Tag Archives: Confessions of an Economic Hit Man

Confessions of an Economic Hit Man – Perkins

How did I come across this most controversial book by Perkins? It all started when world travelling MT got back from a well deserved vacation at Dubai. At Dubai are the seven wonders of the new world: skyscrapers that literally scrape the sky, artificial islands shaped like palm trees, Ferrari dealerships on every corner just like 7-11s in Waikiki. I said, ‘Of course, it must be the oil revenue’. The reply was surprising: ‘Well, no, they don.t actually have oil there’. It turns out some of the Emirates are oil rich, but not all of them. Dubai is not. But for some reason, their infrastructure–that is to say roads, schools, hospitals–is in tip-top shape. They are also a tax free zone. So the question became: if they have no oil and are tax free, how do they get all this money to do all these things? I mean, over here, we have tons of natural resources and there.s all sorts of taxes but the average person on the street complains about the infrastructure and there.s certainly no Burj Khalifa punctuating the Victoria (or Vancouver) skyline. How did Dubai do so well? We couldn.t figure it out. But it was a most interesting question.

Flash forward a few weeks. I.d been asking people. No one seemed to know. One evening, I was on the rooftop talking to Z and her friend A. I recounted to them the words you read in the last paragraph. ‘Ah’, said A, ‘the reason they can do it is because of how supranational agencies controlled by the US such as the World Bank and the IMF funnel money into their economy. What the US gets in return is that US corporations are allowed unlimited access to the local economies’. He was quite sure of this and followed up with, ‘You.ve got to read Confessions of an Economic Hit Man by John Perkins’. Now, it seemed rather odd that the World Bank and the IMF would be lending Dubai money since their mandate is to provide last ditch support to failing economies (i.e. Eastern Europe when communism fell in the 1990s, Western Europe after WWII, and so on). Dubai seems to be doing too well to be getting a ‘rebuilding’ loan. But hey, there are stranger things! And here.s what else: TW also had a copy sitting on his bookshelf (it.s funny how things pop up all over the place after someone mentions it). His verdict: he read it a long time ago but was a good read.

They had a copy in the library. Here.s how it looks:

Perkins, Confession of an Economic Hit Man

Perkins, Confession of an Economic Hit Man

I should start by saying my own confession: I didn.t finish it. There is something very wrong with the frame of reference from which the book is written. First, let me provide an example of what I mean by ‘frame of reference’ and then I will give some examples from Perkins’ book.

Frame of Reference

In the 2004 comedy Team America: World Police, the good guys are infiltrating the terrorist organization. You know, to gather intelligence. So they go undercover and in disguise to the restaurant the terrorists frequent. They say, ‘Who can I talk with to join the terrorists?’. The bar goes silent: that was not the right thing to say. While we call them terrorists, the terrorists do not call one another terrorists: they consider themselves freedom fighters; they are doing some kind of service for their communities. The joke is that the team America secret agents are too stupid to figure that out: they can only see things from their frame of reference. If they were more clever, they would have asked something along the lines of, ‘How can I join the movement?’, or something along those lines. That frames of reference can be turned into a joke in a comedy suggests that most people understand what they are: otherwise it wouldn.t be funny.

Perkins’ Frame of Reference

So when young Perkins gets out of university and starts hunting for a job, he gets hired on by an international consulting firm to falsify economic projections. That.s how the evil corporations sell infrastructure projects to unwitting third-world countries: they inflate growth projections to create a perceived need for infrastructure (but don.t countries employ their own statistics bureaus to estimate growth?). Since Perkins doesn.t know a lot about how to do economic projections, the corporation sends him to the Boston public library for three months to do research (really, a company would do this with a new hire?). They also assign their new hire an attractive study partner to accompany him at the library every day and seduce him (wow, you don.t say?). So his marriage gets wrecked in the process. But here.s where it gets strange: his study partner/mistress tells him her job is to transform Perkins into ‘an economic hit man’ or EMH.

This is the part that I just couldn.t believe. There.s lots wrong with the book, but this is what caused me to put it down. It.s a problem with the frame of reference. Let.s say companies do a lot of bad things, I give you that. But they don.t look at it as bad things from their point of view. Take everyone.s favourite example today: oil companies. The word on the street is that they.re poisoning the environment. But if you.re looking to work for an oil company or you.re an oil company executive, you don.t look at it that way: you.re ‘powering the future’ or something like that. They don.t hire new interns and tell them their job is to be ‘environmental hit men’ whose job it is to poison the world! But this is the corporate structure according to Perkins: evil for evil.s sake. To do pure evil is actually quite hard. Just think of all the novels you.ve read in the last ten years: how many have characters that just delight in doing evil, who are motivelessly malign?

It.s the same thing with bribes in Perkins corporatocracy. People give him bribes all the time to falsify economic projections. Now, I.m not saying that bribes don.t happen–they happen all the time. But I.ve never seen it happen quite so transparently. In Confessions of an Economic Hit Man they go down something like this:

Evil Director/Boss/CEO: Perkins I will give you a bribe to falsify the report so we can suck the money out of this unsuspecting Latin American third world country. I am asking because I am an evil capitalist CEO and that.s how evil corporations function.

Perkins: I.m new to this but since this is how you say evil corporations function, sure, I.ll take your money.

Even when Microsoft was taking over the world in the 1990s, they didn.t frame their growth in terms of a maniacal drive to enslave the world: they framed it in terms of coming up with a better spreadsheet, coming up with productivity tools to help businesses thrive, and so on. In Perkins corporatocracy, he and his associates’ frame of reference is pure evil. It.s like a cartoon where Cobra commander or the Decepticons’ one and only goal is to destroy the good guys. While that may be convincing in a cartoon for kids, this is the real world! Sure there are bribes and other nefarious going-ons, but they are never that transparent! Wollstonecraft hits the nail on the head with this quote:

No man chooses evil because it is evil; he only mistakes it for happiness, which is the good he seeks.

What comes to mind is Orson Welles’ War of the Worlds radio broadcasts in the 1930s. When it aired, some people actually thought the aliens were attacking. We now laugh at how gullible people were back then. It couldn.t happen to us moderns, who are so much more sophisticated. But to me, Perkins’ Confession of an Economic Hit Man is just as unbelievable. And people take that book to be an accurate representation of how the IMF, World Bank, and international consulting firms work. I am beginning to understand people.s distaste for capitalism: from the point of view of Confession it is very bad. But does Confession speak the truth?

IMF Interest Rates

So I decided to do some research. There.s a lot of backlash on the exorbitant interest rates supranational agencies such as the IMF inflict on distressed countries. But I.ve never heard anyone divulge the actual figures. Greece is an example of a country getting bailed out by the IMF today. How much interest are they paying on IMF loans?

According to this September 2013 article from the German magazine Der Spiegel, Greece is paying 0.7% on the first 80 billion bailout package and 2% on the second 145 billion bailout package. Presumably, Greece is using the proceeds from the bailout packages to pay pensions and public servants and to generally keep their economy afloat. Going to the Bloomberg site tracking ten year Greek bonds, if Greece had secured the money by issuing its own bonds in September 2013, they would have paid 10% at market rates.

What would you have done if you were Greece? Accept loans at 0.7% and 2% from the IMF with conditions (i.e. austerity) or raise the funds by going to the market at 10% (but no strings attached)? It.s not an easy choice, is it?

But Doing Melpomene’s Work is always an easy choice and until next time, I.m Edwin Wong and that.s what I.ll be up to.