The debt crisis of the 1980s confirmed what most economists already knew well: the public sector cannot be trusted to make the rigth choices on behalf of society, especially in matters-such as foreign borrowing- whose ultimate costs may not be fully internalized by voters. The failure of the public sector suggested market discipline as the solution for the efficient channeling of foreign savings into capital-scare developing countries, to be implemented through the liberalization of the capital account and fiscal restraint.