IMF errors may cost lives: Social thinker
IMF errors may cost lives: Social thinker
BUENOS AIRES (Reuters): Social thinker Alvin Toffler warns
Latin American nations that free markets are not the gospel truth
and that International Monetary Fund medicine can costs lives.
The futurist and author of best-sellers like "Future Shock"
and "The Third Wave" told Reuters in an interview on Wednesday
the IMF prescribed "essentially the same medicine to every
disease."
"To go into Indonesia (earlier this year) and to say that they
should raise interest rates in order to attract capital was not
only stupid and arrogant, it got people killed," he said,
referring to attacks on the Chinese minority.
"And that's not the only place -- around the world they leave
a trail of social unrest," said Toffler, who was attending a
management forum in Buenos Aires.
For the past decade Latin American nations have toed the IMF
line and opened their economies to world competition, slashed
public spending, cut subsidies, and reduced the size of
government by selling state-run companies.
The IMF-prescribed polices have spurred growth, but caused
widespread unemployment and widened the gap between rich and
poor. In the current global financial tumult set off by the Asia
crisis last year, the IMF has urged Latin American nations to
deepen reforms, despite growing signs of social fatigue and
political discontent.
As for regional integration now advancing at full steam in
Latin America, tearing down trade barriers without taking into
account each nation's social needs in terms of employment and
education is also a risky proposition, he said.
"The idea of doing it all simultaneously in the fastest
possible way may not be correct," said Toffler. "Each country has
its own unique set of problems."
Nations in the Western Hemisphere plan to set up a Free Trade
Area of the Americas from Alaska to Tierra del Fuego by 2005.
"I believe very strongly in the free market, but I believe in
it as an instrument, not as a theology," Toffler said.
"Many countries have large peasant populations that are
uneducated, like the northeast of Brazil or in China. If you
can't educate those people, you can do nothing," he stressed.
Rather than pursuing the embattled export-oriented model of
the "Asian tigers" for development or the European example for
integration, Latin American states should take full advantage of
their social and cultural differences instead.
The industries of the future will thrive on diversity and will
focus on small-market niches. Even large companies setting up
shop in Latin America should create their own smaller units to
cater to those market segments, he said.
Toffler also advised Latin nations to concentrate on high-
technology products, resist the temptation to use cheap labor as
a magnet to attract direct investment, and participate in joint-
ventures with foreign firms that can ensure the transfer of
technology and revert brain drain.
The author, whose "third wave" concept refers to a new
industrial era based on knowledge and information rather than
tangible assets, said low wages will only work for a while.
Companies first set up shop in Japan before moving to Korea
and other Asian countries on the low-salary trail. Likewise,
firms coming to Latin America seeking cheap labor may migrate in
the future to Africa, he said.
And, in an era in which "each interval of time is worth more
money than the previous," companies may even return to rich
countries where high technology can ensure fast delivery.
"Technology is cheaper than labor," he said.