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Ethics and Etiquette of Third World Debt1

Published online by Cambridge University Press:  28 September 2012

Peter Bauer
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Abstract

Third World debt, seen as distant from the realm of international affairs and ethics, is often subject to abstract economic analysis. Peter Bauer argues that in fact the way in which debt is addressed by debtors and lenders is heavily politicized and should be subject to ethical considerations. Many Third World countries choose to prolong debt even though they are capable of repaying it; moreover, the methods of gauging and reporting current income are spurious and subject to manipulation by countries' trade policies. The ethical questionability of some Third World practices is matched by equally questionable activity in the West. Special interest groups' agendas and banks' eyes for profits influence economic policy in favor of Third World countries, further increasing their debt. Bauer's discussion of these issues of denial and permissiveness depicts Third World debt as a political transaction that wrongly escapes ethical judgement.

Type
Articles
Information
Ethics & International Affairs , Volume 1 , March 1987 , pp. 73 - 84
Copyright
Copyright © Carnegie Council for Ethics in International Affairs 1987

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References

2 These figures are taken from “The International Debt Quagmire,” in Friedberg's (April 20, 1986)Google Scholar, a bulletin issued by C.C. Friedberg & Co., a Canadian firm of commodity brokers. This article presents a convenient summary of some World Bank statistics. There are also informative data on this subject in two articles by Professor Deepa Lai, in The Times (London) (May 8, 1983), and in the Wall Street Journal (April 27, 1983), respectively. Professor Lai argues convincingly that the indebtedness of the major Third World debtors is quite modest by historical standards.

3 In many LDCs, especially in Africa, the producers benefited little from these conditions because a large proportion of export proceeds were taxed away by the state export monopoliesGoogle Scholar.

4 The first of these articles was entitled “Debt Obligations Could Hit Indonesia's Economic Hopes.” It appeared in October or November 1972. I have a Xerox copy but I cannot date it precisely. There is no index of the Financial Times for that year, and its library could not provide me with the date. The second article, entitled “What to Do with a Windfall,” appeared on March 14, 1974Google Scholar.

5 IDA in Retrospect (Washington: The World Bank, 1982)Google Scholar.

6 The Program for Sustained Growth announced by U.S. Treasury Secretary James A. Baker at the October 1985 joint annual meeting of the IMF and the World Bank in Seoul.—EdsGoogle Scholar.