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The Human Face Of Economics
by Ann Scholl , Facundo Arrizabalaga
1 March 2004

Returning to Argentina last year was like coming back to a different country. Everything was worn, tattered, older, poorer. Buses, paving stones, paint on school buildings, people’s faces, the taste of ice-cream. Now Argentina had become a ’proper’ Third World country. It is no longer the envy of the rest of Latin America. It can no longer be compared to Spain or Italy. It now fits its place on the map. And the human cost of a crisis called ’economic’ is laid bare. Economic: An indescript word to describe a crisis that means people’s lives, futures, dreams. Like inequality, hunger or unemployment. Words, now so familiar and overused their significance has become alien. Words that have become clinical; so antiseptic they are almost soothing.

The journey from Buenos Aires’ Parisian centre - where the elite still enjoy a high standard of living - to the villas miseria which ring the city is like moving between two worlds. Here, generations now, continue to be unemployed and live in an environment without opportunities, excluded from society and subsist on a meagre 150 pesos (around $50) state Jefes y Jefas de Hogar subsidy per month. The streets are unpaved, homes are humble 4-wall constructions, running tap water is scarce and the nearest hospital is a two hour walk away. Inequality, hunger and unemployment are an everyday reality here.

In the barrio of Matanza fifty neighbours have joined together to form one of the numerous Movimientos de Trabajadores Desocupados (MTD) - unemployed worker’s movements - that have arisen throughout Argentina. They use a former school building as a community centre. Here they run a bakery, a vegetable garden, have some sewing machines, a t-shirt workshop and are planning to set up an alternative educational programme. They are different from other MTDs as they refuse to accept the Jefes y Jefas de Hogar subsidy. “The state has taken absolutely everything away from us, even our identity,” says Toty Flores, one of the founding members. He expresses his humiliation at being offered 150 pesos per month by the government, which is not even enough for a family to subsist on for one week.

The group believes that the state subsidy generates a culture of survival and destroys the struggle to reclaim work and self-respect. They are seeking to recover this lost dignity through their autonomous self-help project and generate their own employment in a new environment different from the economic system that represses them. They take all their decisions in asambleas - communal meetings - and work around a philosophy of equal opportunities and free choice. When the peso currency was devalued and the price of flour went up - from 18 pesos for 50 kilos to 53 pesos - they agonized over how to produce at the bakery without raising the cost of bread. They wanted to continue solidarity with the neighbours, maintain the current employees, and still provide themselves with a subsistence wage. In the end they decided to produce and sell double to maintain margins.

The gulf between the sensitive and caring decision making and economic principles based on solidarity and community participation carried out by the MTD in Matanza contrasts starkly with the autocratic decisions taken by the international financial institutions in their offices from Buenos Aires to Davos, where the fate of billions of people’s lives is surgically determined.

The World Bank loaned $600 million to Argentina in order to fund the Jefes de Hogar program . Argentina is caught up in a vicious circle of debt which continues to maim the country’s people, natural resources and sovereignty. It was during the Washington backed dictatorship that Argentina’s debt was largely incurred. The regime accumulated around $36 billion between 1976 and 1983. Henry Kissinger gave his approval for the brutal regime to rule by terror: 30 000 students, activists, social workers, or anyone slightly related to a ’communist’ cause were imprisoned, tortured and “disappeared” during these years. Martinez de Hoz, the then minister of the economy, directed the loaned money to corporations and military tyranny. This is why there is a strong legal position that claims a large proportion of Argentina’s foreign debt is illegal, or odious, as Alexander Sacks explains: “If a despotic power incurs a debt not for the needs or in the interest of the State, but to strengthen its despotic regime, to repress the population that fights against it, etc., this debt is odious for the population of all the State. This debt is not an obligation for the nation; it is a regime’s debt, a personal debt of the power that has incurred it, consequently it falls with the fall of this power.” In 1981 the debt acquired by the military was nationalized. This act signified that the argentine people, who never even gave their consent to borrow these loans, were assigned the responsibility to pay them back. They have been suffering the consequences ever since.

