More On African Debt Forgiveness

Jason Kuznicki at Positive Liberty:

A deal is in the works to forgive some $40 billion that the world's poorest countries owe to the world's richest.

Or rather--let us be precise about it--the governments of the world's poorest countries owe the money, and not their people, who had virtually no say in contracting these debts. Let's recall that the governments in question are almost never democratic, rarely respect individual rights, and have manifestly not used this borrowed money to benefit their peoples.

By rights, I should be against this deal. Aid to the third world most often amounts to a tax on productive people in wealthy countries for the benefit of militaristic, repressive dictators who live like Roman emperors in the middle of third world squalor. And let's not forget the bureaucrats and financiers who take their cut along the way, a point Paul Musgrave once made to dramatic effect. As a general rule, this money doesn't help the poor, and forgiving the debt is not a gesture of kindness to the neediest people in the world. It's a gesture of kindness to the repressive regimes that made them needy to begin with.

But then, consider the consequences of not forgiving the debt. Our cadre of dictators--sustained by corruption, brute force, and foreign aid--will repress their people even further to pay back the loans. You can bet they won't be selling their palaces or dipping into their Swiss bank accounts. This is why we should forgive the debt, because enforcing it won't do anything to help the situation either. It's also the reason why we ought not to loan money like this in the first place. In other words: forgive, don't forget.

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Charles, Not to nitpick, but

Charles,

Not to nitpick, but John Hancock didn't really have all that much to do with the Constitution. He was one of the prominent signers of the declaration of independence who didn't actually attend the convention (along with Jefferson, Henry, Lee, and the Adamses).

John, you leave that John

John, you leave that John alone. His Constitution meant a lot to him. Just 'cuz we didn't sign it...

Mr. East, why not openly advocate those repressive governments enact a hard crackdown on all private property and outright enslave every third woman? I mean, that would certainly be when "things get tough."

Hueter: "Furthermore,

Hueter: "Furthermore, exactly to whom would the debt be repaid?"

John Hancock?

Hold on a minute. Forgiving

Hold on a minute. Forgiving the debt entrenches the position of the dictators, and frees up resources for more repression, more arms and more palaces. Revolution only happens when things get tough.

I heard an interesting spin on this yesterday. The basket cases in Africa are either in default, or about to go into default on their loans, i.e. the money has gone, kaput, disappeared, never to be seen again.

Our clever politicians wouldn't look too good losing all our money like this so, hey presto, debt relief. Saint Tony Blair and Saint George Bush bask in the glory of their new found sainthood, all of the suckers whose money was lost have a warm glow of happiness thinking that they've helped the starving millions, and the third world gets to apply for more loans.

A win-win situation for everybody.

Analogies with contractual

Analogies with contractual debts are not apposite. These were not "debts" in any meaningful sense. They were slush funds disbursed by one set of thieves (Western Governments and assorted international "institutions") to other even more egregious sets of thieves (viz various despots and collectivists) upon terms that would entail innocents (third world taxpayers and other productive people) being forced to repay the monies in question at some date in the future.

That said, the despots that took the money in the first place should be chased to the ends of the earth.

Julius

I don't either, Charles,

I don't either, Charles, especially since it's chump change compared to the large amounts the West has dumped into Africa. The real danger, as I see it, is that these people who pushed for and negotiated the deal now think they've actually done something of consequence. To the extent that this delays free market reforms (if it does at all), it would be harmful.

Furthermore, exactly to whom

Furthermore, exactly to whom would the debt be repaid? I certainly didn't loan Cameroon $50 in 1990 with the assumption it'd be paid back in 15 years with a low, Emerging Nation-State Rate of just 1.99%. I assume some federal accounts receivable departement gets the payments, lumping them either into the general revenue fund or some specific government program. Beyond the possible negative message it sends to individuals within those countries that it is OK to break one's contractual promise, I don't see a libertarian objection to writing off the debt.

Charles, I don't think that

Charles, I don't think that I could openly advocate those repressive governments enact a hard crackdown on all private property and outright enslave every third woman as you suggest.

Maybe every fourth woman, I'll have to think about it.

Mr. Miller, that's what I

Mr. Miller, that's what I get for being flippant.

Mr. East, your restraint is impressive!

Charles, your failure to

Charles, your failure to take umbridge at my wise crack is also impressive.
When I said that conditions must get worse for revolutions to occur in the third world, I had in mind Zimbabwe. There has been media speculation that organised resistance to Mugabwe is immanent following his latest excesses. Maybe Zimbabwe is not typical. It was relatively wealthy until recently and many of the citizens still have the resources to rise up against a dictator.
However, I was wrong to generalise. In countries such as Sudan and those countries where genocide, sickness and starvation are endemic the populations are probably too beaten down to rise up against their rulers. I doubt if things could get any worse for these folk.