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Don’t Cry For the IMF

Michael Borucke

While traveling in Europe last July, I met an Argentinean student in Greece. We talked about the impending IMF aid, which will keep the Argentinean economy from defaulting on its loans when repayment begins in September. But the aid, she told me, would not solve anything. She told me how the $130 billion debt was tied to the social unrest and feelings of hopelessness that pervade Argentina today. Weekly protests from tens of thousands of unemployed and employed alike are growing in strength and numbers. Students, teachers, laborers, and even doctors have participated in road blockades to show dissatisfaction with the policies of the International Monetary Fund (IMF). These policies have destroyed social services once provided by the government.

Where did things go wrong? At some point in time, Argentina had to be sustainable as a country, else it would not exist today. Well, some would say the destabilization began with the European conquest of the Americas, but that’s laughable. It’s ludicrous, inappropriate even, to think that a history of plunder, genocide, and rape have anything to do with the present. Just forget I said anything about conquest. Instead, let’s look at the economic situation of Argentina.

Argentina has been in financial trouble for at least the past twenty years. In 1989 the Menem government attempted to pull Argentina out of economic turmoil by privatizing many of Argentina’s industries. It is thought that giving a publicly-run industry like telecommunications to the private sector will increase a country’s economic growth. Unfortunately, the move didn’t keep a large segment of Argentina’s middle class from poverty. Nor did privatizing railroads create jobs for the unemployed or underemployed (40% of the population). Three years after the water and sanitation industries were put into private hands, 60% of the population in the nation’s capital, Buenos Aires, were without access to the sewer system.

Though the population may have suffered from these neo-liberal policies, statistics from the World Bank’s Web site show an overall growth in the economy from the 1980s to the nineties ( Even with this growth, Argentina has been in a recession for the past four years.

Given the increased growth, free market proponents contend that privatization and other neo-liberal tools aren’t the cause of Argentina’s problems. Instead, it is the governmental regulations that prevent the market from being truly free. Economic growth will only help people once everything is left up to the free market. Industry should be totally privatized. There have got to be some lakes in Argentina that could be privatized. The rain might be another possible source of income, provided the right technological capabilities. And doesn’t Argentina have some rainforest left? Why not let the free market take care of that?

Indonesia has got the right idea here. With weak governmental regulations and enforcement, local businessmen are illegally cutting down the last substantial rainforests in Southeast Asia. Of all the tropical hardwood that America imports, 80% is illegally cut from these rainforests and sent to places like Home Depot and Lowe’s.

The fun doesn’t have to stop at industry. The privatization of education is already underway here in the States, so why not in Argentina? Government spending could be cut if teachers from other, poorer countries were imported to Argentina to work for less.

Of course, these ideas are absurd. So is an unregulated market. We as a society place limits on the free market because we understand that some practices, although encouraged by the free market, are morally unacceptable no matter how cost-efficient. Child labor is one such practice that we have deemed too cruel to utilize (at least in the United States... as far as I know).

It is also important to understand that we as a society can decide that current policies are too cruel even if they are put forward by the free market, its adherents, and government officials. Privatization, deregulation, and liberalization are not inevitable. They are simply choices, like child labor, that people should be able to choose or not choose.

The case of Argentina has shown that free market practices have not solved the economic woes of the nation, let alone the suffering of the people. The conditions on the current aid package slash government spending in the usual places, with health and education being two of the first to go. Of special note is the 13% cut in pay for government workers -- including teachers -- and their pensions. Unemployment hovers around 17% nationally. There is little future for the youth in Argentina, and like many recent college graduates, my Argentinean friend is looking for work as far away from Argentina as possible.

No small aid relief is going to quell the discontent of the people, let alone solve the enormous budgetary crisis. Without continued support from the IMF and the U.S., Argentina will be unable to pay back its debt on schedule. Current solutions to the problem include the “restructuring of debt” (read: more neo-liberal policies). The cancellation of the debt is not being considered, yet it is an option nonetheless. Without a dark cloud of debt hanging over the country, the government could provide the necessary social services. But I can’t offer solutions; I can only hope people educate themselves about the type of globalization currently under way. Who are the people pushing for and against it, what do these people have to gain from their actions, and what are the effects of globalization on developing nations?