The great challenge for the International Monetary Fund is to build a new Structural Adjustment Program that is truly useful to the countries

Countries that have financial problems due to lack of foreign currency to meet their needs and with difficulties in accessing the international private financial system are forced to resort to the International Monetary Fund to obtain resources.

The Fund imposes a set of conditions known as Structural Adjustment Programs, whose main objective is saving or limiting spending to supposedly clean up the economies of the countries. It is considered that the deficit of public finances due to unproductive or oversized expenditures is mainly responsible for inflation and the recession or stagnation of production and consumption in the economies and is, therefore, the great enemy to overcome. The implicit objective of this spending limitation is to achieve a balance or surplus between income and expenditure and, in the worst case scenario, to achieve a moderate rate of fiscal deficit not exceeding 2% of GDP.

To defeat the fiscal deficit, a series of medicines are prescribed, including reducing public spending on everything that is direct transfers to the population such as pensions, scholarships, social assistance and also reducing high-cost public services such as health and education. for which part of them is passed on to the private sector, that is, part of the health and education services are privatized. The same is done with respect to other public services and public companies that do not generate profits. The Adjustment Programs also contemplates the supposed balance of the financial sector of the countries for which they impose positive interest rates, that is, higher than the level of inflation, the liberalization of trade, that is, of any restriction on imports and exports, the elimination of subsidies and all kinds of price controls in the economy.

The Economic Adjustment Programs supposedly seek the welfare of the countries but in reality they generate totally opposite results: devaluation of the currencies, less production, less consumption, more unemployment, inflation, more poverty in the weakest sectors of the population that receive less pensions, less health, less education and the decrease in credit due to the augment in interest rates, among other serious problems.

Spain, Italy, Portugal and Greece are the countries in Europe where Adjustment Programs have been applied in recent years. In the 90s of the 20th century, these programs were developed in Latin America and, as a consequence, extreme left governments emerged in 10 nations of the Continent: Argentina with Kirchner, Brazil with Lula, Bolivia with Morales, Ecuador with Correa, Paraguay, Uruguay, Honduras, El Salvador and Venezuela with Chavez and the left was strengthened in Mexico by winning Lopez Obrador in Mexico this year 2018.

The great challenge for the International Monetary Fund is to build a new Adjustment Program that is truly useful to the countries and allows global financial equilibrium.

IMF-Supported Programs

https://www.imf.org/external/np/exr/faq/progfaqs.htm

The austerity policies cause big damage to the citizens of the world, a different visión on the factors of production

Today, many countries of the world are subject to austerity policies. These policies generate a big damage to the people: devaluation of the currencies, inflation, decrease of the salaries, unemployment, less health, education and less pensions. Instead of austerity policies, the world requires a monetary policy that guarantee to all citizens of the world the financial resources to satisfy their basic needs.

It is important to say that currently the scarce factor of production are natural resources such as water and oil because man cannot create natural resources, but money really is not a scarce resource, simply because man can create the amount of money to attend the needs of the people; However, understanding this idea in all its implications requires a new and non-traditional way of thinking about the role of money in the economy.

Until now, the economy has considered that the scarce factor of production has been capital and has assumed the abundance of hands to produce, the labor factor, as well as the abundance of natural resources, land factor. But the world reality has shown that natural resources and especially water and oil are and will be scarce resources in the 21st century. This constitutes a total change in the paradigm of the economy, a thesis that is convincingly proven in the book Running Out: How Global Shortages Change the Economic Paradigm (1)

(1)  https://www.amazon.com/gp/product/0875865135/ref=dbs_a_def_rwt_hsch_vapi_taft_p1_i5

Two programs to reduce global poverty, pollution and unemployment, video

Birth Control and a Global Program of Reforestation to create millions of Green Jobs in the world

Overpopulation is the main cause of the world poverty and pollution

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The main cause of the world poverty and pollution is overpopulation because every day the natural resources are and will be scarcer and the financial resources too, due to the austerity policies.

Man really cannot create natural resources as water and oil but if can print the amount of money to solve the needs of the people; however, this require a different manner of to think about the issuance of money in the world.

I believe that to reduce poverty and pollution should be developed two essential programs: a) A Program of Birth Control especially for the undeveloped nations and b) A Global Program of Reforestation to create millions of Green Jobs in the world. The United Nations and the World Bank should be the institutions to develop those programs.

