Transcript LIFE AND debt: A movie debrief

LIFE AND DEBT: A MOVIE DEBRIEFLET’S BREAK THIS DOWN!
JAMAICA: A BRIEF HISTORY
1655: English occupied Jamaica and created
agricultural-based economy (slave labour) to
support industrial revolution in England
 18th Century: sugar cane export flourished
 1807: abolition of slave trade= no more sugar
cane exports, followed by serious drought
 1865: social, economic progress from English
including new technologies (irrigation)

1920: sugar cane increase; increase in land
size
 19th century: rise in banana trade, 1890=
banana replaced sugar cane as major export
 Great Depression (1930s): demand for
economic development from British rule= 1
million pounds/ yr for 20 yrs on development
 BUT… funds were not implemented to deal with
Jamaica’s structural problems

ABSTRACT

Jamaica’s indebtedness to international
lenders, especially the IMF= structural
adjustment policies and forced free trade

The weakness of the Jamaican dollar= due to a
series of devaluations imposed by the IMF
WHAT’S THE DEAL WITH THE IMF?

The IMF is only concerned with short-term
borrowing to meet immediate needs of a countrythe effect is more $ in the pockets of 1st world
nations (U.S., Great Britain, etc.) because of high
interest rates

The World Bank was established to help rebuild
countries after WWII (i.e. England)- Jamaica under
British rule

1962: Jamaican Independence after 300+ yrs
POST- INDEPENDENCE: WHAT DID THIS MEAN?
Post independence, countries like Jamaica
quickly realized they had financial troubles
because lack of economic strength= they
needed time to build their economy!
 1973: hike in oil prices= a large $$ impact
 Jamaica is oil importer- went to private banks
for loans
 IMF: try to cutback spending, THEN come to us

PRESSURE FROM THE IMF
Manley: felt pressured to approach IMF
because Jamaica unable to pay for imports
 Wanted repayment plan compatible for longterm development
 IMF: development is Jamaica’s problem
 IMF: loaned $$ short term with high interest
rates, imposed heavy conditions

IMF’S CONDITIONS
1. Budget cut-backs
 2. Devaluations in currency ($$)
 3. Interest rates under their control
 4. Free trade
 5. Privitization

= vicious cycle, because
there is no money allocated for
development of Jamaican economy
IMPORTS AND EXPORTS
IMF restricted spending to healthcare & education
 Initially, IMF: decrease imports, increase exports
 Imports: what comes INTO the country
 Exports: what goes OUT of the country

Jamaica is dependent on imports from other
countries: oil, medicine, books, food, etc.
 Debt reaches $7 billion

CROPS
Jamaican crops are rotting, because U.S. crops
are cheaper to buy in Jamaica (CRAZY!)
 IMF put pressure to open
up to imports: previous
measures prevented imports,
ensuring Jamaican farmers
their own market (too small
to be self-supporting)

PRODUCE (THINK: HONEYDEW MELONS)
Jamaican produce is more expensive ($$)
because it is not mechanized- “Can a machine
compete with a machete?”
 Produce doesn’t meet standards

“Free trade flows in
one direction: toward
the U.S.A.”

DAIRY INDUSTRY
Dairy industry had been growing in Jamaica
 1992: government took out loan of $50 million
from Inter-American Development Bank to
support dairy industry
 Condition: had to abandon local subsidies
(additional financial support to farmers, i.e. tax
cuts), and abandon restrictions on imported
milk products

Abandon restrictions on imports= U.S.A. started
importing powdered milk
 Powdered milk: cheap (affordable), does not
spoil (for longer transportation), easier storage
 Result: Jamaican farmers
went out of business=
could no longer keep up with
imports of powdered milk;
cut back on business
dramatically

BANANA INDUSTRY: THE LOME AGREEMENT
Jamaica produces 90, 000 tonnes of bananasexported to UK (former colony)
 Europeans who had colonies in the past wanted to
give them extra help


The Lome Agreement is an agreement of African,
Caribbean, and Pacific (ACP) countries with the
European Union, which gave former colonies extra
help in trade= guaranteed market, tariff free
IS THE LOME AGREEMENT FAIR?
U.S. (on behalf of Chiquita) went
to the WTO and charged that this
preferential treatment of certain
countries was against WTO rules of free trade


Chiquita, Dole, and Del Monte (U.S. owned)
control 95% of world banana market= most
grown in Latin America under repressive and
exploitive regimes; very low wages (sometimes
$1/day).
In Honduras, Chiquita banana
workers went on strike;
they were forced back to work
at gunpoint: there are no unions to protect
workers!!

Under these conditions, the multinationals can
bring their produce to market more cheaply.
 Banks won’t invest in Jamaican bananas

FREE TRADE ZONE
In the free trade zones, workers paid less than
what American workers would be paid.
 Kingston Free Trade Zone (FTZ), encircled with
fencing and barbed wire, rows of factories,
assembly of garments
 FTZ not part of Jamaica= not subject to things like
income tax, duties, not subject to any other
Jamaican laws.
 Don't meet the quotas= don't get paid for the work
you did. $30/week wages.
 On the job, one can't talk or go to the bathroom
freely. Workers have to pay many taxes (where is
the $$ going?!)

Foreign companies were promised that
Jamaican workers would not form unions
 Chinese workers imported= tension between
Jamaican workers and Chinese workers- WHY?
Chinese getting paid in US $$!
 FTZs are counterproductive- factories now
moving to Mexico= cheaper labour, loss of
18,000 jobs
 How is Jamaica going to repay loans they took
out to open the FTZ?

WHAT WAS THE IMF’S RESPONSE?
Director of IMF says: key to growth is to attract
foreign investment (private investors)
 Manley says that private foreign investors won't
provide money for some of the things the
country needs: infrastructure, education,
healthcare, food self-sufficiency= they are only
interested in making a profit

HOW CAN JAMAICA CHANGE IMF POLICY?

Votes in IMF are proportional to the size of the
country in the world economy, so U.S. has 17.5% of
the vote, then Japan and Germany.

To change an IMF policy, need 80% of the vote
(can't be done without the support of U.S. and W.
Europe).

Does Jamaica really have a “say” in changing
policies? How is this ironic?
MCDONALDIZATION
McDonald’s could be purchasing Jamaican
products- instead, they import them (Why?)
 McDonald’s using cheaper imported beef
 American ranchers use an anabolic steroid
Stilbestrol that isn't sold in Jamaica, enabling
them to produce more meat more quickly (and
therefore, more cheaply)= “Cancer-causing
agent”

SLAVERY?
In slavery, the master would take
the best part of the food.
 Similarly, today in America, only the best parts
of the chicken are sold (the back, neck, feet,
etc.), are dumped into Third World countries.
 Dark meat from U.S. being sold into Jamaica at
20 cents/lb., even though it costs 50 cents/lb.
to produce, simply because it can't be sold in
the U.S= Jamaican chicken farmers are
suffering
