John Perkins recounts times spent hoodwinking developing economies out of their resources for the US and warns how his Chinese counterparts are raising the bar.
I was an economic hit man (EHM) for the US through the 1970s. My job was to dupe other countries into believing that what the US did would be a benefit to all the people in those countries. Nothing could have been further from the truth.
This same hit-man strategy continues today. And now, China has taken it to new levels.
The strategy US employs involves identifying low-income nations that possess oil or other resources but lack sufficient means and/or the political will to develop them. It then sends EHMs to convince the resource-rich nations to accept large loans from what’s known as the Washington Consensus (the World Bank, International Monetary Fund, US Treasury Department, and related institutions). The target countries must use their undeveloped resources as collateral.
An important condition in our strategy is that the loans are earmarked to hire US companies to build power grids, ports, industrial parks, and other infrastructure projects that drive economic growth. These companies reap huge profits, a few local elite business owners benefit from the improved infrastructure, and everyone else suffers because funds are diverted from health services, education, and other public sectors to pay interest on the loans. The debts are so large they can’t be repaid and the countries default on their loans. This process is often referred to as debt-trap diplomacy.
As a first step toward addressing the default problem, the EHMs demand that the low-income nations sell their oil, minerals, or other collateralised resources at rock-bottom prices to US transnational corporations (which often don’t pay US taxes but are supported by US policies), with few (if any) environmental and social regulations.
When a country’s collateralised resources turn out to be insufficient to pay off the debt, the second step is to implement what are known as neoliberal policies. These include imposing austerity programmes that reduce taxes for the rich and cut wages and social services for everyone else, reduce government regulations, privatise public-sector businesses and sell them to North American investors, and discourage collective bargaining — all of which support “free” markets that favour transnational corporations.
When a country’s collateralised resources turn out to be insufficient to pay off the debt, the second step is to implement what are known as neoliberal policies.
In modern times, the justification for EHM tactics is the perception that they produce better lives for those in low-income countries, raising them to higher-income status and elevating the poorest people to the middle class. “We are the good guys” is the story taught in economics and business courses at universities, as well as in World Bank and IMF reports. Neoliberal advocates promote the perception that money will “trickle down” from the corporations and elites to the rest of the population and that everyone will benefit.
For many years, I believed this story and I was convinced to spread that perception. Like so many involved in the economic development business, I thought I was doing the right thing. My staff and I compiled impressive statistics to “prove” that our strategy resulted in greater prosperity, equality, and democracy. Eventually, I realised that we were promoting a lie. The Washington Consensus and its neoliberal policies almost always cause greater inequality. We were cheating people who deserved better.
In the past decade, China has become extremely successful at replicating, modifying, and improving the EHM strategy. China has learned from the successes and failures that I and other US EHMs have made over the years. As a result, and despite some recent setbacks, China has become the dominant economic power in many countries around the world. It’s the number one investor and/or trading partner throughout much of Africa, Latin America, Asia, the Middle East, the island nations, Europe, and even North America .
In the past decade, China has become extremely successful at replicating, modifying, and improving the EHM strategy.
It’s important to keep in mind that rhetoric around China’s modifications disguises the fact that China’s EHMs are using the same basic tactics as those employed by the US. The EHM strategy — whether implemented by the US or China — has created a degenerative global system, known as a “Death Economy”, that maximises short-term profits and materialistic consumption, ignores the social and environmental costs, exploits and depletes resources, expands inequality, buries countries in debt, and accelerates climate change.
The EHM strategy must end. It’s time to replace the Death Economy based on short-term profits for the few with a regenerative, Life Economy based on long-term benefits for all people and nature.
Taking individual and collective action to usher in a Life Economy requires:
- promoting and supporting economic activities that pay people to regenerate destroyed environments, recycle, and develop benign technologies;
- spreading the idea that transitioning into a regenerative Life Economy is essential to life;
- supporting local businesses, cooperatives, farms, and other institutions that employ sustainable practices and help preserve nature;
- mapping out a personal campaign for changing perceptions so blog writers should inspire people; carpenters should use only sustainable materials and declare it, and parents should teach their children about the Life Economy; and
- Joining or starting a social media campaign by emailing a corporation’s chief executive to say you are ceasing to buy the corporation’s products until it rights its wrongs (stops polluting, pays fair wages to all employees and so on). Ask all your contacts to do the same. When chiefs receive enough of these they will respond to the threat to their business.
We live at a critical moment in human evolution. Let us see it as a great opportunity. Let us stop duping ourselves and others into acting in ways that are destroying life. Let us redefine what it means to be successful human beings on a fragile planet. Let us recognise that the US and China — and all of us around the world — can disagree on many things, but let’s agree that no one prospers, no one survives, on a dead planet.
Let us agree that it’s time to join together in transforming the Death Economy into a Life Economy.