51. Against Foreign Loans

Plum Local IV ::: Part IV
National Finance: Debt and Taxes

== chapters 51 - 78 ==

=== look to right column for direct links to chapters ===

51. Against Foreign Loans
Bob Komives
::

Poor countries continue to go into debt to other countries and international banks. They must repay their debt using one of the world's hard currencies --their own, considered too soft. Too often, some lucky citizens in the debtor nations manage to hoard hard currency that comes in through loans, while their governments hoard only the debt. Such problems hobble government and exacerbate the dichotomy between rich and poor in debtor nations, but damage is not restricted to debtors. The world suffers waste. Immense resources, including human effort and intellectual talent, pour into the system that supports international debt. Assume for a moment I can convince you that the system is invalid. Imagine the benefits we would reap if we divert this waste of resources into productive endeavor --endeavor that improves investment within nations and the trading of resources among nations.

As 1987's September turned to October. The members of the International Monetary Fund and World Bank met in Washington D.C. confronted by continuing crises in world finances. They started their meetings with little hope that they would devise a solution to the international debt problem. Their pessimism proved justified. By Christmas, banks in U.S. America had begun to write off large parts of their international loan portfolios as bad debt. If international debt gets less popular attention today than in 1987, perhaps the novelty is gone. International debt is an old problem that still stymies financial leaders.

Certainly some international debt comes from ill-conceived loans on bad projects, but other debt piles up from projects that were good-but-slow-to-prove-it. Money leant to enhance ecological, educational and social systems, for example, may return manifold profit in increased wealth, but the profit may come too slowly to cover the interest on the loan. Other projects may return profits quickly to society in general but too slowly to the marketplace. The market, not reflecting true benefit and detriment, declares the project a failure. Internal, national investment can accept some inflation as tradeoff for long-term and non-market benefits from good-but-slow projects. Instead of paying off the debt directly, the nation lets its money lose a little value --achieving the same end. An international loan, however, requires prompt payment to avoid geometrically escalating debt. Any country that embarks on good-but-slow projects by borrowing foreign money invites default --unnecessary default.

Much in life is unnecessary but quite acceptable, even enjoyable. International debt is unnecessary, but also harmful. I reach the same conclusion if the lender is a private bank or a multinational institution such as the World Bank or the Interamerican Development Bank. I reach the same conclusion even for projects that promise to be good-and-fast. I am against foreign loans.

:: Bob Komives, Fort Collins © 2006 :: Plum Local IV :: 51. Against Foreign Loans ::
With attribution these words may be freely shared, but permission
is required if quoted in an item for sale or rent

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52. The Unnecessary Burden of Foreign Debt

The Unnecessary Burden of Foreign Debt
Bob Komives
::

In Guatemala
they have a way to carry heavy loads
—primitive, simple, and efficient—
one or two loops of rope engage the load,
carry it to the forehead
where loop closes with strip of leather or cloth.

Body tilts,
bends forward to balance load:
perhaps a bulging sack
holding a quintal of maiz,
or small table
topped by seeming household of furniture,
or wooden frame
with pottery stacked five feet high by four feet wide.

From the bus windows
I watch men carry such loads
down,
up
steep mountain roads,
distant from past town and last house.

I see small loads
watching boys learn the art
under burdens cut to their size.
I enjoy their smiles spurts of speed.
Paces and decades ahead
I see burdens too-large,
postures too-bent,
leathery foreheads too-creased
under burdens saddled to a man.

In Guatemala,
they have a way to weed corn
—primitive, simple, and efficient—
with machete and stick.
The stick is narrowest where it fits the hand.
A subordinate branch makes a hook at the other end.
Though well-chosen and well-fashioned,
the stick may be left by the field to be recovered tomorrow
or replaced,
fashioned anew from branch of a living fence.
The stick gathers and supports grass and weeds
as the machete cuts them at the ground.
Machete strokes begin high from vertical.
Agile wrist and low body
take them quickly down to horizontal.
This smooth, rhythmic movement
fits and fills both the confines of tall corn
and the muscles of a short body.

