Activities

1. Keynes on Foreign Debts

The policy of reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness should be abhorrent and detestable -- abhorrent and detestable, even if it were possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilized life of Europe. Some preach it in the name of justice. In the great events of man's history, in the unwinding of the complex fates of nations, Justice is not so simple. And if it were, nations are not authorized, by religion or by natural morals, to visit on the children of their enemies the misdoings of parents or of rulers.

Please answer the following questions.

1. Why was a huge debt imposed on Germany after World War I?
2. How does the situation in Germeny resemble that of the heavily-indebted poor nations today? How is today's situation different?
3. Why did Keynes think the policy would "sow the decay of the whole civilized life of Europe"?
4. What does Keyens mean by "in the unwinding of the complex fates of nations, Justice is not so simple"?

2. Reading Cartoons

Please answer the following questions. Why is the banker happy to have a customer who owes him billions? Why is the bank called "Chase Madhatter"? What does the cartoon suggest about the Third World's ability to pay its debts? The second cartoon shows native servants bringing back the "kill" of a rich Western hunter on safari. What three regions are represented by the servants? Why are they depicted this way? Why is one of the bundles represented as a bomb? What does this cartoon say about the West's attitude toward Third World debt burderns?

3. Comparing Economic Statistics

Please answer the following questions:

1. Based on this chart, what relationship is there between poverty and high levels of external debt?

2. Which countries on this chart are running a trade surplus? What relationship do you think that has with their ability to service their foreign debt?

3. Bolivia is the world's largest producer of coca, with over 23,000 hectares in cultivation. How does that fact affect your understanding of its inflation, unemployment and export figures?

4. Nigeria is a major oil producer. Oil accounts for 95% of its foreign exchange earnings. It is also a net importer of food. How do those facts affect your understanding of its import and export figures?

5. In 2002, the United States imported $478 billion worth of stuff than it exported. The US has run a trade deficit in each of the last thirty years. How does that fact affect your understanding of its external debt figure?

6. Beyond this chart, what information would you have to seek in order to better understand these nations' economic circumstances? Where would you look for that information?