Cafe Hayek - Latest Comments in Why are poor nations poor

Re: Why are poor nations poor

Name — Wed, 23 Sep 2009 12:02:55 -0000

A politically liberal friend just gave me an article by Stiglitz titled "Stimulate or Die". I was considering how to rebut it when I came across this article.

If government stimulus is supposed to revive moribund economies, why do massive World Bank funded projects and foreign aid fail to lift African countries out of poverty? In fact, using the Keynesian tactic of confusing correlation and causation, one would conclude it exacerbates poverty. Given that aid involves no increase in public debt and that much of the debt connected with major infrastructure projects will be eventually forgiven, these stimuli should be even more effective than what Krugman and Stiglitz propose we need in the US. Is it possible that government is generally ineffective in deploying investment capital and that increases in exogenously derived (as I would describe federal government spending funded by Chinese t-bond buyers) social spending provides no long term benefit, beyond a short-term voter palliative?

Re: Why are poor nations poor

wonda — Tue, 11 Aug 2009 21:26:07 -0000

I dont understand why dont the poor nations just got F*** themselves ! !Amn the wealthy nations should get off their FAT asses and HELP the F***** people out ! !

Re: Why are poor nations poor

erp617 — Tue, 30 Nov 1999 02:00:00 -0000

Poor nations had socialism foisted on them when the colonials were kicked out. All the loans in the world won't help them because they don't invest the money in their own prosperity. Even if their leaders don't steal it for themselves, once its spent, they merely come looking for more.

Re: Why are poor nations poor

vikingvista — Tue, 30 Nov 1999 02:00:00 -0000

"Giving money/credit to people mostly induces them to spend, not produce."

You're right. The common misconception is that "credit built this country". That ignores the crucial importance of borrower selection. The truth is closer to "production built this country". The key is to lend money to producers. The profit motive of the lender tends to produce that result. Without the profit motive, such as with politically motivating lending like the IMF performs, you instead tend to get wealth destruction.

And when the nature of the borrower is not considered, credit is more akin to a wealth transfer or subsidy. The result, as you said, is to stimulate the "borrower" to spend.

Re: Why are poor nations poor

K Ackermann — Tue, 30 Nov 1999 02:00:00 -0000

Try asking Don if there should be an IMF.

Don, should there?

If not, I'd be curious to hear your main reason for it not to exist.

Re: Why are poor nations poor

brotio — Tue, 30 Nov 1999 02:00:00 -0000

I agree that they aren't. I disagree that we can't do something about it. - Yasafi

WTF are you going to do about it? You voted for Obama, and you've defended every policy of his that's been debated here. You'll be voting for Obama in 2012, and still be accusing us of being GWB cheerleaders.

Re: Why are poor nations poor

Martin Brock — Tue, 30 Nov 1999 02:00:00 -0000

How would forgiving those loans solve the problem?

"Forgiving the loans" is a misnomer. The IMF made bad loans to corrupt statesmen who can't repay the loans. They'll never repay the loans out of any utility generated by resources that the credit organized productively, because the credit wasn't expended this way, so the statesmen can only repay the loans to imposing unproductive rents on subjects whose productivity is already marginal.

So "loan forgiveness" is not necessary. A writeoff of bad IMF loans is necessary. Instead, the IMF expects its borrowers to coerce repayment out of neighbors with nothing to show for the borrowing.

It's like I extend credit to the mafia don down the street from you, and when he can't repay it, I tell him to march down to your place with his pistol and collect what I'm due.

And if you don't cough it up, that's because you're a bad credit risk. Get it? My bad lending can't be the problem, because that's just unthinkable. I'm a brilliant banker, so the failure of my investments must be the fault of borrowers, and if it's not their fault, it must be their neighbors. Something must be done to prove my wisdom, so get those pistols out and start collecting.

Needless to say, the same logic applies to taxpayer bailouts of Bank of America and Wachovia. This problem is not unique to third world governments, not remotely. The same thing happens here. We only use different words to describe it. We've met the third world debt problem, and it is us.

