27 November 2012
The Lion and the Cat Third world debt is defined by the Cambridge Dictionary of Business as, “money that is owed to rich countries by the poorer countries of the world” (Cambridge Dictionaries Online). This vague interpretation of the term leads citizens of the first world (developed countries) into a labyrinth of ambiguity and delusion. Third world country debt is debt that poor countries have acquired as a result of efforts to industrialize. Although the definition given by the Cambridge Dictionary defines ‘rich countries’ as the source of collection, it in fact, is banks and IFIs (International Finance Institutions) within the ‘rich countries’ that many poor countries are paying off their debts to. Developing countries (another term used to describe third world countries) borrowed money from private banks and IFIs in order to induce industrialization and make way for progression, but what began as a steady march towards advancement ended as an ironic halt into stagnation (Canel). Third world country debt began as problem in the 1970s and has flourished into a crisis over the past 40 years. The direct results of this crisis are shocking. Many countries in Sub-Saharan Africa are forced to repay the debt, as a direct result, those countries are failing to provide fundamental public necessities, health-care, and education to its citizens. Since the acquisition of the debt in the early 1970’s, many organizations have risen to help alleviate the debt burden, but as evidence shows, the efforts of those organizations have failed to keep up with demands of a an impoverished nation, billions of people wake up and go to sleep hungry every day, people die from preventable illnesses in staggering numbers, and children are robbed of education and the opportunity for a better future. The only plausible and ethical solution to the third world debt crisis is the complete cancellation of the debt. This solution, today, may be looked at as radical, but evidence from the past has proved that debt cancellation has worked.
In ancient times it was normal for prosperous countries to relieve the developing countries of their duties to pay debts when the debt became overwhelming and too large to pay, as economic historian and former Wall Street economist, Michael Hudson states, “from 2000 B.C. to the time of Christ, it was normal for all of the countries of the world to periodically cancel the debts when they became too larger to pay . . . the effect was to make a clean slate so that society would begin all over again” (Povinelli). This debt cancellation was most notably derived from The Bible, in Leviticus 25:8‐12, where it speaks of the Jubilee debt cancellation, but never the less, this ‘clean slate’ that Hudson spoke about was essential for developing countries in ancient times to develop and prosper. Many bank executives of the first world argue that debt cancellation is more of a biblical norm than means of prosperity, but over time the banks and institutions have lost all connection to the humility that being a citizen of the world brings. Greed has blinded them from seeing the direct repercussions of debt, repercussions that include hunger, famine, illiteracy, and regression.
The early 1970’s brought forth a surge in value in the price of cocoa, tin, oil, and coffee. These commodities were the primary source of revenue for many developing countries, or highly indebted countries (HIPCs) (Canel). As a result of the high value of these exports leaders in developing countries looked to borrow money from private banks in order to expand government spending (Bulow). The assumption was that the money would be borrowed in an attempt to industrialize. The countries were not worried about borrowing vast amounts of money because the supposition was that the value of exports would remain high and industrialization would come quickly, thus paying back the money would not