WEBVTT - Should Rich Countries Cancel Poor Countries’ Debt? 0:00:01.480 --> 0:00:05.000 Welcome to Stuff you should know, a production of iHeartRadio. 0:00:11.200 --> 0:00:13.920 Hey, and welcome to the podcast. I'm Josh and there's Chuck. 0:00:13.960 --> 0:00:18.079 It's just the two of us, the dynamic duo doing 0:00:18.160 --> 0:00:21.400 our thing. Training wheels are off. This is stuff you 0:00:21.400 --> 0:00:21.759 should know. 0:00:23.360 --> 0:00:24.960 Can I have a brief preamble? 0:00:25.760 --> 0:00:26.439 Oh? Please? 0:00:27.040 --> 0:00:30.520 Well, I know people skip around our show. Some adherents 0:00:30.560 --> 0:00:32.599 listen to every single one, of course, which we appreciate. 0:00:32.640 --> 0:00:35.879 But some people pick and choose, just like I do 0:00:36.000 --> 0:00:38.960 with my favorite show sometimes. But I want to urge 0:00:38.960 --> 0:00:41.120 people to listen to this if at first they're like 0:00:41.840 --> 0:00:47.559 debt cancelation boring, because you know, economics is not my 0:00:47.720 --> 0:00:52.040 jam at all. But like I realized that having an 0:00:52.080 --> 0:00:57.560 understanding of global debt and debt cancelation, it's really a 0:00:57.560 --> 0:01:01.800 pretty fundamental. Like having that fundamental understanding really helps you 0:01:01.920 --> 0:01:07.000 understand so much about politics and global economy. And just 0:01:07.240 --> 0:01:08.840 when you hear that stuff on the news and you 0:01:08.840 --> 0:01:11.880 don't get it, I think it's really easy just to think, like, oh, 0:01:11.920 --> 0:01:14.920 America is paying everyone's debts, right, and that's. 0:01:14.720 --> 0:01:15.679 Just not how it works. 0:01:15.720 --> 0:01:18.039 And to have a real understanding of that, I just 0:01:18.080 --> 0:01:20.680 think makes you more well armed as a human. 0:01:21.680 --> 0:01:23.680 I think that was an excellent preamble. Man. 0:01:23.920 --> 0:01:27.679 Thanks, this is really good. Livia crushed this article, just 0:01:27.840 --> 0:01:28.640 absolutely crushed. 0:01:28.680 --> 0:01:32.840 It was so clearly in her wheelhouse, and I was 0:01:33.160 --> 0:01:35.160 actually approached to thinking it was going to be interesting, 0:01:35.200 --> 0:01:36.440 and it turned out to be one of the most 0:01:36.440 --> 0:01:39.080 fascinating things I've researched in a very long time. 0:01:39.120 --> 0:01:40.319 Ohough, are you going to say it turned out to 0:01:40.319 --> 0:01:41.240 be super boring for me? 0:01:41.640 --> 0:01:45.200 No, I'm really into this because you're right, like, when 0:01:45.200 --> 0:01:48.320 you peel this back, you're looking at the inner machinations, 0:01:48.360 --> 0:01:53.200 the most basic functioning of the global economy that there is. 0:01:53.440 --> 0:01:55.960 This is it, this is what it all runs on 0:01:56.080 --> 0:01:59.400 what we're about to talk about, and it's hugely important. 0:01:59.800 --> 0:02:03.240 And there's an idea that the West has been taking 0:02:03.280 --> 0:02:06.200 advantage and I'm going to accidentally say the West a lot. 0:02:06.600 --> 0:02:08.640 There's a lot of different ways you can talk about 0:02:08.720 --> 0:02:13.519 the different income countries. Apparently, like the World Health Organization 0:02:13.600 --> 0:02:18.040 says low and middle income countries. Yeah, the United States 0:02:18.040 --> 0:02:20.839 and Europe would be higher income countries. Some people say 0:02:20.840 --> 0:02:24.840 developed and undeveloped. There's a lot. It's like a minefield basically. 0:02:24.880 --> 0:02:26.720 So I'm going to accidentally say the West a lot, 0:02:26.760 --> 0:02:29.560 which is not correct anymore, but it still gets the 0:02:29.600 --> 0:02:30.359 point across. 0:02:30.520 --> 0:02:32.840 Yeah, and I think Livia not I think, I know, 0:02:33.040 --> 0:02:36.400 she went with the term global South to refer to 0:02:37.280 --> 0:02:40.960 what were we think of as generally lower to middle 0:02:41.000 --> 0:02:44.440 to lower income countries. She did make that up, but 0:02:44.600 --> 0:02:46.679 that's you know, it's a collection of largely sort of 0:02:46.760 --> 0:02:50.280 Latin American, some Asian and African countries which we're going 0:02:50.360 --> 0:02:52.480 to be talking about, so we'll probably mix and match. 