Latest News

Jubilee Statements

Monitoring the impacts of government and corporate behaviour in communities overseas.

The Science of Debt

Release Date: 12-Aug-2008

Dr  Jason  Gallate

As a scientist I experienced a discomfiting mix of emotions upon reading the article published by Stuckler et al in PLoS Medicine on the rise of tuberculosis rates with IMF loans. The thing that I was most pleased about was how substantial, solid and scientifically valid the article was. The upsetting part was the fact that the IMF is so culpable.

It is easy to denigrate the World Bank and the IMF. I did, even before I knew what they were. I was schooled on the mantra that these institutions were the evil mechanisms by which the ruling elite of greedy Western nations maintained and increased inequality. But there are almost always two sides to any debate and my opinion was woefully uninformed. Often such heated rhetoric and uninformed passion is fashionable. It leads to flash in the pan activism and too often not a lot of real change. Institutions with money, influence and power easily dismiss opponents who ‘straw man’ their positions. Too often people wanting to address inequity characterise themselves as unbalanced, agitating, malcontents. Passion is good, but so is knowledge, dogged commitment and discipline.

Stuckler et al’s article supplies part of this knowledge. It is a very provocative piece of research with a sophisticated statistical methodology that is very damning of the IMF. There is a simple, astonishing and obvious mathematical argument that malicious loans to the developing world are wrong — for every dollar that the developing world receives it pays back five — this is wrong on so many levels. These are the people of the world that need aid the most and we are bleeding a profit out of them at a ratio of five to one. But, if you are not yet convinced that something is a little bit wrong in the international loan market then you can peruse the effects of taking an IMF loan on tuberculosis rates in a host of different former soviet countries in the PloS article. The bottom line of the study is that more people die from tuberculosis, after many important factors have been controlled for, and spending on health goes down if you take an IMF loan. The authors suggest that the mechanism that leads to the poorer health outcomes is the set of conditions placed upon the loan by the IMF that necessitate reductions in public spending. It is clear evidence that the strings attached to loans should be cut.

There is another side to this coin and the IMF put a team of researchers onto showing it. Statistics are complicated and the majority of their rebuttal is aimed at obfuscating the issue rather than directly addressing the evidence supplied in the original paper. However, the fact that both not having an IMF loan and also coming out of an IMF loan was correlated with a decrease in TB rates doesn’t do much for the IMF’s case.

Jason is  head of research at the Centre for the Mind, University of Sydney. He received his PhD in neuroscience in 2005.