Lines form outside food pantry
Millions of people have lost their jobs and the savings they saved throughout their lives. In developing countries poverty and despair reign supreme.
While containment is presented to the population as the only way to resolve a global public health crisis, its devastating economic and social consequences are being ignored.
The unspoken truth is that the novel coronavirus provides a pretext for powerful financial interests and corrupt politicians to plunge the entire world into a spiral of mass unemployment, bankruptcy and extreme poverty.
This is the real picture of what is happening. Poverty is global. As famines break out in Third World countries, closer to home, in the richest country in the world:
"Millions of desperate Americans wait in long queues to receive alms and long lines of miles have formed at food banks and unemployment bureaus across the United States over the course of last week".In India
" Food is disappearing, .... in the slums, too scared to go out , to walk home or trapped in the streets of repression,From Mumbai to New York, it's the "Globalization of poverty"
In India there have been 106 deaths from the coronavirus to date, and for putting it into perspective 3,000 Indian children die of hunger every day ".
Production has stalled. Famine in Asia and Africa. Famine in the United States. All countries are now Third World countries. It is the "Third World" of the so-called "developed" high-income countries.
« La faim se développe à Mumbai : les travailleurs pauvres font maintenant la queue pour obtenir de la nourriture gratuite. Trois semaines après le verrouillage national, les organisations et les personnes qui fournissent des repas gratuits à Mumbai sont unanimes : la faim dans la capitale financière a fortement augmenté et continue de croître. »
And what is happening in Italy?
People are running out of food. Reports confirm that the Mafia, rather than the government, "is gaining popular support by distributing free food to poor families in quarantine who have run out of money," according to The Guardian.
This crisis combines fear and panic over Covid-19 with a sophisticated process of economic manipulation.
Let us first examine the impacts on developing countries.
Developing countries in the IMF's "economic medicine" and the globalization of poverty
Is the coronavirus crisis part of a larger macroeconomic agenda?
First, a little history
I have spent over ten years doing field research on the impacts of IMF and World Bank economic reforms in Africa, Asia, Latin America, Eastern Europe and the Balkans.
Since the early 1980s, "economic medicine" was imposed on indebted developing countries under what was called the "structural adjustment program" (SAP).
From 1992 to 1995, I undertook field studies in India, Bangladesh and Vietnam and returned to Latin America to complete my study on Brazil. In all the countries I have visited, including Kenya, Nigeria, Egypt, Morocco, and the Philippines, I have observed the same pattern of economic manipulation and political interference by institutions based in Washington. In India, as a direct result of IMF reforms, millions of people have been driven to famine. In Vietnam - which is one of the most prosperous rice-producing economies in the world - famines have broken out in the country, a direct consequence of the lifting of price controls and the deregulation of the grain market. (Preface to the second edition of Globalization of Poverty , 2003)
The hegemony of the dollar has been imposed. With the increase in dollar-denominated debt, the entire national monetary system was eventually "dollarized" in most developing countries.
Massive austerity measures have led to the collapse of real wages. Large-scale privatization programs have been imposed. These murderous economic reforms - applied on behalf of creditors - have invariably caused economic collapse, poverty and mass unemployment.
In Nigeria, from the 1980s, the entire public health system was dismantled. Public hospitals have been forced into bankruptcy. The doctors I spoke to described the famous and cruel structural adjustment program (SAP) with a touch of humor:
"We've been sapped by the SAP", they said, our hospitals have literally been destroyed thanks to the IMF-World Bank.From structural adjustment to global adjustment
Today, the mechanism for triggering poverty and economic collapse is fundamentally different and increasingly sophisticated.
The current economic crisis of 2020 (which is part of the logic of the COVID-19 pandemic) is unprecedented in the history of the world. The IMF and the World Bank do not need to negotiate a structural adjustment loan with national governments.
What has happened in the context of the Covid-19 crisis is a "global adjustment" in the structure of the world economy. Suddenly, this Global Adjustment (MA) triggers a global process of bankruptcy, unemployment, poverty and utter despair .
How is it implemented? Containment is presented to national governments as the only solution to resolve the Covid-19 pandemic. It becomes a political consensus, regardless of the devastating economic and social consequences.
National governments are forced to comply
Partial or complete shutdown of a national economy is triggered by the application of "WHO guidelines" on containment, as well as restrictions on trade, immigration and transportation, etc.
Powerful financial institutions and lobby groups like Wall Street, Big Pharma, the World Economic Forum (WEF), and the Bill and Melinda Gates Foundation have participated in the development of WHO actions concerning the Covid-19 pandemic.
Restricted traffic and reduced trade and air travel have paved the way. This shutdown of national economies was undertaken around the world from March, simultaneously affecting a large number of countries in all major regions of the world. It is an unprecedented event in the history of the world.
This shutdown affects production and supply lines for goods and services, investment activities, exports and imports, wholesale and retail trade, consumer spending, closure of schools, colleges and universities, research institutes, etc.
In turn, it almost immediately leads to mass unemployment, bankruptcies of small and medium-sized enterprises, collapse in purchasing power, widespread poverty and famine.
What is the underlying objective of this restructuring of the world economy? What are the consequences? Cui Bono ? (" Who does it benefit from? ")
- A significant concentration of wealth;
- the destabilization of small and medium-sized enterprises in all major sectors of economic activity, including the service economy, agriculture and manufacturing;
- derogation from workers' rights. It destabilizes the labor market;
- It squeezes wages (and labor costs) in high-income so-called "developed" countries as well as in impoverished developing countries.
