The recent flooding in Mozambique has increased pressure for the West
to forgive hundreds of billions of dollars of debt owed by third-world
countries. The argument for debt forgiveness is that “crushing” debt
service payments (interest) prevent poor countries from becoming
As attractive as the debt-forgiveness argument appears, it is fatally
flawed. While it is true that third-world debt loads are very high
compared to their Gross National Product (GNP), that’s not the whole
story. In far too many third-world countries, rampant government
corruption and socialism crush the productive potential of their
citizens. As a result, unless we cure the underlying sickness, debt
forgiveness will have a short-lived impact.
I spent ten years of my life working with private-sector business
people and government officials in 25 developing countries in every part
of the world. I committed a decade of my life to the struggle for
freedom and economic independence because I believed that I could make a
difference. We had many successes, but in each country, they were waging
a war between those who understood the power of the private sector and
those who wanted to maintain government control of the economy.
My decade of work taught me a powerful lesson. Real economic and
social progress is impossible in a country where government leaders fear
freedom, independence and capitalism. Every country, despite its
poverty, has rich people who live quite well and fear competition. How
does debt forgiveness change that picture?
In every poor country, the rich and their political allies wield
inordinate power. These economic and political elites view capitalism
and individual freedom as a direct threat to their power. How does debt
forgiveness change that picture?
If you look at some key third-world hot spots, the story is the same.
In Nicaragua, where 35 families controlled that wonderful country, and
Haiti, which its Creoles raped, the story was the same. The wealthy
wanted more and didn’t care about most of their brothers and sisters. In
Mexico and Zimbabwe, government ministers care more about their power
than their people. In India and Iraq, the political haves are determined
to hold onto power, no matter how many of their fellow citizens live
brutal, unnecessarily short lives.
Will anything change in these countries if we forgive their debt?
Will their people be freed to create wealth? Will their children get the
education that they need to develop to their fullest? Will debt
reduction do anything more than reward government crooks and their
private sector collaborators?
Instead of debt forgiveness, I propose that we cut a deal with each
country that owes us money. We will restructure their payment schedule
if they agree to restructure their economies. We will invest in their
economic development if they free their people from the shackles of
socialism. We will help them speed their economic development if they
declare war on corruption and invest in their people. And, oh yes, we
will monitor their success and reward them appropriately.
Some will say that my proposal is a form of imperialism. I don’t mind
being called an imperialist if I can reduce the unnecessary crushing
poverty that billions of my brothers and sisters experience. I don’t
mind being called an imperialist if I can help every human being in poor
countries realize the full extent of their God-given ability. Call me
any name you want, but let my people go!
While we are at it, I also propose that we bring many third-world
students to America for college. And then send them back. This is the
first generation of foreign students who lack any experience of
colonialism. As a result, when they see how the average American lives,
they ask, “Why can’t my people live like that?”
I can think of no more powerful weapon for economic growth and
freedom than students who have experienced the American dream and know
that their governments have lied to them.
At the end of the day, the power of America is her respect for the
potential of each of us. America is not perfect, but she is the best
that there is on this planet.
Debt forgiveness ignores the moral, economic and structural flaws
that are responsible for so much unneeded poverty around the world.
Let’s help honest third-world countries earn their way out of debt. And
let’s tell those government leaders who prefer poverty to freedom,
capitalism and justice that there is no free lunch.