Confessions of an Economic Hit Man by John Perkins. Do not read this book if you want to remain comfortable in the American consumer culture. As a matter of fact, I recommend that you NOT read Happy Are You Poor and this book together, because THEN it is double whammy that knocks you down and leaves with you with little to excuse yourself. These books are Lenten books. Time for change. Time for conversion. Time for the brutal, ugly, honest truth that leaves you gasping for air and yet convicting you in the deepest recesses of your heart.
I find it so interesting that Ecuador plays such an important role in Perkins’ life. Ecuador was absolutely instrumental in ripping my soul to the forefront and forcing me to ask difficult questions and re-read the Gospel with new eyes.
I am now left wondering how to make the change. If one owns a home you have to buy things for your home. I am the middle of a slllooowww remodel. Is this wrong? It is such a slippery slope. And that is what makes Perkin’s book absolutely brutal to read because he does NOT allow us to blame “the other.” Nope. He makes sure we all know WE are the problem.
I read parts out loud to my husband and now we are praying for wisdom in what to do with the information we now have.
Here is one tiny snippet of information from his book that really shores up all of Perkin’s arguments and personal story. It should be the first page in the book, but he hides it towards the back.
The income ratio of the one-fifth of the world’s population in the wealthiest countries to the one-fifth in the poorest countries went from 30 to 1 in 1960 to 74 to 1 in 1995. And the World Bank, the U.S. Agency for International Development, the IMF, and the rest of the banks, corporations, and governments involved in international “aid” continue to tell us that they are doing their jobs, that progress has been made (242-43).
Confessions of an Economic Hit Man has been on my list for awhile, RCM – I may just pick it up this evening. Sounds like an unsettling (in a good way) Lenten read, as you say
The book sounds more like an indictment of international aid agencies than it does an indictment of the American consumer.
There is a section I have to quote for you, BA. It was as if he has read your sweatshop posts.
By the way, one might get the impression from reading Mr. Perkins’ quote above that international income inequality increased from 1960 to 1995. That’s not actually the case. International income inequality has actually been declining, due to high levels of growth in places like India, China, South Korea, Singapore, Hong Kong, and Taiwan, among others. The way Mr. Perkins phrases his statistic obscures this fact.
RCM,
When I evaluate an argument, one of the questions I ask is how much of it is based on reason, evidence, and logic, and how much it works simply through pejorative labeling. The passage of Mr. Perkins’ that you cite is almost entirely the latter.
The passage of Mr. Perkins’ that you cite is almost entirely the latter.
Which one are you referring to? The one on the post or on the above comment?
I don’t think quoting a blog suffices, BA. Moreover, even if that were the case, if you read (scholarly) books on modern slavery, there does not seem to be a direct link between declining income equality and growing number of slaves. There will always be a group of very poor people (mostly peasants) who will not be represented in those brackets and will be more vulnerable to become slaves.
By the way, thanks for the tip, RCM! I will definitely read it when I get a chance. I have to say that I often find myself buying clothes at Target or other cheap places because of the budget that we try to keep. I have tried to buy handmade clothes, but they are very expensive. I guess I can try thrift stores for cheaper alternatives, but it is hard to buy cheap and at the same time be conscious of issues abroad :-/ I only find this to be an issue with clothes; everything else we can get away buying certified fair trade.
The main difference between ‘the old fashioned slave trader’ and ‘the modern slave trader’ is that one is a slave trader and the other isn’t. You certainly are free to advocate denying jobs to people in third world countries for their own good, but don’t pretend this is rescuing them from slavery and you’re a latter-day abolitionist. You are removing freedom from them not enhancing it, even if you feel better qualified than they to evaluate their interests.
That doesn’t mean we shouldn’t try to regulate the worst abuses; but it does mean that we should proceed with caution so as not to make people worse off than they already are. Name-calling (slave-trader!) does little to clarify the issue.
BA: He addresses those same stats you quote because he participated in those stats. He notes that in America you can bomb a village and then have all the companies move into re-build and the stats will show an economic explosion. Actually, I would be really interested if you read the book and wrote a review and see what your thoughts are.
