Who says structural adjustment programs are just for poor countries?
In April, as the COVID-19 pandemic laid waste to the American economy, leaders in Donald Trump’s Republican Party began lacing their comments on bailouts with critiques of economic policies. American states are now getting a treatment Washington technocrats once reserved for struggling foreign nations, as Mitch McConnell, the leader of the Republican majority in the US Senate and the gatekeeper of any aid, proposed states controlled by the opposition Democratic Party file for bankruptcy before seeking assistance.
“We’re not interested in rescuing them from bad decisions they’ve made in the past,” McConnell said when asked about support that might help pay for state universities, pension funds, and firefighters in a crisis that threatened to undermine every such institution. “We’re not going to let them take advantage of this pandemic to solve a lot of problems that they created for themselves.”
McConnell’s comment became, in a matter of weeks, received wisdom on the American right. It also opened the door for what was, by comparison, a more generous offering. While a few pundits proposed withholding aid entirely from Democratic-controlled states, others proposed the government dispense aid to states that adopted more business-friendly economic reforms.
“California is facing a $54 billion budget deficit—equivalent to 37% of the total budget,” read one Wall Street Journal editorial. “To help address the shortfall, Governor Gavin Newsom wants billions of federal dollars. Not so fast. Any bailout should come with strings attached. Washington should tie assistance to tax reform, putting the Golden State’s finances on stable footing while also stimulating investment and growth.” (Never mind that, under Trump, the US national debt is due to reach its highest levels in history.)
As of writing, negotiations have stalled on aid to the states. The Trump administration, caught up in its own incompetence, seems to prefer denying any money to states. But the mere suggestion of tying aid to economic reform points to an emergent reality. In the midst of a once-in-a-century crisis, America’s ruling party is willing to use a bailout to force a particular vision for change onto American states, just as the World Bank and the International Monetary Fund (two Washington institutions headquartered just down the road from the halls of the US Congress) did to Asian, Latin American, and African nations in another era.
As an idea, structural adjustment is rooted in the heady anti-government politics of the American right. In 1981, Ronald Reagan launched his US presidency with a broad castigation of any government intervention. “Government is not the solution to our problems,” he said. “Government is the problem.”
In America, rhetoric differed from reality: under eight years of Reagan’s presidency, the United States’ federal workforce grew by about 324,000 people, and the national debt tripled, from $907 billion to $2.6 trillion. But in Africa, neoliberal technocrats could shape societies with freer hands.
In 1981, the World Bank released a book-length report, “Accelerated Development in Sub-Saharan Africa: a Plan for ACTION,” more commonly known as “the Berg report,” which would guide multilateral aid to Africa for years. The report identified a number of hindrances to Africa’s development, including overvalued currencies and a mishandling of agriculture, where most African countries derived most of their export earnings. But one major theme is obvious: African governments were too big. More specifically, they employed too many people, were too eager to intervene in the economy, and too willing to provide services for free. Donors had to provide more aid, but any foreign assistance had to be tied to essential policy changes.
“African governments,” Elliot Berg and the other World Bank authors wrote, “must be willing to take firm action on internal problems, be more open to proposals to revise policies in the light of experience, and be willing to accept the proposition that without policy reform, higher aid will be difficult to mobilize.”
The story that followed is more or less known to any student of Africa’s post-colonial history. One country after another endured near-systemic collapse as the high priests of capitalism instructed African leaders to wreck public institutions and social structures as surely as any Marxist revolutionary could have. In Nigeria, a currency devaluation led to a spike in farmers’ earnings, followed by a long period of rising incomes for traders and exporters at the expense of smaller producers. In Ghana and Kenya, reduced subsidies meant small farmers’ seed and fertilizer costs rose, often beyond what they could afford. Universities lost essential funding and sometimes closed altogether, prompting a professional exodus. African healthcare—already lacking funding after independence—suffered yet more budget shortfalls and became even worse.