 

Austerity versus welfare, 20 essays on the world economy in the 21st century

In 2008 the economic crisis erupted in the United States, following the collapse of major financial institutions, crisis immediately reflected on Europe and the rest of the world.

Governments were forced to pick up the tab for bankers, giving them money, but the real solution chosen to remedy the crisis was the adoption of austerity measures that hit, not the bankers or the banks, but the rest of the population by reducing public spending on vital sectors like health, education and public employment. In other words, they took the money for the payment of the services of the population to give the money to the bankers and banks.

Why austerity in public spending and not austerity in banks?

That's the key question; however, has no clear response from politicians.

Banks did not practice healthy financial policies and therefore went to bankruptcy.

The 2008 financial crisis revealed a fact already well known: the public finance deficit of nations.

And, despite the deficit, governments were left with no choice but to give money to failing banks to prevent the collapse of economies, because some institutions had a major role in the overall financial structure of countries.

Instead than focus on how the financial institutions are managed, the attention of institutions like the International Monetary Fund and the European Central Bank, politicians and media shifted to the deficit of public finances, giving rise to programs cut in public spending that have diminished services and caused unemployment to millions of people.

The public finance deficit has basically an origin: the growth of the population, that every day has more material needs. This forces the state to meet those needs.

In the Western, welfare policy inspired in the Keynesian idea was primarily aimed at ensuring citizens social security: pension rights, unemployment insurance, the right to health and education, and ran from the end of World War II until the 80 when the English Prime minister, Margaret Thatcher, adopted the neoliberal model promoted by the Chicago School, seeking, inter alia, the elimination of the deficit of public finances. The model was also adopted by President Ronald Regan of the United States, the International Monetary Fund, the World Bank and governments in Latin America in the 80s and 90s of the twentieth century. But it is necessary to underline that none of the goals of neoliberalism including reducing or eliminating the deficit of public finances was achieved in those years. On the contrary, the deficit in England and the United States during the President Ronald Regan period increased exponentially. The same neoliberal scheme of the 80s and 90s is now imposed on Europe, especially to the southern countries of the continent, Greece, Portugal, Spain and Italy by the International Monetary Fund and the European Central Bank, led by Germany and France.

In the essays I've gathered in this paper, it is demonstrated why austerity is not the appropriate way to achieve the welfare of people.  On the contrary, the way is the expansion of money to meet the needs of the growing population without causing inflation.

Monetary expansion must be related to the growth of the population and its needs and cannot be considered as the main cause of inflation. The main cause of inflation is human selfishness that has no limits to the accumulation of wealth and the trend to the robbery.

The following are links to the essays:

Giving financial assistance direct to the consumers

http://pablorafaelgonzalez.blogspot.com/2008/11/giving-financial-assistance-direct-to.html

How to recover an economy after a financial disaster

http://pablorafaelgonzalez.blogspot.com/2008/11/how-to-recover-economy-after-financial.html

Was the 2008 recession provoked with a deliberate objective?

http://pablorafaelgonzalez.blogspot.com/2008/12/was-2008-recession-provoked-with.html

Banks in bankruptcy but rich bankers, Theory of the coercive deficit

http://pablorafaelgonzalez.blogspot.com/2008/12/banks-in-bankruptcy-but-rich-bankers.html

The mortgages are not the main cause of the financial fallout

http://pablorafaelgonzalez.blogspot.com/2008/12/mortgages-are-not-main-cause-of.html

Effects of the economic crisis on the world stability

http://pablorafaelgonzalez.blogspot.com/2009/11/effects-of-economic-crisis-on-world.html

What true wealth is? The monetary illusion

http://pablorafaelgonzalez.blogspot.com/2009/12/what-true-wealth-is-monetary-illusion.html

Abstract ideas, economic reality and philosophy of science

http://pablorafaelgonzalez.blogspot.com/2010/06/abstract-ideas-economic-reality-and.html

Money is only metal and paper without intrinsic value, philosophy of money

http://pablorafaelgonzalez.blogspot.com/2011/06/money-is-only-metal-and-paper-without.html

Economic crisis 2011: the solution is to realize that the economy operates in a new scale and not reducing the public spending

http://pablorafaelgonzalez.blogspot.com/2011/08/economic-crisis-2011-solution-is-to.html

Fiscal deficit and size of the economy

http://pablorafaelgonzalez.blogspot.com/2011/09/fiscal-deficit-and-size-of-economy_18.html

