Hey U.S., welcome to the Third
It's been a quick slide from economic superpower to economic basket case.
By Rosa Brooks
19/09/08 "LA Times" - -- Dear United
States, Welcome to the Third World!
It's not every day that a superpower makes a bid to transform itself into a
Third World nation, and we here at the World Bank and the International
Monetary Fund want to be among the first to welcome you to the community of
states in desperate need of international economic assistance. As you spiral
into a catastrophic financial meltdown, we are delighted to respond to your
Treasury Department's request that we undertake a joint stability assessment of
your financial sector. In these turbulent times, we can provide services
ranging from subsidized loans to expert advisors willing to perform an
emergency overhaul of your entire government.
As you know, some outside intervention in your economy is overdue. Last week --
even before Wall Street's latest collapse -- 13 former finance ministers
convened at the University
of Virginia and agreed
that you must fix your "broken financial system." Australia's Peter Costello noted that lately
you've been "exporting instability" in world markets, and Yashwant
Sinha, former finance minister of India, concluded, "The time
has come. The U.S.
should accept some monitoring by the IMF."
We hope you won't feel embarrassed as we assess the stability of your economy
and suggest needed changes. Remember, many other countries have been in your
shoes. We've bailed out the economies of Argentina,
Brazil, Indonesia and South Korea. But whether our work
is in Sudan, Bangladesh or now the United States, our experts are
committed to intervening in national economies with care and sensitivity.
We thus want to acknowledge the progress you have made in your evolution from
economic superpower to economic basket case. Normally, such a process might
take 100 years or more. With your oscillation between free-market extremism and
nationalization of private companies, however, you have successfully achieved,
in a few short years, many of the key hallmarks of Third
Your policies of irresponsible government deregulation in critical sectors
allowed you to rapidly develop an energy crisis, a housing crisis, a credit
crisis and a financial market crisis, all at once, and accompanied (and partly
caused) by impressive levels of corruption and speculation. Meanwhile, those of
your political leaders charged with oversight were either napping or in bed
with corporate lobbyists.
Take John McCain, your Republican presidential nominee, whose senior staff
includes half a dozen prominent former lobbyists. As he recently put it,
"I was chairman of the [Senate] Commerce Committee that oversights every
part of the economy." No question about it: Your leaders' failure to
notice the damage done by irresponsible deregulation was indeed an oversight of
Now you are facing the consequences. Income inequality has increased, as the
rich have gotten windfalls while the middle class has seen incomes stagnate.
Fewer and fewer of your citizens have access to affordable housing, healthcare
or security in retirement. Even life expectancy has dropped. And when your
economic woes went from chronic to acute, you responded -- like so many Third World states have -- with an extensive program of
nationalizing private companies and assets. Your mortgage giants Fannie Mae and
Freddie Mac are now state owned and controlled, and this week your reinsurance
giant AIG was effectively nationalized, with the Federal Reserve Board seizing
an 80% equity stake in the flailing company.
Some might deride this as socialism. But desperate times call for desperate
Admittedly, your transition to Third World
status is far from over, and it won't be painless. At first, for instance, you
may find it hard to get used to the shantytowns that will replace the exurban
sprawl of McMansions that helped fuel the real estate speculation bubble. But
in time, such shantytowns will simply become part of the landscape. Similarly,
as unemployment rates continue to rise, you will initially struggle to find a
use for the expanding pool of angry, jobless young men. But you will gradually
realize that you can recruit them to fight in a ceaseless round of armed
conflicts, a solution that has been utilized by many other Third
World states before you. Indeed, with your wars in Iraq and Afghanistan, you are off to an
Perhaps this letter comes as a surprise to you, and you feel you're not fully
ready to join the Third World. Don't let this
feeling concern you. Though you may never have realized it, you've been
preparing for this moment for years.