The Crisis in the Sudan Jude Wanniski July 7, 2004

Memo To: Sen. John Edwards [D NC]
From: Jude Wanniski
Re: A Worthy Cause

Congratulations on being selected by Senator Kerry as his vice-presidential running mate. I’d frankly hoped he would choose others on the list being circulated, but I do hope you will be a help to his candidacy, as I am actively considering voting for the Democratic ticket this year for the first time since 1964. I’d actually planned to write about the crisis in the Sudan today, expecting Mr. Kerry would not be making his choice known until later in the week, but it now occurs to me that I might interest you in taking up as your own personal cause the poverty and political turmoil in Black Africa. We are being told that you are a rags-to-riches political person who sees the world from the bottom-up, as opposed to the top-down, born well-to-do perspective of Mr. Kerry or President Bush. As a successful trial lawyer, you've taken on the biggest corporate giants on behalf of the little guy. You could do the same in this worthy cause.

It wouldn’t take much at all to “fix” the problems of Black Africa, Senator, given the fact that most of them have been caused by the Movers and Shakers of Corporate America who pull the strings at the International Monetary Fund. It is clear that your populism identifies with the folks on the bottom of the ladder, not the Movers and Shakers at the top. In that sense alone, you most resemble Ronald Reagan’s approach to policymaking, at home and abroad. I’ve been trying to get Republican political leaders for years and years to see the destructiveness of the IMF and World Bank in creating the conditions that invite poverty and civil wars in the undeveloped world, but the Movers and Shakers in the multinational power structure have no interest in the kinds of changes I’m talking about. Our industrial powers do not want competition from undeveloped countries become developed and our big banks are not interested in growth, only in getting paid back on their loans to the Sudans and Zimbabwes and Ethiopias of the world.

In case you had not heard, the situation in the Sudan is now as ugly as anything the world has seen since the slaughter in Rwanda a decade ago. A million refugees have been displace by the civil war and an estimated 10,000 per MONTH are dieing disease, starvation and weapons. There have been tensions and low-level killings in the Sudan for decades, but in the last two years the Arabs of the north and the blacks of the south have been killing each other at an escalating rate, with the blacks getting the worst of it.

The Sudan is a big place, Senator. There are only 38 million people living there, but at 966,000 square miles it could hold all of Alaska, Texas, New York, Pennsylvania, New Jersey, Massachusetts, Connecticut, Rhode Island, New Hampshire and Vermont. Put another way, it would take up one third of the continental United States. That means the central government in Khartoum has quite a job policing the country and it has to make do with less than $1 billion per year in revenues, a sizeable chunk of which goes to pay the army.

Then there are the payments to the IMF/World Bank. Fifteen years ago, Sudan had $15 billion in dollar debts, but with interest payments piling up when they could not make payments, the debt is now $30 billion. Hamid Ali, a PhD candidate in economics at the University of Texas who is from the Sudan, tells me that to help Sudan Malaysia now pays $5 million a month to the IMF to meet its minimum requirements. He also tells me the IMF, wanting to get paid back on principle, is demanding the Khartoum government undertake further “austerity measures,” cutting spending and collecting taxes.

Now here is the fun part, Senator Edwards. If I told you the top rate of tax on personal incomes in the Sudan was 30%, you would almost certainly say that tax policy could not be the problem because our tax rates in the U.S. are higher than that, considerably higher when you add federal to state tax rates. But what if I then told you that the 30% rate is encountered at an annual income of $54. That’s right Fifty-four dollars. The workers who are on payrolls have 30% of their wages lopped off after they make $1 and pennies per week. The per capita income is $371, and no wonder, as it is impossible for capital to form. And the personal income tax is only one tax, which collects almost no revenue because there is so little actual business that can take place when smothered by this kind of confiscation. Income from business profits is taxed at 45% on anything over $40 per year. Hamid Ami says the government gives tax gatherers a percentage of what they bring in, and the tax agents “guess a number that is amount you ought to pay as tax and the burden on you is to prove otherwise.”

Is it any surprise that when the IMF/World Bank is strangling the national economy, the people of the Sudan might as well be living in the 15th century. They would be living much better back then, without state governments to act as agents of the power structure in New York and Washington. But when there was distress, a shortage of calories to eat or to heat with, the tribes would war with each other, killing off a percentage of each other until there were enough calories to go around. Slavery was not such a bad condition back then, when the alternative was cannibalism.

This is not only happening in the Sudan, but all over Africa, which has been victimized in many ways by the floating U.S. dollar, which causes distress in our national economy, but boom-and-bust catastrophes in the commodity-producing developing world. Just think about this as a worthy cause you might take up. I’ve not been able to get my Republican friends at the Club for Growth interested because they are chiefly interested in policies that help stocks and bonds on Wall Street. The editors at The Wall Street Journal know the story, but they are mostly interested in promoting pre-emptive wars against the Axis of Evil. I’ve tried to get my friends at the Congressional Black Caucus interested, but they are mostly interested in helping Africa where they can by getting U.S. taxpayers to channel aid to the worst cases in Africa, although I point out that the financial aid is generally confiscated by the big banks as payments on their debts. I’ve tried to interest several reporters and editors at The New York Times in taking up this worthy cause, but they prefer to write about the corruption of political leaders in Africa as the chief problem. And tax reform sounds too much like supply-side economics, which the Times loathes and detests.

If you are interested at all, please let me know. I have the tax tables for all of Africa, both black and Arab and mixed, courtesy of my old friend Rep. Charlie Rangel and the Library of Congress. With the smallest amount of effort, you could produce the greatest amount of benefit for the greatest number of people. No kidding.