The Debt Crisis and the rise of neoliberalism

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The Debt Crisis and the rise of (neo)liberalism
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Aims of Lecture

• Analyze the debt crisis and its impact on health
• Complete weekly worksheet
• Work on group presentations

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Recap

• Bretton-Woods
• - context?
• Social liberalism (Keynesianism)
• - key ideas
• - Key institutions?
• Development through modernization/industrializatio
  n
• - what did this involve?
• - how was it financed?

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The rise of (neo)liberalism
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Backyard geopoliticsThe Chilean Experiment,
1973/74

• The Chilean army - backed by CIA - ousts elected
  socialist leader Salvador Allende
• I don't see why we need to stand by and watch a
  country go communist due to the irresponsibility
  of its people. The issues are much too important
  for the Chilean voters to be left to decide for
  themselves Henry Kissinger,
• Military
• - violently repressed social movements trade
  unions
• - dismantles community health centers in poorer
  areas
• Neoliberal Economists Chicago boys
• - encourage privatization
• - facilitate foreign direct investment free
  trade
• - promote export-led growth

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End of the Gold Standard, 1973

• Nixon abandons the -Gold agreement for system of
  
• floating exchange rates due to
• - Declining competitiveness in international
  manufacturing
• Spiraling debts due to Cold War, especially
  Vietnam
• The value of the ?

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OPEC crisis 1974

• OPEC continues pricing oil in dollars but raises
  the price by 3/4 times in just a few months

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Recycling Petrodollars

• Throughout the 1970s, huge
• amounts of petrodollars oil profits
• are deposited by OPEC nations
• in US-owned offshore banks
• Banks loan these s out at low interest rates to
  govt.s in developing countries who need s to
  pay for oil
• Including some notorious dictators

Somoza
Mobutu
Duvalier
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Volker shock, 1979

• Throughout the 1970s prices continue to rise,
  whilst there is slow economic growth
• stagflation
• In 1978, Paul Volker, Chairman of the Fed, raises
  interest rates to combat inflation

The Volker shock, 1979
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Running on pro-neoliberal policies, Reagan
promises fight inflation and promote economic
growth
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and defeats Jimmy Carter in 1980
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Growing inequality

• Thatchers neoliberal government seeks to
  naturalize inequality and promote individualism
• It is our job to glory in inequality and see
  that talents and abilities are given vent and
  expression for the benefit of us all.
• There is no such thing as society, only
  individuals and their families.

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The debt crisis

• After the Fed raises the national interest rate
  (Volker shock), the offshore banks do the same
• So, the variable interest on those loans made
  to developing countries now increasesRAPIDLY!

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Default enter the IMF

• In 1982, both Argentina and Mexico declare that
  they are unable to repay their loans many more
  countries follow in the Global South
• To prevent global economic crisis the IMF
  re-schedules the debt on condition of a series of
  requirements called
• Structural Adjustment Programs SAPs

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How can examining neoliberal globalization,
especially SAPs, help us understand the spread
of HIV/AIDS and other infectious diseases?
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Over the weekend

• Go online and have a look at the PBS series
  Commanding Heights
• http//www.pbs.org/wgbh/commandingheights/
• Do some work towards your group presentations, in
  preparation for more class group work sessions
• On Monday well review the impact of
  (neo)liberalism on healthcare services and also
  have a look at some example midterm questions
  so make sure you have completed the two required
  readings.