0:02:52.480 --> 0:02:53.919 I'll probably say global South a lot. 0:02:54.440 --> 0:02:57.560 Yeah, that's a I mean, I've seen that virtually everywhere 0:02:57.560 --> 0:03:01.040 as well. I think the low and low middle income 0:03:01.680 --> 0:03:06.799 countries called licks and mix as like it's super wonky. Yeah, 0:03:06.800 --> 0:03:09.519 it is a little cute for what we're talking about, because, 0:03:09.600 --> 0:03:11.600 I mean, what we are talking about is the idea 0:03:12.200 --> 0:03:18.160 that has become more and more widespread that the global North, 0:03:18.600 --> 0:03:22.120 which I just recently referred to as the West, has 0:03:22.160 --> 0:03:26.280 long been exploiting the global South, basically taking advantage of 0:03:26.320 --> 0:03:30.919 it for its natural resources, cheap labor, and then using 0:03:31.000 --> 0:03:36.800 that money to enrich itself, right, not really funneling much back. 0:03:36.840 --> 0:03:39.240 And then when it does funnel it back to the 0:03:39.280 --> 0:03:42.600 global South, it does so with strings attached or interest 0:03:42.720 --> 0:03:46.320 rates in the form of loans, bonds, that kind of thing. 0:03:46.920 --> 0:03:49.480 And there's this idea that, like, that's just totally unfair, 0:03:49.640 --> 0:03:52.680 that that this playing field has started out from the 0:03:52.800 --> 0:03:59.600 get go so imbalanced that the only responsible, human, humane 0:03:59.680 --> 0:04:03.800 thing to do is to cancel the debt of some 0:04:03.960 --> 0:04:06.120 of the poorest countries in the world. 0:04:07.600 --> 0:04:10.320 Yeah, I mean, it's kind of that simple, you know, 0:04:10.400 --> 0:04:13.360 there's this idea, and libby us is a great, just 0:04:13.400 --> 0:04:17.920 sort of example to bring it home. When someone steals 0:04:17.920 --> 0:04:21.440 your credit card or steals your identity and racks up 0:04:21.480 --> 0:04:23.279 a bunch of money in your name, you don't have 0:04:23.320 --> 0:04:26.120 to pay for that. That is something that you're not 0:04:26.720 --> 0:04:30.520 on the hook for. And there's this called odious debt. 0:04:30.520 --> 0:04:32.000 There's a lot of people that think, you know, we 0:04:32.000 --> 0:04:35.880 should apply that same logic to sovereign debt. And this 0:04:35.960 --> 0:04:40.239 isn't a new idea. This idea has been around for 0:04:40.880 --> 0:04:44.080 about one hundred years or so a little more than that, 0:04:44.800 --> 0:04:47.159 with the idea of the Spanish American War coming to 0:04:47.200 --> 0:04:51.200 an end when the US gets control of Cuba from Spain, 0:04:51.800 --> 0:04:55.280 but Spain, as the colonizer, had racked up a ton 0:04:55.320 --> 0:04:58.520 of debt on the back of Cuba and the US. 0:04:59.120 --> 0:05:01.080 And we'll talk about the power structure of why they 0:05:01.120 --> 0:05:03.520 were able to do this. It was basically because they 0:05:03.520 --> 0:05:07.560 had the power through the Paris Peace Treaty and said, hey, Cuba, 0:05:08.080 --> 0:05:11.400 this is your fault, this is Spain's fault, so you 0:05:11.440 --> 0:05:14.720 shouldn't be as a relatively poor nation, you shouldn't be 0:05:14.760 --> 0:05:17.920 on the hook for this. So Spain's got a step 0:05:18.000 --> 0:05:22.160 up and pay and the US had the power, you know, 0:05:22.320 --> 0:05:24.520 at the time, they had the upper hand in that agreement. 0:05:25.000 --> 0:05:27.279 So in the Paris Peace Treaty, Spain was kind of 0:05:27.279 --> 0:05:29.680 forced into taking on that debt. 0:05:30.120 --> 0:05:32.120 But that's not how it always works, right. 