The Hindu Business Line : Tales from economic hit men

The game of Economic Hit Men has just got more complex, the corruption more pervasive, but their operations more fundamental to the world economy and politics, says John Perkins who returns with his EHM in `A Game As Old As Empire'. Third World countries are caught in a web of control — financial, political, and military — that is extremely hard for them to escape, rues the book narrating many deeply disturbing stories of greed and international corruption.

John Perkins has struck again. If you remember, he hit the shelves a few years ago, with Confessions of an Economic Hit Man, which was daringly brought out by Berrett-Koehler after 25 other publishers had rejected the manuscript. "During its first week in bookstores it went to number 4 on Amazon.com... In less than fourteen months, it had been translated into and published in twenty languages. A major Hollywood company purchased the option to film it," Perkins would reminisce. "A quarter century ago, I saw myself as a hit man for the interests of US capitalism in the struggle for control of the developing world during the Cold War."

For starters, EHM or economic hit men are `highly paid professionals who cheat countries around the globe out of trillions of dollars'. Using a variety of tools such as `fraudulent financial reports, rigged elections, payoffs, extortion, sex, and murder,' they `funnel money' from international organisations `into the coffers of huge corporations and the pockets of a few wealthy families who control the planet's natural resources'. Thus, explained Perkins, in the opening paragraph of Confessions.

Now, he returns with a whole bunch of `economic hit men, journalists, and investigators' to reveal `many more deeply disturbing stories of greed and international corruption'. Because, "Today, the EHM game is more complex, its corruption more pervasive, and its operations more fundamental to the world economy and politics," as he rues in the intro to A Game As Old As Empire from (www.crosswordbookstores.com).

"Third World countries are caught in a web of control — financial, political, and military — that is extremely hard for them to escape," observes the book's editor Steven Hiatt. "Payments on Third World debt require more than $375 billion a year, twenty times the amount of foreign aid that Third World countries receive. This system has been called a `Marshall Plan in reverse', with the countries of the Global South subsidising the wealthy North."

He gives examples of how dozens of countries are getting SAP-ped of `financial health and independence' because of the Structural Adjustment Programmes (SAPs) of the IMF (International Monetary Fund). "Zambia was forced by the IMF to abolish tariffs on imported clothing, which had protected a small local industry of some 140 firms. The country was then flooded with imports of cheap second-hand clothing that drove all but 8 firms out of business... The IMF's SAP in Peru slashed tariffs on corn in the early 1990s, and corn from the US — whose farmers are subsidised at the rate of $40 billion a year — flooded the country."

Third World countries suffer further because of the continual decline of prices for the export of traditional goods, such as coffee, cocoa, rice, sugar, and cotton. "In 1975, a new tractor cost the equivalent of 8 tonnes of African coffee, but by 1990 the same tractor cost 40 tonnes."

Yet another blow is from `sharp cuts in health and education spending' dictated by IMF programmes. In Ghana, for instance, `the percentage of school-age children who are actually attending school is falling' because of tightened budgets...

Riveting accounts.

Poaching in the poorer countries

Contrary to the best of intentions, resources often flow from the poor countries to the rich, says Bob Deacon in Global Social Policy & Governance, from Sage (www.sagepublications.com). This adverse flow can be in many forms, including `debt payments that have not yet been written off' and `commodity prices.'

A distressing form of reverse flow that Deacon talks of is the poaching by the rich countries - of doctors, nurses and teachers trained at the cost of the South. Developing countries contribute to paying for global public goods by training physicians, health workers and medical scientists, but do not benefit from these professionals, he says, citing a 2003 study by Sanjoy Nayak. "He suggests that flows of health workers from the Indian subcontinent continue at the fast rates established in the 1970s. He estimates that recipient countries have gained $12 billion to $16 billion from India alone due to emigration of physicians. This is far greater than all the global health funds put together."

India isn't alone as a generous donor. The book informs that in the UK, nearly 5,600 nurses trained in the Philippines registered during 2002-03; the tally from India was 1,800; from South Africa, 1,400; and from Nigeria and Zimbabwe, 1,000, combined.

"There have been proposals to counteract this regressive redistribution by taxing migrant physicians and sending the proceeds back to the country that trained the doctor to cover part of the cost of their education, but this has not been implemented," informs Deacon. In 2004, the Commonwealth agreed to a package of measures `to end the organised targeting of poor countries by richer ones seeking teaching staff'. Similarly, the UK government established a code of practice whereby its NHS Trusts should not go poaching in poor countries for nurses, one learns. "However, Trusts were circumventing this by using agency nurses... "

Wish someone studied the extent of `poaching' in IITs and IIMs, too.

Economists and weathermen

Can monetary policy help in distribution and macro-allocation? No, it is a blunt instrument directed only towards the production and consumption of market goods, say Herman E. Daly and Joshua Farley in Ecological Economics, from Pearson (www.pearsoned.co.in). "Economists typically have a poor understanding of what is happening in the economy at any given moment," chide the authors. Don't expect the economists, therefore, to give quick answers to questions like: `Is unemployment too high? Is the economy growing too fast, threatening inflation? Are we headed for recession?' Weathermen, perhaps, fare better; they can `look outside right now and tell you what the weather is,' even if they were wrong in their forecasts!

Elsewhere in the engagingly written book, the authors wonder why the IMF bets billions of other people's dollars, to stubbornly pursue policies that have been proved to be wrong. "IMF economists are almost all trained in neoclassical economics. They believe well-informed people make rational choices based on rational expectations... "

Conversely, George Soros bets billions of his own dollars, on his belief that `people act on the basis of imperfect understanding, and equilibrium is beyond reach'. Result: "Soros frequently wins his bets, while the IMF record speaks for itself." Extending the market mechanism to all domains has the potential of destroying society, Soros would caution.

Card fraud

Let's wrap with Other People's Money by Neil Forsyth (www.landmarkonthenet.com). A true story from the leaves of British financial crime, as Elliot Castro, `Britain's most audacious, and friendliest credit card fraudster,' narrates to the author.

Here is how Castro starts on the nebulous path, as a sixteen-year-old: "I accidentally stumbled into the host's bedroom. As I turned to leave I saw a credit card sitting on a table and I picked it up and put it in my pocket. I can't really say much more about it than that, there was no great ceremony or inward debate before I nicked my first card." Next morning, though, he wakes up in cold sweat. "What had I done?

I couldn't decide my next move and had no one to confide in. In the kitchen I asked my mum what happened if someone used her credit card and she told me the bank gave her the money back. Suddenly things didn't seem so bad, and a thought entered my head... "

A reading list that can keep you awake!

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