It is neoliberalism to the umpteenth degree. Suddenly (in recent months), the Covid-19 crisis has contributed to impoverishing a large part of the world's population. And guess who comes to the rescue? The IMF and the World Bank :
IMF Managing Director Kristalina Georgieva casually admitted that the global economy is at a standstill, without addressing the causes of the economic collapse.How does it intend to "protect the global economy"?
"The WHO is there to protect the health of the people, the IMF is there to protect the health of the global economy," says Georgieva.
To the detriment of the national economy?
What is his "magic bullet"?
" We have an overall lending capacity of $ 1,000 billion. " (IMF MD Georgieva, press conference in early March )At first glance, it seems "generous", a lot of money. But at the end of the day, it's what you might call 'play money', which means :
" We will lend you the money, and with the money we lend you, you will pay us back " (paraphrase).
Conférence de presse conjointe sur la Covid-19 par le directeur général du FMI et le président du groupe de la Banque mondiale. Washington, D.C., le 4 mars 2020
The IMF is explicit. In one of its lending windows, the Trust Fund for assistance and response to disasters (Disaster Containment and Relief Trust ) , which applies to pandemics is generous,
"Provides grants for debt relief to our poorest and most vulnerable members."Absurd statement: he is there to bail out the creditors' coffers, the money is allocated to debt service.
"For low-income countries and for emerging middle-income countries, we have ... up to $ 50 billion that does not require a full IMF program. "No strings attached to how you spend the money. But this money increases the stock of debt and requires repayment.
Countries are already in a straitjacket. And the goal is for them to comply with the demands of the creditors.
It is the neoliberal solution applied at the global level: no real economic recovery, more poverty and unemployment in the world. The "solution" becomes the "cause". It initiates a new process of indebtedness. It contributes to an escalation of debt.
The more you lend, the more you push developing countries to comply with political rules. And that is ultimately the goal of the bankrupt American Empire. is intended to increase the external debt .
In recent developments,G20 finance ministers have decided to "put on hold" the repayment of the debt service obligations of the world's poorest countries. Debt cancellation was not considered. Quite the contrary. The strategy is to accumulate debt.
It is important that developing country governments take a firm stand against the IMF and World Bank "bailout".
The Global Debt Crisis in Developed Countries
An unprecedented fiscal crisis is unfolding at all levels of government. With high unemployment levels, inbound tax revenues in developed countries are almost at a standstill. Over the past two months, national governments have become increasingly indebted .
In turn, Western governments as well as political parties are increasinglyunder the control of creditors, who ultimately lead the boat.
All levels of government have been thrown into debt stranglehold. Debt cannot be repaid. In the United States, the federal deficit "increased by 26% to reach 984 billion dollars in fiscal 2019 , the highest level in 7 years." And that's just the start .
In Western countries, a colossal expansion of public debt has taken place. It is used to finance "rescues", "aid" to businesses as well as "social safety nets" to the unemployed.
The logic of the bailouts is in some ways similar to that of the 2008 economic crisis, but on a much larger scale. Ironically, in 2008, US banks were both the creditors of the US federal government and the lucky beneficiaries:the bailout was funded by the banks with the aim of "bailing out the banks." Does it sound contradictory?
State privatization
This crisis will eventually precipitate the privatization of the state. More and more, national governments will be under the thumb of Big Money .
Riddled with the accumulation of debts, what is at stake is the possible de facto privatization of the entire state structure, in different countries, at all levels of government, under the surveillance of powerful financial interests . The fiction of "sovereign governments" serving the interests of voters will nevertheless be maintained.
The first level of government to be privatized will be the municipalities (many of which are already partially or fully privatized, such as Detroit in 2013). American billionaires will be encouraged to buy an entire city.
Several large cities are already on the verge of bankruptcy. (This is not new).
Is the city of Vancouver ready for privatization? "The mayor of Vancouver has already indicated that he fears the bankruptcy of his city. ( Le Devoir , April 15, 2020)
In major American cities, people are simply unable to pay their taxes: New York City's debt for fiscal year 2019 stands at $ 91.56 billion (FY 2019), an increase of 132% since fiscal year 2000 . In turn, personal debts have exploded all over America.
"American households collectively have about $ 1 trillion in credit card debt. " No action is being taken in the United States to reduce interest rates on credit card debt.
A new New World Order?
Containment impoverishes both developed and developing countries and literally destroys national economies . It destabilizes the entire economic landscape. It undermines social institutions, especially schools and universities. It drives small and medium-sized businesses into bankruptcy.
What kind of world awaits us?
A devilish "new world order" in the making, as Henry Kissinger suggests? ( WSJ Notice, April 3, 2020 ):
"The coronavirus pandemic will forever change the world order."Remember Kissinger's landmark 1974 statement:
« Le dépeuplement devrait être la priorité absolue de la politique étrangère américaine à l'égard du Tiers-Monde ». (Mémorandum du Conseil national de sécurité de 1974)The political implications are considerable. What kind of government will we have in the aftermath of the crisis?
Concluding remarks
There are many misunderstandings about the nature of this crisis. Several progressive intellectuals today say that this crisis constitutes a defeat of neoliberalism. "It opens a new beginning". Some see it as a "potential turning point", which opens up an opportunity to "build socialism" or "restore social democracy" in the wake of the lockdown.
The evidence amply confirms that neoliberalism has not been defeated. Quite the contrary. Global capitalism has consolidated its hold. Fear and panic prevail. The state is being privatized. The tendency is towards authoritarian forms of government.
These are the problems we have to face.
The historic opportunity to confront the power structures of global capitalism, including the military apparatus of the United States and NATO, remains to be firmly established following the lockdown.
Translated by Mondialisation.ca
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