3/04/2009

Confessions of an Economic Hit Man

Debt as a weapon, hmmmm.

No idea if any of this is true, but it certainly makes for a good story.



Confessions of an Economic Hit Man

7 comments:

davidjcairns said...

Solfest, I only had time to watch the first ten minutes of this...but I would say I'm very much in line with this guys thinking. I've heard of his work, and it's pretty well respected amongst a lot of academics...whatever that might me to anyone.

Since I don't have time to comment on all of this, I have a question: Do you think it's right for foreign investors to pay national soldiers? As seen in Nigeria where we have Esso, Shell, and Chevron Texaco are "topping up" Nigerian soldiers' wages with large bonuses?

Solfest said...

Of course the other side to this story is if the west did not lend these countries money and help them build utility infrastructure they would be criticized for not "helping" these developing nations.

As far as paying soldiers I think that all countries have an obligation to provide a legal framework for their people and businesses to work in. This means a police and judicial system that works. If a country cannot provide this what do you as a company do?

If they all pack up and leave what happens to that country? We have pirates stealing oil tankers and holding them for ransom.

So do I think it's right to pay soldiers to protect a companies assets?

In a word, yes. It seems it is necessary.

davidjcairns said...

Yes, I see your side of the story. But do you think that there is corporate social responsibility? To invest where they pull the resources from?

But also an interesting development is that in the last fifteen years is that China has had as much or worse levels of abject poverty than most African nations...but we don't send aid there...and look how they are doing financially now.

Solfest said...

No they don't have any responsibility to invest in the country where they pull the resources from. The govt of that country has a responsibility to negotiate fair compensation from the company for their resources. That govt then uses that money to invest in their own country. However if that govt is corrupt? It all breaks down.

The govt also has a responsibility to insure that the company mining the resources follows proper environment practices.

The company’s only responsibilities are to follow all local laws and to provide the shareholders a return on their capital.

If there is no return the capital leaves, if there is no capital the resources stay in the ground, if the resources stay in the ground there are no jobs and no taxes.

Period.

If that is what your country wants then that is fine. Do not allow any development.

It’s a very left wing liberal way of thinking to assume that the “natives” don’t know what’s good for them. They are autonomous; they make the decisions for themselves and for their country. It is not for us to question these decisions.

There are also many examples of companies coming into a country and spending billions of dollars to develop an industry only to have that nation expropriate all those assets at the point of a gun, or the point of the pen freshly minting a new “bill”.

China is a strange example of what a dictatorship can accomplish. They can trample human rights faster than any evil "company" and there is no one to stop them. If they want something done, it happens, no discussion.

So while remaining a communist country China has changed dramtically, they have adopted some very capitalist ideas about growing their economy.

In order for business to flourish there has to be a rule of law. It appears that any kind of rule of law will work as long as it is not corrupt.

Or at least not too corrupt.

Solfest said...

Oh yes one more thing, the more I listen to John Perkins the less I believe him.

But it's still a great story. Which I'm sure sold a lot of books, and will make a good movie.

Hint Hint.

He has an agenda.

davidjcairns said...

Well, you've made some good points, but one more thing that I'll throw out there is that many of these countries do have corrupt governments -- and multi-national corporations do not have the responsibility to somehow stop it...but then, does anyone the responsibility to alleviate abject poverty?

Solfest said...

You and I have the responsibility, you and I.

Corruption is the issue that is the hardest to see an answer to. We could send the Americans into every country to bring peace and democracy, but we know that doesn’t seem to work.

We the world get mad at them when they do that, and we get mad at them when they don't.

The UN seems to be almost useless in this.

So I don't know. You know we support micro finance and I believe it is one answer and something, albeit very little, that we can do.

You, you're young, you can change the world.

Go for it.