0:05:32.680 --> 0:05:35.760 No, there's another example that kind of demonstrates the other 0:05:35.760 --> 0:05:39.520 way it can go, which is with the African National Congress, 0:05:39.960 --> 0:05:43.200 which was headed by Nelson Mandela in the post apartheid 0:05:43.279 --> 0:05:48.839 South Africa, and they they were the successor to the 0:05:48.839 --> 0:05:52.279 apartheid government and they took on all of South Africa's 0:05:52.320 --> 0:05:55.440 existing debt. Well, they considered that debt odious because a 0:05:55.440 --> 0:05:59.400 lot of that debt had been borrowed to spend on 0:06:00.080 --> 0:06:04.640 military and police to keep the population in line and 0:06:04.680 --> 0:06:10.240 to enforce apartheid, which had been globally rejected. Even little 0:06:10.240 --> 0:06:15.280 Stevie wasn't into apartheid at the time. But so they said, 0:06:15.279 --> 0:06:17.400 this is odious debt, like we're not going to pay this, 0:06:17.440 --> 0:06:19.840 We shouldn't be expected to pay this. This is money that 0:06:19.920 --> 0:06:23.120 we would be paying back that was borrowed to keep 0:06:23.240 --> 0:06:26.440 us repressed. How does that make any sense? And the 0:06:26.520 --> 0:06:30.040 thing is is there's no international law that recognizes the 0:06:30.080 --> 0:06:34.480 odious debt doctrine. It's more like a come on, guys, like, seriously, 0:06:34.560 --> 0:06:37.560 let's use our common sense. But common sense doesn't always 0:06:37.600 --> 0:06:41.880 like jibe with capitalism. Fortunately for the African National Congress, 0:06:42.560 --> 0:06:45.520 the people who were heading South Africa under Nelson Mandela, 0:06:46.000 --> 0:06:48.200 they had a huge ally in the Soviet Union at 0:06:48.200 --> 0:06:52.000 the time, so they were actually like, yeah, Soviet unions 0:06:52.040 --> 0:06:53.440 like these guys aren't going to pay their debt back 0:06:53.440 --> 0:06:55.840 and the world is just going to go along with it. 0:06:56.200 --> 0:06:59.359 The problem is the Soviet Union crumbled and the African 0:06:59.440 --> 0:07:02.080 National Congres ended up having to pay that apartheid debt 0:07:02.200 --> 0:07:04.560 back because they no longer had the backing of a 0:07:04.600 --> 0:07:05.920 superpower any longer. 0:07:06.160 --> 0:07:10.920 Yeah, so that's a good sort of post preamble post amble. 0:07:11.760 --> 0:07:13.480 It was a pamble. 0:07:13.880 --> 0:07:17.600 It's a pamble that brings us to this idea, which 0:07:17.680 --> 0:07:23.240 is post colonialism, and what do we do about this? 0:07:23.840 --> 0:07:27.440 And it is pretty pretty much agreed upon by any 0:07:28.080 --> 0:07:34.280 rational thinker that Europe plundered the world for five hundred 0:07:34.360 --> 0:07:35.600 years or so, give or take. 0:07:36.120 --> 0:07:37.760 Yeah, Europe and the United States. 0:07:37.920 --> 0:07:41.000 Yeah, well yeah, Europe, which the United States, which which 0:07:41.040 --> 0:07:41.760 came from Europe. 0:07:42.000 --> 0:07:43.760 Okay, I'm kind of lumping us all in at that point. 0:07:43.920 --> 0:07:44.320 I got you. 0:07:44.520 --> 0:07:50.920 Yeah, And that plundering basically led to where we are today. 0:07:50.960 --> 0:07:54.160 It put all these different countries on different paths, one 0:07:54.200 --> 0:07:59.200 toward prosperity and one path toward being poor. 0:07:59.320 --> 0:08:01.240 And there's a better word for that. What's the word 0:08:01.880 --> 0:08:06.640 opposite of prosperity, impoverished? Impoverished. That's a good one, That's 0:08:06.640 --> 0:08:08.200 what it was I was thinking. But it's even better. 0:08:08.760 --> 0:08:11.120 Yeah, And I mean the way that that happened was 0:08:11.160 --> 0:08:15.040 the the global North came to the global South and 0:08:15.080 --> 0:08:18.360 said we're going to take all of your natural resources 0:08:18.360 --> 0:08:20.960 by force. And that was just straight up colonialism. 