A new book titled Africa’s Odious Debts: How Foreign Loans and Capital Flight Bled a Continent begins its conclusion with the following. During the past four decades, sub-Saharan Africa has experienced a financial hemorrhage. We estimate that from the thirty-three countries for which we have data, capital flight between 1970 and 2008 amounted to $735 billion in 2008 currency. Including imputed interest earnings, the drain of resources amounted to $944 billion. These sums far surpass the same countries’ combined external debts, which stood at $177 billion in 2008. This means that sub-Saharan Africa is a net creditor to the rest of the world. If this is true, why are so many of Africa’s people so poor? The answer, of course, is that the subcontinent’s external assets are private and in the hands of a narrow and wealthy stratum of its population, whereas its external debts are public and therefore borne by the people as a whole through their governments. Our statistical estimates indicate that half or more of the money flowing into Africa as foreign loans exited in the same year as capital flight. Now joining us are the authors of the book: Professor Leonce Ndikumana, who teaches economics at the University of Massachusetts Amherst and is a research associate at the PERI institute, and Professor James K. Boyce, director of the Program on Development, Peace Building and Environment at PERI institute. Thank you both for joining us.
from the transcript:
PAUL JAY: So this is the beginning of what’s going to be a three-part series. In part one, we’re going to talk about the roots of this debt crisis in Africa. In the second part, we’re going to talk about the human costs of the crisis. And in the third part, we’re going to talk about solutions and just what the word “odious debt” refers to. So, Leonce, can you give us some background on what you mean by this odious debt, some of the historical roots of this debt? …
In Part 2, Léonce Ndikumana and James K. Boyce explain how the cost of servicing external odious debt leads to tragic underspending on health care and education (11:50):
from the transcript:
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Washington. This is the second part of our series of interviews based on the book Africa’s Odious Debts: How Foreign Loans and Capital Flight Bled a Continent. One of the things the book points out is that Africa spends more on servicing its external debt than it does on health care. …
And in Part 3, Léonce Ndikumana and James K. Boyce detail how international law supports Africa rejecting debts that did not benefit the people (18:04):
from the transcript:
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Washington. This is the third and final part of our series of interviews based on the book Africa’s Odious Debts: How Foreign Loans and Capital Flight Bled a Continent. In the first two parts of our interviews, we talked about the extent to which Africa’s debt was accumulated because IMF and World Bank and private banks made loans to dictators, kleptocracies, in the name of the Cold War and for the sake of the scramble for the riches of Africa, gave these loans knowing they would be, essentially, misused, not used for the benefit of the people of the countries that did the borrowing. So the question in this segment we’re asking: then why the heck should the people of these countries keep servicing these debts? And it turns out there is some international law that says maybe they shouldn’t be. …
A few days back, economist Nouriel Roubini made the offhand comment that:
Karl Marx had it right. At some point, capitalism can destroy itself. You cannot keep on shifting income from labor to capital without having an excess capacity and a lack of aggregate demand.
As has been noted before, nothing Roubini said was at all – ahem – revolutionary. In fact, there’s really no dispute that his analysis was founded on “well-proven conventional modern macroeconomics.” Much of it didn’t even go beyond Economics 101.
In an article on Project Syndicate which describes the difficulties besetting solutions reliant on fiscal policy, monetary policy, and inflationary measures, Roubini further writes:
Karl Marx, it seems, was partly right in arguing that globalization, financial intermediation run amok, and redistribution of income and wealth from labor to capital could lead capitalism to self-destruct (though his view that socialism would be better has proven wrong). Firms are cutting jobs because there is not enough final demand. But cutting jobs reduces labor income, increases inequality and reduces final demand.
Recent popular demonstrations, from the Middle East to Israel to the UK, and rising popular anger in China – and soon enough in other advanced economies and emerging markets – are all driven by the same issues and tensions: growing inequality, poverty, unemployment, and hopelessness. Even the world’s middle classes are feeling the squeeze of falling incomes and opportunities.
Of course, Roubini is playing fast and loose with the definition of “socialism.” Stalinist Russia – that is to say, the Soviet Union after Lenin’s more or less capitalist New Economic Policy was replaced – (and its numerous imitators) was an experiment in nationalized state capitalism on an underdeveloped, pseudo-feudal society.
