For example, I understand loaning to governments that need to build infrastructure, so long as its not a road to no where.
Indeed. There is NOTHING wrong with a country acquiring a national debt, SO LONG as its acquired for the purpose of improving national infrastructure and increasing the capacity of the economy to conduct business and achieve greater economic growth.
This can also apply to subsidization of the educational process in order to provide a more qualified and skilled work force, which then attracts investment capital and corporations to conduct business there. This then leads to higher employment, higher wages, and eventually higher tax revenues from which the debt is paid back.
What national indebtedness SHOULD NOT be permitted to be used for, is to pander to the voting class by creating massive social programs and entitlements that generate little economic return to the nation, but rather, further burden it with future unfunded liabilities.
That's the problem Argentina and many other Latin nations have faced. They have used the available funding from the IMF to finance their own social programs, focused primarily on pandering to a particular voting class. They give them welfare, rather than the means to obtain employment. And the rest has been spent upon corrupt business practices, with dubious governmental contracts.
Every nation faces such corruption to some extent. But in Argentina, it became a situation of putting the government in debt, pocketing what you can in the process personally, and then letting someone else straighten out the mess in the future, while the politicians spirit their "ill-gotten" gains to the US or some other safe haven.
Hawk |
