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Should Rich Countries Cancel Poor Countries’ Debt? · Stuff You Should Know

0:01
Speaker 1: Welcome to Stuff you should know, a production of iHeartRadio.
0:11
Speaker 2: Hey, and welcome to the podcast. I'm Josh and there's Chuck.
0:13
Speaker 2: It's just the two of us, the dynamic duo doing
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Speaker 2: our thing. Training wheels are off. This is stuff you
0:21
Speaker 2: should know.
0:23
Speaker 1: Can I have a brief preamble?
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Speaker 2: Oh? Please?
0:27
Speaker 3: Well, I know people skip around our show. Some adherents
0:30
Speaker 3: listen to every single one, of course, which we appreciate.
0:32
Speaker 3: But some people pick and choose, just like I do
0:36
Speaker 3: with my favorite show sometimes. But I want to urge
0:38
Speaker 3: people to listen to this if at first they're like
0:41
Speaker 3: debt cancelation boring, because you know, economics is not my
0:47
Speaker 3: jam at all. But like I realized that having an
0:52
Speaker 3: understanding of global debt and debt cancelation, it's really a
0:57
Speaker 3: pretty fundamental. Like having that fundamental understanding really helps you
1:01
Speaker 3: understand so much about politics and global economy. And just
1:07
Speaker 3: when you hear that stuff on the news and you
1:08
Speaker 3: don't get it, I think it's really easy just to think, like, oh,
1:11
Speaker 3: America is paying everyone's debts, right, and that's.
1:14
Speaker 1: Just not how it works.
1:15
Speaker 3: And to have a real understanding of that, I just
1:18
Speaker 3: think makes you more well armed as a human.
1:21
Speaker 2: I think that was an excellent preamble. Man.
1:23
Speaker 1: Thanks, this is really good. Livia crushed this article, just
1:27
Speaker 1: absolutely crushed.
1:28
Speaker 2: It was so clearly in her wheelhouse, and I was
1:33
Speaker 2: actually approached to thinking it was going to be interesting,
1:35
Speaker 2: and it turned out to be one of the most
1:36
Speaker 2: fascinating things I've researched in a very long time.
1:39
Speaker 1: Ohough, are you going to say it turned out to
1:40
Speaker 1: be super boring for me?
1:41
Speaker 2: No, I'm really into this because you're right, like, when
1:45
Speaker 2: you peel this back, you're looking at the inner machinations,
1:48
Speaker 2: the most basic functioning of the global economy that there is.
1:53
Speaker 2: This is it, this is what it all runs on
1:56
Speaker 2: what we're about to talk about, and it's hugely important.
1:59
Speaker 2: And there's an idea that the West has been taking
2:03
Speaker 2: advantage and I'm going to accidentally say the West a lot.
2:06
Speaker 2: There's a lot of different ways you can talk about
2:08
Speaker 2: the different income countries. Apparently, like the World Health Organization
2:13
Speaker 2: says low and middle income countries. Yeah, the United States
2:18
Speaker 2: and Europe would be higher income countries. Some people say
2:20
Speaker 2: developed and undeveloped. There's a lot. It's like a minefield basically.
2:24
Speaker 2: So I'm going to accidentally say the West a lot,
2:26
Speaker 2: which is not correct anymore, but it still gets the
2:29
Speaker 2: point across.
2:30
Speaker 3: Yeah, and I think Livia not I think, I know,
2:33
Speaker 3: she went with the term global South to refer to
2:37
Speaker 3: what were we think of as generally lower to middle
2:41
Speaker 3: to lower income countries. She did make that up, but
2:44
Speaker 3: that's you know, it's a collection of largely sort of
2:46
Speaker 3: Latin American, some Asian and African countries which we're going
2:50
Speaker 3: to be talking about, so we'll probably mix and match.
2:52
Speaker 1: I'll probably say global South a lot.
2:54
Speaker 2: Yeah, that's a I mean, I've seen that virtually everywhere
2:57
Speaker 2: as well. I think the low and low middle income
3:01
Speaker 2: countries called licks and mix as like it's super wonky. Yeah,
3:06
Speaker 2: it is a little cute for what we're talking about, because,
3:09
Speaker 2: I mean, what we are talking about is the idea
3:12
Speaker 2: that has become more and more widespread that the global North,
3:18
Speaker 2: which I just recently referred to as the West, has
3:22
Speaker 2: long been exploiting the global South, basically taking advantage of
3:26
Speaker 2: it for its natural resources, cheap labor, and then using
3:31
Speaker 2: that money to enrich itself, right, not really funneling much back.
3:36
Speaker 2: And then when it does funnel it back to the
3:39
Speaker 2: global South, it does so with strings attached or interest
3:42
Speaker 2: rates in the form of loans, bonds, that kind of thing.
3:46
Speaker 2: And there's this idea that, like, that's just totally unfair,
3:49
Speaker 2: that that this playing field has started out from the
3:52
Speaker 2: get go so imbalanced that the only responsible, human, humane
3:59
Speaker 2: thing to do is to cancel the debt of some
4:03
Speaker 2: of the poorest countries in the world.
4:07
Speaker 3: Yeah, I mean, it's kind of that simple, you know,
4:10
Speaker 3: there's this idea, and libby us is a great, just
4:13
Speaker 3: sort of example to bring it home. When someone steals
4:17
Speaker 3: your credit card or steals your identity and racks up
4:21
Speaker 3: a bunch of money in your name, you don't have
4:23
Speaker 3: to pay for that. That is something that you're not
4:26
Speaker 3: on the hook for. And there's this called odious debt.
4:30
Speaker 3: There's a lot of people that think, you know, we
4:32
Speaker 3: should apply that same logic to sovereign debt. And this
4:35
Speaker 3: isn't a new idea. This idea has been around for
4:40
Speaker 3: about one hundred years or so a little more than that,
4:44
Speaker 3: with the idea of the Spanish American War coming to
4:47
Speaker 3: an end when the US gets control of Cuba from Spain,
4:51
Speaker 3: but Spain, as the colonizer, had racked up a ton
4:55
Speaker 3: of debt on the back of Cuba and the US.
4:59
Speaker 3: And we'll talk about the power structure of why they
5:01
Speaker 3: were able to do this. It was basically because they
5:03
Speaker 3: had the power through the Paris Peace Treaty and said, hey, Cuba,
5:08
Speaker 3: this is your fault, this is Spain's fault, so you
5:11
Speaker 3: shouldn't be as a relatively poor nation, you shouldn't be
5:14
Speaker 3: on the hook for this. So Spain's got a step
5:18
Speaker 3: up and pay and the US had the power, you know,
5:22
Speaker 3: at the time, they had the upper hand in that agreement.
5:25
Speaker 3: So in the Paris Peace Treaty, Spain was kind of
5:27
Speaker 3: forced into taking on that debt.
5:30
Speaker 1: But that's not how it always works, right.
5:32
Speaker 2: No, there's another example that kind of demonstrates the other
5:35
Speaker 2: way it can go, which is with the African National Congress,
5:39
Speaker 2: which was headed by Nelson Mandela in the post apartheid
5:43
Speaker 2: South Africa, and they they were the successor to the
5:48
Speaker 2: apartheid government and they took on all of South Africa's
5:52
Speaker 2: existing debt. Well, they considered that debt odious because a
5:55
Speaker 2: lot of that debt had been borrowed to spend on
6:00
Speaker 2: military and police to keep the population in line and
6:04
Speaker 2: to enforce apartheid, which had been globally rejected. Even little
6:10
Speaker 2: Stevie wasn't into apartheid at the time. But so they said,
6:15
Speaker 2: this is odious debt, like we're not going to pay this,
6:17
Speaker 2: We shouldn't be expected to pay this. This is money that
6:19
Speaker 2: we would be paying back that was borrowed to keep
6:23
Speaker 2: us repressed. How does that make any sense? And the
6:26
Speaker 2: thing is is there's no international law that recognizes the
6:30
Speaker 2: odious debt doctrine. It's more like a come on, guys, like, seriously,
6:34
Speaker 2: let's use our common sense. But common sense doesn't always
6:37
Speaker 2: like jibe with capitalism. Fortunately for the African National Congress,
6:42
Speaker 2: the people who were heading South Africa under Nelson Mandela,
6:46
Speaker 2: they had a huge ally in the Soviet Union at
6:48
Speaker 2: the time, so they were actually like, yeah, Soviet unions
6:52
Speaker 2: like these guys aren't going to pay their debt back
6:53
Speaker 2: and the world is just going to go along with it.