Re: Why are poor nations poor

MWG — Tue, 30 Nov 1999 02:00:00 -0000

"Unregulated markets???"

-muirdog

idiot

Re: Why are poor nations poor

muirgeo — Tue, 30 Nov 1999 02:00:00 -0000

So look at the last administration, look at the current administration. Look at all the wealthy people in high office, look at the bailouts, look at the employment history of the FED chief, the Sec of Treasury, etc., and tell yourself that they are looking out for average people.

YASAFI

Posted by: Sam Grove

I agree that they aren't. I disagree that we can't do something about it. The problem is bringing the average person up to speed on the facts and getting them out of their stupor. The powers that be understand the masses will tolerate a certain degree of inequity before they revolt.

Re: Why are poor nations poor

Russ Wood — Tue, 30 Nov 1999 02:00:00 -0000

Russ,

Forgiving existing debt is a simplistic approach that will not magically make poor countries richer.

The IMF issue boils down to the origination of the loans in the first place. The IMF follows austerity policies. They insist on higher taxes and other Keynesian ideas for countries they "help". These bad policies make the economy deteriorate, and the poor countries are left asking for more loans or forgiveness of loans.

You can find this anti-IMF idea in many places, ranging from anarchists to pro-market libertarians. Here is a piece with aspects of both views.

http://polyconomics.com/ssu...

Re: Why are poor nations poor

Nathan — Tue, 30 Nov 1999 02:00:00 -0000

"You curb both corporations and the state by simply enacting real campaign finance reform and lobby reform."

"You get free energy by simply making the rivers run uphill."

Seriously, muirgeo, how can you post thousands of inane drivelings on this site and not have at least one ounce of public choice theory penetrate your thick skull? Politics is a market too. Public choice theory has shown for years that the foxes are guarding the henhouse, and your "solution" is to ask the foxes real nicely to relinquish their power. Describing as "simple" any plan which involves those with the most power chopping off their own arms betrays a stunning ignorance of human nature, and is precisely the reason why I want people like you to have as little power over my life as possible.

Re: Why are poor nations poor

muirgeo — Tue, 30 Nov 1999 02:00:00 -0000

You are totally correct actually. The only mistake you made is assigning the above actions to capitalism.

That my friend is simply politics. Men in power, Republican and Democrat, do this and that is why politicians are generally bad people.

Posted by: Ray Gardner

No!!! You don't get to claim the tautological argument that if something goes wrong then it must not be capitalism.

muirgeo

"Which takes us to the larger point of your own generally collectivist view. You see very clearly the evils that government does, but then you want fewer individual rights, and more power in the hands of the government. "

Ray Gardner

You guys claim I always misrepresent your position but here you are clearly misrepresenting mine.

No!!! I co not want more power in the hands of the government. I want the government to answer to and be responsive to the people NOT the corporations.

If it's responsive to "the people" equally rather then just the interest of the wealthy we shouldn't see such abuses of power.

muirgeo

"You - and other collectivists for that matter - seem to think some men are actually good, and should be in charge of other men by some kind of cosmic fiat. Three hundred years ago you would have no doubt been in favor the "divine right" of kings because of course if you trust the evil land owners, they'll just screw you, but the king, well, he'll take care of you and always look out for your best interests."

Posted by: Ray Gardner

No I believe that a society with minimal rules will favor the worst types of people while honest fair minded hardworking people get screwed. And three hundred years ago you and the conservative Tories sided with the king because this country was his property. Being a property rights kind of guy on what basis would you argue that the revolutionaries had any right to take the Kings property The revolutionaries from that time forward have always sided with diffusing power. Yours is a position that consolidates power. YOURS is a position of divine rights, indentured servitude and rule by the Paris Hiltons of the world.

Your facts and your logic are completely azz-backwards.

