Wednesday, July 26, 2006

The Ugly Side of Capitalism

Last night our small group from Santa Cruz visited El Museo de Deuda Externa in Buenos Aires. Opened last year in the basement of a cultural center near the medical school, this is the first ever museum of foreign debt in the world. But there ought to be more. Foreign debt is the reason why the rich -- primarily in the west -- prosper and the poor -- primarily in the south -- suffer. Although loaning money may seem like an altruistic move on the part of First World banks, it enables them to control and enfeeble Third World economies.

We learned about this during a talk by museum docent Albierto Murrillo. Argentina is a likely place to have a Museo de Deuda Externa because it was the first country to renounce its debt and free itself from a crippling economic burden. But, as Murrillo pointed out, renouncing¨"hated debt" is a recognized principle of international law. After the American Revolution, the new United States cancelled all its debts with Britain. And, more recently, under the direction of the U.S., Iraq renounced its debt to European banks because it was incurred under the government of Sadam Hussein. So when President Nestor Kirchner renounced (which sounds more positive than "defaulted") Argentine´s debt of something like $150 billion, he felt the country was within its rights since the loans were contracted by previous corrupt governments, particularly the military regimes which ruled in the 1970s and 1980s.

Murrillo told us, in Spanish (which was translated for the less advanced like me), that Argentina was first offered money by the British in 1824 which was used to build infrastructure. By the 1980s, however, a "financial bicycle" was in place which allowed corrupt politicians and businessmen to launder money and to profit from money transfers to other countries. Factories closed because imports were so cheap. Inflation and unemployment rose to astronomic heights. By the time of Carlos Menin, the country was surviving not by producing goods but by borrowing money. Eventually the economy collapsed, the banks shut, and everyone suffered. Under "Plan Brady" the country´s loans were sold and distributed around the world and interest rates rose rapidly, making it impossible to repay the loans. Kirchner´s only solution was to renounce/default.

This economic system, however, is no accident. The west prospers at the expense of weaker countries. In order for there to be wealth in one place, it is necessary that others must pay. Argentina now is struggling to become a victor rather than a victim. As the sign says in the museum: "Deuda Externa -- Nunca Mas."

I´ve been walking extensively through different barrios in Buenos Aires, and little poverty is apparent, at least during the day. The streets are mostly clean and many of the buildings are new. I know it´s different in the country and even in the city at night when the "cartoneros" come out to scavage for useful trash that might bring them some pesos. The streets in Palermo and Belgrano are lined with tall apartment buildings. Their lobbies are gleaming with marble, glass and overly polished brass. There are modern podiums outside the door where one rings a bell for the apartment. Block after block of luxury flats. Who is living in them? Certainly not the poor. Moochie told me the other night that these neighborhoods are populated mainly by the military, and they´ve been on top of the social structure in Argentina for decades. They also perpetrated the worst abuses of the "Dirty War" in the 1970s when thousands of people, mostly young, disappeared. Now they live in these beautiful buildings which are surrounded by shops catering to the middle and upper classes. It´s a lovely picture. But watch out for the dog poop on the sidewalks!

Does capitalism have a beautiful side? Only, I think, if you´re rich and powerful.

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