36 After Capitalism

The Structural Adjustment Programs of the IMF

Extreme forms of “austerity” are prescribed to attack inflation and stabilize the currency\c These include:
Reducing the government budget by trimming payrolls and social spending, which causes massive layoffs; and introducing fees for education and medical care, which results in higher rates of illiteracy, suffering and death.

• Increasing interest rates to combat inflation, which hurts small farmers and businesses struggling to repay their loans; this makes the country more profitable for foreign investors, though they may pull their money out at any moment.
• Eliminating customs tariffs charged on imported goods, which allows multinationals to compete equally with and bankrupt domestic manufacturers.
• Eliminating laws that prohibit foreign ownership of land, resources and businesses, which permit multinational corporations to open factories in poorer countries, where they are usually offered tax breaks, low wages and free trade zones, often resulting in “sweatshop” conditions.
• Cutting subsidies for basic necessities, which frees up more money for debt repayments while forcing the poor to pay more for basic foodstuffs to survive.
• Reorienting economies from subsistence to export by giving incentives to farmers to produce cash crops instead of food for domestic consumption; and encouraging the export of raw materials.

These are the hallmarks of neo– liberal free market economics. The wealthy elite of a country often benefit from these policies. With fewer currency controls, they are able to invest their profits overseas or in foreign currencies.
Structural adjustment programs are usually disastrous for the common people. Rich countries like the United States would never accept these IMF rules. Eastern Europe, Russia, Africa and Latin America are all suffering terribly under these IMF structural policies. The World Bank recently estimated that the protectionist measures imposed by the rich countries cost the undeveloped countries more than twice as much as the total aid going from the North to the South.
According to Oxfam International, “fiscal discipline” imposed on the Philippines included reducing the non– salary element of the health budget by one– third. Allocations for preventative health care budgets for malaria and tuberculosis have fallen by 27 percent and 36 percent respectively, and immunization programs by 26 percent. On the basis of data from the Philippines Department of Health, Oxfam estimates that the reduced provisions for preventive health care programs will result in an additional 29,000 deaths from malaria and an increase of 90,000 in the number of untreated tuberculosis cases every year)’
This trend is repeated in country after country. Juan de Dias Parra, the head of the Latin American Association for Human Rights, in a meeting in Quito, Ecuador, noted: “In Latin America today there are 70 million more hungry 30 million more illiterate, 10 million more families without homes, 30 million more unemployed persons, than there were twenty years ago. There are 240 million human beings in Latin America without the necessities of life, and this when the region is richer and more stable than ever, according to the way the world sees it.