Re: Why are poor nations poor

MWG — Tue, 30 Nov 1999 02:00:00 -0000

"Unregulated markets???"

-muirdog

idiot

Re: Why are poor nations poor

muirgeo — Tue, 30 Nov 1999 02:00:00 -0000

Seriously, muirgeo, how can you post thousands of inane drivelings on this site and not have at least one ounce of public choice theory penetrate your thick skull? Politics is a market too.

Nathan

Well quite simply because their are other existing democratic and parliamentary forms of government that seem to do a better job at getting more equal representation. OOK?? So it's NOT inane. And of course you offered no solution... or is that a claim that the current system of those with the most money make the rules your favored system? Because I sure didn't hear you give any alternative solution.

... and is precisely the reason why I want people like you to have as little power over my life as possible.

Nathan

I'm arguing for diffusing the power as greatly as possible.... All I want is for George Soros, Bill Gates, the family farmer, me and the inner city resident to have equal access to power... what are YOU arguing for? So please stun us with your brilliance of just how power should be structured... ? Unregulated markets??? Talk about INANE!

Re: Why are poor nations poor

muirgeo — Tue, 30 Nov 1999 02:00:00 -0000

Corporations = people with money.

Governments = people with guns.

George thinks guns are nicer than money.

Posted by: Sam Grove

Sam,

Even in the mafia the dons don't do the shooting. they have hired guns.... but they have all the power and money.

Re: Why are poor nations poor

muirgeo — Tue, 30 Nov 1999 02:00:00 -0000

Merg,

That may be true. But would it be a reason for curbing the corporations or the state?

You have never ever answered even one of my questions.

Just this once, please, and I promise to go out a kill a capitalist for you.

Posted by: dg lesvic

You curb both corporations and the state by simply enacting real campaign finance reform and lobby reform.

I as a doctor can not take even too nice of a pen from a drug representative for risk of loosing my license for conflict of interest. Any money exchanging in any way from lobbyist to campaigns is bribery of a public official. Politician should basically be require to wear live helmet webcams anytime they are doing publics business except in rare cases of national security. Secret deals are not part of the public interest. Don't like then don't be a politician.

Re: Why are poor nations poor

MWG — Tue, 30 Nov 1999 02:00:00 -0000

I lived in Brazil for 3 years and they're probably as good an example as any of what the village idiot (muirdog) is talking about. Except, ONCE AGAIN, he has let too many people of the Naomi Klein breed guide his thinking.

It is true that Brazil took on massive amounts of debt under their string of dictators. Some of the money was no doubt stolen, but most of it went to infrastructure and industries deemed too "important" to be run in private hands. Unlike what the idiot (muirdog) claims about these countries, Brazil was highly protectionist. Everything from telecommunications, and aviation, to banks were OWNED and operated by the government and outside competition, particularly from foreigners was not allowed.

The reasoning behind theses policies was to protect these industries until they could compete on their own (the old infant industry argument) and make Brazil a prosperous nation. The results were massive amounts of debt while at the same time creating a wealthy and protected class and leaving the rest in poverty.

It was only under the democratically elected Fernando Henrique Cardoso and his moves to privatize large numbers of state owned companies and allow for competition from foreigners (those evil corporations) that you began to see a booming middle class and a sharp rise in the standard of living.

I always laugh when I hear people describe foreign (particularly American) owned corporations operating in these developing countries. Their views could not be farther from the truth.

Re: Why are poor nations poor

K Ackermann — Tue, 30 Nov 1999 02:00:00 -0000

C'mon, Professor, you know there are some questionable calls the IMF has made.

Some of the strings the IMF has attached to their loans have had devistating consequences on those countries.

When bean counters and policy wonks decide that aid should be conditional on a country stopping fertilizer subsidies to it's farmers, or medicine for tropical diseases, then something is wrong that those wonk and bean counters are allowed to breath the same air as the rest of us.

