By Max A. Joseph
The existing global economic system, which the International Monetary Fund (IMF) and sister organizations such as the World Bank and the World Trade Organization (WTO) are micromanaging on behalf of the western nations, is neither fair nor workable. It is based on an uninterrupted transfer of wealth from the Third World to the developed countries that has effectively extinguished the aspirations of too many of the world’s inhabitants, thus responsible for most of the ills affecting humanity. Nevertheless, much of the world is ignoring the reality that the system is an insidious threat to international peace and security.
Almost everyone would agree that poverty poses the biggest challenge to social stability in our interdependent world. Yet, the IMF, by all accounts the sergeant-at-arms of the global economic system, believes otherwise. Its advocacy of far-reaching cuts in public spending in the volatile Third World while encouraging unrestricted expenditures in the stable developed world, is reckless, to say the least. This straight-jacketed directive to rectifying economic mismanagement in the “underdeveloped” world, which conflicts with its multi-pronged approach to solving the same ailment in the developed countries, amounts to a malfeasance that condemns the former to a system of subsistence, penury, despair and dependency on politically-unreliable foreign aid.
Given that our little planet is, for better or for worse, irreversibly interconnected, one thing naturally affects another sometimes in the most unexpected way. The economic dysfunction resulting from the IMF’s reckless policies is not only responsible for a mass migration from Third World countries to the developed world, but also the resurgence of nationalist and fascist tendencies in the latter. The waves of refugees fleeing the wars in Afghanistan and Syria and poverty in Africa that have the potential of altering the social fabric of many European countries may be the tip of the iceberg, as more disconcerting developments would likely follow.
As the dysfunction at the lower end of the global economic structure intensifies, complications in the advanced economies inevitably crop up and would continue to fester in the face of ineffective measures or lack of constructive ideas from the architects of the system. Meanwhile the alarm bells are rigging in the most unlikely places. Bill Gross, who runs the Janus Global Unconstrained Bond Fund, was quoted as saying “the central banks are “running out of time” to reflate the global economy as their aggressive policies including quantitative easing and low, even negative, interest rates are losing their effectiveness.” The Bond Manager, you may guess it, wasn’t referring to the central banks of Burundi, Haiti or Mali, but the U.S Federal Reserve Bank, the European Central Bank (ECB) and, to a lesser extent, the Bank of Japan.
Having tried everything in the book in the last 10 years to engineer robust global economic growth, albeit unsuccessfully, these entities seem in no rush to change course and usher a new economic order, even though the fate of humanity itself is at stake. What would it take for the keepers of the current economic order to finally realize that it has, in fact, ran its course, due to the complexities of a reality that did not exist 72 years ago when the Bretton Woods Agreement was conceived? The notion that Switzerland, a country of 8.5 million souls, can use its own currency in international trade while Nigeria (200 million inhabitants and loaded with natural resources) is required to use designated currencies such as the U.S dollar or the euro for the same purpose epitomizes the unfairness and unreasonable nature of the system that the IMF is ruthlessly enforcing.
Another example is the notion of having the impoverished countries of the Third World exchanging their natural resources for currencies that are constantly losing value and not backed by anything. In Haiti, the IMF-backed move to extract an estimated 20 billion worth of gold in the northern part of the country is consistent with the practice of legally stealing poor countries’ resources. Complicating matters is the retaliatory predisposition of the system that naturally discourages countries from deviating from the script. Penalties range from access to international loans for needed development projects being denied to sanctions (formal or informal) to outright military invasions. The more than 50 military interventions by France in its former African colonies meant to neutralizing nonconformists are a testament of the immoral underpinning of the status quo, which the IMF is duly enforcing through its stewardship.
Ordinarily prosperous or economically secure people do not fight God’s battles, which they consider an exclusive celestial prerogative. Correspondingly, poverty-stricken people whose destiny depends on the vagaries of the global economic system rather than their own determination tend to embrace celestial salvation as a coping mechanism for their wretched conditions. It explains the widespread use of religion as a utopian refuge in every corner of the globe, including the developed world, that the adherents somewhat believe would insulate them from the depressed state of worldly penuries.
Whether the tendency is escapism or misdirected priority, this religious-induced fervor that has become the bread and butter of poverty-stricken people throughout the world is a latent threat that the keepers of the system are ignoring at their own peril, as its convergence with terrorism attests. Simply put, the chicken is coming home to roost. The architects of this inequitable and oppressive economic system are now dealing with its unintended consequences.