions against Panama, Ecuador, Poland, Cote d'Ivoire, Turkmenistan and the Democratic Republic of the Congo. Liana Cisneros, the head of Jubilee 2000s Latin America Campaign, said, “These people are trading in human misery. Elliott Associates L.P. are picking over the bones of the Peruvian economy like a pack of vultures. It may be just business to them, but to the Peruvians it represents schoolbooks, medicine and clean water.”

Raffer answers challenge from IMF on Vulture Funds ... "In the paper , Prof. Kunibert Raffer, the Viennese academic who first unearthed Chapter 9 of the US legal code as a model for international bankruptcy, has drafted a response to the IMF, who are insisting that the Fund must play a crucial role in the bankruptcy process, to protect sovereign debtors from so-called "Vulture" Funds. Raffer, and the international Jubilee 2000 movement, are concerned to protect sovereign debtors from the IMF".

In 1984 the US Court of Appeals for the Second Circuit in New York granted US insolvency protection to Costa Rica. The court recalled a Canadian precedent, drew analogies to US laws, quoted § 901(a), stating that Costa Rica's actions were "consistent with the law and the policy of the United States" and “in entire harmony with the spirit of bankruptcy laws the binding force of which ... is recognised by all civilised nations ... Under these circum­stances the true spirit of international comity re­quires that schemes of this character, legalized at home, should be recognized in other countries.” (UNCTAD 1986, p.142, emph. mine) After a rehearing in 1985, however, the court reversed itself. The executive branch had joined the litigation as amicus curiae making it clear that they supported the IMF rather than principles recognised by all civilised nations according to the court.


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