Katerina, the reality is most of us are stuck. We are buying local as much as positive, and budget wise where else can people shop? Really? The part where we do have power is by making a movement and forcing change in our laws.
I don’t think quoting a blog suffices, BA.
The blog is by an economic professor at Harvard and former head of the Council of Economic Advisors, and quotes from the paper of an economics professor at Columbia available at the NBER (if you don’t want to click through the link on Prof. Mankiw’s blog, you can find the paper here)
He addresses those same stats you quote because he participated in those stats. He notes that in America you can bomb a village and then have all the companies move into re-build and the stats will show an economic explosion.
This is what’s known as the broken windows fallacy. If it were right, one would expect that the U.S. economy would have grown faster in the period right after 9/11 than before. That’s not actually what happened. When you blow something up, rebuilding takes resources, and those resources cannot be put to the productive uses they otherwise would have.
Look, in 1960 the per capita GDP of South Korea was the same as in Ghana. Per capita GDP in South Korea is now 17 times that of Ghana’s, and it is in fact now one of the countries in the top fifth in Mr. Perkins’ factoid about income ratios. Do you really think that South Korea managed to do this simply by blowing up buildings over and over again?
Actually, I would be really interested if you read the book and wrote a review and see what your thoughts are.
I’d be happy to. As it happens, I’m also reading a book right now on the history of foreign aid and economic development (by William Easterly). Like Perkins, Easterly spent many years working in this area (he was at the World Bank), and like Perkins he is very critical about the aid establishment. I suspect, though, that his analysis differs from Perkins’ at several key points. I would be happy to mail you a copy of the book if you’d like to read it.
RCM – I’ve become more and more uncomfortable with the way the powerful game the whole world economic system to their benefit, with the (at least tacit) complicity of nearly all of us.
I confess that part of me does not want to read the book, for fear of being confronted with a choice of either doing nothing and increasing my complicity (or at least being more knowing in my complicity) or, doing something, with all the perils that would entail.
I had a friend from New Zealand a few years ago, who I asked, “What was the first thing you noticed about America whgen you first got here?”
She answered, “You are swimming in propaganda, and you don’t even see it.”
The thing is, I believe people like me (single, and thus no family to support) are under greater obligation to oppose the “machinery of night” (to borrow a phrase from Ginsberg) than are people who have family obligations.
We need to pray that Americans’ eyes are opened and that we repent of and renounce the ways we support an exploitative and evil system, whose primary purpose appears to be enriching the already powerful.
There is a part of me that hopes the entire system comes apart. I imagine lots of Roman citizens of the late empire felt the same way.
You are removing freedom from them not enhancing it, even if you feel better qualified than they to evaluate their interests.
John Henry, you’ve obviously never lived in a Third World country for an extended period of time, as I did, for almost a decade, in India and Sri Lanka, if you believe that the average person or voter in such a society shares in the “evaluation of their interests.”
digby,
You’re right. I have not lived in a third world country for a significant period of time. From what I’ve read, working conditions are often appalling. The choice between starvation/prostitution/begging and factory work for very low wages and long hours is not much of a choice. At the same time, I think it’s important to accurately characterize what’s going on. It’s not ‘slavery’, because, as I said, if you remove the option of the factory work, you have decreased rather than increased their freedom.
It’s important when we talk about addressing such situations that we not make things worse, and I think the slavery analogy can tilt the discussion in that direction. Slavery should be abolished; factories in third world countries? Not necessarily. First, do no harm.
He makes sure we all know WE are the problem.”
Does he mean by “we” some abstract thing like “the system” or does he mean the choices you and I make every day?
“Does he mean by “we” some abstract thing like “the system” or does he mean the choices you and I make every day?”
Zach, good question. I would say both. He definitely argues that there is a system in place, but he also argues that the system is not accidental. Our choices–from where we work to where we shop, to whom we elect (although he doesn’t argue for Dems/Repubs), impacts the rest of the world. He refuses to believe there is a conspiracy.