Socialism as such was not and has never been tried. You can certainly criticize Marxist ideas (I do), but you can’t say that “socialism failed” if you don’t even pretend to follow the manual.
Greek athletes may have to abandon training and start looking for jobs as the financial crisis slashes sports funding in the birthplace of the Olympics.
“Athletes are being forced to stop because they can’t get by financially,” said Stella Lazarou Tigka, the president of the Vouliagmeni Nautical Association, a sports club in a seaside resort south of Athens. Eight of its members were on the 13- strong national women’s water polo team that won the gold medal last week at the FINA World Championships in Shanghai.
Greece can no longer afford to support athletes while they train. With the country in its third year of recession, state spending on sports has been slashed. Funds to the Greek Olympic Committee for 2009-2012 were cut to 8 million euros ($11.3 million) from 30 million euros in the previous four years, Hellenic Olympics Committee President Spyros Capralos said.
Austerity measures pledged by the government in exchange for a 110 billion-euro May 2010 bailout plan from the European Union and International Monetary Fund may make matters worse. Beyond hurting the competitiveness of its athletes at the 2012 Olympic Games in London, the biggest economic upheaval in a generation may put Greece decades behind as discretionary spending on activities such as sports is deemed not a priority.
Wussies. So a few athletes have to get jobs and can’t train in their sport? We gave up the shuttle program and certainly other more important things than athletes. It’s what tough he-man economies do when the going gets tough. These athletes can always ask to be athletes again when they’re reincarnated next time.
Seriously, this article is the perfect example of what happens to a society that chases the almighty buck, whether it is Greece or its creditors. Greed definitely is not good. I pity the athletes who are in their prime and have only one shot in their lives. The world is much less interesting when the austerians run the joint.
House Democrats are once again afraid they’re about to get sold out by a president from their own party.
As bipartisan debt limit negotiations between congressional leaders and the White House rev up, a number of Democrats are worried that President Barack Obama will agree to a deal with the GOP that cuts federal spending too deep, undermines the social safety net, slashes entitlement programs and does not include a single dime in tax increases.
These Democrats, mainly progressives and liberals, fear the White House will be too quick to give in to an ideologically rigid group of tea-party-driven Republicans who won’t even consider Democratic proposals to close certain tax loopholes or cut off certain tax credits to raise more revenue. Democrats are scheduled to meet with Obama at the White House on Thursday.
. . .
Some lawmakers were upset that Obama seemed to indicate to House Democrats during a recent White House session that he wanted to “get past” the debt ceiling debate — a sign that he was most interested in the politics of a mega-budget deal.
“I think the president and his team have their calculation where they want to posture him for his reelection,” Grijalva added. “And we have our calculation, too, and we think that our base and our constituency is not going to be happy with the deal.”
Oregon Rep. Peter DeFazio said his Republican colleagues told him that Obama was moving toward the GOP position on spending cuts after they left their own meeting with the president at the White House.
. . .
the secretive nature of the budget talks doesn’t help calm nerves, said Rep. Jim McGovern (D-Mass.).
“I continue to hope and pray that we’re not going to be thrown under the bus, that the cuts aren’t going to be all focused on programs that benefit poor people, the most vulnerable,” McGovern said. “It’s difficult, because you have an unreasonable new majority in the House that’s making unreasonable demands. But I got enough to be depressed right now without thinking what the debt ceiling deal is going to be. I will get depressed when I see it.”
Any deal that liberals dislike could have reverberations within the Democratic base, and progressive lawmakers warn that Obama needs the grass roots to stay fired up for 2012.
Am I the only one who’s sick of these people fretting? Nonsense rightist ideology is pushing this country off a cliff, and these people are standing by, twiddling their thumbs, watching the train wreck in slow motion, and telling reporters, ‘we just wish they’d listen to us.’
At what point do these people stop with the self-pity routine and start building the revenue models and infrastructure necessary to drive the public discussion and muscle-through left policy?
Sometimes, just having your heart in the right place isn’t enough, especially when the consequences of inaction, or action of insufficient scale and effect, are so dire.