The book Confessions of an Economic Hit Man proposes a unique discussion of economic relations between developed and developing countries, unethical behavior patterns, and corruption of the World Bank and the American corporations towards weak states. Perkins familiarizes readers and the global community with an exceptional profession of a hit man or economic consultant, whose job is to promote loans and investments to LDCs, convincing them of potential ‘benefits’ and great opportunities for new projects. In reality, the task and role of a hit man are to lead foreign companies and states to bankruptcy because of too high loans and interest rates they cannot afford.
Perkins vividly portrays that European and American governments provide unfair economic policies towards less developed countries and weak companies. Perkins writes that all countries in the world—those in support of or opposed to globalization—support the concept of economic growth and development. Growth means the opportunity for wealth creation and income generation at the expense of taxpayers’ and states’ budgets. Support for economic globalization is based on the realization that it enables nations, governments, societies, enterprises, and individuals to create more wealth and generate more income through more efficient modes of production, consumption, and exchange.
Thus, the duty and responsibility of an economic consultant like Perkins are to pursued government and companies to take enormous loans they will never pay off. Economic consultants like Perkins persuade governments that increases in wealth and income give rise to higher standards of living and improved quality of life. Without a growing productive sector of the economy, it is not possible to sustain higher levels of wealth creation or income generation. This is in spite of its actual and potential benefits to both rich and developing countries. This opposition, if left unchecked, threatens to push the world back to the dark days of protectionism and closed societies reminiscent of the Cold War.
Perkins compares his position in an American company with an Inquisitor whose job is to kill and cut the economic system of a weak country like Indonesia. Also, Perkins claims that in the industrialized countries, the middle class—the most politically powerful group of voters in most democratic countries—is split between those who are benefiting from the transformations and those who are being left out. Naturally, the losers are using their individual and collective leverage to oppose or slow it down.
In all the emerging economies—from Argentina to Russia—members of the middle class have seen their incomes, investments, and other assets depreciate in value as a result of inflation and falling exchange rates. As well, their privileges and free government services have either been eliminated or significantly reduced as their governments divest themselves and thus are unable to finance elaborate subsidies or programs. All parties are invited to join, including key ministries, businesses, NGOs, academics, and trade unions.
Public servants represent respective ministries or agencies, whereas private sector members attend as individuals. These methods of doing business allow America to expand its empire and improve the position of its construction and engineering companies. The most disturbing fact is that foreign companies do not receive loans and financial support promised by the World Bank. Following Perkins, money is transferred “from one bank account in Washington, D.C., to another one in New York or San Francisco” (34).
In the competitive world, there are no friends and partners. That is why it is very important to have an independent, impartial, credible, and competent system of dispute resolution, both domestically and internationally. In developing countries, this should be an integral part of the country’s national integrity and regulatory system. By choosing winners and losers, a government can stifle competition and innovation through public policy instruments such as awarding contracts, loans, grants, concessions, tax cuts, and protectionist subsidies to select businesses.
Examples of this include subsidies to farmers and protective tariffs to their domestic textile and steel firms, thus keeping away producers from developing countries and transition economies. All countries and all societies have experienced (and continue to experience) some form of corrupt, unethical conduct by their political, business, and civic leaders as well as ordinary citizens. Differences occur in how different societies tolerate corruption or how much they are prepared to punish the perpetrators.
In sum, the most impressive issue is that the American government and officials support these practices and do nothing to prevent unethical behavior and cheating of weak countries. Evidence from the United States seems to suggest that corporate corruption is related to the business cycle. Boom times, associated with inflated wealth creation, provide corporate executives with opportunities for greed and fraudulent conduct. Regulatory systems are lax and unable to keep up with the growing volume of business transactions.
Yet, the misconduct of large U.S. corporations, such as Enron, hurts more than just their employees, customers, and shareholders—they hurt the Third World. In this regard, the business sector is particularly critical because they have the resources, and are strategically positioned, to leverage their resources: either to perpetuate or to eradicate corruption. Corruption keeps foreign capital away. International capital goes where it is needed but stays only where it feels welcome. Corruption discriminates against foreign business interests because local businesses are much closer to the politicians and civil servants.
Works Cited
Perkins, J. Confessions of an Economic Hit Man. Berrett-Koehler Publishers, 2004.