0:08:21.080 --> 0:08:24.720 Right, Well, natural resources is one thing, but then also 0:08:25.160 --> 0:08:26.840 and we're going to make you do help us do 0:08:26.920 --> 0:08:31.880 it on the backs of enslaved people. I mean, we 0:08:31.920 --> 0:08:34.840 talked about slave labor, and then later on it became 0:08:35.080 --> 0:08:37.360 you know, cheap labor, which is kind of where we 0:08:37.400 --> 0:08:39.520 are now. But at first it was there was just 0:08:39.559 --> 0:08:41.360 no money being exchanged. Is Hi, we're going to take 0:08:41.400 --> 0:08:43.640 your stuff. You're going to help us take your stuff. 0:08:44.280 --> 0:08:46.360 And this is going to lead all of these different 0:08:46.360 --> 0:08:50.040 countries around the world down two very different paths. And 0:08:50.600 --> 0:08:54.360 the argument is basically like, hey, today, and we'll get 0:08:54.360 --> 0:08:56.120 way way more into the weeds on this stuff. But 0:08:57.040 --> 0:08:58.800 this is what led us to where we are today. 0:08:58.920 --> 0:09:03.360 So the debt forgiveness of these countries isn't just like, oh, 0:09:03.440 --> 0:09:06.320 you know, you're poor country and we're a rich country, 0:09:06.360 --> 0:09:08.480 so we got to pay your debts. It's no, we 0:09:08.640 --> 0:09:11.600 got rich off of your backs for hundreds of years. 0:09:12.160 --> 0:09:14.839 And so the R word, if you want to bring 0:09:14.920 --> 0:09:18.560 up something like reparations, is not like a fine that 0:09:18.600 --> 0:09:21.920 you've paid for being a bad country. It is it's 0:09:21.960 --> 0:09:25.400 almost like a better and this is people are probably 0:09:25.440 --> 0:09:26.719 going to kill me for this. But a better way 0:09:26.760 --> 0:09:29.400 I think to think about it is a long overdue 0:09:29.440 --> 0:09:31.200 payment for labor. 0:09:31.960 --> 0:09:33.800 I think that's the fairest way to look at it. 0:09:33.840 --> 0:09:36.720 Because the other ways of looking at it makes it 0:09:36.760 --> 0:09:40.200 seem like that the global South are needy who are 0:09:40.280 --> 0:09:43.680 getting handouts from the global North who are being heroic 0:09:43.920 --> 0:09:45.120 by giving them handouts. 0:09:45.200 --> 0:09:46.640 Right, So, yeah, which is not true. 0:09:47.080 --> 0:09:49.120 No, I agree with I agree with you. I think 0:09:49.120 --> 0:09:51.480 that that's a really good way to look at at reparations, 0:09:51.559 --> 0:09:54.760 especially through post colonialism. And the other thing is a 0:09:54.840 --> 0:09:58.280 lot of people argue against things like reparations based on 0:09:58.360 --> 0:10:02.440 the idea that, like you kind of touched on it, 0:10:02.480 --> 0:10:04.760 that this is something that happened in the past. Man, 0:10:04.880 --> 0:10:08.600 I didn't enslave anybody. I didn't like go exploit the 0:10:08.720 --> 0:10:11.880 Congolese for their rubber trees and cut their hands off 0:10:11.880 --> 0:10:14.120 when I caught them stealingly. I didn't do that. My 0:10:14.120 --> 0:10:16.640 grandparents didn't even do that. I had nothing to do 0:10:16.760 --> 0:10:20.240 with that. So colonialism, straight up colonialism where you go 0:10:20.320 --> 0:10:22.679 in and use force and invaded country and say all 0:10:22.720 --> 0:10:24.640 your stuff is ours now and we're using you as 0:10:24.640 --> 0:10:28.280 slave labor. That went away largely in the nineteenth century, 0:10:28.320 --> 0:10:31.280 definitely by the twentieth century, but it was replaced by 0:10:32.400 --> 0:10:38.760 the same end exploitation. It was just dressed up slightly differently. 0:10:38.840 --> 0:10:41.720 So like we saw with the United Fruit Company helping 0:10:41.800 --> 0:10:47.560 overthrow the Guatemalan government, the elected Guatemalan government that we 0:10:47.600 --> 0:10:50.560 talked about in our Edward Burnet's pr episode, Like it 0:10:50.679 --> 0:10:53.000 was kind of like that. We would go around, and 0:10:53.040 --> 0:10:54.640 by we, I mean the Global North. We would go 0:10:54.679 --> 0:10:59.880 around and destabilize other countries, governments and economies to our 0:11:00.200 --> 0:11:03.400 benefit if they weren't friendly to the kind of trade 0:11:03.440 --> 0:11:06.000 and exploitation we wanted from them, right and then we 0:11:06.040 --> 0:11:08.480 would see to it that somebody else would get installed. 