I see an old man every day
on the road to El Rosario.
His machete and a boy are constant companions.
I know not where they live.
Seldom do I know in which of the fields they work.
I see them on the road between.

They come early
racing a day's work
against sun's rise to oppressive heat.
Yet, they come later than most.
They may start with others,
but in kilometers of walking
they fall behind.
The old man does not move fast.
The boy is in no hurry—
his walk seems youthful,
but two paces behind the old man.

I cannot know
if it is the years of work with the machete
or the carrying of heavy loads
that has bent that back and humped those shoulders.
But, as the man walks by me now,
his eyes focus on the ground
two paces in front of his feet.
Back is tilted;
head is bent
—as if to carry a load of corn.
I choose to believe he can no longer carry such loads.
The machete in one hand hangs as burden enough.

One, hot mid-day as suffered a long walk
I saw them at work in a field.
Old man and boy
propping unwanted growth with theirs sticks,
severing it from its roots with their machetes.
I wanted to believe that the boy does more than his share,

On their walk home
they look no different than when they came.
Neither requires conversation.

The first time I passed,
the sound of a gringo-ish “a dios!”
caused the old man to startle;
he turned his head to reply.
Now, salutations to me
are as those to other familiar voices
—uttered quietly in the rhythm of the resigned pace.
On occasion, I pass by, say nothing.
Neither old man nor boy give apparent notice.

Am I silent from sympathy or reverent from respect?
Have I passed a humble man who has worked too hard, too long?
Am I watching a great man who has long carried great loads?
I look for cues in the eyes of the boy
and choose to see reflections of a hero two paces ahead.

Every day on their walk to work in El Rosario.
—until yesterday.

Heavy Loads, 08

Good governments finance what they hope will be good projects and services --whatever the source of funds. Good projects and services are successful. They benefit society in excess of the resources that go into them. Even developing countries have experts with sophisticated training to evaluate the likelihood of success. Lenders who make loans to developing countries presumably have people with similar training to make the same evaluation. Experts do not know for certain whether a project will succeed or fail, but success is their goal.

International debt is a burden to the developing countries that carry it. I argue that it is unnecessary; the international lending structure need not exist. To illustrate and simplify my argument, I will name Guatemala as a representative developing country and the United States of America as a representative foreign lender.
Guatemala is a small country with a fairly large international debt. It is a wonderful and troubled country. In 1998 we hope that recent peace will hold. In March of 1986 I held high hopes for a new democratically elected government under president Venicio Cerezo which had launched an Economic and Social Reorganization Plan. Within 18 months, however, Cerezo's government acknowledged that the plan had failed. A key factor in the failure seems to have been under spending. Of the amount that it had budgeted for public investment, the Guatemalan government spent only about one third. The limited spending failed to stimulate the economy. Faced with ever decreasing living standards and continuing civil war, the government abandoned its first plan and began a new effort on August 1, 1987, The National Reorganization Plan. The new plan was less ambitious and at least as unsuccessful. The first Guatemalan plan had borrowed some ideas from the New Deal and U.S. America's recovery from the Great Depression. Public projects would help get things moving. However, national coffers went dry. International loans did not make up the difference.
When we hear of the suffering that afflicts many developing nations that have large foreign debt, we should pause to consider that in accumulating this debt their governments probably tried to follow norms of international finance.

Guatemala followed today's norms for responsible finance when it refused to undertake beneficial projects for which there was no money. The public projects that Guatemala proposed but did not undertake were designed by dedicated and well educated planners. It is reasonable to suppose that some of the projects could have stimulated the economy and reduced poverty. Cerezo's government refused to undertake projects for which it had no money. Under conventional wisdom, in failing to act the Guatemalan government acted responsibly. Did it act correctly? If they were good projects, no. Should international lenders have filled the gap and financed these good projects with loans? No. An international loan is never more economically feasible than is internal financing, and international debt is never less burdensome than internal debt.

