Ralphie
The Fly
- Joined
- Jan 13, 2006
- Messages
- 149
Ok, this post is about debt relief. I'm just going to post my point of view vs. some competing points of view I've seen brought up. Again, without a crystal ball I don't think there's any way to know which answer will turn out to be correct, so I'm trying to be careful in saying that these are just my opinions, which may or may not be right.
Argument - Africa will lose their credibility and thus opportunity for financial stability if their debts are simply cancelled. While it may be painful for them in the short term, it will be better for their economy in the long run if they tighten belts and pay them off. Also, if debts are simply cancelled they may well just end up with new debts and perhaps even come to expect that these new debts will also be written off. Another argument - they accrued these debts, so they should have to pay them off. That's just justice.
My POV - In less dire circumstances, I might agree. After all, the US decided to repay its debts to Britain after the Revolutionary War when they were a young poor country, in order to establish credibility. In light of the more extreme situation in many African countries, though, I think their situation is a bit different. They have no belt to tighten, no fat to cut. In some cases countries are struggling simply to pay the interest on these debts. This creates a poverty trap where resources cannot be spent on development, they must go towards paying off old debt. As a result, new income is not being generated that could potentially help alleviate this debt. (And Purpleoscar - I'd just like to note that I did not mean the West has caused Africa's infrastructure problems, only that debt repayment is hurting their ability to address these problems). In terms of the fairness of them not paying back their debts, well, my thought is that sometimes we choose mercy over justice. I can't say it's what will be the most profitable financially for the US, but not every decision should be based on that.
I'd also like to add that if we simply write of debt willy-nilly and then stand back and wait for the improvements to roll in, well, we'll be waiting a long time. I definitely think countries should be held to some standards in terms of stable government and attempts at rebuilding their economy before we grant debt relief. Also, there need to be simultaneous interventions here. Debt relief is great but other factors such as infrastructure, trade reform, public health, government, etc., will all have to be addressed as well in order for this to go anywhere. I will admit this situation is tricky and delicate at best, but I believe there is a lot of hope and potential there as well.
Argument - Africa will lose their credibility and thus opportunity for financial stability if their debts are simply cancelled. While it may be painful for them in the short term, it will be better for their economy in the long run if they tighten belts and pay them off. Also, if debts are simply cancelled they may well just end up with new debts and perhaps even come to expect that these new debts will also be written off. Another argument - they accrued these debts, so they should have to pay them off. That's just justice.
My POV - In less dire circumstances, I might agree. After all, the US decided to repay its debts to Britain after the Revolutionary War when they were a young poor country, in order to establish credibility. In light of the more extreme situation in many African countries, though, I think their situation is a bit different. They have no belt to tighten, no fat to cut. In some cases countries are struggling simply to pay the interest on these debts. This creates a poverty trap where resources cannot be spent on development, they must go towards paying off old debt. As a result, new income is not being generated that could potentially help alleviate this debt. (And Purpleoscar - I'd just like to note that I did not mean the West has caused Africa's infrastructure problems, only that debt repayment is hurting their ability to address these problems). In terms of the fairness of them not paying back their debts, well, my thought is that sometimes we choose mercy over justice. I can't say it's what will be the most profitable financially for the US, but not every decision should be based on that.
I'd also like to add that if we simply write of debt willy-nilly and then stand back and wait for the improvements to roll in, well, we'll be waiting a long time. I definitely think countries should be held to some standards in terms of stable government and attempts at rebuilding their economy before we grant debt relief. Also, there need to be simultaneous interventions here. Debt relief is great but other factors such as infrastructure, trade reform, public health, government, etc., will all have to be addressed as well in order for this to go anywhere. I will admit this situation is tricky and delicate at best, but I believe there is a lot of hope and potential there as well.