In which we examine a claim in a Johann Hari column

Hungary kept on pursuing sensible moderate measures, instead of punishing the population. They imposed taxes on the hugely profitable sectors of retail, energy and telecoms, and took funds from private pensions to pay the deficit.

Stealing peoples\’ pensions is \”moderate\” in HariLand.

So when in 2001 the IMF found out the Malawian government had built up large stockpiles of grain in case there was a crop failure, they ordered them to sell it off to private companies at once. They told Malawi to get their priorities straight by using the proceeds to pay off a loan from a large bank the IMF had told them to take out in the first place, at a 56 per cent annual rate of interest. The Malawian president protested and said this was dangerous. But he had little choice. The grain was sold. The banks were paid.

The next year, the crops failed. The Malawian government had almost nothing to hand out. The starving population was reduced to eating the bark off the trees, and any rats they could capture. The BBC described it as Malawi’s “worst ever famine.” There had been a much worse crop failure in 1991-2, but there was no famine because then the government had grain stocks to distribute. So at least a thousand innocent people starved to death.

At the height of the starvation, the IMF suspended $47m in aid, because the government had ‘slowed’ in implementing the marketeering ‘reforms’ that had led to the disaster. ActionAid, the leading provider of help on the ground, conducted an autopsy into the famine. They concluded that the IMF “bears responsibility for the disaster.”

Unfortunately the Action Aid report seems to be no longer on their site. However:

The worst famine in fifty years has resulted in several thousand deaths in Malawi in early 2002. An in-depth report by Action Aid Malawi places blame on a complex combination of technical failure and political mismanagement. The report calls a \”fallacy\” rumours that the IMF caused the famine by ordering the government to sell its grain reserves; both the Bank and the Fund had a hand, however, in the growing indebtedness of the agency responsible for the reserve, and recommendations to reduce the reserve which were based on inaccurate information on crop yields.

BTW, that 56% rate of interest?

That was the domestic rate of interest on Treasury Bills in Kwacha. And inflation was 57%. Thus the real rate of interest was -1%.

So, do we get to conclude that Johann Hari is a lying toerag?

I think we do, yes. Even the BBC disagrees with him.

9 comments on “In which we examine a claim in a Johann Hari column

  1. Taking s0me of the vast pile of private-saved pension funds seems like a nice easy out if you have no concept of private property. Quelle Surprise that Hari has no such concept.

    I was explaining the Argentine Solution to a lefty friend recently and was pleasantly surprised when she said “they wouldn’t dare to that here, would they?”. I am really surprised that the Hungarian government got away with it. Clearly not yet a free country.

  2. Anatole Kaletsky, who famously declared himself as “not a socialist”, called in one hysterical “save Brown” column a few years ago for the state to levy a 10% tax on private savings to give to other people to “stimulate demand”.

    That’s right – the establishment economic commenter called on the State to steal people’s savings just to keep the party going another few months. The British government didn’t even do this in 1940, probably the darkest moment for the country since the early 19th century, possibly even worse.

    Napoleon and Hitler didn’t require the State to steal people’s savings but apparently a recession with Labour in power did.

    This, of course, is one of the reasons why I am extremely dubious about private pensions. Your money is a sitting duck for two or three decades, the odds are quite reasonable that in that time some far Left loonies might be elected. Once in power they can do what they like. They can demonise you as the “kulaks” of the time, the BBC et all will happily play along and your money is gone.

    It’s a bit harder to steal 20% of your house, though.

  3. Rob – “That’s right – the establishment economic commenter called on the State to steal people’s savings just to keep the party going another few months. The British government didn’t even do this in 1940, probably the darkest moment for the country since the early 19th century, possibly even worse.”

    Except in 1940 and for decades after they did sort of inflate everybody’s savings away. A 10 percent inflation rate is more or less the same as confiscating 10 percent of people’s savings and they almost did that almost every year for about a decade I dimly remember.

    Worse, you could have been patriotic and bought War Bonds during either war. I don’t think anyone got their money back.

    “Napoleon and Hitler didn’t require the State to steal people’s savings but apparently a recession with Labour in power did.”

    I think we can say that Hitler comprehensively stole everyone’s savings. Anything you had saved up in 1939 was worth roughly zero in 1945. And the French were not dumb enough to save in a bank while Napoleon was alive. I expect it was well into De Gaule’s reign that the French opted for banks rather than gold bars under the mattress.

    “This, of course, is one of the reasons why I am extremely dubious about private pensions.”

    Well I am tempted to steal State pensions as they apply to civil servants. I imagine we will get around to that in the end.

  4. Blue Eyes – “Taking s0me of the vast pile of private-saved pension funds seems like a nice easy out if you have no concept of private property. Quelle Surprise that Hari has no such concept.”

    Notice they have more or less done that in the US despite having a fairly clear concept of private property. Not only is Social Security essentially empty bar some IOUs because the American government has already taken all the dosh, but Obama recently got the civil servant pension fund to support his government as it started to run out of cash.

    The bottom line is that pensions are like Aladdin’s Cave to politicians – great piles of cash that no one will want or notice is missing for a few decades. I am just amazed that they aren’t all looted already. But we’re getting there bit by bit. I would not hold out any hope for any pension fund no matter where you are in the West. Even if it is not outright theft, in some countries there have been moves to appoint Trade Unionists and other Leftists to the boards of superannuation funds and the like to make sure they are invested “properly”. Looting in slow motion.

  5. Johann Hari Flakes! Packed full of half-truths, misrepresentations and outright lies! With 40% less fat!

    No other journalist would be allowed to be this egregiously playful with the truth. He’s only got this far because he reconfirms the right biases to the right people. Laurie Penny is trying to squeeze into the same market.

    I hear Ireland is doing the whole plundering pensions thing too. Maybe they’ll finally get Hari’s seal of approval for a change.

  6. Eh? They didn’t punish the people, they just confiscated their pensions?

    Uh-huh. And I suppose feudalism wasn’t oppression, it was just redirecting resources?

  7. Not quite outright theft, but Gordon did get rid of the tax credit which had previously mitigated the effects of corporation tax on dividend income for pension funds.

  8. Hari’s use of the term “innocent people” here is shite, too. Used in a context in which it is meaningless in order to appeal to emotions. Pathetic.

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