It is clear to me that Google research is not going to be a good refutation of Perkins. This will require a bit more research in the libraries and through actual experience.
As far as reason, evidence, and logic, I detect dogmatism trumping all three in the criticism of this book here (which I suspect has not be read by its critics).
As far as reason, evidence, and logic, I detect dogmatism trumping all three in the criticism of this book here (which I suspect has not be read by its critics).
I have to question your recent tack Poli. Repeatedly, you’ve refused to discuss the issue in question (or look at the evidence cited), then dismissed others as dogmatic. If you do not want comment threads, that’s fine. But if you do, there’s no sense interrupting the threads with unsupported accusations of illogic and dogmatism.
If you do not have time to participate in conversations, I understand. Everyone is busy, and it’s easy to be impatient when people disagree with you. But it’s bad form to call people illogical, evidence averse, illogical, and dogmatic when you won’t participate in the conversation. Just my two cents. And I’ll admit that my first comment, written in haste, was more strident in tone than I intended.
Let’s not kid ourselves: The free enterprise system, or capitalism, is profoundly non-Christian, even anti-Christian. It is not based on loving one’s neighbor as oneself; it is based on “every man for himself,” and its most apt motto is, “I am not by brother’s keeper.”
But because it is based on the way people actually are, i.e., sinful (selfish and lazy), it is eminently practical. It prods people to get busy; it “produces wealth”; it helps to keep them from killing each other for various tribal or religious or other reasons because they are focused on making money.
We have seen the problems associated with trying to impose idealistic systems meant to make people love their neighbors as themselves and work unselfishly for the good of all. We have seen Stalinism, Maoism, etc. These systems have proven themselves to be highly impractical and also subversive of the values they are supposed to promote.
Our best bet seems to be a system of free enterprise along with a social consensus that there are certain humanitarian and common-good values that always trump strictly free-enterprise values–which looks to me like what has been called “social democracy.”
As it happens I checked Confessions of an Economic Hitman out from the library this afternoon and am about twenty pages into it. Per RCM’s request, I will have more thoughts once I finish. If Poli wants to read Easterly’s book, I’d be happy to send him a copy (just as I’m happy to send RCM a copy if she is interested).
As for Perkins’ statistic, the problem (actually one of several) is that he isn’t comparing the same countries with each other. Many of the poorest countries in 1960 weren’t among the poorest in 1996 and visa versa. Botswana, for example, was the fourth poorest country in the world in 1950. By 2001 its per capita income can growth by a factor of thirteen. China and India were both among the poorest countries in 1950, but are not in that group today. If you look at how the countries that were poorest in the past are doing today, the picture looks somewhat different. Average growth in the poorest fifth of countries in 1950 averaged 1.6% a year for 1950-2001, versus 1.7% for everyone else (all this is in the Easterly book, not based on “Google research”).
Note: none of this is to say that Perkins is wrong about the IMF, World Bank, etc. Many of the poorest countries that did the best over the last sixty years did so with only minimal foreign aid. But it does mean that this particular statistic is not quite as telling as one might be led to believe.
RCM,
It is definitely reasonable to admit that the choices we make impact the rest of the world. This is more motivation to make good choices :)
I’m fond of the saying, “if you want to change the world, please start with yourself.”
And for further disclosure, I’m skeptical that a system that enables persons to freely choose their own actions, even their own economic actions, is necessarily anti-Christian, as Christianity is about making the free choice to love. This is not to say that persons should be free to do anything , or that the economy should operate without rules (that’s obviously ludicrous).
The free market economy is not based on the Hobbesian “war of all against all”. This is an unnecessary and artificial opposition. The free economy means just that: an ecomomy where persons are free (here meaning strictly not controlled by some social or political institution)
We have seen the problems associated with trying to impose idealistic systems meant to make people love their neighbors as themselves and work unselfishly for the good of all. We have seen Stalinism, Maoism, etc. These systems have proven themselves to be highly impractical and also subversive of the values they are supposed to promote.