:: Bob Komives, Fort Collins © 2006-2008 :: Plum Local IV :: 52. The Unnecessary Burden of Foreign Debt ::
With attribution these words may be freely shared, but permission
is required if quoted in an item for sale or rent

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53. Buy Good Projects.

Buy Good Projects.
Bob Komives
::

A good project is a good investment;
a bad project is a bad investment--
whether building life,
species,
family,
association,
or nation.

A good investment pays
yet bears no debt.
What would the biosphere owe
(and to whom?)
for the inter-galactic loans
that financed its development?
Did the Gulf of Mexico
ever repay its debt to the Mississippi River?
Who could tell Mahatma Gandhi
that he had repaid all investments in his life?

Good Projects Are Good Investments

A good project, a good program, raises the value of the nation. It can lead to deflation even if paid for with newly printed money. A bad project or program causes inflation even when paid for with money in hand. If the government of the United States of America happens to have a million excess dollars, to waste them on a failure would damage the economy and the value of the dollar. Even if the Guatemalan government happens to have four million excess quetzales, wasting them on a failure would damage both the value of the quetzal and the Guatemalan economy. A money-in-hand project puts no new money into circulation, it does use and alter resources and produce inflation as the old amount of money chases after reduced resources.

If failure is to be paid for with an international loan it will cause even more inflation. In order to pay off the loan the borrowing nation has to export resources equal in value to those invested in the project plus an additional amount to cover interest. The net reduction or alteration of resources is greater than if the same failure were paid for with money-in-hand; the value of national currency falls more.

Now, consider a good project. The Guatemalan government has plans for a four million quetzal project. All analyses indicate the social, moral, and environmental results will range from acceptable to beneficial. Analyses also show that the project should increase the wealth of the nation well beyond the four million quetzal investment. Unfortunately, the treasury does not have four million quetzales on hand.

This project should proceed. It will be deflationary even if Guatemala prints new money to pay for it. If analyses are close to correct, this good project raises the value of the nation beyond the current market value of the new money to be spent on it. That is deflation. If Guatemala were to borrow foreign money to pay for the project, the result might also be deflationary. However, the interest payments added to the project cost will lower net national worth below that achieved through the issuance of new money for the same project.

:: Bob Komives, Fort Collins © 2006-2008 :: Plum Local IV :: 53. Buy Good Projects. ::
With attribution these words may be freely shared, but permission
is required if quoted in an item for sale or rent

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54. Money Works Better Than Debt.

Money Works Better Than Debt.
Bob Komives
::

Let's look at two graphs of possible outcomes from three hypothetical projects: A, B, and C. Project A is a resounding success. B is marginally successful. Project C is a failure. The graphs show the net national benefit or net national loss from each project. Where there is a net benefit, the wealth of the nation increases and the net-benefit line on the graph ends above the centerline. That is a successful project. Almost all projects will start out creating a net loss because resources are spent before benefits return. The project that never creates a net benefit is a failure.



Graph 1 assumes the three projects are paid for internally. Graph 2 assumes an international loan finances the same projects.



The two projects that bring net benefit without the loan (Graph 1) bring fewer benefits when financed by an international lender. Project B changes from a marginally successful project to a failure --producing a net loss. C is a failure in Graph 1 but worse in Graph 2. Why?

If U.S. America decides to lend U.S. dollars for a Guatemalan project, then Guatemala will have to pay back the principal plus interest (Graph 2). Guatemala will draw upon the project's benefits to pay back the principal --the one-time cost in resources of the project. Any benefits left over, less the amount needed to pay interest, are the project's net benefit or net loss. The interest is the price charged by the USA to Guatemala for the privilege of borrowing. The added charge reduces Guatemala's net benefit.

