Mystery:
How Wealth Creates Poverty in the World
Michael Parenti
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?
Over the last half
century, U.S.
industries and
banks (and other western corporations) have invested heavily in those
poorer
regions of Asia, Africa, and Latin America known as the “Third World.” The transnationals are attracted
by the rich natural
resources, the high return that comes from low-paid labor, and the
nearly
complete absence of taxes, environmental regulations, worker benefits,
and
occupational safety costs.
The U.S.
government has subsidized this flight of capital by granting
corporations tax
concessions on their overseas investments, and even paying some of
their
relocation expenses---much to the outrage of labor unions here at home
who see
their jobs evaporating.
The transnationals
push out local businesses in the Third World
and preempt their markets. American agribusiness cartels, heavily
subsidized by
U.S.
taxpayers, dump surplus products in other countries at below cost and
undersell
local farmers. As Christopher Cook describes it in his Diet for a
Dead
Planet, they expropriate the best land in these countries for
cash-crop
exports, usually monoculture crops requiring large amounts of
pesticides,
leaving less and less acreage for the hundreds of varieties of
organically
grown foods that feed the local populations.
By displacing
local populations from their lands and robbing them of their
self-sufficiency,
corporations create overcrowded labor markets of desperate people who
are
forced into shanty towns to toil for poverty wages (when they can get
work),
often in violation of the countries’ own minimum wage laws.
In Haiti,
for
instance, workers are paid 11 cents an hour by corporate giants such as
Disney,
Wal-Mart, and J.C. Penny. The United States is one of the
few countries that has
refused to sign an international convention for the abolition of child
labor
and forced labor. This position stems from the child labor practices of
U.S. corporations
throughout the Third World and
within the United
States
itself, where children as young as 12 suffer high rates of injuries and
fatalities, and are often paid less than the minimum wage.
The savings that
big business reaps from cheap labor abroad are not passed on in lower
prices to
their customers elsewhere. Corporations do not outsource to far-off
regions so
that U.S.
consumers can save money. They outsource in order to increase their
margin of
profit. In 1990, shoes made by Indonesian children working twelve-hour
days for
13 cents an hour, cost only $2.60 but still sold for $100 or more in
the United States.
U.S. foreign aid usually works hand
in hand
with transnational investment. It subsidizes construction of the infrastructure needed by corporations in
the Third World: ports, highways, and
refineries.
The aid given to Third World governments comes with strings
attached. It
often must be spent on U.S. products, and the recipient nation is
required to
give investment preferences to U.S. companies, shifting consumption
away from
home produced commodities and foods in favor of imported ones, creating
more
dependency, hunger, and debt.
A good chunk of
the aid money never sees the light of day, going directly into the
personal
coffers of sticky-fingered officials in the recipient countries.
Aid (of a sort)
also comes from other sources. In 1944, the United Nations created the
World
Bank and the International Monetary Fund (IMF). Voting power in both
organizations is determined by a country’s financial contribution. As
the
largest “donor,” the United States
has a dominant voice, followed by Germany,
Japan, France, and Great Britain.
The IMF operates in
secrecy with a select group of bankers and finance ministry staffs
drawn mostly
from the rich nations.
The World Bank and
IMF are supposed to assist nations in their development. What actually
happens
is another story. A poor country borrows from the World Bank to build
up some
aspect of its economy. Should it be unable to pay back the heavy
interest
because of declining export sales or some other reason, it must borrow
again,
this time from the IMF.
But the IMF
imposes a “structural adjustment program” (SAP), requiring debtor
countries to
grant tax breaks to the transnational corporations, reduce wages, and
make no
attempt to protect local enterprises from foreign imports and foreign
takeovers. The debtor nations are pressured to privatize their
economies,
selling at scandalously low prices their state-owned mines, railroads,
and utilities
to private corporations.
They are forced to
open their forests to clear-cutting and their lands to strip mining,
without
regard to the ecological damage done. The debtor nations also must cut
back on
subsidies for health, education, transportation and food, spending less
on
their people in order to have more money to meet debt payments.
Required to
grow cash crops for export earnings, they become even less able to feed
their
own populations.
So it is that
throughout the Third World, real wages have declined, and national
debts have
soared to the point where debt payments absorb almost all of the poorer
countries’ export earnings---which creates further impoverishment as it
leaves
the debtor country even less able to provide the things its population
needs.
Here then we have
explained a “mystery.” 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.
In their perpetual
confusion, some liberal critics conclude that foreign aid and IMF and
World
Bank structural adjustments “do not work”; the end result is less self-sufficiency and more poverty
for the recipient nations, they point out. Why then do the rich member
states
continue to fund the IMF and World Bank? Are their leaders just less
intelligent than the critics who keep pointing out to them that their
policies
are having the opposite effect?
No, it is the
critics who are stupid not the western leaders and investors who own so
much of
the world and enjoy such immense wealth and success. They pursue their
aid and
foreign loan programs because such programs do
work. The question is, work for whom? Cui bono?
The purpose behind
their investments, loans, and aid programs is not to uplift the masses
in other
countries. That is certainly not the business they are in. The purpose
is to
serve the interests of global capital accumulation, to take over the
lands and
local economies of Third World peoples, monopolize their markets,
depress their
wages, indenture their labor with enormous debts, privatize their
public
service sector, and prevent these nations from emerging as trade
competitors by
not allowing them a normal development.
In
these respects, investments, foreign loans,
and structural adjustments work very well indeed.
The real mystery
is: why do some people find such an analysis to be so improbable, a
“conspiratorial” imagining? Why are they skeptical that U.S. rulers knowingly and deliberately
pursue
such ruthless policies (suppress wages, rollback environmental
protections,
eliminate the public sector, cut human services) in the Third World? These
rulers are
pursuing much the same policies right here in our own country!
Isn’t it time that
liberal critics stop thinking that the people who own so much of the
world---and want to own it all---are “incompetent” or “misguided” or
“failing
to see the unintended consequences of their policies”?
You are not being very smart when you think
your enemies are not as smart as you. They know where their interests
lie, and
so should we.
Michael Parenti's recent books
include The
Assassination of Julius Caesar (New Press), Superpatriotism (City
Lights), and
The Culture Struggle (Seven Stories Press). For more information visit: www.michaelparenti.org.