Memo To: Website Fans, Browsers, Do-Gooders
From: Jude Wanniski
Re: Same Old, Same Old Baloney
President Bush and his partners at the Gleneagles, Scotland, G-8 Summit are mighty proud of themselves for the headlines they made by agreeing to a $50 billion aid package for impoverished Africa. But as far as I can tell from the meager details coming from the summit, it is a replay of the same old foreign-aid racket that our distinguished heads of state have been playing with sub-Sahara Africa for the last four decades. Unless I am surprised when the fine print is reported, it looks like the funds will be spread over several years, will go to the creditor banks, will be offset by reductions in other aid funds, and will be picked up by G-8 taxpayers.
The only real relief Africa would get is if he could persuade G-8 partners to install supply-siders at the IMF, World Bank and AID. Dribbling dollars into the Dark Continent to repay western bankers will do nothing to expand economies smothered under ridiculous tax systems where every unit of output has to go through so many tax gates that there is no way for capital to form. This is the direct result of decades of stupid IMF policies promoting tax increases and inflationary currency devaluations in Africa in exchange for cash so the recipient governments could pay the New York and European bankers on their loans.
The press is no better than the politicians. Nicholas Kristof of the New York Times brings tears to our eyes when he reports on the deaths in Darfur, but no matter how much I prod him there is no mention that the 30% top income-tax rate in the Sudan is encountered at $54 a year and it costs the government more to collect the nickels and dimes than it gets in revenue. This is the pattern across Africa, with the only countries showing small signs of prosperity -- Botswana and Ghana to name two – having tax systems that permit producers and investors to see some after-tax profits at the end of the day.
To get a taste of the baloney being sliced in Gleneagles this week, here are a few comments from John Pilger, the incendiary columnist for London’s New Statesman followed by an interview with a clear-eyed 35-year-old Kenya economist who may not understand supply-side economics, but sure understands the greed of western money-men and politicians who pretend to be do-gooders.
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Excerpt from “THE G8 SUMMIT: A FRAUD AND A CIRCUS” by John Pilger, June 22 New Statesman
There is no conspiracy; the goal is no secret. [British Chancellor of the Exchequer] Gordon Brown spells it out in speech after speech, which liberal journalists choose to ignore, preferring the Treasury spun version. The G8 communiqué announcing the "victory for millions" is unequivocal. Under a section headed "G8 proposals for HIPC debt cancellation", it says that debt relief to poor countries will be granted only if they are shown "adjusting their gross assistance flows by the amount given": In other words, their aid will be reduced by the same amount as the debt relief. So they gain nothing. Paragraph Two states that "it is essential" that poor countries "boost private sector development" and ensure "the elimination of impediments to private investment, both domestic and foreign".
The "55 billion" claimed by the Observer comes down, at most, to 1 billion spread over 18 countries. This will almost certainly be halved - providing less than six days' worth of debt payments - because Blair and Brown want the IMF to pay its share of the "relief" by revaluing its vast stock of gold, and passionate and sincere Bush has said no. The first unmentionable is that the gold was plundered originally from Africa. The second unmentionable is that debt payments are due to rise sharply from next year, more than doubling by 2015. This will mean not "victory for millions", but death for millions.
At present, for every 1 dollar of "aid" to Africa, 3 dollars are taken out by western banks, institutions and governments, and that does not account for the repatriated profit of transnational corporations. Take the Congo. Thirty-two corporations, all of them based in G8 countries, dominate the exploitation of this deeply impoverished, minerals-rich country, where millions have died in the "cause" of 200 years of imperialism. In the Cote d'Ivoire, three G8 companies control 95 per cent of the processing and export of cocoa: the main resource. The profits of Unilever, a British company long in Africa, are a third larger than Mozambique's GDP. One American company, Monsanto - of genetic engineering notoriety - controls 52 per cent of the maize seed in South Africa, that country's staple food.
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A Der Spiegel interview with Kenyan economist James Shikwati, under a headline: “For God’s Sake, Please Stop the Aid!” Please use the link for the entire interview, well worth reading. I loved his story of the Kenyan biochemist driving a taxi.