When, instead of seeking an international loan, Guatemala finances such projects internally (Graph 1), the entire excess of benefit over cost accrues to Guatemala. No extra national wealth is lost or exported.
Under internal financing, good projects are economically successful. Under external borrowing some very good projects are economically successful, but extra wealth must be exported to pay interest on the loan. They are less successful, less profitable, than projects financed internally. Projects that could be marginally beneficial when financed internally will likely become failures when financed with an international loan. For projects destined to fail, an international loan can turn mere failure into disaster.

:: Bob Komives, Fort Collins © 2006-2008 :: Plum Local IV :: 54. Money Works Better Than Debt.
::
With attribution these words may be freely shared, but permission
is required if quoted in an item for sale or rent

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55. Foreign Debt: Don't Let False Analogy Fool You.

Foreign Debt: Don't Let False Analogy Fool You.
Bob Komives
::

I did not enjoy the story,
One opines;
it is much too artificial.

So it is,
Two reminds;
but such is the real world.

I suppose it is,
One resigns;
I suppose it is.

A Dialogue

I think most of us consider borrowing money to be serious business; we do not do it if we have in hand the money or resources to undertake our project; we borrow when we need money for good projects. A developing country would seemingly pay for its projects itself if it has the money to do so, borrow if it does not. As any individual, does not a country borrow because it needs the money? If it cannot collect the money at home it needs foreign money, right? No, wrong.

Clearly, the Guatemalan government borrows from foreign lenders because it believes it needs the foreign money, just as I believe I need a bank's money when I ask for a loan. But herein lies the great mistake --the false analogy behind loans to national governments. It is falsely assumed that the principles of private borrowing can be applied to borrowing by governments of sovereign nations that caretake their own currencies. This error built the international debt crisis.

When I borrow from a bank --in an unsecured loan-- paper passes in two directions. I hand the bank a signed paper that is my loan agreement. In return, I get paper money. I try to prosper. By prospering I can pay off the loan, maintain a good credit rating, and borrow more if needed. By managing well my financial affairs, I also manage the value of the paper that I issued to the bank, my loan agreement.

I control the value to the bank of my loan by the skill with which I manage my financial affairs, however the bank has almost no control over the value of the money that it gives to me. While the bank tries to prosper and manage well its financial affairs, it does not manage the value of the paper dollars that it passes out in loans. The effect on the value of money that comes from the actions of one bank is insignificant. Money fluctuates in value due to forces that neither bank nor borrower can manage. Our roles are not symmetrical. While we borrowers manage the value of the paper we issue, moneylenders cannot.

An international, intergovernmental loan is different: both borrower and lender manage the value of the paper they issue. When Guatemala borrows one million dollars from the USA its representative signs a piece of paper called a loan agreement and, in return, receives other paper called dollars. Each paper dollar gives Guatemala a claim to some resources in U.S. America. Although dollars may be used for transactions outside of the USA, their fundamental value lies in a guarantee by the government of the United States of America that this money can buy a million dollars worth of goods and services in the USA. The amount that each dollar can buy is not guaranteed; the right to participate in the USA marketplace is. During the period in which Guatemala uses the borrowed dollars, the government of the United States of America protects the value of the dollars as best it can. It manages the total number of dollars in circulation as well as the general flow of the USA economy. It tries to maintain a healthy dollar.

The loan agreement signed by Guatemala gives the USA claim to some of the resources of Guatemala. The fundamental value of the loan agreement lies in a guarantee by the government of Guatemala that it will forgo use of somewhat more than one million dollars worth of its future resources to repay the loan plus interest. The government of Guatemala protects the value of the loan agreement as best it can. It controls the number of loans that the country has outstanding as well as the general flow of the Guatemalan economy. It tries to maintain a healthy loan agreement.

This international loan is symmetrical. Paper dollars buy a paper loan. A paper loan buys paper dollars. U.S. America hands Guatemala paper dollars signed by its treasurer and continues to manage the dollar's value. Guatemala hands U.S. America a paper loan agreement signed by a comparable government official and continues to manage the loan's value. In economic terms, the roles of the USA as lender and Guatemala as the borrower are essentially the same.