There are alternatives other than Stalinism and Maoism – Government involvement in the economic system falls somewhere on a continuum, it seems to me. No government involvement can lead to things like child labor, and more generally to societies where the wealthy few control all the wealth, and the poor multitudes live out their lives in grinding poverty and deprivation. Such places are usually a dime’s width from armed revolution.
I imagine Katerina Ivanovna, with her Latin American experiences, can probably shed some light on what societies like that are like to live in.
Zach, he believes that the system is NOT “free market” as it works today. He believes it hearkens back to the mercantile system. Read it and see if you agree.
BA, I think you should post a review afterward.
Hmm a mercantilist economy … I’m interested to hear how the characterization could apply to the US or other Western nations.
Zach writes:
“The free market economy is not based on the Hobbesian ‘war of all against all’. This is an unnecessary and artificial opposition. The free economy means just that: an ecomomy where persons are free (here meaning strictly not controlled by some social or political institution).”
Consider the relationship between you and your employer in the “free market economy.” Your employer will pay you just as little as he possibly can to retain your services, while you will require from him just as much as you possibly can for your services. If either of you two parties in the transaction are considering how much you actually need to feed and house yourself and your family, or how much the employer can reasonably be asked to pay you without unduly sacrificing his own interest, or any such thing, then you are considering values extraneous the free market system per se.
The system is all about getting as much as you can for yourself (for your services or a product) and giving as little as you can to your fellow man. This is the essence of pricing (or the law of supply and demand), which is right at the heart of the whole shebang. People get agitated about “price gouging” for very high-demand items in times of emergency, as something disreputable and immoral, when in fact all pricing is “price gouging.” In every price there is “gouging” just as deep as the seller can get away with–”whatever the market will bear.”
It sounds lovely to say that the whole system is just about making free choices; then there is the hard reality behind the way people actually relate each other in this system. It is the reality of a fallen world.
I’d like to explore this idea:
Saying that selfishness is the essence of pricing does not make it so. An economic transaction does not have to be selfish. And actually, the early market theorists understood prices and the free exchange to be an example of a transaction where both parties benefit. Their benefit does not have to be considered “selfish”. Maybe they are actually thinking of their family when they pay the grocery store clerk money for the bread.
Prices convey information about supply and demand. Some things that people do are worth more than other things people do. This is juts reality. You can’t pay the grocery store clerk and the M.D. the same amount of money; there services are not comparable. Prices exist (and have always existed)
When prices aren’t set by the market freely, the prices contain in a sense bad information and everyone participating in the transaction is actually hurt. There may in fact be more or less of a good and therefore the good may not really be worth as much as the person selling it says it is. But the buyer would have no idea because the information contained in the price is bad.
And an employer doesn’t have to pay you as little as he possibly can. There is no mandate, and it’s not even necessarily true that his business may suffer for it.
How else do you establish economic relations between mankind? The state-planned economy has failed miserably everywhere it has been tried. Europe etc. are more or less operate as free markets heavily burdened by taxation.
I suppose that’s an option for us but Europe is not really the best place to live.
The Shakertown pledge comes to mind. http://en.wikipedia.org/wiki/The_Shakertown_Pledge
On a lunch-time visit to my local library, I found it to have both the Hit Man book, and also Easterly’s book (which I’ve been somewhat interested in ever since hearing his very interesting interview on EconTalk.) but Easterly was checked out so I ended up with only this one.
So I should have the chance to give it a quick read while awaiting with interest hearing BA’s thoughts on it.
I’ve located a copy and started it also.
Btw, I second RCM’s recommendation for Happy Are You Poor; one need not agree with every practical suggestion (e.g. where to set the thermostat) in the book to find a great deal that is valuable for reflection.
Zach,
You have made some points there about the function of pricing and the practicality of the free market system that I tried to avert to myself previously–no arguments there.
But you don’t seem to agree that the free market system basically runs on selfishness. If we talked about “people pursuing their own economic interests,” would that sound better?
Concerning those mutually-beneficial economic transactions, I don’t know about you, but I for one usually try to do my best to make them as me-beneficial as possible!–which is perfectly normal behavior and a perfect example of not doing unto my neighbor as I would have him do unto me.