Thursday, April 26, 2007

Economic Growth Creates Poverty In The World

There is a "mystery" we must explain: How is it that as corporate investments and foreign aid and international loans to poor countries have increased dramatically throughout the world over the last half century, so has poverty? The number of people living in poverty is growing at a faster rate than the world’s population. What do we make of this?
It is, of course, no mystery at all if you don't adhere to trickle-down mystification. Why has poverty deepened while foreign aid and loans and investments have grown? Answer: Loans, investments, and most forms of aid are designed not to fight poverty but to augment the wealth of transnational investors at the expense of local populations.

There is no trickle down, only a siphoning up from the toiling many to the moneyed few. (From Mystery: How Wealth Creates Poverty in the World by Michael Parenti)

Even though most Americans believe the poor are to blame for their own problems, the truth is inequality is the inevitable result of capitalism. "Wealth" is moved from those who have little money or power to those who already have a lot of both. Increasing the pace of economic growth does little to combat poverty, because it is a problem of distribution, not production. Sub-Saharan Africa is one of the most fertile places in the world, yet it also boasts the highest rates of poverty, hunger and malnutrition.

In The End of Economic Growth, Adam Parsons points out:
If one billion dollars in overseas aid truly lifted 434,000 people out of extreme poverty... then the world would be an altogether different place.
The 'trickle-down theorists', in no short number, argue with the same few hackneyed metaphors to illustrate their obsession with economic growth, like the rising tide that lifts all boats, or that, rather than share the cake more evenly, it is better to bake an even larger one... What this complacent premise fails to account for is the billions of people earning less than two dollars a day who are fortunate to own a corrugated shelter, let alone a 'cake' or a 'boat' to rise in. Poverty eradication is a nice enough idea, the lesson seems to be, so long as it remains consistent with the assumption of the rich getting richer.

As of May 2005, the three richest people in the world have assets that exceed the combined gross domestic product of the 47 poorest countries. Wow, Bill Gates' personal net worth is higher than the GDP of more than half of the world's countries. (Crossed out because the comparison isn't valid - see comments)

To plead for a redistribution of wealth, even for a one percent redistribution of the incomes of the richest 20 percent to the poorest 20 percent, is tantamount to asking for a magic wand so long as the existing macroeconomic polices drive international politics... Another rudimentary metaphor to add to the trickle-down theorists limited repertoire, in this sense, might be the description of a cancerous tumour.

In other, related news, the UNDP says the brain drain costs the African continent over $4 billion annually. Canada's immigration policies do nothing to help, by the way. Our immigration policy favours the wealthy and professionals, such as doctors and lawyers - although once they get here, they are often unable to practice.


TomCat said...

Often times the economic growth that the US enjoys comes from the econmic oppression of others in the world.

Mark Dowling said...

comparing the net assets of one entity with the gross production of another is surely a bit flawed? I understand what you're getting at but if you make inappropriate comparisons it makes your overall argument seem sketchy.

Red Jenny said...

Mark, you're right. That was sloppy of me. I have crossed out the offending paragraph.