6:56
Speaker 2: The problem is the Soviet Union crumbled and the African
6:59
Speaker 2: National Congres ended up having to pay that apartheid debt
7:02
Speaker 2: back because they no longer had the backing of a
7:04
Speaker 2: superpower any longer.
7:06
Speaker 3: Yeah, so that's a good sort of post preamble post amble.
7:11
Speaker 2: It was a pamble.
7:13
Speaker 3: It's a pamble that brings us to this idea, which
7:17
Speaker 3: is post colonialism, and what do we do about this?
7:23
Speaker 3: And it is pretty pretty much agreed upon by any
7:28
Speaker 3: rational thinker that Europe plundered the world for five hundred
7:34
Speaker 3: years or so, give or take.
7:36
Speaker 2: Yeah, Europe and the United States.
7:37
Speaker 3: Yeah, well yeah, Europe, which the United States, which which
7:41
Speaker 3: came from Europe.
7:42
Speaker 1: Okay, I'm kind of lumping us all in at that point.
7:43
Speaker 2: I got you.
7:44
Speaker 3: Yeah, And that plundering basically led to where we are today.
7:50
Speaker 3: It put all these different countries on different paths, one
7:54
Speaker 3: toward prosperity and one path toward being poor.
7:59
Speaker 1: And there's a better word for that. What's the word
8:01
Speaker 1: opposite of prosperity, impoverished? Impoverished. That's a good one, That's
8:06
Speaker 1: what it was I was thinking. But it's even better.
8:08
Speaker 2: Yeah, And I mean the way that that happened was
8:11
Speaker 2: the the global North came to the global South and
8:15
Speaker 2: said we're going to take all of your natural resources
8:18
Speaker 2: by force. And that was just straight up colonialism.
8:21
Speaker 3: Right, Well, natural resources is one thing, but then also
8:25
Speaker 3: and we're going to make you do help us do
8:26
Speaker 3: it on the backs of enslaved people. I mean, we
8:31
Speaker 3: talked about slave labor, and then later on it became
8:35
Speaker 3: you know, cheap labor, which is kind of where we
8:37
Speaker 3: are now. But at first it was there was just
8:39
Speaker 3: no money being exchanged. Is Hi, we're going to take
8:41
Speaker 3: your stuff. You're going to help us take your stuff.
8:44
Speaker 3: And this is going to lead all of these different
8:46
Speaker 3: countries around the world down two very different paths. And
8:50
Speaker 3: the argument is basically like, hey, today, and we'll get
8:54
Speaker 3: way way more into the weeds on this stuff. But
8:57
Speaker 3: this is what led us to where we are today.
8:58
Speaker 3: So the debt forgiveness of these countries isn't just like, oh,
9:03
Speaker 3: you know, you're poor country and we're a rich country,
9:06
Speaker 3: so we got to pay your debts. It's no, we
9:08
Speaker 3: got rich off of your backs for hundreds of years.
9:12
Speaker 3: And so the R word, if you want to bring
9:14
Speaker 3: up something like reparations, is not like a fine that
9:18
Speaker 3: you've paid for being a bad country. It is it's
9:21
Speaker 3: almost like a better and this is people are probably
9:25
Speaker 3: going to kill me for this. But a better way
9:26
Speaker 3: I think to think about it is a long overdue
9:29
Speaker 3: payment for labor.
9:31
Speaker 2: I think that's the fairest way to look at it.
9:33
Speaker 2: Because the other ways of looking at it makes it
9:36
Speaker 2: seem like that the global South are needy who are
9:40
Speaker 2: getting handouts from the global North who are being heroic
9:43
Speaker 2: by giving them handouts.
9:45
Speaker 1: Right, So, yeah, which is not true.
9:47
Speaker 2: No, I agree with I agree with you. I think
9:49
Speaker 2: that that's a really good way to look at at reparations,
9:51
Speaker 2: especially through post colonialism. And the other thing is a
9:54
Speaker 2: lot of people argue against things like reparations based on
9:58
Speaker 2: the idea that, like you kind of touched on it,
10:02
Speaker 2: that this is something that happened in the past. Man,
10:04
Speaker 2: I didn't enslave anybody. I didn't like go exploit the
10:08
Speaker 2: Congolese for their rubber trees and cut their hands off
10:11
Speaker 2: when I caught them stealingly. I didn't do that. My
10:14
Speaker 2: grandparents didn't even do that. I had nothing to do
10:16
Speaker 2: with that. So colonialism, straight up colonialism where you go
10:20
Speaker 2: in and use force and invaded country and say all
10:22
Speaker 2: your stuff is ours now and we're using you as
10:24
Speaker 2: slave labor. That went away largely in the nineteenth century,
10:28
Speaker 2: definitely by the twentieth century, but it was replaced by
10:32
Speaker 2: the same end exploitation. It was just dressed up slightly differently.
10:38
Speaker 2: So like we saw with the United Fruit Company helping
10:41
Speaker 2: overthrow the Guatemalan government, the elected Guatemalan government that we
10:47
Speaker 2: talked about in our Edward Burnet's pr episode, Like it
10:50
Speaker 2: was kind of like that. We would go around, and
10:53
Speaker 2: by we, I mean the Global North. We would go
10:54
Speaker 2: around and destabilize other countries, governments and economies to our
11:00
Speaker 2: benefit if they weren't friendly to the kind of trade
11:03
Speaker 2: and exploitation we wanted from them, right and then we
11:06
Speaker 2: would see to it that somebody else would get installed.
11:08
Speaker 2: Sometimes people just straight up got assassinated, but it wasn't
11:11
Speaker 2: wholesale slavery and slaughter like it had been in colonial days.
11:16
Speaker 2: So that was post colonialism. Today again, the same thing
11:20
Speaker 2: is going on. We're exploiting and extracting the resources from
11:24
Speaker 2: the global South for the use and enrichment of the
11:27
Speaker 2: global North at firesale prices, and then we're selling the
11:31
Speaker 2: things that we use those resources to make back to
11:35
Speaker 2: the global South at greatly inflated prices, which is called
11:38
Speaker 2: the trade inequality. And that is how we're keeping the
11:41
Speaker 2: global South impoverished.
11:43
Speaker 1: Right now, All right, that's a great boy, you just
11:46
Speaker 1: summed up the whole thing.
11:48
Speaker 2: We're done.
11:48
Speaker 3: Then I'll tell you what this is. Early for a break.
11:52
Speaker 3: But let's take a break and we'll talk about this
11:53
Speaker 3: great through line example that Livia included of the Democratic
11:57
Speaker 3: Republic of Congo. Right after this, we should know.
12:05
Speaker 2: Lar childs of h.
12:08
Speaker 4: Y s k as w s k as good.
12:22
Speaker 3: All right, So Livia used this great example, and I
12:25
Speaker 3: love it when in an example in an article like
12:27
Speaker 3: this can serve as a through line through the whole thing.
12:29
Speaker 3: And this this kind of does here and there, which
12:31
Speaker 3: is really helpful for a dumb dumb like me who
12:34
Speaker 3: doesn't really get econ. But I got this, so I
12:37
Speaker 3: know if I can get this, that anyone can. But
12:40
Speaker 3: the Democratic Republic of Congo, which used to be Zaire,
12:44
Speaker 3: let's go back to the old days of the late
12:46
Speaker 3: nineteenth century. They were and are a very rich country
12:49
Speaker 3: in resources, copper, cobalt, diamonds, oil, you name it, lots
12:54
Speaker 3: of rich, rich stuff. In the nineteenth century, King Leopold
12:58
Speaker 3: of Belgium said, hey, the rest of Europe, why don't
13:02
Speaker 3: you let me go down there and basically enslave this
13:06
Speaker 3: country and use it for production of rubber and ivory.