When Argentina failed to pay portions of $132 billion to its creditors in December 2001 - the largest sovereign default on record - the biggest ’economic’ crisis in its history began. This means that children are malnourished in a country that once fed Europe. Argentina’s creditors, policed by the IMF, require the government to structure the economy to favour debt repayment.

An export based economy, which earns foreign exchange, is demanded. In Argentina’s case genetically modified soya is exported. A country overwhelmingly rich in natural resources that once produced high quality wheat and meat has been transformed into a ’soya republic’, producing animal forage for cattle in Europe. Deforestation, floods and pesticide contamination are only a few of the, often irreversible, environmental costs. An agriculture orientated towards exporting a few cash crops causes farmers to neglect food production for local consumption. Therefore staple foods become more expensive and hunger and malnutrition occur. As indebted countries compete to export to the north prices for these crops go down. Susan George, writer and long time campaigner on debt eloquently explains: “I really believe that there is a war going on. Debt is war because you can do everything with debt that you can with classical warfare except to occupy territory. In classical war you get hold of other people’s resources, and that’s what we’re doing with debt. We’re getting the cheapest raw materials we’ve had in sixty years.”

The IMF’s structural adjustment requirements create more poverty as the government is directed to fund the debt and interest incurred and cut down on health, education and social welfare. The IMF requires the government to privatise state owned enterprises, devalue the local currency in order to enhance competitiveness for export and of course adopt “free trade”. Embracing “import liberalisation” as part of the free trade package has disastrous consequences. In Concordia, a major orange producing region in Argentina’s Mesopotamia, oranges imported from Israel rather than local oranges were sold in the fruit and vegetable shops, as, within the logic and ’free’ competition of ’free’ trade they were cheaper. Oranges rotted on the trees in local orchards and unemployment rose dramatically while oranges were flown in from the other side of the world. The direct consequences of these ’economic’ measures are paid for with human lives: Generations now have lived without opportunities as the state serves its creditors rather than the population.

Debt is used as a method of socio-economic control. Structural Adjustment policies limit state participation in the economy. This is why President Kirchner’s meetings with IMF officials precede any national political news in the argentine newspapers. As Chomsky clarifies: “For about half the world’s population right now, national economic policy is effectively run by bureaucrats in Washington:” So much capital leaves the south for the north in debt repayment, that one former executive director of the World Bank claimed the current decapitalization of Latin America is comparable to the plunder during the colonial conquest. By1990 Latin America’s debt had risen from $200 billion to $433 billion. Between 1982 and 1996 a staggering $ 740 billion left the region for repayment. Debt accounts for less than 6% of the banks’ outstanding portfolio, but its use as a political tool is invaluable: It maintains the subordination of the Third World in the absence of official colonies. The U.S.’s urgent request to cancel 90% of Iraq’s debt, under the ’odious debt’ argument that the Iraqi people should not have to pay back money contracted under Saddam’s dictatorship, exemplifies just how strategic debt repayment is. Concern for human rights and welfare are yet again relative, when corporations such as Halliburton and U.S. supremacy are at stake.

Currently over half the population live below the poverty line in Argentina. However, the victims of debt are not only confined to indebted 3rd World countries. Northern governments give their banks tax concessions using taxpayer’s money and therefore it is the working population who assume the risks of lending for the banks. In addition, when corporations transfer jobs to the South under the ’advantages’ (cheap labour, slack labour laws etc.) of ’free’ trade this causes unemployment in the North.

Most importantly, international financial institutions such as the IMF and the World Bank and numerous private banks and governments, who knowingly lent billions of dollars, not only to the dictatorship in Argentina, but to Suharto in Indonesia, the dictatorships in Guatemala and El Salvador, Saddam Hussein in Iraq, Duvalier in Haiti, Pinochet in Chile, Somoza in Nicaragua, Noriega in Panama, and who continue to support the ’drug war’ in Colombia, the illegal occupation of Iraq, Karimov in Uzbekistan and the apartheid in Israel, have not only contributed and continue to contribute to wars, massacres and despots, but were and are active accomplices. It is now their duty to recognize these debts as odious, instead of creating more hunger, more deaths and more ’economic’ terror.

Source: Znet, February 27, 2004.

Ann Scholl
Facundo Arrizabalaga