Life + Debt was a great film; especially when followed by a lecture from Fran Korten on the trouble of lending through the International Monetary Fund.
As with the other videos in the Social Justice course, I learned something new that I was completely unaware of… another way that developed nations like the U.S. take advantage of poorer nations through the International Monetary Fund and other international organizations.
I didn’t realize what a negative toll globalization has had on poorer nations. When richer nations subsidize and sell goods on a massive scale to other nations, especially products like food, they deteriorate the local markets by selling goods at lower prices. I had no idea that the United States was flooding the Jamaican market with produce, meat, milk powder and various other items at prices less than what they even cost to produce.
As one farmer in the film put it:
“When it’s ready for harvesting, you see imported potato, right in front of your home, being sold… It’s an insult to our dignity… not being able to produce and sell in your own market at home.”
The film explained the link between lower cost imports, and the requirements put on the Jamaican government by the IMF to open up to this type of international trade. It is really unfortunate that the IMF provides loans not to help countries build and improve their infrastructure, but only to keep them indebted. Debt is a powerful mechanism that keeps not just individuals, but entire nations in a cycle of perpetual serfdom. In order to pay off their debt, they must continue to borrow. However, in order to continue to borrow, they must be open to outside trade which continues to deteriorate their economy, as local businesses shut down, unable to compete with lower cost foreign goods.
Not surprisingly, the United States came up with another “improvement plan” for Jamaica, promised to provide hundreds of individuals with employment opportunities — as they were, of course, no longer able to work in fields, dairies, farms, or other agricultural positions.
This idea, instituted in the 1980′s was known as the “Free Zone” It was described in the film as follows:
“The Free Zone operates in a theoretical thing that is not even part of Jamaica. It is a separate entity so the goods come in in a container and go through guarded gates. After it leaves the Free Zone, it goes back onto the ship, never, in effect, having touched the shores of Jamaica. So those factories are not liable to local controls. They’re not liable to things like income tax or certain duties, taxes, anything like that. The Free Zone is to give the opportunity for people to operate without the controls or the laws or the systems that normally govern a country’s operation.”
This zone was created, in essence, as a place to take advantage of cheap labor on a large scale. With few other options, many Jamaicans went to work in these factories creating goods to be shipped back to the United States and Europe. However, as time went on, the factories began to exploit the worker’s rights, requiring more work in less time. Without any local oversight to protect the workers, they were at the mercy of the company in order to secure their paycheck… yet another example of modern-day serfdom. If the employees had anywhere else to go, they would. But with a declining economy, fewer jobs and less money, they had little choice.
And, because the “Free Zones” were provided to Jamaica as a “service,” they incurred a large amount of debt to provide these jobs to their citizens. All the while, the corporations and countries that were operating in the Free Zone basically operated for free. The low wages that they paid to the workers was far less than the amount of money that the Jamaican government is paying back at high interest rates.
However, as globalization continued and labor began a commodity to be sold at the lowest price, factories began closing down as cheaper labor was found in Mexica and Asia. Now being shut out of the factories, many Jamaicans have nowhere to go for work. Foreign companies continue to sell products cheaper than they can make locally, and now pull out of places like the Free Zones leaving them with little to no employment opportunities.
Michael Manly, a former Prime Minister of Jamaica states the problem quite clearly in how it relates to the country’s debt and its relationship to the IMF:
“Private capital is not going to come in and help you with your infrastructure. To help you develop an adequate education system. To help you develop a good health system. Private capital is not going to come and take a chance in developing your agriculture so that you can really do a lot of the feeding of yourself. It is understandably only interested in how it can make a quick buck.”
Poor nations have no choice but to borrow from the IMF, because private lenders are only interested in making profits. Unfortunately, this borrowing only leads to further globalization, more imports of foreign goods, and further degradation of what little economy they have.
“Look at every IMF country today and tell me which has a really good hospital service, which has a good education system, which has anything… All of them are trapped in that old colonial crisis of finance.”
The worst part about this is that most citizens of developed countries don’t even know that their nation is taking advantage of those less fortunate. We continue to donate to non-profit organizations that are doing good work in poorer nations so that we feel we are doing something positive, yet wonder why it is never enough. That all the aid and money we send doesn’t end up having any lasting effect. The reason is that developed nations continue to collect unimaginable amounts of money in the form of loans and interest that basically negate any amount of money that we could ever hope to spend in aid or charity work.
We must come up with a better solution that gets to the root of the problem. Rather than continue to perpetuate a cycle of national serfdom, we must eliminate high interest rates on international borrowing and support programs that allow poorer nations to build their education systems and improve their own economies by allowing them the ability to provide their own goods and services without being undersold by subsidizes imports.