13:11
Speaker 3: And sure, we may kill ten million people, like half
13:15
Speaker 3: of the population but just think of the money that's
13:18
Speaker 3: waiting for us if we do this, and Europe said
13:21
Speaker 3: it sounds good to me, go have at it. Flash
13:24
Speaker 3: forward about sixty something years and they won independence in
13:29
Speaker 3: nineteen sixty and a prime minister was democratically elected named
13:33
Speaker 3: Patrice Lamumba. Six months later, La Mumba was killed in
13:38
Speaker 3: a coup that was supported by our old friends in
13:40
Speaker 3: Belgium and the United States because of a suspicion of
13:44
Speaker 3: being in bed with the Soviet Union. A general takes
13:49
Speaker 3: power Mobuto Cesci Seiko and through the support of the
13:53
Speaker 3: US and other I guess richer Western countries, basically spent
13:58
Speaker 3: about three decades lining his pockets with money and from
14:03
Speaker 3: except for about twenty seven years from seventy to ninety seven,
14:06
Speaker 3: the nation's debt went from five percent of the GDP
14:09
Speaker 3: to one hundred and fifty percent.
14:11
Speaker 2: Right. And the reason the debt went up so much
14:14
Speaker 2: is because, like you said, he's lining his pockets. And
14:16
Speaker 2: the other countries from the Global North that were lending
14:20
Speaker 2: this money to drc knew that he was lining his pockets.
14:25
Speaker 2: They didn't care because he could turn around and use
14:27
Speaker 2: his country's natural resources to pay off these debts that
14:30
Speaker 2: he was using to enrich himself while his people were
14:34
Speaker 2: impoverished and starved. The thing is is like that is
14:38
Speaker 2: on cesse seiko, sure, right, but also on the lenders,
14:43
Speaker 2: the financiers, who knew what he was doing and did
14:45
Speaker 2: not care about what happened to the people of the
14:47
Speaker 2: Democratic Republic of Congo. They just cared that they had
14:51
Speaker 2: a steady flow of natural resources, and that right there,
14:55
Speaker 2: that's that's as far as capitalism goes. That's fine, there's
14:58
Speaker 2: no moral hazard to that. But the thing that makes
15:03
Speaker 2: this moment in history different than say, the nineteen sixties,
15:06
Speaker 2: is we've now come to question that part of capitalism.
15:11
Speaker 2: Some people question capitalism as a whole, and you can
15:13
Speaker 2: do that, But I tend to think that capitalism itself
15:16
Speaker 2: is not an inherently flawed system, but that it has
15:18
Speaker 2: some really flawed capes that are hung around at shoulders.
15:25
Speaker 2: I don't know why I went with capes, but you
15:26
Speaker 2: get the point, right, And one of those is the
15:28
Speaker 2: idea that corporations should maximize profits at all costs without
15:33
Speaker 2: any regard to morality or global citizenship. It doesn't matter,
15:38
Speaker 2: So those corporations can't really be lumped in in any
15:42
Speaker 2: legal sense, because they're just doing corporations too, being psychopaths
15:46
Speaker 2: who are out to maximize profits as much as possible.
15:49
Speaker 2: So that's where we're at. Like a lot of people
15:51
Speaker 2: just stop at blaming sesse Seiko for being as corrupt
15:54
Speaker 2: as it comes and plundering his own nation, but they're
15:57
Speaker 2: not also like panning to the left a little bit
16:01
Speaker 2: to see the larger picture, And that's what you have
16:03
Speaker 2: to do when you really are examining global sovereign debt
16:07
Speaker 2: crises like we're in right now.
16:09
Speaker 3: Yeah, for sure. So this is kind of going on
16:12
Speaker 3: a timeline. So that was the sixties and into the seventies.
16:15
Speaker 3: Now we go, which will lead up to the eighties
16:18
Speaker 3: debt crisis. In the seventies, if everyone who knows history
16:23
Speaker 3: knows that.
16:24
Speaker 1: That was a bad time for oil, I guess a
16:26
Speaker 1: good time.
16:26
Speaker 3: If you're an exporter, oil prices went through the roof,
16:30
Speaker 3: and if you are an importer of oil, this is
16:34
Speaker 3: going to have a ripple effect, and it did all
16:36
Speaker 3: across the world to basically ramp up inflation, raise the
16:39
Speaker 3: cost of fuel, which affects the cost of a lot
16:42
Speaker 3: of other things. Because of a domino effect. And the
16:46
Speaker 3: other side of this is these oil rich countries that
16:50
Speaker 3: were now exporting. Not only were they getting all this
16:52
Speaker 3: dough and enriching themselves from the oil. Fine, that is
16:56
Speaker 3: what it is. They then said, hey, we can now
17:00
Speaker 3: be a lender and lend money to these poorer countries
17:03
Speaker 3: and some of these Latin American countries that are really
17:06
Speaker 3: kind of growing fast, and who cares about the risk
17:10
Speaker 3: involved and everyone sending up warning signs. We're the lender
17:13
Speaker 3: and we're going to make a ton of interest off
17:15
Speaker 3: of this dough that we now have because of the
17:19
Speaker 3: oil that we are selling to them.
17:21
Speaker 2: Yeah, that would be a familiar pattern that would emerge.
17:24
Speaker 2: But that oil thing that you were talking about, for
17:26
Speaker 2: non exporting countries like the United States, that was a
17:29
Speaker 2: real problem because we saw just very recently in the
17:32
Speaker 2: last several months, when oil prices go up, all prices
17:36
Speaker 2: go up because everything's so dependent on oil. And that
17:38
Speaker 2: happened in the early eighties too, So inflation started to
17:42
Speaker 2: get so far out of hand. I think it reached
17:44
Speaker 2: like fourteen percent. What was it we were like screaming
17:47
Speaker 2: about recently, like six or eight, which was bad enough.
17:49
Speaker 2: This is fourteen percent, So the guy who ran the
17:52
Speaker 2: Federal Reserve, Paul Vulker, committed what's now known as the
17:57
Speaker 2: Vulgar Shock. He jacked interest rates up so suddenly and
18:01
Speaker 2: so high, I think, up to twenty percent, that it
18:05
Speaker 2: immediately triggered a global recession. And it definitely did, within
18:09
Speaker 2: a couple of years, wedge everybody out of that global recession.
18:13
Speaker 2: It stabilized that inflation, brought prices down, things got back
18:16
Speaker 2: to normal. But you had to be a really rich
18:20
Speaker 2: country to weather that fairly. Well. If you weren't a
18:24
Speaker 2: rich country, you were screwed. And so these countries that
18:27
Speaker 2: had already racked up tons of debt now had high
18:32
Speaker 2: interest rates and low currency values and were expected to
18:35
Speaker 2: pay these loans back. So if you were on like
18:38
Speaker 2: a three point two percent or a four percent interest
18:41
Speaker 2: rate on an eighty billion dollar loan, you owed three
18:44
Speaker 2: point two billion dollars to service that loan. If it
18:46
Speaker 2: went up to twenty percent interest rates, you suddenly owed
18:49
Speaker 2: fifteen billion dollars to service that loan. So Mexico, Brazil,
18:53
Speaker 2: a bunch of other countries, I think twenty seven of
18:55
Speaker 2: them said we can't pay these debts any longer. This
18:59
Speaker 2: is not sustainable and frankly, it's now become odious because
19:03
Speaker 2: of this Volker shock that we didn't do anything to do,
19:05
Speaker 2: but now we're suffering because the US decided to plunge
19:08
Speaker 2: everyone into a global recession to help itself.
19:12
Speaker 3: Right, So this is going on. All these countries have
19:15
Speaker 3: thrown up their hands basically and said we just can't.
19:18
Speaker 3: Like it's not you know, we're not saying, oh, we
19:20
Speaker 3: don't want to pay that, like we literally can't afford to,
19:24
Speaker 3: and that people started beating the drum, like you said
19:26
Speaker 3: on odious debt again and activists started speaking up. Peru
19:30
Speaker 3: is a great example that you mentioned. In nineteen eighty five,
19:33
Speaker 3: the president of Peru, Alan Garcia, said, you know what,
19:37
Speaker 3: We're not going to pay any payments on our debt
19:41
Speaker 3: in excess of ten percent of our export revenues and
19:44
Speaker 3: that's the only way to keep our country solvent basically,
19:48
Speaker 3: which helped them out in the short term. But then
19:50
Speaker 3: all of a sudden, you're doing that, and every financial
19:53
Speaker 3: institution all over the world looks and says, we can't
19:56
Speaker 3: trust Peru anymore, we can't do business with them, and
19:59
Speaker 3: we can't invest in Peru if we're a company or
20:03
Speaker 3: corporation looking to invest in foreign economies, and that triggered
20:07
Speaker 3: a hyperinflation there by the end of the eighties. And
20:10
Speaker 3: so all of this mess is happening in the eighties,
20:13
Speaker 3: and finally, finally two organizations stepped in and said, we
20:17
Speaker 3: got to do something about this. The International Monetary Fund,
20:21
Speaker 3: the IMF, and the World Bank stepped in. These are
20:24
Speaker 3: two organizations founded post World War two. In part, the
20:28
Speaker 3: World Bank was to help dig Europe out of the
20:31
Speaker 3: economic devastation they suffered during the war, and the IMF
20:35
Speaker 3: initially was just to sort of encourage all countries to
20:39
Speaker 3: get along economically. But then after this, the IMF and
20:43
Speaker 3: the World Bank basically became a lender, a multilateral public lender.