0:11:08.600 --> 0:11:11.840 Sometimes people just straight up got assassinated, but it wasn't 0:11:11.920 --> 0:11:15.880 wholesale slavery and slaughter like it had been in colonial days. 0:11:16.080 --> 0:11:20.040 So that was post colonialism. Today again, the same thing 0:11:20.120 --> 0:11:24.439 is going on. We're exploiting and extracting the resources from 0:11:24.520 --> 0:11:27.120 the global South for the use and enrichment of the 0:11:27.160 --> 0:11:31.640 global North at firesale prices, and then we're selling the 0:11:31.640 --> 0:11:35.000 things that we use those resources to make back to 0:11:35.080 --> 0:11:38.480 the global South at greatly inflated prices, which is called 0:11:38.520 --> 0:11:41.840 the trade inequality. And that is how we're keeping the 0:11:41.880 --> 0:11:43.439 global South impoverished. 0:11:43.520 --> 0:11:46.360 Right now, All right, that's a great boy, you just 0:11:46.400 --> 0:11:47.280 summed up the whole thing. 0:11:48.360 --> 0:11:48.920 We're done. 0:11:48.960 --> 0:11:52.120 Then I'll tell you what this is. Early for a break. 0:11:52.120 --> 0:11:53.920 But let's take a break and we'll talk about this 0:11:53.960 --> 0:11:57.719 great through line example that Livia included of the Democratic 0:11:57.840 --> 0:12:00.520 Republic of Congo. Right after this, we should know. 0:12:05.000 --> 0:12:05.840 Lar childs of h. 0:12:08.000 --> 0:12:14.920 Y s k as w s k as good. 0:12:22.400 --> 0:12:25.360 All right, So Livia used this great example, and I 0:12:25.400 --> 0:12:27.320 love it when in an example in an article like 0:12:27.320 --> 0:12:29.160 this can serve as a through line through the whole thing. 0:12:29.840 --> 0:12:31.560 And this this kind of does here and there, which 0:12:31.600 --> 0:12:34.400 is really helpful for a dumb dumb like me who 0:12:34.400 --> 0:12:37.120 doesn't really get econ. But I got this, so I 0:12:37.160 --> 0:12:40.240 know if I can get this, that anyone can. But 0:12:40.760 --> 0:12:43.640 the Democratic Republic of Congo, which used to be Zaire, 0:12:44.520 --> 0:12:45.920 let's go back to the old days of the late 0:12:46.000 --> 0:12:49.280 nineteenth century. They were and are a very rich country 0:12:49.320 --> 0:12:54.280 in resources, copper, cobalt, diamonds, oil, you name it, lots 0:12:54.280 --> 0:12:58.680 of rich, rich stuff. In the nineteenth century, King Leopold 0:12:58.679 --> 0:13:01.960 of Belgium said, hey, the rest of Europe, why don't 0:13:02.000 --> 0:13:06.040 you let me go down there and basically enslave this 0:13:06.200 --> 0:13:10.520 country and use it for production of rubber and ivory. 0:13:11.080 --> 0:13:15.040 And sure, we may kill ten million people, like half 0:13:15.080 --> 0:13:18.320 of the population but just think of the money that's 0:13:18.360 --> 0:13:21.200 waiting for us if we do this, and Europe said 0:13:21.200 --> 0:13:24.360 it sounds good to me, go have at it. Flash 0:13:24.440 --> 0:13:29.480 forward about sixty something years and they won independence in 0:13:29.559 --> 0:13:33.760 nineteen sixty and a prime minister was democratically elected named 0:13:33.760 --> 0:13:38.160 Patrice Lamumba. Six months later, La Mumba was killed in 0:13:38.200 --> 0:13:40.720 a coup that was supported by our old friends in 0:13:40.760 --> 0:13:44.760 Belgium and the United States because of a suspicion of 0:13:44.800 --> 0:13:49.320 being in bed with the Soviet Union. A general takes 0:13:49.360 --> 0:13:53.439 power Mobuto Cesci Seiko and through the support of the 0:13:53.559 --> 0:13:58.640 US and other I guess richer Western countries, basically spent 0:13:58.720 --> 0:14:03.680 about three decades lining his pockets with money and from 0:14:03.880 --> 0:14:06.880 except for about twenty seven years from seventy to ninety seven, 0:14:06.920 --> 0:14:09.680 the nation's debt went from five percent of the GDP 0:14:09.840 --> 0:14:11.160 to one hundred and fifty percent. 