Cultural Economics

I watched most of "Life and Debt" tonight, in my ongoing search for information regarding the IMF, World Bank, etc. It's a documentary about IMF and World Bank loans that are often granted on harsh terms and with less regard to the borrower's interest as compared to the lender's (remember, these loans are for the specific purpose of advancing the borrower, not the lender). Also probed was globalization and the opening up of Jamaica's ports in conjunction with the devaluing of Jamaica's currency, and how these actions destroyed many domestic industries. All the while, the movie is narrated by a woman who has an obvious disdain for western culture and wealth.

But, it was a good experience. I wasn't convinced by its anecdotal evidence of the evils of free trade. However, I was intrigued by how much the U.S.'s protectionist policies (subsidies & tariffs) adversely affected Jamaica's wellbeing (e.g., Chiquita and Dole bananas are protected Latin American imports). Also intriguing, the IMF insisted upon devaluation based upon their snap shot of the world market, in order to boost Jamaican domestic industry relative to the rest of the world. But because Jamaica is so dependent on exports, many domestic industries (and citizens) suffered in the long term.

And it goes on and on. The video was mildly educating, more so for people who are already familiar with the system, to give them a human emphasis on textbook economics.

I'm coming to see economic development more and more something that cannot be forced upon people. IMF and World Bank loans, whether they come with strict conditions or not, tend all the more to destabilize global resource flows: there are just too many variables to account for. On the one hand, you can devalue a country's currency to stimulate domestic industry, but on the other hand, doing this will destabilize domestic industry. Or, liberating trade barriers subjects smaller economies to un-liberated trade barriers of large countries, hurting the small countries all the more; this is, of course, not an argument against opening up trade barriers, but instead against protectionism as a whole. However, now you have an entire community of folks who think that free trade impoverished their culture. Are you better off in the grand scheme of things?

Also interesting in my studies of these organizations is how efficiently (that is, inefficiently) knowledge can travel between agents at the top level to the people that they're trying to help. You have westernized, government-sponsored loan agencies attempting to help third-world, non-english speaking cultures. There's so much that can and does go wrong, and yet, the IMF and World Bank are still here.