20:50
Speaker 3: That's complicated to sort of explain how that all works,
20:54
Speaker 3: but let's just leave it at It was controlled still
20:57
Speaker 3: by these northern countries, the UA in other rich countries.
21:01
Speaker 2: And it still is. And bear this in mindful when
21:04
Speaker 2: we talk about today. The IMF is partly funded by
21:07
Speaker 2: rich countries called the Paris Club, which includes the United
21:10
Speaker 2: States and most European democracies. Right, it's nice, it does.
21:14
Speaker 2: It sounds like the kind of place i'd want to
21:16
Speaker 2: hang out. Yeah, I want to go have a sip
21:18
Speaker 2: of something with my pinky in the air, you know exactly,
21:21
Speaker 2: So just put that, put that in your bonnet and
21:24
Speaker 2: smoke it later. Right. The IMF is funded in part
21:27
Speaker 2: by democracies and governments around the world. Okay, so the
21:32
Speaker 2: IMF and the World Bank changed their mandate. They decided
21:35
Speaker 2: now that they were going to basically aid in development
21:38
Speaker 2: around the world, but especially focusing on lower income, middle
21:42
Speaker 2: income countries to help them. And this is the view
21:46
Speaker 2: of the economists that the IMF and their supporters to
21:50
Speaker 2: help these impoverished nations learn to be better capitalist economies
21:56
Speaker 2: and as a result become a self sustate and self supporting,
22:02
Speaker 2: basically creating neoliberal economies where there was say socialist economies
22:07
Speaker 2: or other types of economies opening them up for business.
22:10
Speaker 2: And so they would start sending these loans to these
22:13
Speaker 2: countries that really attractive interest rate, sometimes as low as
22:16
Speaker 2: like no interest whatsoever, in which case it was basically aid,
22:20
Speaker 2: but there were strings attached, and they were things like
22:25
Speaker 2: increase your tax revenue, stop social spending. All those state
22:31
Speaker 2: owned enterprises you have, you need to privatize them to
22:34
Speaker 2: open it for competition, and most importantly, you need to
22:38
Speaker 2: open up your whole country, get rid of trade restrictions,
22:40
Speaker 2: all that stuff, open them up to international business so
22:43
Speaker 2: we can come in as unfettered as we want to.
22:46
Speaker 2: And by the way, to help you understand all this
22:48
Speaker 2: and do all this, we're going to send our own
22:50
Speaker 2: Western economists and advisors to teach you how to do this.
22:55
Speaker 2: And some of those advisors and their successors you showed
23:00
Speaker 2: up in the eighties are still there. They never laughed.
23:03
Speaker 2: They're just part of like that nation's government. Basically.
23:06
Speaker 3: Yeah, these were called structural adjustment programs or SAPs, ironically,
23:12
Speaker 3: and you know, the proponents would argue what you just
23:16
Speaker 3: talked about, and then people that didn't think it was
23:19
Speaker 3: such a great idea would say, well, this is just
23:21
Speaker 3: sort of a new version of the same thing, right,
23:25
Speaker 3: And which is why they call it neo colonialism. It's
23:28
Speaker 3: you coming in and saying, hey, we want to use
23:31
Speaker 3: your resources and tap your country or sap your country,
23:37
Speaker 3: but you got to spend the money that we're lending
23:40
Speaker 3: you at cheap rates of the way we say. A
23:42
Speaker 3: lot of countries got on board during the nineteen eighties.
23:46
Speaker 3: It also led to a lot of unrest and a
23:48
Speaker 3: lot of protests. In nineteen eighty five, to go back
23:51
Speaker 3: to our example of the DRC, they had these economic
23:55
Speaker 3: policies implemented by the IMF. By nineteen eighty five, the
23:59
Speaker 3: Washington Post did a report that basically said, their hospitals
24:03
Speaker 3: and their schools are decimated. Malnutrition is going through the roof.
24:08
Speaker 3: Activists once again started rearing their heads. There was one
24:11
Speaker 3: guy who I think this bears maybe a deeper dive
24:14
Speaker 3: at some point, but his name was Thomas Sankara, and
24:17
Speaker 3: he was the president of a West African nation called
24:21
Speaker 3: Burkina Fasso in the early eighties and a leftist guy
24:26
Speaker 3: who basically was beating the neo colonialism drum. And in
24:31
Speaker 3: July of eighty seven, he gave a big speech at
24:33
Speaker 3: the Organization of African Unity where he said, everyone joined
24:37
Speaker 3: with us, and let's not pay this debt to our colonizers.
24:42
Speaker 3: Let's remember that idea. Let's get that going again. A
24:45
Speaker 3: few months later, he was assassinated in a bloody coup
24:48
Speaker 3: from his former friend who became his rival, a guy
24:52
Speaker 3: who still doesn't own up to being a part of
24:54
Speaker 3: this like to this day.
24:57
Speaker 1: His name was.
24:57
Speaker 3: And I heard a few ways of pronouncing, but I'm
25:00
Speaker 3: going to blaze compare compare.
25:05
Speaker 2: I like that.
25:06
Speaker 3: It was kind of tough, but you know, so what
25:09
Speaker 3: happens is a leftist organizer, president advocate against this speaks
25:17
Speaker 3: up and is promptly killed, and then that country promptly
25:21
Speaker 3: rejoins the IMF and World Bank.
25:24
Speaker 2: Yeah, and sank Kara he was very dangerous because he
25:27
Speaker 2: was starting to make real waves. If all those African
25:32
Speaker 2: nations join together and just said we're not paying you back,
25:34
Speaker 2: tens hundreds of billions of dollars would have just evaporated
25:37
Speaker 2: for the Global North right. So that's why he was assassinated.
25:42
Speaker 2: But he left this legacy of looking at sovereign debt
25:46
Speaker 2: among low income nations in a certain way that some
25:51
Speaker 2: people still kind of see it through today, and which
25:53
Speaker 2: is kind of the lens we're looking at it through
25:55
Speaker 2: in this episode, which is that it's like the colonizers
26:01
Speaker 2: coming into a country, exploiting it, leaving and then sending
26:07
Speaker 2: a bill to the country right to repair the damage
26:12
Speaker 2: done by colonialism. That that's essentially what's going on with
26:17
Speaker 2: the Global North lending money interest to the global.
26:22
Speaker 3: South right, and in the case of Sinkara at the time,
26:26
Speaker 3: and it's good that he's you know, been sort of canonized,
26:28
Speaker 3: I guess now.
26:29
Speaker 1: But is that the right word. Yeah, okay.
26:35
Speaker 3: At the time, basically it's send the message to all
26:38
Speaker 3: other countries, like you see what happened to him when
26:41
Speaker 3: you when you rise up and try and take a
26:43
Speaker 3: stand against this kind of thing, and it basically quashed
26:46
Speaker 3: things until the nineties when Bono got to be in
26:51
Speaker 3: his bonnet.
26:53
Speaker 2: Yeah, so that's a that's a really interesting thing that happened,
26:58
Speaker 2: and it happened almost exclusive because of Bono. There was
27:01
Speaker 2: a guy named Martin Dent who was a professor at
27:03
Speaker 2: Keele University in the UK, and in the early nineties
27:06
Speaker 2: he came up with this idea that, hey, the millennium's coming,
27:09
Speaker 2: let's use it as a chance to like wipe the
27:11
Speaker 2: debt free. Because in Jewish tradition there used to be
27:14
Speaker 2: something called the Jubilee. We've talked about it before. I
27:16
Speaker 2: don't remember what it was. I think we did one
27:18
Speaker 2: on the Rolling Jubilee. Maybe maybe, But it's this idea
27:22
Speaker 2: that every fifty years in Jewish culture, all debts would
27:25
Speaker 2: be wiped free, right, And they were saying okay, yes, yeah, okay,
27:31
Speaker 2: And so they were saying Dent was saying, hey, let's
27:33
Speaker 2: just do this. We could totally do this and start
27:35
Speaker 2: the millennium fresh and everybody on more of an equal footing.