0:14:11.800 --> 0:14:13.960 Right. And the reason the debt went up so much 0:14:14.040 --> 0:14:16.160 is because, like you said, he's lining his pockets. And 0:14:16.559 --> 0:14:20.640 the other countries from the Global North that were lending 0:14:20.680 --> 0:14:25.480 this money to drc knew that he was lining his pockets. 0:14:25.560 --> 0:14:27.920 They didn't care because he could turn around and use 0:14:27.960 --> 0:14:30.400 his country's natural resources to pay off these debts that 0:14:30.440 --> 0:14:34.280 he was using to enrich himself while his people were 0:14:34.440 --> 0:14:37.920 impoverished and starved. The thing is is like that is 0:14:38.040 --> 0:14:43.040 on cesse seiko, sure, right, but also on the lenders, 0:14:43.080 --> 0:14:45.400 the financiers, who knew what he was doing and did 0:14:45.400 --> 0:14:47.880 not care about what happened to the people of the 0:14:47.920 --> 0:14:51.240 Democratic Republic of Congo. They just cared that they had 0:14:51.240 --> 0:14:54.640 a steady flow of natural resources, and that right there, 0:14:55.160 --> 0:14:58.720 that's that's as far as capitalism goes. That's fine, there's 0:14:58.720 --> 0:15:02.920 no moral hazard to that. But the thing that makes 0:15:03.080 --> 0:15:06.440 this moment in history different than say, the nineteen sixties, 0:15:06.960 --> 0:15:11.040 is we've now come to question that part of capitalism. 0:15:11.480 --> 0:15:13.720 Some people question capitalism as a whole, and you can 0:15:13.760 --> 0:15:16.440 do that, But I tend to think that capitalism itself 0:15:16.480 --> 0:15:18.920 is not an inherently flawed system, but that it has 0:15:18.960 --> 0:15:25.000 some really flawed capes that are hung around at shoulders. 0:15:25.040 --> 0:15:26.480 I don't know why I went with capes, but you 0:15:26.480 --> 0:15:28.680 get the point, right, And one of those is the 0:15:28.720 --> 0:15:33.800 idea that corporations should maximize profits at all costs without 0:15:33.840 --> 0:15:38.600 any regard to morality or global citizenship. It doesn't matter, 0:15:38.760 --> 0:15:41.920 So those corporations can't really be lumped in in any 0:15:42.000 --> 0:15:46.040 legal sense, because they're just doing corporations too, being psychopaths 0:15:46.040 --> 0:15:48.680 who are out to maximize profits as much as possible. 0:15:49.160 --> 0:15:51.440 So that's where we're at. Like a lot of people 0:15:51.520 --> 0:15:54.320 just stop at blaming sesse Seiko for being as corrupt 0:15:54.360 --> 0:15:57.800 as it comes and plundering his own nation, but they're 0:15:57.840 --> 0:16:00.880 not also like panning to the left a little bit 0:16:01.480 --> 0:16:03.760 to see the larger picture, And that's what you have 0:16:03.800 --> 0:16:07.400 to do when you really are examining global sovereign debt 0:16:07.440 --> 0:16:08.920 crises like we're in right now. 0:16:09.240 --> 0:16:12.000 Yeah, for sure. So this is kind of going on 0:16:12.040 --> 0:16:15.480 a timeline. So that was the sixties and into the seventies. 0:16:15.520 --> 0:16:18.360 Now we go, which will lead up to the eighties 0:16:18.440 --> 0:16:23.200 debt crisis. In the seventies, if everyone who knows history 0:16:23.280 --> 0:16:24.600 knows that. 0:16:24.040 --> 0:16:26.400 That was a bad time for oil, I guess a 0:16:26.400 --> 0:16:26.720 good time. 0:16:26.760 --> 0:16:29.800 If you're an exporter, oil prices went through the roof, 0:16:30.440 --> 0:16:34.160 and if you are an importer of oil, this is 0:16:34.200 --> 0:16:36.240 going to have a ripple effect, and it did all 0:16:36.280 --> 0:16:39.920 across the world to basically ramp up inflation, raise the 0:16:39.960 --> 0:16:42.720 cost of fuel, which affects the cost of a lot 0:16:42.760 --> 0:16:46.600 of other things. Because of a domino effect. And the 0:16:46.640 --> 0:16:50.040 other side of this is these oil rich countries that 0:16:50.080 --> 0:16:52.600 were now exporting. Not only were they getting all this 0:16:52.760 --> 0:16:56.520 dough and enriching themselves from the