October 6, 2008

Blowback from Economic Black Ops?

I've been reading John Perkins' book "Confessions of an Economic Hit Man". It has made me think how much the oversized financial trouble in the economies of the developed world is at least partly an instance of blowback from economic operations that were initiated in the 1970's.

Perkins claims in his book that he was approached by people from the NSA in the beginning of his career as an economist in a big energy engineering company. (Chas. T. Main, now part of The Parsons Corp.). He was encouraged by the government people and his superiors to produce overly optimistic economic forecasts to encourage foreign governments to take huge amounts of debt for oversized development projects. The aim of this was to bring nations into debtor relationships with the US and the World Bank, thus retaining significant political control.

One paragraph in a chapter that is otherwise focused on the problems of modern Ecuador lit up a lingering thought that had been floating around my head for some time:
"During those tree decades, thousands of men and women participated in bringing Ecuador to the tenuous position it found itself in at the beginning of the millennium. Some of them, like me, had been aware of what they were doing, but the vast majority had merely performed the tasks they had been taught in business, engineering, and law schools, or had followed the lead of bosses in my mold, who demonstrated the system by their own greedy example and through rewards and punishments calculated to perpetuate it. Such participants saw the parts they played as benign, at worst; in the most optimistic view, they were helping an impoverished nation." [emphasis mine]
If this "operation" was as widespread as Mr. Perkins claims, it might actually have had an influence in the behaviour of underlings that observed their bosses coming up with and encouraging the most hyper-optimistic assumptions of economic development.

Because people do not just stay at a single job, untold numbers of workers might have participated in operations that were led by people secretly but intentionally working towards creating financial hardship. These people would take this behaviour as the normal way to do business. Some of those people that had early in their careers in the 1970's unwittingly worked in such projects are now on the very top of the business world.

The stream of thought in the financial world that just like that crosses straight over into hubris has been somewhat a mystery to me. This explanation, though only partial at best, is a very tempting one.

Naturally such operations could not be single-handedly responsible for the psyche of a whole generation. But it could have produced an additional amount of cultural acceptance for seemingly short-sighted practices of financial overreach.

It is, of course, also perfectly feasible that Perkins' book is not completely honest, but an elaborate attempt at trying to clean his own image. It can be a drag on one's conscience to witness the economic ruins left behind by sloppy or self-serving economic assessments.

Perkins' writing style does have a certain bit of self-centredness. (I was a hit man, but a conscious one.) The story also project an image of a person with such a level of cognitive dissonance that makes it somewhat hard to believe. Perkins' possible exaggerations of his moral discomfort in the early years doesn't necessarily mean that he is lying about the alleged government collusion.

As an idea, especially knowing of other operations of the US intelligence apparatus, the situation described by Perkins has some credibility. If these operations did indeed happen, a part of the financial trouble today can surely be ascribed to blowback from these (hopefully foregone) misdeeds.

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