What is the theory behind these “reforms?” I put the question to University of Missouri at Kansas City economist Michael Hudson who responded that:
The “new economic thinking” of neoliberalism holds that privatization of public infrastructure can make investors rich. Creditors will lend and get secure collateral, and equity investors will become rent extractors limited only by their inability to dismantle government regulations against windfall gains, a rent-tax, “unexplained earnings” taxes and other rentier income.
When rent extraction impoverishes the economy, the financial solution is for the IMF or other intergovernmental organization to lend governments enough foreign exchange to pay their foreign creditors—and make taxpayers pay the cost of the tax shift off finance and real estate and monopoly onto labor. The result is economic shrinkage.
And sometimes, the result is catastrophe, as with what occurred in Russia in the mid-1990s or massive political instability, as with what happened in Argentina between 1998-2002.
Hudson also notes that Mr. Soros has a rather long anduninspiring track record in Eastern Europe…Michael Hudson
The National Interest
James Carden
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