Financial crisis: the solution is to issue more money and not reducing the public spending

http://pablorafaelgonzalez.blogspot.com/2011/10/financial-crisis-solution-is-to-issue.html

Bank of England recognizes that to issue more money is the solution

http://pablorafaelgonzalez.blogspot.com/2011/10/bank-of-england-recognizes-that-to.html

Austerity generates unemployment, poverty and political instability

http://pablorafaelgonzalez.blogspot.com/2011/11/austerity-generates-unemployment.html

There are not true reasons for the financial crisis in Europe

http://pablorafaelgonzalez.blogspot.com/2012/01/there-are-not-true-reasons-for.html

How rationalist ideas based in the mathematical logic affect the life of millions of people, the European crisis

http://pablorafaelgonzalez.blogspot.com/2012/07/how-rationalist-ideas-based-in.html

Why is it necessary to build a new balanced economic model without ideological prejudices?

http://pablorafaelgonzalez.blogspot.com/2012/08/why-is-it-necessary-to-build-new.html

Is there a limit to the amount of money that an economy can to issue? A reflection on the U.S. fiscal cliff

http://pablorafaelgonzalez.blogspot.com/2012/11/is-there-limit-to-amount-of-money-that.html

The lack of money should not be the cause of the poverty of nations

http://pablorafaelgonzalez.blogspot.com/2013/02/the-lack-of-money-should-not-be-cause.html

The austerity policy is not necessary, a thesis different from traditional concepts of monetary policy

http://pablorafaelgonzalez.blogspot.com/2013/04/the-austerity-policy-is-not-necessary.html

The backing of money

http://pablorafaelgonzalez.blogspot.com/2013/10/the-backing-of-currencies.html

Four priorities and programs for the world development

The most important problems and priorities of the world are: a) overpopulation, b) destruction of nature and the environment, c) poverty d) egoism and lack of social education. Following we will explain each one.

1.       Overpopulation

In the last 100 years the population grew more than in the rest of the humanity history; this has been a consequence of the advance in the science and technology. The trend of high growth has augmented in the recent decades and the perspective is that at mid and long term will be more intense. But the problem is that the resources do not increase in the same proportion.

1.1.  Solution

A solution is to develop a global campaign of education to promote the responsibility and to highlight that a family most have only the number of children that a couple can care, this mean, to feed, educate, to give medical assistance and to assure an appropriate home.

The campaign must be accompanied of concrete medical programs developed by the governments to help the population to reach the objectives.

2.       Destruction of nature and the environment

The world shows evident signs of the nature and environment destruction: climate change, contamination of the sources of water, pollution of the cities and too many other problems that affect the health and quality of life of millions of people.

2.1. Solution

There is no one solution because the environmental problems are innumerable. However, we can do something concrete to help the environment: it is a global program of reforestation, which might contribute to restore the balance of nature and to improve the quality of life of the people. The reforestation is an effective way to diminish the climatic change effects and, moreover, to protect the threatened sources of water.

3.       Poverty

The key to combat the poverty is the employment: good and stable jobs with fair salaries. To reach those objectives would be necessary to carry out three plans: a) a program of job training, b) a program to increase the number of jobs in the economy, that we have denominated the double working-day and the half working-day (1) and c) the creation of millions of ecological employments, through the global program of reforestation proposed in the previous epigraph. The countries might create permanent activities to plant and to keep diverse kind of trees for different uses and this would be a concrete contribution to the solution of the jobless.

4.       Egoism and lack of social education

They are the cause of the most world problems.

4.1. Solution

A solution is to employ the immense power of the mass media to create in the world population attitudes to favor the economic and social development; they are: a) To promote the responsibility in the family that, among other duties, require to have only the number of children that a couple can care, b) to protect nature and the environment, especially, to keep the forests, do not contaminate the sources of water and to do a rational disposal of waste and c) to develop campaigns of public health to teach the population rules to prevent the spread of illnesses.

5.       Conclusion

Of course, these ideas are not the solution of the humanity problems, but its application might create better conditions of life for millions of people worldwide. This kind of initiatives must be promoted by institutions of international influence, like United Nations and the World Bank. Without the sponsorship of those agencies the programs would not be possible. So that in the hands of the leaders of the United Nations, Ban Ki- moon and the World Bank, Jim Yong Kim, is the possibility of to realize these initiatives.

(1)    http://www.amazon.com/Pablo-Rafael-Gonz%C3%A1lez/e/B001JOAE2U