oil. Fine, that is 0:16:56.520 --> 0:16:59.960 what it is. They then said, hey, we can now 0:17:00.120 --> 0:17:03.920 be a lender and lend money to these poorer countries 0:17:03.960 --> 0:17:06.680 and some of these Latin American countries that are really 0:17:06.760 --> 0:17:09.920 kind of growing fast, and who cares about the risk 0:17:10.000 --> 0:17:13.400 involved and everyone sending up warning signs. We're the lender 0:17:13.440 --> 0:17:15.520 and we're going to make a ton of interest off 0:17:15.560 --> 0:17:19.520 of this dough that we now have because of the 0:17:19.560 --> 0:17:21.440 oil that we are selling to them. 0:17:21.920 --> 0:17:24.240 Yeah, that would be a familiar pattern that would emerge. 0:17:24.440 --> 0:17:26.399 But that oil thing that you were talking about, for 0:17:26.560 --> 0:17:29.760 non exporting countries like the United States, that was a 0:17:29.800 --> 0:17:32.680 real problem because we saw just very recently in the 0:17:32.760 --> 0:17:36.160 last several months, when oil prices go up, all prices 0:17:36.200 --> 0:17:38.760 go up because everything's so dependent on oil. And that 0:17:38.800 --> 0:17:42.280 happened in the early eighties too, So inflation started to 0:17:42.320 --> 0:17:44.280 get so far out of hand. I think it reached 0:17:44.320 --> 0:17:47.120 like fourteen percent. What was it we were like screaming 0:17:47.160 --> 0:17:49.640 about recently, like six or eight, which was bad enough. 0:17:49.960 --> 0:17:52.600 This is fourteen percent, So the guy who ran the 0:17:52.600 --> 0:17:57.280 Federal Reserve, Paul Vulker, committed what's now known as the 0:17:57.359 --> 0:18:01.680 Vulgar Shock. He jacked interest rates up so suddenly and 0:18:01.760 --> 0:18:05.520 so high, I think, up to twenty percent, that it 0:18:05.600 --> 0:18:09.560 immediately triggered a global recession. And it definitely did, within 0:18:09.560 --> 0:18:13.600 a couple of years, wedge everybody out of that global recession. 0:18:13.600 --> 0:18:16.680 It stabilized that inflation, brought prices down, things got back 0:18:16.680 --> 0:18:20.000 to normal. But you had to be a really rich 0:18:20.080 --> 0:18:23.920 country to weather that fairly. Well. If you weren't a 0:18:24.000 --> 0:18:27.840 rich country, you were screwed. And so these countries that 0:18:27.960 --> 0:18:31.920 had already racked up tons of debt now had high 0:18:32.000 --> 0:18:35.480 interest rates and low currency values and were expected to 0:18:35.480 --> 0:18:38.040 pay these loans back. So if you were on like 0:18:38.240 --> 0:18:41.040 a three point two percent or a four percent interest 0:18:41.119 --> 0:18:44.120 rate on an eighty billion dollar loan, you owed three 0:18:44.160 --> 0:18:46.720 point two billion dollars to service that loan. If it 0:18:46.760 --> 0:18:49.920 went up to twenty percent interest rates, you suddenly owed 0:18:49.960 --> 0:18:53.480 fifteen billion dollars to service that loan. So Mexico, Brazil, 0:18:53.760 --> 0:18:55.840 a bunch of other countries, I think twenty seven of 0:18:55.880 --> 0:18:59.440 them said we can't pay these debts any longer. This 0:18:59.480 --> 0:19:03.119 is not sustainable and frankly, it's now become odious because 0:19:03.160 --> 0:19:05.920 of this Volker shock that we didn't do anything to do, 0:19:05.960 --> 0:19:08.800 but now we're suffering because the US decided to plunge 0:19:08.840 --> 0:19:12.080 everyone into a global recession to help itself. 