27:38
Speaker 2: And Bono is like, I like that a lot. And
27:41
Speaker 2: he took this up and very nice. Sorry, he championed it. No,
27:47
Speaker 2: no need for apologies.
27:48
Speaker 1: I had that one.
27:50
Speaker 2: He championed this whole idea and I don't want to
27:54
Speaker 2: say single handedly, but largely was responsible for the eradication
27:58
Speaker 2: of about one hundred and thirty billion dollars worth of debt.
28:01
Speaker 2: He did almost single handedly just by going and talking
28:05
Speaker 2: to the right people getting them on board.
28:08
Speaker 1: Yeah.
28:08
Speaker 3: I mean, there are a lot of stories of Bono's
28:12
Speaker 3: charm in these rooms with these people that range from
28:16
Speaker 3: you know, brutal dictators to far far right religious zelots
28:24
Speaker 3: like Bono gets in the room with those guys. Bonna
28:27
Speaker 3: is a Christian, very very Christian man, super Catholic, very Catholic.
28:31
Speaker 3: I'm reading his book still now.
28:32
Speaker 1: It's great.
28:33
Speaker 2: Oh yeah, what's it called Catholic? Me Catholic?
28:36
Speaker 1: You by Bona it is. I was trying to think
28:40
Speaker 1: of another riff on that, but that nailed it. It's
28:42
Speaker 1: called Surrender, I think, but really good book. Anyway.
28:45
Speaker 3: Bono is a guy that can have a lot of
28:49
Speaker 3: sway when he gets in a room with someone. And
28:51
Speaker 3: he got together with Christian groups, with NGOs, with Republicans
28:55
Speaker 3: and Democrats and all kinds of people from all over
28:58
Speaker 3: the world, people he had to apologize for being in
29:00
Speaker 3: the same room with, you know, because he thought he was,
29:03
Speaker 3: you know, doing some good and he was and got
29:05
Speaker 3: a lot of people on board, tens of millions of supporters.
29:10
Speaker 3: It launched formerly in nineteen ninety six, and this was
29:13
Speaker 3: called Jubilee two thousand. I don't think we mentioned the
29:16
Speaker 3: official name. I think it's called what's it called now?
29:20
Speaker 2: Just yes, that's much better.
29:22
Speaker 1: Yeah, it's a great name. I like Jubilee two thousand.
29:24
Speaker 1: That has a fun ring to it.
29:26
Speaker 2: Sure, and I think it served its purpose for a while.
29:28
Speaker 3: But because of things like the Christian group involvement, you
29:31
Speaker 3: had Republicans on board.
29:33
Speaker 1: In some cases.
29:35
Speaker 3: There was a guy named Spencer Bacchus from Alabama, a
29:38
Speaker 3: rep there that basically said, hey, this will cost each
29:42
Speaker 3: American a dollar twenty a year to get children out
29:47
Speaker 3: of hunger all over the world. And it's not that
29:50
Speaker 3: much money. Some people were slower to come around, but
29:53
Speaker 3: even people that were slower to come around eventually said, well, listen,
29:56
Speaker 3: they're probably not going to pay it anyway, so maybe
29:59
Speaker 3: we should get on board with another plan.
30:02
Speaker 2: Right, not everybody?
30:04
Speaker 4: Did.
30:05
Speaker 2: I read this American Heritage contemporaneous article that was like this,
30:10
Speaker 2: this is reckless, especially for the GOP. It's going to
30:13
Speaker 2: cost America billions of dollars and for what And now
30:16
Speaker 2: in retrospect, it's like that article has an age very
30:18
Speaker 2: well for humanity, that's what actually And so Spencer Bacchus,
30:25
Speaker 2: he's a real hero here, like he made this his
30:27
Speaker 2: mission and he actually reached across the island, worked with
30:30
Speaker 2: Maxine Waters, an arch liberal, and got what was called
30:35
Speaker 2: the Jubilee Act passed finally in two thousand and eight.
30:38
Speaker 2: And it was a hugely bipartisan act that wiped out
30:42
Speaker 2: a lot of debt that America held. And by America
30:46
Speaker 2: being a part of this and other European nations being
30:49
Speaker 2: a part of this, other nations started to follow. Like
30:52
Speaker 2: Bono would say, the IMF got on board, the World
30:56
Speaker 2: Bank got on board, and so suddenly a lot of
30:59
Speaker 2: money that the global South. Oh, the global North was
31:02
Speaker 2: just wiped out.
31:04
Speaker 3: Yeah, Bona said, every country deserves to live free of poverty.
31:09
Speaker 3: Every street should have a name.
31:11
Speaker 2: Do it in the name of love.
31:14
Speaker 1: Oh wow, we could really go down a rabbit all here.
31:17
Speaker 2: Yeah, on your knees, boy, I'm not sure that fits.
31:23
Speaker 3: Yeah, that's pretty good. So seventy percent, I believe was
31:28
Speaker 3: the number. Initially, the debt was going to be reduced
31:32
Speaker 3: by seventy percent for thirty three different countries in Africa,
31:36
Speaker 3: Latin America, and Asia, and the US agreed to more
31:42
Speaker 3: debt cancelation. I think there was a Jubilee debt campaign
31:47
Speaker 3: in the UK that stepped up between twoenty twenty fifteen
31:51
Speaker 3: that was about one hundred and thirty billion dollars worth
31:53
Speaker 3: of debt canceled. And we do should we should point out,
31:57
Speaker 3: Liviya very and I'm glad you did this. Reminded that
32:00
Speaker 3: it's not a dollars dollar thing, like you can spend
32:04
Speaker 3: one hundred million bucks to maybe cancel a billion dollars
32:07
Speaker 3: in debt sometimes, right, because.
32:09
Speaker 2: You're taking into kind of all the interests and researchructing
32:12
Speaker 2: and all that stuff involved, you're just they really just
32:15
Speaker 2: owe you one hundred million in principle, but it ballooned
32:17
Speaker 2: up to a billion dollars. But as far as that
32:19
Speaker 2: lower income country is concerned, that's a billion dollars. They
32:22
Speaker 2: don't have to pay where to you, it was just
32:24
Speaker 2: one hundred million, just one hundred million.
32:25
Speaker 3: Yeah, exactly. So that's basically what happened in the sort
32:30
Speaker 3: of two thousands is all these countries got on board.
32:34
Speaker 3: The framework was sort of led by the US for
32:37
Speaker 3: the Heavily Indebted Poor Countries initiative from the World Bank
32:41
Speaker 3: and the IMF, and you know, it worked pretty good
32:45
Speaker 3: through the two thousands and twenty ten's for the most part.
32:49
Speaker 1: It helped.
32:50
Speaker 2: It did, and as a matter of fact, it was
32:53
Speaker 2: helped not just by that initiative. So that was a
32:55
Speaker 2: big deal, right, Like we shouldn't really breeze past it.
32:58
Speaker 2: It was a big deal. There was a lot of
33:00
Speaker 2: heart behind it, a lot of genuine like humanity from
33:03
Speaker 2: countries that held a lot of debt that just said, okay,
33:06
Speaker 2: we're going to forgive this for the greater good. But
33:09
Speaker 2: there was another thing that happened too, which was the
33:12
Speaker 2: global financial crisis of two thousand and seven and eight. Right,
33:16
Speaker 2: the big meltdown from the US housing market bubble. That actually,
33:21
Speaker 2: because the US FED was so interested in combating the
33:25
Speaker 2: effects of that and the recession that followed, they dropped
33:29
Speaker 2: interest rates like crazy to like basically zero, and so
33:33
Speaker 2: that meant that international lending rates were also really low too,
33:36
Speaker 2: which led to easy money. A lot of people could
33:39
Speaker 2: borrow money. There were a lot of rich countries that
33:41
Speaker 2: had lots of money to lend, and countries that wanted
33:44
Speaker 2: it could borrow it for really cheap. And it was
33:46
Speaker 2: so cheap you could borrow money to pay back the
33:49
Speaker 2: other money you just borrowed. It was kind of like
33:52
Speaker 2: that set up.
33:53
Speaker 1: I was just leverntry at the time. Yeah, I did
33:56
Speaker 1: exactly that.
