American taxpayers are being asked by Bill Clinton, Newt Gingrich and corporate America to contribute $18 billion to expand the functions of the International Monetary Fund. Based on the track record of the IMF, not only would this infusion of money not improve the currently unstable global situation, but it might even make it worse.
Four years ago, when Mexico was in dire economic circumstances, we were pledged by these same people to provide billions to the IMF and to bail out the investors and banks who had lost money in that country. We were told that if Mexico went under, the contagion would spread, and an international economic disaster would occur.
Today, despite the IMF money, the Mexican economy is in disastrous condition. Wages are way down, unemployment and child labor are way up, a massive dislocation in small business and family agriculture has occurred, and the Mexican Congress is now considering a huge bailout of that country's banking system.
But something else has happened as a result of the Mexican bailout. The reckless investors learned an important lesson: American taxpayers, through the IMF, would protect their loans and investments, no matter how stupid or ill-advised these might be. With that knowledge in mind, these irresponsible bankers and speculators poured huge sums of money into Asia and Russia.
Last year, when Thailand, Indonesia and South Korea suffered economic meltdown, the Clinton administration, Newt Gingrich and corporate America started chanting their mantra again about the need to bail out these speculators, and the IMF bailed out Asia.
Now we have Russia. When communism fell in 1991, the Russian government received the undivided attention and guidance of the IMF and its policy advisors — not to mention approximately $20 billion in IMF loans over the past seven years. The result? The most significant economic decline of any major nation in modern world history.
In Russia today, millions of workers are unpaid, old people do not receive their pensions, and hunger and malnutrition are serious concerns. Russia's gross domestic product has fallen by at least 50 percent; capital investment by 90 percent; and meat and dairy livestock herds by 75 percent. A nation that, despite its inefficient and bureaucratic system, used to be one of the great agricultural and manufacturing producers in the world now imports a majority of its food and produces almost nothing. And, as we all know, Russia has recently defaulted on its loans.
A handful of people in Russia have accumulated billions of dollars, much of it illegally, and have enormous power over that country, which is now rampant with corruption. At a recent Congressional hearing, two Russian economists — one from the left, the other from the right — both stated it would be foolish to give Russia more IMF money, because those funds would simply disappear into the wrong pockets.
Given the horrendous record of the IMF in making life worse for the people of Mexico, Asia and Russia — not to mention the misery the austerity programs demanded by the IMF have caused in Africa and Latin America — why in God's name would anyone want to continue down this incredible path of failure?
The United States cannot turn its back on the world economy. We must address the serious economic situation now unfolding. Our goal must be to help develop sustainable and stable economies in countries throughout the world, not boom-or-bust models designed to make foreign investors rich. Our goal must be to make the United States an ally of working people and a defender of the poor and the hungry, not a representative of the rich, the powerful and the corrupt.
We must develop a progressive agenda based on global labor rights, environmental protections, democratization, local and regional economic development, and constructive domestic investment as keys to a global economy that serves people and the environment. Such an agenda would include local initiatives, national policies and international institutions to counter uncontrolled deflation and the race to the bottom.
This agenda doesn't seek to isolate the U.S. from the rest of the world or to blame "foreigners" for our troubles. It aims to build a new global economy that benefits poor and working people around the world, rather than just a wealthy elite. It views the people of other countries as sharing profound common interests with the people of the U.S.
This is a reasonable alternative to the path trod by the IMF. While the U.S. Senate has already voted to expand the International Monetary Fund's functioning and provide another $18 billion for this organization, I am glad the House has, up to this point, resisted, approving only $3.5 billion.
The IMF is a failed institution, and the taxpayers of this country should not be asked to provide funds for its failed policies.