Hey U.S., welcome to the Third
It's been a quick slide from economic superpower to economic
By Rosa Brooks
Times" - -- Dear United States, Welcome to the
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 World
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 measures.
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.
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