Timing is one incidental difference, but not as significant as it might seem. Presumably the outflow of dollars would be an immediate drain on the USA, whereas the drain on Guatemalan resources gets delayed until project benefits flow. The timing of benefits should accordingly be just the opposite --early in Guatemala, delayed in the USA. However, both economies are likely to make short and long-term adjustments that dampen the effects of timing. Dollars that leave as a foreign loan do not necessarily come home quickly to the USA to be cashed in. Some will circulate for years internationally before returning to extract goods and services from the national economy. The loan agreement itself is a long-term national asset that will tend to uphold the short-term value of the dollar. A rapid drain on the economy of the USA is unlikely. In Guatemala, a loan agreement may affect domestic resource allocation long before the payments are due. Guatemala should gain in the short-term as it takes in money from the lender. However, the short-term drain felt by Guatemalans may be as great or greater than that experienced by citizens of the USA. Anticipating the debt payments, their government will tend to favor investments in export production, thereby altering local consumption. The citizenry of Guatemala may experience this extraction of customary goods and services from their economy almost immediately.

Don't let a false analogy fool you. Borrowing by national governments is not like borrowing by you and me.

:: Bob Komives, Fort Collins © 2006-2008 :: Plum Local IV :: 55. Foreign Debt: Don't Let False Analogy Fool You. ::
With attribution these words may be freely shared, but permission
is required if quoted in an item for sale or rent

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56. Poor Countries Do Not Need Rich Money.

Poor Countries Do Not Need Rich Money.
Bob Komives
::

One said: The Guatemalan government does not seem to have extra quetzales.
Can it lend them to itself
or, for that matter, to anybody else?

said Two: Yes, the government in the United States of
America does not seem to have extra dollars.
(Its accounting sheets seem to show negatives
where extra dollars are supposed to be.)
Yet it lends new dollars to other nations
and invests them in its own.
It also uses them to wage war.

One said: I know such irresponsible practice is long since condemned.
Have not those United States long since prospered?

said Two: Yes. Meanwhile poor countries long since work
to avoid such irresponsible practice,
and those poor countries long since remain poor.

One said: So, if the United States of America
lends and profits,
invests and profits
with money that they are supposed not to have,
might Guatemala try to do the same?

said Two: Yes, and it should.

||

If you can accept that the system for lending to sovereign nations is invalid there is yet another practical question: do not poor countries need dollars or some other strong currency to participate in the international marketplace? Politics, tradition, and organizations such as the World Bank and the International Monetary Fund can prevent countries from using their currency easily in the world marketplace, but there is no economic justification. The beauty of marketplace is that it adjusts prices to allow trading in products of different value. Imagine a farmers' market in which tomatoes from many farmers --varying in quality and kind-- cannot be traded except by using as currency the prized tomatoes of a few powerful farmers. This is unnecessary and unacceptable.

Guatemala, Brazil, Mexico, the USA and any other country can finance good projects with their own currencies. Within the country, venders of goods and services must accept the national currency without question. Such is the history of money. For off-the-shelf international purchases, project managers can buy what they need using local money converted to the foreign seller's preferred money at the current exchange rate. For international orders and long-term contracts, project managers and sellers can agree to a price tied to some standard such as dollars, marks, francs, yen, or a composite index. They can still make payments in national currency in an amount adjusted according to that standard.

Wealthy as well as developing nations will experience setbacks that create prejudice against their currency in world markets. A crisis in Guatemala may cause most of the rest of the world to stop for awhile accepting the quetzal. Guatemala might flood the market with quetzales by making too many international purchases in too little time. The value of the quetzal could drop dramatically. However, trade will resume. The marketplace can establish an efficient exchange rate. If the USA or an international organization wishes to help, it could offer in-kind aid or political support. It should never lend money. A loan will reinforce prejudice against the borrower's currency. Why should we accept a troubled country's money when we know the country has just received more familiar currency from a rich country?

