How does interest make the rich richer and the poor poorer?

Confessions of an Economic Hit Man

Here is one way, as described by former economic hit man John Perkins in his book “Confessions of an Economic Hit Man”:

Claudine told me that there were two primary objectives of my work.

First, I was to justify huge international loans that would funnel money back to MAIN and other U.S. companies (Bechtel, Halliburton, Stone and Webster, and Brown and Root) through massive engineering and construction projects.

Second, I would work to bankrupt the countries that received those loans (after they had paid MAIN and other U.S. contractors of course) so that they would be forever beholden to their creditors, and so they would present easy targets when we needed favours, including military bases, UN votes, or access to oil and other natural resources.

My job, she said was to forecast the effects of investing billions of dollars in a country. Specifically, i would produce studies that would project economic growth twenty to twenty five years into the future and that evaluated the impacts of a variety of projects. For example, if a decision was made to lend a country $1 billion to persuade its leaders not to align with the Soviet Union, I would compare the benefits of investing that money in power plants with the benefits of investing in a new national railroad network or a telecommunications system.

Or I might be told that the company was being offered the opportunity to receive a modern electric utility system, and it would be up to me to demonstrate that such a system would result in sufficient economic growth to justify the loan. The critical factor, in every case, was gross national product. The project that resulted in the highest average annual growth of GNP won. If only one project was under consideration, I would need to demonstrate that developing it would bring superior benefits to the GNP.

The unspoken aspect of every one of these projects was that they were intended to create large profits for the contractors, and to make a handful of wealthy influential families in the receiving countries very happy while ensuring the long term financial dependence and therefore the political loyalty of governments around the world.

The larger the loan, the better.

The fact that the debt burden placed on a country would deprive its poorest citizens of health, education, and other social services for decades to come was not taken into consideration…The rich get richer and the poor grow poorer.

(Source: “Confessions of an Economic Hit Man” by John Perkins)