33:57
Speaker 3: I got a stated in come loan for our first
34:01
Speaker 3: house by just walking in there and saying, we make
34:04
Speaker 3: this munch of money, and they went, sounds great. And
34:07
Speaker 3: we had a bunch of credit card debt and we
34:09
Speaker 3: rolled that into that loan because we had overborrowed for
34:13
Speaker 3: a lot of different reasons, not because we were just
34:15
Speaker 3: living the high life emily early because early business investment
34:18
Speaker 3: and stuff like that. But we rolled all that into
34:21
Speaker 3: one big thing, and so I can, like you can
34:26
Speaker 3: use the example of an individual, and it's kind of
34:29
Speaker 3: the same as these countries.
34:30
Speaker 2: It's the exact same thing. It's all the same principles,
34:34
Speaker 2: it's even largely the same mechanisms with the same people
34:37
Speaker 2: involved as far as lenders go. It's just on a
34:40
Speaker 2: global scale or like a like an individual scale. But
34:44
Speaker 2: it's that's a great point. It's virtually the same thing.
34:47
Speaker 2: So with all of this easy money, people started racking
34:50
Speaker 2: up more and more and more debt because it seemed
34:53
Speaker 2: like the spigot was never going to turn off, which
34:55
Speaker 2: is always like, when you start thinking the spigot's never
34:57
Speaker 2: going to turn off, you should stop immediately.
34:59
Speaker 1: Yeah, because that means that the spigot.
35:01
Speaker 2: Turning off is right around the corner, and everybody's gonna
35:03
Speaker 2: get caught with the hot potato. And that's essentially what
35:06
Speaker 2: happened when COVID hit.
35:07
Speaker 1: You're mixing metaphors in a great.
35:08
Speaker 2: Way around the corner with the hot potato.
35:11
Speaker 1: You know, spiggots and hot potatoes. And I don't know
35:14
Speaker 1: what's coming next.
35:15
Speaker 2: There's probably some baseball metaphor or something. Okay, you know,
35:19
Speaker 2: you get caught with three loans and you're out. I'm
35:23
Speaker 2: I'm really I'm off my game, Chuck. I used to
35:25
Speaker 2: be so much better at this, and then you kids.
35:28
Speaker 1: You're killing it.
35:29
Speaker 2: I feel like it's evaporated a little bit, just temporarily,
35:32
Speaker 2: but a little bit.
35:33
Speaker 1: No, No, you're crushing it.
35:34
Speaker 2: Okay, Well, I say that we take a little break.
35:36
Speaker 2: I'm going to recollect myself. And we've reached the COVID
35:39
Speaker 2: pandemic having a huge impact on that debt, definitely large
35:47
Speaker 2: hous of each.
35:50
Speaker 4: Sksh sks tough.
36:00
Speaker 2: You should know. So COVID nineteen strikes, and all of
36:07
Speaker 2: a sudden, that money dries up because everybody needs money,
36:10
Speaker 2: and like all countries, lower income, middle income, high income
36:14
Speaker 2: countries are all borrowing money because business as usual has
36:18
Speaker 2: just stopped, right.
36:19
Speaker 3: Yeah, I mean health care costs are going through the roof,
36:23
Speaker 3: business is going into the toilet, and trade has gone
36:25
Speaker 3: into the toilet, not completely, but for a large part.
36:29
Speaker 3: And so the world all of a sudden was thrust
36:32
Speaker 3: into a global financial crisis. And I love that Olivia
36:38
Speaker 3: even used your word. She used upshot.
36:40
Speaker 1: I saw that it's wear enough.
36:43
Speaker 3: The upshot, though, is now because of all this, they're
36:47
Speaker 3: all of these countries, not all of them but many
36:49
Speaker 3: of these countries that we've been talking about are in
36:51
Speaker 3: more debt than ever before. The debt burden of nations
36:55
Speaker 3: classified as developing nations went from two point one trillion
36:59
Speaker 3: in two thousand to four point one trillion in two
37:02
Speaker 3: thousand and nine to eleven point one in twenty twenty one.
37:06
Speaker 2: That's crazy. And then like the external debt to gross
37:09
Speaker 2: national income ratio among those countries external debt is all
37:13
Speaker 2: the foreign held debt to their gross national income went
37:18
Speaker 2: from seventeen percent in twenty ten to forty eight point
37:21
Speaker 2: five percent twenty twenty one. Daggering number it is, and
37:25
Speaker 2: it's a really scary number too, especially if your country,
37:28
Speaker 2: like I need to feed my people and I need
37:31
Speaker 2: some money, and now it's the money's dried up because
37:34
Speaker 2: some of these wealthier countries are borrowing two and that
37:37
Speaker 2: that also means that they need the money that I
37:39
Speaker 2: already owe them, So they're not going to be very
37:42
Speaker 2: interested in forgiving debts right now, especially post COVID. So
37:45
Speaker 2: it put everybody in a really precarious situation that we're
37:48
Speaker 2: still in now. And it followed the same thing that
37:51
Speaker 2: happened in nineteen eighty two inflation happened, which meant that
37:55
Speaker 2: the value of the dollar went down and value of
37:56
Speaker 2: international currency went down, so it made it more expensive
37:59
Speaker 2: to pay your debts. And then also or you needed
38:02
Speaker 2: more money to pay the same amount. And then also
38:06
Speaker 2: as interest rates went up, that meant that it was
38:09
Speaker 2: unsustainable to service a debt, just like it was in
38:12
Speaker 2: nineteen eighty two. It just got too expensive. In countries
38:15
Speaker 2: now are doing the same thing. They're saying, I don't
38:17
Speaker 2: know what we can do to pay this, we need help.
38:21
Speaker 1: Yeah, and a lot of it.
38:22
Speaker 3: You know, when you break it down, it's really important
38:24
Speaker 3: to look at where this money's coming from, because it
38:28
Speaker 3: used to be a lot more like IMF multilateral sort
38:32
Speaker 3: of lending now. I think there was one estimate LIVA
38:36
Speaker 3: included that African countries about thirty five percent of their
38:41
Speaker 3: external debt to private creditors which have interest rates more
38:45
Speaker 3: along the lines of five percent twelve percent to Chinese creditors.
38:49
Speaker 3: They've China has really stepped in to fill a void,
38:52
Speaker 3: So just kind of keep your eye on that. At
38:54
Speaker 3: about two point seven percent, thirteen percent to other governments,
38:58
Speaker 3: in thirty nine percent to those multilateral institutions that we've
39:02
Speaker 3: been talking about at a rate of about one point
39:04
Speaker 3: five percent, so more money in private debt, less money
39:09
Speaker 3: and multilateral institutions. And if you're talking about two or
39:13
Speaker 3: three percentage points on hundreds of billions of dollars, that's
39:16
Speaker 3: a huge difference.
39:18
Speaker 2: Yeah. And the reason you're like, well, why don't they
39:20
Speaker 2: just get it all from the IMF, Well, those private
39:23
Speaker 2: lenders they have high interest rates, but they don't come
39:26
Speaker 2: with strings attacked exactly raising taxes on your people and
39:30
Speaker 2: not spending on social programs anymore. If they're just using
39:33
Speaker 2: market conditions, right and saying, well, your country's this risky,
39:37
Speaker 2: so we're going to charge this interest rate on'll do it.
39:39
Speaker 2: Chic with it, right, But the IMF will say, we'll
39:42
Speaker 2: charge you a low interest rate, but you also have
39:43
Speaker 2: to completely restructure your economy to a way we say. So,
39:48
Speaker 2: there's pluses and minuses of both. But that those private
39:52
Speaker 2: lenders becoming bigger and bigger in the last couple decades
39:55
Speaker 2: is really distressing because the collectively private lending now rivals
40:01
Speaker 2: like the Paris Club as far as geo political global
40:04
Speaker 2: influence goes. And that's that's distressing to me. You might say, well,
40:09
Speaker 2: it's not like the Paris Club and other wealthy nations
40:11
Speaker 2: did a very good job when they were in control.
40:14
Speaker 2: They were still in some way, shape or form like
40:18
Speaker 2: subject to the to the people back home in their votes. Right,
40:22
Speaker 2: there's at least still nominally that with with you know, corporations,
40:25
Speaker 2: there's nothing but their shareholders. It's just it's different to me,
40:29
Speaker 2: and I'm not entirely comfortable with it. But the upshot
40:33
Speaker 2: is there's now private lenders that own entire chunks of
40:36
Speaker 2: whole nation's economies. Like there's a commodities group called Glencore.
