lol hafizmo ur funny
nah chacha i dont lecture.. i do tutor though and really i'm not much of a genuis i just find it intersting coz of some of the grim world realities that become so clear all of a sudden when you learn economics..
and i guess most Muslims tend to learn commerce to change it right? :) becaue the principles of economics are pretty factual, but when its not controlled by a set of morals things go out of hand.. and you endup with 3rd world africa and south america and 3rd world east asian countries (except a few).
and hey... economically, doesnt it make sense, if you run a business, you want to be successful and make as money as possible.. and so if u assume the government of country x is running a business (which is in the form of the entire economy)... it would do all it can to make sure it gains the most profit.. so it's only natural that it will impose heavy protectionism measures on imports from cheaper producing 3rd world countries and subsidise its own producers...
and so u get all these potentially strong 3rd world economies (due to them having so much more comparative advantage over first world countries) being kicked back coz everyone else is imposing tariffs, quotas on their exports.. and so they're flushed into poverty.
And the story gets worse... because after they've been flushed into poverty, people get unhappy and they blame the government (and assuming the gov is not corrupt at first), the government runs desperately to the IMF for help.. and the IMF (which.. similar to the UN is mostly controlled by strong developed economies... and the country that has the biggest share in it happens to be *cough cough*).. so yeh.. the IMF forms advises to the helpless country based on the conclusion arrived to by the member countries that control the IMF which till recently was in the form of 'SAP' (Structural Adjustment Program)
And so the SAP encourages things like tightening the monetary policy (pump up interest rates), squeezing fiscal policy (tighten governmetn spending, cut health assistance and public good provision), privatise public assets... AHA!
And so the politicians of stuffed economies hear 'privatise public assets!!?' and they get really annoyed coz they know it means doomsday for them (due to the publics reaction if such thing was done)... and so you have the IMF fella winking to them indirectly hints that the politician will get money out of the privataisation.. and so his eyes widen and happily agrees.. ofcourse the people who buy these assets tend to be foreigners who have the money from overseas... the poor country desperately wants to attract foreign investment sot hey induce such business people with tax free periods and tax cuts and all sorts of gizmos.. natuarlly it means that the government budget experiences negative growth.. the IMF is pleased (with the full support of theoretical economics, because afterall it is majorly influenced by *cough cough* and the rest of the first world countries who are naturally out there for their own interests, which is economically understandable) and encourages them to continue that behaviour and they'll happily fill the economy with loans..
the populous are seething with rage because they have to pay for hospital services now.. nothing is free anymore, the government isnt quite after trouble, so in the short term borrowing money is a good idea regardless of the interest rate... so they borrow.. and borrow and borrow.. but ofcourse there's no such thing as 'free donation', you need to pay it back with more on top to encourage 'more donations' by the IMF.. and interestingly the case becomes such that the 3rd world country is donating to the IMF (the first world countries) instead of visa versa... and then a few weeks later you hear Kofi Anan (Head of the U.N.) innocently realising:
"“Funds should be moving from developed countries to developing countries, but these numbers tell us the opposite is happening…. Funds that should be promoting investment and growth in developing countries, or building schools and hospitals, or supporting other steps towards the Millennium Development Goals, are, instead, being transferred abroad.”
But economically speaking, it'd be foolish to wave all the debts on these poor countries because you'll be making economic losses.. but teh countries are now riddled with corruption (that was triggered by guess who.. read above if you forgot), so the best way to solve the embaresment is to accuse the politicians corruption as teh source of the problem and not the loans..
And it gets worse! foreigners are now using the developing economies as a spring board for their personal success, and they've made sure they boudn the government to contracts to make sure they wont be touched by any national work legislation (so their workers can work for less than minimum wage standards, no worry about polution permits... afterall the head of the World Bank was very much against hte idea of 3rd world countries having clean air (that was inefficiency according to him)
http://www.whirledbank.org/ourwords/summers.html . The poor old farmers who use to account for the majority of 3rd world countries exports are now worth cactus, because the government was forced to devalue the currecny adn so they're export is dirt cheap... farmers want to make as much as money as they can (and they need to! they're poor for gods sake) so they flood the market with goods.. the poor fellas dont realise that flooding the market with their crops means that prices will drop (coz there's more than what ppl want, so u only encourage them to buy by drecreasing the price) and the farmers go broke.
But it gets better in a way! Now the first world countries have a good suggestions to the 3rd world people "You guys suck at producing technological goods and services, and that's the only way you'll get any decent economic output... soooo why not let us come in and open up technology firms, we're the ones with teh epxerience.. buttt we need your help too.. we want to have full transaction flexibility, u gotta promise ull set us free as far as taxation and all that crap is concerned, because free markets work most efficiently without protectionism and taxation"... the governments don't have much of an option, its either that or walls go up betweent hem and first world coutnreis (in terms fo international trade).. so you get these (smart) entrepeanuers running massive enterprises and stuff... they epxort their goods to first world countries, the money gets to go back to the 3rd world country (how coool), but the government cant tax the business, it's got no repatriation limits on the owner(s)... and so the owner decides he wants the money transferred back to his homeland and so the money goes on a journey in the opposite direction...
The government is miserable, but they cant say anhything coz they're corrupt and they'll be exposed if they dare reveal anything about how bad the policies in place are.. so they swallow the bullet, the people are desperate, no decent jobs no nothing, so they resort to crime and drugs. the U.N. is very concerned about all this and are upset that the governments arent doing enough to stop violence theft and robbery, it's all the governments fault.. its nothing to do with the economics of teh situation. So it's catch 22.
And the poor countries live miserably ever after...
Disclaimer: This is no criticism to the IMF, they mean well with whatever they're doing... they're economic genuises implementing teh laws of economics with full loyalty and sincerity... even based on welfare economics principles they'er very arguably correct... because they have (economically smart) definitions of Social Marginal Cost and Social Marginal Benefits.. which is economically understandable.. it was never meant to be one of those lame moral institutions coz then they'll become economic suckers and no one will sponsor them.. so respect to the IMF.