Counting Blessings

by Natasha Chart [courtesy of MyDD]

This diary at DailyKos from a woman who got laid off along with 2/3 of her company yesterday is going to become increasingly regular news. For all that I've been swimming in the schadenfreude at watching the banks collapse and multimillionaire CEOs humbled, mass layoffs of ordinary people like this, as well as the evaporation of retirement savings for people unlucky enough to be retiring in a downturn, were inevitable and they give me no joy.

I didn't relish that end of things when, at the end of the dotcom bubble, my Silicon Valley firm essentially shut down completely. The product and one tech support guy were sold to another company and the rest of us were let go. (I'm not sure I should be kidding about their selling the tech support guy. I heard earlier this year that he still works with the remnants of the product as it exists today.) It took quite a while to find another job and my income has yet to recover its 2001 peak.

Not that this empathizing will make you feel better if you got laid off recently. Only another job is really going to help with that and I wish you good fortune. I'm just saying that I snark out of bitterness, as opposed to a glibertarian lack of concern.

But seriously, Pets.com? AOL being worth more than Time-Warner? The business climate in 2001 was a fantasyland, a delusion. It couldn't have gone on like that and (in theory predictably, though no one wanted to listen to the people who did predict it) it didn't.

All the ordinary people who'd built their dreams on the jobs that couldn't last, all of us took a bath. And how were we supposed to know any different? The media and business press were unctously lapping up quotes from tech CEOs, idolizing their lifestyles, luxuriating in E-Trade advertising dollars, and crowing about how business had changed forever. Ha.

It could have been worse, though. We might have lived in a developing country run under the iron thumb of the International Monetary Fund; that was something to be thankful for then, and something to be thankful for still today.

In fact, both the IMF and World Bank are now singing a different tune about the proper response to financial meltdowns, talking about the need for more government oversight, saying that African countries who've refused to integrate with world financial markets will be hurt the least. A stunning admission of reality on their part. Robert Zoellick of the World Bank is quoted in that article describing the current crisis as having "confused" people about free market principles, but countries subject to IMF riots over the years haven't been even remotely confused about the rules of global finance: whatever benefits the big, developed nations is good, period.

Hence we've had trade protectionism for the US and its allies, paired with the merciless extraction of capital and raw materials from developing nations. In fact, hop below the fold with me and let's step through the standard 4 1/2 step IMF crisis recovery plan that will never be fully implemented in the US on account of how no one wants torch-bearing mobs burning stuff down in America del Norte.

Joseph Stiglitz, former chief economist of the World Bank, courtesy of Greg Palast, will now walk you through what the IMF and World Bank wouldn't dare recommend for the US and Europe, what's quoted and in bold below is from the article linked in this paragraph. And I'd like to clarify what I mean by "recommend;" when you're a developing nation in desperate need of a loan from the international markets to bail your economy out of a hole, you follow these recommendations or no one, no one, loans you money. To it, then ...

"Step One is privatisation."

Which is to say, exactly the opposite of what's happening in the States and Europe right now. Not the government stepping in to save troubled financial institutions by purchasing ownership shares, but the sell-off of state-run utilities to foreign or domestic investors at fire sale prices.

"Step Two is capital market liberalisation."

As Stiglitz explains, the lifting of restraints on all capital market transactions. No stopping of practices like short selling. No restriction on the withdrawal of foreign investment, often precipitous. And as Palast goes on to explain, "to seduce speculators into returning a nation's own capital funds, the IMF demands these nations raise interest rates to 30%, 50% and 80%."

Which is to say, basic interest rates. At this point, no one who isn't either filthy rich or a foreign investor can afford to participate in an economic transaction involving credit. Weimar Republic-style inflation, where wheelbarrows of cash can barely feed a family, may occur.

"At this point, according to Stiglitz, the IMF drags the gasping nation to Step Three: market-based pricing - a fancy term for raising prices on food, water and cooking gas."

The privatization of utilities in developing nations followed by the lifting of rate restrictions and account servicing requirements has routinely resulted in rates for basic necessities like water and electricity going up in hard times. Many of a society's poorest people would therefore be cut off from these services, and expansion of what we in the US consider to be basic services into undersupplied communities would come to a crashing halt.

Here, our government is free to consider helping the poorest ratepayers, people who would be most grimly affected. They are free to insist that electric companies, even if they are private, have to give you a few months to get your bills together before they can cut you off. They can forbid shutoffs during extreme weather. Not so, a nation following the IMF's dictates.

"This leads, predictably, to Step-Three-and-a-Half: what Stiglitz calls 'the IMF riot'."

Consider a low-income community in the US where all federal assistance for winter heating oil has been shut off, there are no Food Stamps anymore, there are no free public clinics or health services anymore, rates for all utilities have gone up, and public schools have been forced to charge fees for all students.

It would be, to quote Terry Pratchett and Neil Gaiman from "Good Omens," a picnic: "hot, nasty, and eventually given over to the ants."

As noted in Palast's article, and do read the whole thing, public revolts against the destruction of their livelihoods and futures happen like clockwork. They're inevitable. People can only take so much.

"Now we arrive at Step Four: free trade."

Translation: no more protections for agriculture, manufacturing, or any other domestic industry, and no tariffs on any foreign goods - even if they come from countries that are deliberately selling subsidized goods below production costs.

Somewhere in here, any labor protections are also likely to be jettisoned. The only important thing is attracting foreign capital, which hates uppity factory workers who want to work less than 10 hours a day and get through their working life unmaimed.

This inevitably destroys the quality of life of whatever small farmers and craft producers have managed to hang on through all of this, and often does severe damage to any nascent manufacturing industry that the country has managed to develop. If you had a budding middle class, well, screw them. Unless the main commodity you sell is oil, your doom is now to sell unfinished, raw commodities at wholesale and purchase finished products at international retail.

Good luck rebuilding after all that, and thanks for playing.

Here At Home

With balanced budget amendments passed in various states and budget shortfalls are now pushing, for example, Virginia to cut hundreds of jobs and Maryland to enact forcible furloughs, there will probably be cuts to essential support services. These states are often having to cut education funding.

The chances that the federal government won't do what it can to help? Zilch.

When it comes to talking about Americans, it's obvious that cutting poverty assistance and education funding, making it more difficult for people to hold onto homes and small businesses, will make this downturn even harder to recover from. We know this, it's obvious. It's becoming political suicide to suggest otherwise.

But though we're hurting now, and all our future prospects probably just got a whole lot dimmer, let's insist that these lessons carry over into our international policy from now on.

The World Bank and IMF don't act as independent entities, but as extensions of US and European policy goals. They break open recalcitrant markets for our investors, humble poorer governments until they can't dare resist the wishes of wealthier nations, impoverish millions of people for the benefit of international capital markets, and look the other way when corrupt dictators take out loans their countries can never pay back and then skim off the top for personal enrichment before leaving town. They have done it repeatedly, relentlessly.

I'm glad that these policies won't be enacted here, in the country I call home. But I also hope they'll never be forced on anyone again, especially now that we can see what the IMF and World Bank really think of them: they aren't good enough for the United States.