I saw them working in a field one day.
He was swinging his machete.
I only looked for a moment,
probably because I didn't really want to believe it's possible.
He swung his machete all that day and many days since--
his friend working beside him.
I would like to think
that the boy does a little more than his share,
but it's probably just the opposite.

They walk home looking no different than when they came.
The boy does not require conversation of his old companion.

The first time I passed,
the sound of a gringo-ish "a dios!"
caused him to turn his head to reply.
Now, salutations to me
are the same as to the other familiar voices on the road
--uttered quietly in the rhythm of the resigned pace.
On occasion, I have passed without saying anything
--an irrational form of sympathy.
But he passed giving no notice to me,
maybe a little relieved that his attention was not diverted
--his attention on the road just two paces away.
However, why should I walk by him in sympathy
when his companion walks with him in respect.
It takes a great man
to have worked that hard for that long.
Maybe, in reality,
he still can carry a good-sized load on his back.
And the boy too is looking just two paces ahead
--at that man he wants to emulate.

After all, you see him every day
on the road to work in El Rosario.
At least he was there yesterday.

Passing

:: Bob Komives, Fort Collins © 2006 :: Plum Local IV :: 56. Poor Countries Do Not Nee Rich Money ::
With attribution these words may be freely shared, but permission
is required if quoted in an item for sale or rent

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57. Weak Argument For Reverse Foreign Debt

Weak Argument For Reverse Foreign Debt
Bob Komives
::

Despite some superficial differences, loans between national governments are reversible. I have tried to argue myself out of this conclusion, but I cannot. I find it difficulty to distinguish borrower from the lender in international loans to national governments -- that is in economic terms. Though common wisdom and common prejudice see them as very different, borrower is lender; lender is borrower. If you have trouble seeing the similarity, try to imagine a loan in the reverse direction.

I have a weak argument for reverse loans to support a troubled country. In a reverse loan, the helping country accepts a loan from the troubled one in the troubled country's currency. The loans have no true economic justification. However, they might have financial justification and could make a great topic to help you survive a dull cocktail party.

A reverse loan could grease international financial machinery for a troubled nation. The reverse-loan agreement gives the troubled lender an immediate asset with which to guarantee international purchases. Also, troubled currency that flows out as loan must come home to be cashed in.

If international lending were reversed, richer borrowing nations would have to buy goods and services from the poorer lending nation using the lender's troubled currency. Since rich nations tend to influence trends and styles, their purchases from a poor nation might foster international interest in the poor nation's goods and services. At least, international markets would have to grow accustomed to dealing in the troubled country's currency.

How would a reverse loan be set up? Instead of U.S. America lending Guatemala one million dollars, Guatemala could lend U.S. America an equal value in quetzales. In return for the loan, the USA will sign an agreement with Guatemala in which it promises that after it spends the quetzales it will forego domestic use of enough USA resources to round up the quetzales it will need to pay back the loan plus interest.

Once it receives borrowed quetzales, the USA can spend them to buy the same coffee, sesame seed, beef, and ornamental plants that Guatemala would have had to export to pay off a loan had it borrowed from the USA. Alternately, the USA could exchange the quetzales for Japanese radios so that Japan could buy the sesame seed.

So, Guatemala can finance the same project as lender that it could as borrower. The quetzales that it lends out are not lost. They will return directly or indirectly to Guatemala as the USA spends them. The loan agreement is an asset. It can serve as collateral to finance purchases or to issue new quetzales pending repayment by the USA of those that were lent out.

My strong argument is that a loan from Guatemala to the USA is fundamentally the same as a loan from the USA to Guatemala. Therefore, each is useless in economic terms. If Guatemala could just as well lend quetzales as borrow dollars it might as well lend the quetzales to itself.