0:19:12.000 --> 0:19:15.080 Right, So this is going on. All these countries have 0:19:15.520 --> 0:19:18.080 thrown up their hands basically and said we just can't. 0:19:18.240 --> 0:19:20.560 Like it's not you know, we're not saying, oh, we 0:19:20.560 --> 0:19:23.320 don't want to pay that, like we literally can't afford to, 0:19:24.080 --> 0:19:26.399 and that people started beating the drum, like you said 0:19:26.600 --> 0:19:30.600 on odious debt again and activists started speaking up. Peru 0:19:30.720 --> 0:19:33.080 is a great example that you mentioned. In nineteen eighty five, 0:19:33.680 --> 0:19:36.880 the president of Peru, Alan Garcia, said, you know what, 0:19:37.160 --> 0:19:41.480 We're not going to pay any payments on our debt 0:19:41.520 --> 0:19:44.679 in excess of ten percent of our export revenues and 0:19:44.720 --> 0:19:47.520 that's the only way to keep our country solvent basically, 0:19:48.280 --> 0:19:50.719 which helped them out in the short term. But then 0:19:50.720 --> 0:19:53.440 all of a sudden, you're doing that, and every financial 0:19:53.440 --> 0:19:56.480 institution all over the world looks and says, we can't 0:19:56.480 --> 0:19:59.280 trust Peru anymore, we can't do business with them, and 0:19:59.480 --> 0:20:03.600 we can't invest in Peru if we're a company or 0:20:03.640 --> 0:20:07.080 corporation looking to invest in foreign economies, and that triggered 0:20:07.080 --> 0:20:10.639 a hyperinflation there by the end of the eighties. And 0:20:10.720 --> 0:20:13.400 so all of this mess is happening in the eighties, 0:20:13.560 --> 0:20:17.639 and finally, finally two organizations stepped in and said, we 0:20:17.680 --> 0:20:21.320 got to do something about this. The International Monetary Fund, 0:20:21.800 --> 0:20:24.600 the IMF, and the World Bank stepped in. These are 0:20:24.720 --> 0:20:28.800 two organizations founded post World War two. In part, the 0:20:28.840 --> 0:20:31.800 World Bank was to help dig Europe out of the 0:20:31.840 --> 0:20:35.280 economic devastation they suffered during the war, and the IMF 0:20:35.359 --> 0:20:39.200 initially was just to sort of encourage all countries to 0:20:39.280 --> 0:20:43.760 get along economically. But then after this, the IMF and 0:20:43.840 --> 0:20:50.159 the World Bank basically became a lender, a multilateral public lender. 0:20:50.800 --> 0:20:54.000 That's complicated to sort of explain how that all works, 0:20:54.040 --> 0:20:57.639 but let's just leave it at It was controlled still 0:20:57.640 --> 0:21:01.640 by these northern countries, the UA in other rich countries. 0:21:01.720 --> 0:21:04.280 And it still is. And bear this in mindful when 0:21:04.320 --> 0:21:07.320 we talk about today. The IMF is partly funded by 0:21:07.640 --> 0:21:10.560 rich countries called the Paris Club, which includes the United 0:21:10.600 --> 0:21:14.800 States and most European democracies. Right, it's nice, it does. 0:21:14.840 --> 0:21:16.399 It sounds like the kind of place i'd want to 0:21:16.440 --> 0:21:18.840 hang out. Yeah, I want to go have a sip 0:21:18.880 --> 0:21:21.120 of something with my pinky in the air, you know exactly, 0:21:21.880 --> 0:21:24.359 So just put that, put that in your bonnet and 0:21:24.359 --> 0:21:27.320 smoke it later. Right. The IMF is funded in part 0:21:27.400 --> 0:21:32.320 by democracies and governments around the world. Okay, so the 0:21:32.400 --> 0:21:35.639 IMF and the World Bank changed their mandate. They decided 0:21:35.640 --> 0:21:38.800 now that they were going to basically aid in development 0:21:38.920 --> 0:21:42.600 around the world, but especially focusing on lower income, middle 0:21:42.600 --> 0:21:46.200 income countries to help them. And this is the view 0:21:46.320 --> 0:21:49.919 of the economists that the IMF and their supporters to 0:21:50.040 --> 0:21:55.880 help these impoverished nations learn to be better capitalist economies 0:21:56.920 --> 0:22:01.720 and as a result become a self sustate and self supporting, 0:22:02.280 --> 0:22:06.960 basically creating neoliberal economies where there was say socialist economies 0:22:07.080 --> 0:22:10.400 or other types of economies opening them up for business. 0:22:10.480 --> 0:22:13.160 And so they would start sending these loans to these 0:22:13.200 --> 0:22:16.280 countries that really attractive interest rate, sometimes as low as 0:22:16.280 --> 0:22:20.160 like no interest whatsoever, in which case it was basically aid, 0:22:20.520 --> 0:22:23.800 but there were strings attached, and they were things like 0:22:25.359 --> 0:22:31.720