40:42
Speaker 2: I think they're out of Switzerland. They own a third
40:45
Speaker 2: of Chad's national debt a third, and they they are
40:49
Speaker 2: very happy to give Chad that money because Chad has
40:54
Speaker 2: secured that debt with its natural resources. So if Chad
40:58
Speaker 2: can't pay its debt via money, glink Core says, just
41:01
Speaker 2: give us some crude oil, and they do very frequently.
41:03
Speaker 1: How much of the national debt that they owe of karens.
41:09
Speaker 2: I know, sorry, no, I like it. And I'm like,
41:12
Speaker 2: I'm surely saying Chad right right, it's not.
41:15
Speaker 1: Shod or I think it's Chad.
41:18
Speaker 2: I think that's what I've always heard too.
41:19
Speaker 1: That's what I've always heard.
41:21
Speaker 3: Because of the COVID pandemic, the Group of twenty, the
41:23
Speaker 3: G twenty organization basically said, you know, we can suspend
41:28
Speaker 3: some interest payments because of COVID, but that's a suspension
41:33
Speaker 3: of interest. It's not absolving any kind of debt at Also,
41:37
Speaker 3: it's just kind of like a temporary band aid, of course.
41:40
Speaker 3: And you know, basically where the point now where there
41:42
Speaker 3: is not any sort of straightforward, non case by case
41:48
Speaker 3: way to make restructuring a country's debt happen. It makes
41:53
Speaker 3: it really tough to sort of figure out an easy
41:56
Speaker 3: solution for sure.
41:58
Speaker 2: And before, I mean it was convoluted enough when you
42:00
Speaker 2: just had like the IMF and the World Bank and
42:02
Speaker 2: the nation's funding them arguing over who did what or
42:05
Speaker 2: needs to do what. Now you have China who may
42:08
Speaker 2: or may not talk to you or come to the
42:09
Speaker 2: table if you ask them to. And then you have
42:12
Speaker 2: the private lenders who are like, hey, we're just in
42:14
Speaker 2: it for the money here, we don't want to do
42:18
Speaker 2: any kind of debt forgiveness. And because you've got all
42:21
Speaker 2: these different players all and all of them need to
42:25
Speaker 2: come together for debt cancelation to happen. It does make
42:28
Speaker 2: it much more difficult because if the private lenders just
42:31
Speaker 2: step back and say, yeah, United States, Paris Club, IMF,
42:35
Speaker 2: World Bank, you guys forgive a bunch of those debts
42:39
Speaker 2: down there in Africa, and then they'll have money to
42:42
Speaker 2: pay the debts for the stuff we lent them at
42:45
Speaker 2: the same rates that we lent it to before. So
42:47
Speaker 2: what you're essentially having on this global international finance scale
42:53
Speaker 2: are rich governments bailing out private lenders when their loans
43:00
Speaker 2: come under jeopardy to protect those corporate profits. And those
43:04
Speaker 2: governments that fund the IMF fund it with taxpayer money.
43:09
Speaker 3: That's right, And the private lenders there's not much of
43:14
Speaker 3: a downside for them, is there.
43:15
Speaker 2: No, not at all. They can just lend, lend, lend,
43:18
Speaker 2: and they know that eventually the IMF and the World
43:20
Speaker 2: Bank's going to bail these people out because there's softies
43:22
Speaker 2: and suckers who can't see some people starve at the
43:26
Speaker 2: in exchange for better access to some or diamonds.
43:31
Speaker 1: Right exactly.
43:33
Speaker 3: There's another way that debt has can be canceled out,
43:38
Speaker 3: and that's becoming more and more popular these days, although
43:41
Speaker 3: on a pretty small level. If you look at the
43:42
Speaker 3: big picture is debt relief for nature incentives, for natural
43:50
Speaker 3: incentives and conservation incentives. Basically groups coming in. Sometimes it's
43:57
Speaker 3: it's usually a private group, like and Belize the Nature
44:00
Speaker 3: Conservancy came in in twenty twenty one and said, and
44:03
Speaker 3: of course this is this is small beans in the
44:07
Speaker 3: big picture, but it's happening. And they said, hey, why
44:09
Speaker 3: don't you will reduce your external debt by about ten
44:13
Speaker 3: percent of your GDP in exchange, you got to put
44:17
Speaker 3: about four million bucks a year into marine conservation or
44:21
Speaker 3: another country might step up and say, hey, will help
44:23
Speaker 3: preserve this coral reef and put money toward that if
44:27
Speaker 3: you cancel some of our debt. Climate change, that's another
44:32
Speaker 3: you know, it's not necessarily colonialism how you might traditionally
44:36
Speaker 3: think of it, but there is an argument going around
44:39
Speaker 3: more and more that hey, these richer northern countries are
44:42
Speaker 3: the ones that are destroying the environment for the most part,
44:46
Speaker 3: and these poorer countries are the ones that are suffering
44:49
Speaker 3: and don't have the kind of money to help themselves
44:52
Speaker 3: like we do. So like that shit factor in as well.
44:56
Speaker 2: Yeah, like if you see things like you do, colonialism
45:00
Speaker 2: can easily apply that to climate change too, Like, why
45:02
Speaker 2: should these countries who contributed almost nothing to climate change
45:06
Speaker 2: but are going to suffer for it have to pay
45:08
Speaker 2: for it themselves. That doesn't make any sense because of
45:11
Speaker 2: where they are. And then there's even worse than that,
45:13
Speaker 2: there's this terrible circular logic where those countries that are
45:17
Speaker 2: going to get hit the worst by climate change and
45:20
Speaker 2: need the most money to spend on bracing themselves for
45:23
Speaker 2: climate change are then the riskiest countries to lend to
45:26
Speaker 2: because they're most susceptible to climate change, so it costs
45:30
Speaker 2: them the most to borrow money to protect themselves against
45:33
Speaker 2: climate change. Yeah, that's the situation that we're in right now,
45:37
Speaker 2: and so a lot of people have kind of moved
45:38
Speaker 2: on from colonialism to Okay, this climate change thing is
45:42
Speaker 2: actually a real thing, and it's not the fault of
45:43
Speaker 2: the global South. It's the global norse responsibility to pay
45:47
Speaker 2: for the mess it created, and the global North is
45:49
Speaker 2: not necessarily on board with that at this time.
45:52
Speaker 3: Yeah, and to kind of put a button on what
45:54
Speaker 3: I mentioned earlier about the R word, there's a historian
45:58
Speaker 3: at the University of West Indies, Hillary Beckles, who did
46:02
Speaker 3: some back of the envelope calculations. I'm sure it was
46:05
Speaker 3: more rigorous than that. I don't want to achieve in it.
46:08
Speaker 3: But basically said, in the Caribbean alone, Europeans got about
46:13
Speaker 3: two hundred years of free labor to the tune of
46:15
Speaker 3: about eight trillion dollars. So don't think of it again
46:20
Speaker 3: as a reparation. But it's like it's just, hey, we'll
46:24
Speaker 3: pay you for all that work that happened for two centuries. Basically,
46:31
Speaker 3: it's a long overdue bill and we're going to pay
46:33
Speaker 3: it now.
46:34
Speaker 2: So if you think that eight trillion is eye popping,
46:36
Speaker 2: get this. There's a twenty twenty two study by some
46:41
Speaker 2: academics I think out of Austria and Spain, and they
46:45
Speaker 2: found that in the year twenty fifteen alone, the global
46:48
Speaker 2: North appropriated from the global South. You ready, twelve billion
46:52
Speaker 2: tons of raw materials, eight hundred and twenty two million
46:56
Speaker 2: hectares of land I think two hundred or twenty one
47:00
Speaker 2: exit jewels of electricity. Surely that's an enormous amount, right
47:05
Speaker 2: in three hundred and ninety two billion hours of labor.
