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.