Your Money or Your Life!

152/YOUR MONEY OR YOUR LIFE!

The Easiest to Impose

A restrictive monetary policy, of severe cuts in public investment

and operating costs, does not involve any risk for a government.

This does not mean that such measures do not have social and

economic consequences; but our reasoning here is based on the

sole criterion of reducing the risk of social unrest.

There is usually no reaction to cuts in public investment, even

when they are severe: a 40 per cent cut over three years in

Morocco; 40 per cent over two years in Cote d'lvoire; 66 per cent

between 1982 and 1985 in Venezuela; and 60 per cent over two

years in the Philippines.

Errors to be Avoided

It is more difficult to implement a programme that equally affects

all groups - that is, a socially neutral programme - than it is to

implement a discriminatory programme. It is easier to make some

groups bear the brunt of the adjustment while sparing others, on

whom the government can count for support.

Total Control is Best

In the face of adversity, the exceptional power of a head of state is

of vital importance to the success of an adjustment. To be sure,

governments have real capacities for resistance, thanks to the

forces of law and order. But when riots threaten a regime's

stability, the authority of a head of state is a maj or asset. This was

true in Morocco, Cote d'lvoire and Venezuela. In Venezuela, the

president enjoyed this authority in 1990 since the same party

controlled the presidency, the parliament and the main trade

union.

Massive Privatisation and Dismissal: A Realistic Agenda

Whether it is a matter of restructuring or privatisation, in many

countries the reform of state-owned companies has been met with

strong opposition, given that such reforms call into question a wide

variety of interests.