By 1989, 34 African countries had accepted structural adjustment packages. In some way or another, all of them suffered. Which brings us back to the United States. As a number of scholars have said, loudly and repeatedly, there is ample reason to suspect Donald Trump is lurching towards authoritarianism. As a contender for the Republican nomination for president, he presented himself as a strongman, declaring frequently that only he could solve the nation’s most vexing problems. As the Republican candidate for president, his speeches were characterized by lies and threats of violence against his personal enemies, real and perceived. In his early days as President, Trump filled important positions with trusted family members who used their positions to enrich themselves. And as his grip on power has waned, he has exploited racial divisions by appealing to an ethno-nationalist base of supporters, assuring them that anything less than total victory will lead to their annihilation. He has called peaceful protesters a threat to the nation and sent riot police to quell them. He has sought out new ways to rig or delegitimize an upcoming election by undermining the postal service and even threatening to deploy security forces to polling places, prompting calls for international election observers to monitor an event that has marked a peaceful transition of power every four years since 1788. Moreover, his refusal to say whether he would leave office if he loses has prompted serious discussion about whether the military can lawfully remove him.
This is where Africa’s history with structural adjustment is especially relevant to the US today. By cutting back public institutions, structural adjustment was supposed to let Africans thrive in new found freedom, like flowers in a garden stripped of its weeds. But instead of making African nations more free, structural adjustment actually made many of them more tyrannical.
The relationship between structural adjustment and authoritarianism is not coincidental. As historian Bonny Ibhawoh writes in a 1999 paper, “the reality of [structural] adjustment in Africa is that a certain measure of repression and authoritarian rule is indispensable to its implementation.” The reason is fairly simple to understand. Structural adjustment programs never worked within democratic processes in Africa, Ibhawoh writes, because they weren’t formed in democratic processes to begin with. Even as the World Bank insisted on the need for “open discussion, debate, and communication involving diverse groups” (presumably including small farmers and unions), had structural adjustment programs been put to a popular vote in any African country, those groups would have rejected them outright, finding virtually everything in the plans contrary to their own interests. National leaders understood if they accounted for what those “diverse groups” wanted, the program would never happen, but if they failed to implement it, “higher aid [would] be difficult to mobilize.” Left to choose, national leaders sided with multilateral donors over constituents, repressing dissent and circumventing democratic institutions to hammer the programs through over public objections.
Damage to democracy was essential to making structural adjustment happen, but it lasted beyond the reform process, to the benefit of repressive African leaders. As Ibhawoh puts it, structural adjustment “disempowers the ruling group and by extension, the state.” What a country is left with is a government devoid of institutions—the rule of the strongman.
Is America there yet? Probably not. For the moment at least, our courts remain independent, our media mostly skeptical, if not outright critical, and dissenting state governors are not so desperate for money that they have to entertain Republican ideas for “reform.” As a president, Trump has the instincts of a despot but lacks the tenacity to circumvent the obstacles written into our system to thwart just such a leader.
But Trump is not the only Republican with tyrannical sympathies. At the party’s national convention in August, speaker after speaker made clear that racial division and fear were just as central to the party’s vision for America as they were to Trump’s. Despite some Republican leaders’ best efforts to put forward a gentler face for the party, the convention only confirmed that authoritarianism will endure at the highest levels of American government, if not through Trump than through one of his successors (one of his kids, perhaps) and through the party. Under a future despotic regime, aid to the states could be yet another tool for a Washington elite and their allies in state governments to strengthen their grip on power. As the COVID-induced recession presses on, dissenting governors may be desperate enough to entertain ideas for “reform” in exchange for needed funds. (By one estimate, failing to provide states aid money could cost as many as four million jobs and a three-percent dip in national GDP.)
In Africa, structural adjustment broke down the social sinews that are essential to any participatory government. But it also inspired new social movements to resist the dictators that followed. As Ibhawoh writes, it was during the height of Nigeria’s structural adjustment period in the late 1980s that dedicated citizens formed some of the country’s most important human rights organizations, including the Committee for the Defence of Human Rights, the Civil Liberties Organization, and the Constitutional Rights Project. If aid breaks down the social structures that make participatory democracy possible in the United States, we Americans will need to seek out models for collaboration that might help us find a way back to an inclusive society. It’s more important than ever that we learn from Africa’s history of enduring, and resisting these strictures in the past.