My weak argument is that if international markets are sticky due to bad habits and irrational prejudice a reverse loan in quetzales from Guatemala to the USA might inject the needed grease. With well greased wheels, a caravan of reverse loans will parade brilliantly compared to the overheated squeak-buckets going in the traditional direction.

:: Bob Komives, Fort Collins © 2006 :: Plum Local IV :: 57.Weak Argument For Reverse Foreign Debt ::
With attribution these words may be freely shared, but permission
is required if quoted in an item for sale or rent

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58. Former Debtor Nations

Former Debtor Nations
Bob Komives
::

When we abandon international loans we will see changes outside the walls of treasury departments of national governments. Projects that international loans would finance today may differ when financed locally. Some projects favored and proposed by international lenders will die because the target nation does not forsee enough benefit. Other projects will be designed differently. Local project managers are likely to use and develop local goods and services to replace more expensive foreign options mandated or favored by international lenders. Purchasing departments will make foreign suppliers compete in a free market --rather than in a restricted market that favors suppliers from the lending nations. Conscientious governments in developing nations will feel even greater responsibility for their nations' futures. They will not hesitate to undertake projects that are likely to produce and to distribute justly more wealth than they consume. They will see that newly printed and well invested money out performs newly signed foreign loans.

In setting fiscal policy, developing nations will be subject to foreign political and economic pressure, but perhaps the pressure will be little more than that exerted among developed nations. Officers of foreign lending institutions and the International Monetary Fund will lose their extraordinary influence over the internal policies of the former debtor nations.

"Former debtor nations," I have not suggested what can be done with the present international debt. It exists, built upon false principles and good intentions. I have no magic answer. Diplomacy, rather than economics, must eliminate existing debt. As to the future, in order to promote peaceful paths to mutual prosperity among nations we must eliminate both the practice and the machinery of foreign monetary debt. In its place we can hope for constructive cooperation among former debtor and lender nations who act with discipline and responsibility.

As child and parent the word, discipline, intrigued me. One moment it seems to mean a steady rigor by which an individual or group works through a challenge. The athlete who sticks to a rigorous training routine has discipline. So does the scholar who works methodically for years to uncover the mysteries of genetic inheritance, as does the former smoker working through a successful withdrawal. They have discipline. Calling it, self-discipline, is redundant. Directly related to this meaning is discipline as a profession. The discipline of the athlete is high jump, of the scholar, molecular biology. This discipline is also a verb. The microbiologist disciplines herself when she enters a rigorous experiment.

Another moment, discipline seems to mean punishment, structure, rigor imposed upon the unwilling. Parents who confine their children to their rooms on Saturday night are said to discipline their children. The department head who docks the pay of a scholar who did not follow rules for the use of the photocopy machine is said to discipline her staff. As a noun: "Children and scholars need discipline from their superiors or they will be irresponsible."

So, I chuckle when someone says, "There is a lack of discipline here," and everyone nods the head in agreement. They can agree about lack of discipline, yet they might have profound disagreement if pressed to elaborate their views.

Self financing issues no license for irresponsibility. Poor countries need discipline as much as rich countries. There is no special reason that discipline for poor countries must be imposed by the International Monetary Fund and international lenders. How do we prevent developing countries from acting irresponsibly if we let them print money rather than borrow it? Unfortunately, we cannot, with certainty, prevent countries from acting irresponsibly. Responsibility must be learned from the pain and reward that come after investment. We should not expect a country to borrow money it does not need and risk inflation it does not want so that it might acquire discipline.

To invest in the well being of a nation
requires good judgment.
To invest poorly
is to risk disaster.
Nations that invest well
do improve quality of life.
Those that invest poorly
do suffer.
Therein lies the lesson in responsibility.

The Lesson in Responsibility

:: Bob Komives, Fort Collins © 2006-2008 :: Plum Local IV :: 58. Former Debtor Nations ::
With attribution these words may be freely shared, but permission
is required if quoted in an item for sale or rent

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