"Robert J. Bradbury" wrote:
>
> Mike Lorrey said:
> > No, they are not free to spend it on social welfare programs.
>
> Huh? You have distorted the argument Mike. What I said the
> program indicated was that the IMF would *not* allow Jamaica
> to loan the money to its farmers at interest rates lower than
> what the IMF was charging.
Sure, how will the Jamaican gov't raise the money to pay for the
difference in interest? Raise taxes?
>
> I said *nothing* about "social welfare" programs unless you
> consider building hospitals or schools "social welfare".
>
> I don't know precisely what the money was spent on, it would
> take a detailed investigation of Jamaican government budgets
> to determine that. There are certainly many cases where
> the money most likely was spent in building palaces for
> dictators or dachas for the loan administrators. However
> in Jamaica's case the money may have been spent on
> the police force to keep relative order with large numbers
> of unemployed individuals as a result of the trade policies.
>
> I simply suggested hospitals or schools as infrastructure
> projects that 3rd world countries might construct in an
> effort to uplift themsevles -- however the use of the funds
> for such projects is problematic if it is going to force
> them to go back to the IMF for larger loans because they
> cannot repay the loans they already have. If you don't
> use the funds in ways that directly serve to increase
> your ability to repay the loans *during* the term of the
> loan, then it looks to me like you are screwed.
>
> > A bank would get mighty pissed if I took out an auto loan
> > and used the money on a vacation to Fiji.
>
> Huh? American banks are *more* than happy to lend you
> money to take a vacation to Fiji. They will even send
> you checks to do so that carry a 9.9% interest rate.
> They just assume you will pay it back and penalize you
> if you miss payments.
But if I cannot demonstrate an *ability to pay* represented by *gainful
employment* or other accounts receivables, they will not loan me any
money for any reason. If I can make a business case that going to Fiji
is going to make me X amount of money, then they are far more likely to
loan me the money, and at a lower rate, than if I say "I just lost my
job, have no savings, am already in debt, and I want to go on vacation."
>
> Now in the case of IMF & Jamaica, it looks like coming
> in the door, they are assuming it isn't going to get paid
> back *and* try to arrange the loan conditions so that
> you can't become competitive enough in world markets that
> you would have the income (presumably from taxes on the
> banana producers) to repay the loan.
Which is all evidence that the loan is structured in a way to force the
Jamaicans to refuse to borrow until they've paid down their existing
debt (which is at lower interest rates, btw).
>
> > I don't. I see it as "You're not allowed to use this money on heroin, or
> > food stamps, but only on buying a car so you can get your ass to work
> > each day."
>
> Mike, that isn't the case here. If there are no jobs then it
> doesn't matter if you have a car or not. If you want to make
> the case that Jamaica mis-spent the money on social welfare
> programs GO FIND SOME EVIDENCE FOR IT!
The loans require that the Jamaicans buy manufactured goods from
industrialized countries with the loan money, which can include
industrial equipment, infrastructure building equipment (tractors,
cement plants, etc), etc., all of which can be used to increase Jamaican
GNP. The IMF has determined that the banana farms in Jamaica are at a
comparative disadvantage with other banana growing regions, and thus
have little hope of competing favorably in the future in that market.
Using loan policies that discourage Jamaicans from investing in losing
propositions is not a dumb idea. Granted that from a libertarian
perspective, it does seem to be the IMF doing a typical 'big brother'
"We know what's best for you" sort of paternalism, which can't help but
breed resentment, no matter how well intended it is, and irrespective of
whether the IMF actually knows what the hell it's talking about.
The problem is the equation of the IMF with the US in the minds of third
worlders. I am of the opinion that the best thing we could do for our
long term reputation in the world is to kick the UN out of New York. We
are painted as guilty by association because the UN is based in the US.
Let some other country deal with the headaches and resentment.
>
> Thanks to Charlie for filling in some of the pieces by providing
> some "data" on how the situation has changed from his perspective.
> That suggests that "non-free trade", i.e. of the type where presumably
> the government and the people "accepted" an "arranged" trade situation
> (perhaps because the British felt it appropriate to "repay" some past
> imperialistic policies) is not, at least in this special instance,
> highly objectionable.
Of course not, especially when it is British subjects who own the
Jamaican banana plantations. It's more an extension of british
imperialism under the Commonwealth system.
>
> I notice that nobody seemed to comment on my comments about the
> rather hefty increases in subsidies the U.S. farmers seem to be
> getting now.
Uh, as I just read in the paper, there was a $5 billion farm subsidy
bill just passed, most of which goes to cotton farmers, which actually
helps Jamaicans working in Jamaican clothing mills. The dems wanted a
$7.5 billion bill, most of which would go to corn farmers in Democrat
congressional districts, and Bush refused it.
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