47:09
Speaker 2: This is twenty fifteen only that was worth to the
47:12
Speaker 2: global North ten point eight trillion dollars between nineteen nineteen
47:17
Speaker 2: twenty fifteen, that total two hundred and forty two trillion
47:21
Speaker 2: dollars of wealth that was essentially extracted from the South
47:25
Speaker 2: by the North. And you say, well, hey, wait a minute,
47:27
Speaker 2: we're not using slave labor anymore. We're not just going
47:30
Speaker 2: in there at gunpoint and extracting those gems and those
47:34
Speaker 2: oil anymore. And no, it's true, but it's what I
47:37
Speaker 2: was talking about earlier. There's now trade inequality where we
47:41
Speaker 2: pay very cheap prices for the raw materials and then
47:44
Speaker 2: sell it much much higher prices back to the people
47:47
Speaker 2: we got those raw materials from. We don't give them
47:49
Speaker 2: a fair price for what this stuff we're taking from
47:52
Speaker 2: them is actually worth. And that's the problem, that's the
47:55
Speaker 2: current problem right now. And that's why a lot of
47:57
Speaker 2: people say, Okay, this stuff is so imbalanced. This debt
48:00
Speaker 2: to have to pay for being impoverished by the North
48:03
Speaker 2: doesn't make any sense, and we should cancel it. And
48:06
Speaker 2: I mean, I think it's pretty clear where I land
48:08
Speaker 2: on that, but there's plenty of other people who are like, look, man,
48:10
Speaker 2: I don't even feel good about paying on social spending
48:14
Speaker 2: in my own country right let alone another country, and
48:17
Speaker 2: those people are going to be very difficult to get
48:19
Speaker 2: on board, but it can happen. Bono did it before,
48:22
Speaker 2: he can do it again.
48:24
Speaker 3: Yeah, And the only thing I'll say is, like, if
48:28
Speaker 3: you end up coming down on the other side of this,
48:32
Speaker 3: that's fine, if you've done the research and you understand
48:36
Speaker 3: the complications of world economies.
48:41
Speaker 1: Like what you shouldn't do.
48:43
Speaker 3: Though, is just think, oh, well, it's as easy as
48:46
Speaker 3: like everyone's on America's teat.
48:50
Speaker 2: Right.
48:50
Speaker 3: You know, it's more complicated than that. If you don't
48:53
Speaker 3: agree in the end, fine, but at least like do
48:56
Speaker 3: the heavy lifting of learning about it and then make
48:59
Speaker 3: up your mind and don't just take sort of the
49:01
Speaker 3: lazy way out. So you got anything else, I got
49:04
Speaker 3: nothing else, just a quick I made a Karen joke
49:08
Speaker 3: and a Chad joke. I love Karen's and Chads, and
49:11
Speaker 3: I think that is all so dumb, but real Karens
49:13
Speaker 3: and Chads have had a hard time with that stuff.
49:17
Speaker 3: And I didn't want to add to that. And I
49:19
Speaker 3: wasn't saying someone as being a Karen. I was just
49:21
Speaker 3: sort of a tangential joke. But I hope that didn't
49:24
Speaker 3: cause any harm or stress very nice.
49:26
Speaker 2: Chuck. I think that that buttons this episode up quite nicely.
49:30
Speaker 1: Stand by the joke. That was pretty good.
49:32
Speaker 2: Since Chuck stands by his joke, that means, of course,
49:35
Speaker 2: the listener mail has been triggered.
49:40
Speaker 3: Great great email about from Gwenn Creamines. I wish it
49:46
Speaker 3: was I would explain a lot about creamins and amusement parks.
49:49
Speaker 3: But just quickly, a couple of corrections we have heard,
49:53
Speaker 3: not corrections, but we have heard a loud and clear
49:56
Speaker 3: from the wolf packers that wolf pack is a Iver's
50:00
Speaker 3: ed term. It seemed like in a lot of different
50:03
Speaker 3: places in the United States, So.
50:05
Speaker 2: I can't believe it. We've not heard from more people
50:08
Speaker 2: about a single thing in recent memory.
50:10
Speaker 1: Yeah, a lot of wolf packers.
50:12
Speaker 3: And also we got the I said something about the
50:15
Speaker 3: inventor of the segue writing off a cliff That was
50:18
Speaker 3: not the inventor. That was the at the time owner
50:21
Speaker 3: of the Segway company, man named Jimmy Hesseltin apparently, who.
50:25
Speaker 1: Was a really really good guy.
50:27
Speaker 2: Yeah.
50:28
Speaker 3: So a bunch of people recommended this podcast episode February sixteen,
50:33
Speaker 3: twenty twenty three, episode called The Hero Who Rode his
50:37
Speaker 3: segue off a cliff, from the podcast Cautionary Tales with
50:42
Speaker 3: Tim Harford.
50:43
Speaker 1: Haven't listened yet, but it sounds great.
50:45
Speaker 2: Very nice. Yeah, I heard from our friend Van Nostrin
50:47
Speaker 2: about that, like almost immediately after the episode came out,
50:50
Speaker 2: that it wasn't him. We got it wrong.
50:52
Speaker 3: Oh and also quickly, since we're talking about corrections, there's
50:55
Speaker 3: this great video on YouTube that explains the whole Fabio
50:58
Speaker 3: goose situation, and it was way more involved than I thought.
51:02
Speaker 3: Fabio claimed at the time it was not a goose
51:05
Speaker 3: and it was a piece of camera equipment because he
51:07
Speaker 3: had a camera on the front of that ride on
51:09
Speaker 3: opening day to film it, and that he tried to
51:12
Speaker 3: sue production company. Production company said it was not camera equipment,
51:15
Speaker 3: it was a duck or a goose or whatever.
51:18
Speaker 1: So I don't know at the end of the day,
51:19
Speaker 1: if that ever really bore out.
51:22
Speaker 2: Does it really matter what's true? If the internet thinks
51:24
Speaker 2: it's a duck.
51:26
Speaker 3: Nobody wrote in about that, by the way, I found
51:28
Speaker 3: that just through investigation. Nice all right, finally, listener mail,
51:31
Speaker 3: Hey guys, my dad was a humorous guy, always telling
51:34
Speaker 3: jokes and pulling pranks. My mom and dad divorced when
51:36
Speaker 3: I was a teen, but they remained friends best friends.
51:39
Speaker 3: In fact, they just both agreed to go their separate
51:41
Speaker 3: ways romantically. Dad never remarried. For as long as I
51:45
Speaker 3: can remember, even when they were still married, his joke
51:48
Speaker 3: was that he wanted to be cremated and his ashes
51:51
Speaker 3: mixed in account of paint, and my mother's bedroom ceiling
51:54
Speaker 3: be repainted with that paint. This is a joke that
51:57
Speaker 3: lasted decades. He repeated it every time he had a
52:00
Speaker 3: chance to, with my mom rolling her eyes. My dad
52:03
Speaker 3: passed away in twenty ten. We planned a military honor service,
52:06
Speaker 3: had him cremated, and had a memorial service at the
52:09
Speaker 3: local veterans park. I purchased five Pewter tens, divided the
52:12
Speaker 3: cremaines for each of his children, and we had the
52:15
Speaker 3: service and presented the urns to my siblings. My mom
52:18
Speaker 3: approached afterward and asked if it would be possible for
52:20
Speaker 3: her to get some cremaines to put in an urn.
52:23
Speaker 3: At this point I reached in my pocket and pulled
52:26
Speaker 3: out a sample paint jar from home depot and handed
52:29
Speaker 3: it to her. Told her Dad wanted her to have this.
52:32
Speaker 3: Of course, I did give her a real urn with
52:34
Speaker 3: real cremaines. The paint was unaltered, but until the day
52:38
Speaker 3: of her passing in twenty seventeen, my dad's earned proudly
52:41
Speaker 3: rested atop this paint. Can on My mother's mantle is
52:44
Speaker 3: a tribute to the longest running joke in the family,
52:47
Speaker 3: fully executed.
52:48
Speaker 1: Sweet that's great. That's from Zach Mitchell in Saint Louis.
52:53
Speaker 2: Hats off to you, Zach. That was That was a
52:55
Speaker 2: good one, So thank you for writing in to tell
52:57
Speaker 2: us about it. And I'm putting my I HAVE back
53:00
Speaker 2: on so I can take it off to you one
53:02
Speaker 2: more time.
53:02
Speaker 3: Absolutely sorry to hear about your parents, but that was
53:05
Speaker 3: a great way to honor your dad and for sure
53:08
Speaker 3: kind of have fun with your mom.
53:10
Speaker 2: Well, if you want to be like Zach, can take
53:11
Speaker 2: us on a roller coaster ride of a motion where
53:14
Speaker 2: there may or may not be a duck that flies
53:16
Speaker 2: into our face. You can do so via email A's
53:19
Speaker 2: Stuff podcast at iHeartRadio dot com.
53:25
Speaker 1: Stuff you Should Know is a production of iHeartRadio. For
53:28
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53:32
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