The IMF will say with a straight face that it doesn't kill people at the wholsesale level, but all I know is that famine existed where there wasn't any before, and villiages no longer exist where there used to be when medicine was available.

Re: Why are poor nations poor

indianajim — Tue, 30 Nov 1999 02:00:00 -0000

muirgeo wrote: "Yeah capitalism run amuck is why poor nations are poor in many cases."

I have no idea why you blame capitalism. Neither businessmen nor politicians are perfect beings and the back-door deals that are cut between some of them to deceive and defraud are certainly evidence of this. But to argue that Koslowski's choices are prima facia evidence of the deficiency of capitalism is to prclaim ignorance of how he will be spending the rest of his life.

Re: Why are poor nations poor

Ray Gardner — Tue, 30 Nov 1999 02:00:00 -0000

Muir:

Exactly. Then own the thug, take over the countries assets as collateral, let multi-national corporations use the "borrowed" money to build things and profit handsomely, privatize public assets... again putting them in the hands of the corporations,

You are totally correct actually. The only mistake you made is assigning the above actions to capitalism.

That my friend is simply politics. Men in power, Republican and Democrat, do this and that is why politicians are generally bad people.

Which takes us to the larger point of your own generally collectivist view. You see very clearly the evils that government does, but then you want fewer individual rights, and more power in the hands of the government. (Unless I've misread your posts in the past and your some kind of quasi-anarchist - but I have to admit I usually ignore you.)

You - and other collectivists for that matter - seem to think some men are actually good, and should be in charge of other men by some kind of cosmic fiat. Three hundred years ago you would have no doubt been in favor the "divine right" of kings because of course if you trust the evil land owners, they'll just screw you, but the king, well, he'll take care of you and always look out for your best interests.

Re: Why are poor nations poor

Gil — Tue, 30 Nov 1999 02:00:00 -0000

Meh. Gecko seems to say what I'm thinking - poor countries are poor because they're just non-productive, period. Other countries have had impediments too but they overcame them. Other countries, such as China, aren't exactly laissez-faire but they are getting somewhere. It's just the same as listening to someone who cries poor and it's because "everyone's holding him back" only realise he just a plain loser.

Re: Why are poor nations poor

geckonomist — Tue, 30 Nov 1999 02:00:00 -0000

I think there are many possible reasons why poor countries are poor.

But living in a dirt poor African country surrounded by the same and worse, I think awfully bad policies have something to do with it.

This policies may serve only the elite, may protect thieves, hinder trade, screw the poor peasants, etc. But what would foreign governments have got to do with this?

They might give money to the thugs in charge, but not dealing with these thugs doesn't make them go away, nor -even if it did- would it garantee that the ones who take over are any better.

Both China & Myanmar aren't ruled by sweethearts who care much for the freedom of their people. Is the embargo against one of the two doing so much good and the trading with the other so much harm?

The IMF & World bank are quite irrelevant (as China & India & Singapore & South Korea & ... prove every day), both when a country does well as when it goes down. Though they like to claim credit for the former and to blame corruption for the latter.

Re: Why are poor nations poor

S Andrews — Tue, 30 Nov 1999 02:00:00 -0000

BTW, I listened to an interview of this guy John Perkins on radio and I wanted to throw up. This man was just a leg breaker for a mafia ( the state ). He has no clue what so ever about economics, and went onto say that any profits over 5% should be confiscated by the state - may be because he wanted Mafia ( the state ) to do more hit jobs.

Re: Why are poor nations poor

S Andrews — Tue, 30 Nov 1999 02:00:00 -0000

even if this economic hitman is telling the truth, what imbecile muirgeo doesn't understand, is the fact that hitman was funded by the ALMIGHTY STATE.

Re: Why are poor nations poor

Lee Kelly — Tue, 30 Nov 1999 02:00:00 -0000

muirgeo,

If "capitalism" means funding third-world dictators so that politicians can hand out more goodies to their friends, then you will find very few capitalists on this blog, and would be better served by commenting elsewhere.