Life is tough in south of the equator and getting tougher everyday. Brazil is one of the largest economies in the world and yet can't provide a reasonable standard of living for nearly half of its 165 million citizens. Explaining this conundrum is easy: foreign debt and structural adjustment policies. How and why rich southern countries borrowed extensively in the 1960s and 1970s is a complicated story but the broad strokes are that there was a lot of surplus northern money around that needed a productive home. Brazil, like most of the developing world, borrowed to fund mega-projects and economic expansion. When interest rates skyrocketed in the early 1980s, their debts were increasing at a faster rate than their economies and thus began the spiral into a debt crisis. Fearing default and the consequent global economic meltdown that would result, the IMF and World Bank have been busy for 20 years 'restructuring' southern economies to ensure that the money continues to flow north. Most indebted countries have paid off their initial debts many times over and yet still do not see a light at the end of the tunnel. Currently, Brazil owes 56% of its total GDP in debt and this proportion grows every year despite massive repayments.
A restructured economy is one that produces primarily for export to earn foreign currencies to support debt repayment. Unfortunately, as the southern countries all turn to the same once-lucrative tropical products like coffee, cocoa, shrimp and palm oil, the price for these commodities plummets with abundant supply. That means if you are a coffee exporter like Brazil, you need to produce 1095 tonnes to make a million dollars today whereas in 1980 you only needed 308 tonnes. These countries mortgage their environments to produce ever more and cheaper products to service debts that never stop compounding. Not only the environment suffers as social programs are eradicated to create more funds for debt service. Governments also reduce job creation strategies and limit union strength. High unemployment and weak unions keep labor rates low to attract foreign investment. Even the lucky ones who find work struggle against falling wages and rising costs of living. So, in the end, poor people get poorer while the flow of money from south to north continues. As long as we demand both cheap products and debt servicing, there will be no escape from the barrio for the world's poorest. [Note: there is just a small paragraph on the card itself, this longer statement is from the publisher.]