The globalisation of inequality
‘Our planet is not balanced. Too few control too much, and too many have too little to hope for. Too much turmoil, too many wars. Too much suffering.’ Depending on who you are, you might think that this is Mother Teresa or Sub-Commandante Marcos of the Zapatistas. Actually, it’s James Wolfensohn, President of the World Bank, speaking at the joint WB-IMF meeting in Dubai in September this year.
A few days after Wolfensohn got it off his chest, the International Herald Tribune reported that the International Monetary Fund, which bitterly attacked Malaysia’s Mahathir Mohammad during the East Asian financial crisis, has since had a rethink. Aw shucks, we were, you know, sort of wrong: ‘The IMF has since accepted that Mahathir’s (capital and currency controls) formula worked.’
Around the same period, the Wall Street Journal came up with this original idea. Well, original for the Journal, anyway. It wrote: ‘Markets are a great way to organise economic activity, but they need adult supervision.’ Now had they figured this out 20 years ago, millions of poor families might have been spared a great deal of misery. Misery brought about precisely by the idea that markets could solve every single problem of the human race. An idea propagated forcefully and ruthlessly by the World Bank, the IMF and the Wall Street Journal.
Any criticism of the market as God these past two decades led to being branded a heretic. The market had all the answers. There was no miracle it could not perform. Some, like Swaminathan Aiyer, argued that markets alone could save the environment. Others, like Time magazine, asserted that hunger was but a function of anti-market systems. Want jobs? Leave it to the market. The market wasn’t just good for democracy. It was Democracy. This was the baloney of the last 15-20 years. There were other possible positions. Such as that you might need the market. As a tool, not as a tyranny. As just one instrument amongst many, not as an all encompassing ideology. But that would have been blasphemy.
So are the high priests of the Bank, the Fund and the Wall Street Journal sincere about this realisation? That markets need adult supervision? No such luck. (Never mind that countless millions across the world believe the Bank and the Fund – not to mention the Journal – urgently require adult supervision.) One of the tenets of market fundamentalism is that the preacher is always exempted from the practice. Iraq today presents a great example. The first declaration of the American-run Iraqi governing council was to open up every single sector of the Iraqi economy to full foreign ownership.
At the same time, any Iraqi ownership was effectively pre-empted. Two local entrepreneurs for instance, had set up the country’s first cell phone network after the war. They were doing a thriving business when they were shut down physically, and the network building job was handed over to MCI of America, a company that had no experience in that field and which only months ago was caught in the biggest accounting fraud in history.
So much for free markets. The Iraqi market is now free for American corporations ranging from Halliburton and MCI to scores of others. Halliburton is importing oil into Iraq – a country with the world’s second largest reserves of oil – at a cost of $ 1.70 a gallon. It actually costs 71 cents a gallon in the region, but the Americans have established a very captive ‘free’ market. This ‘opening up’ process resembles the opium wars of the 19th century.
Let us now look at the growth of inequality. Inequality is worse in today’s world than at any point since World War II. Inequality has grown faster in the last 15 years than in the past 50. The series of United Nations Human Development Reports since 1990 establishes that very clearly. Look at just a few of its dimensions. Rich-poor divides, resource inequality, income and consumption, access to health, or even just to water, or jobs. This crisis now affects most of the planet.
Of the many trends in globalisation, the crucial one today is corporate globalism. A world driven by and for corporate profits. Based on corporate greed rather than human need. It’s a world marked by the collapse of restraint on corporate power, in every continent.
The income gap between the top 20 per cent of the world’s population and the bottom fifth has more than doubled. By 1998, the top 20 per cent consumed 86 per cent of all goods and services. The bottom fifth made do with 1.3 per cent. The world’s richest 200 people, according to the 1999 Human Development Report, ‘more than doubled their net worth in the four years to 1998, to over $ 1 trillion. The assets of the top three billionaires are more than the combined GNP of all least developed countries and their 600 million people together.’ By 2003, that position had worsened. To the point that the Fund and Bank are making bleats of caution (if not of remorse).
What is being termed an ‘economic recovery’ in the USA, as Professor Paul Krugman of Princeton points out, is a period in which the same economy has lost three million jobs. It has also happened in a period when Chief Executive Officers (CEO) salaries reached their highest ever. (Jack Welch of GE with his $ 123 million compensation and Richard Grasso of the New York Stock Exchange with his $ 140 million, for instance.) The number of Americans living in poverty rose sharply to 12.4 per cent of the population. And among minority Blacks and Hispanics, that percentage is almost double.
Russia, once the second superpower, was subjected to ‘shock therapy’ and other doctrines of market fundamentalism in the 1990s. The former USSR lost 42 per cent of its Gross Domestic Product in a spectacularly short period. A remarkable achievement. No country has ever done that without a famine or a war. Russia did it with just the help of Jeffrey Sachs and the IMF. Poverty in Russia skyrocketed, accompanying a rise in mortality rates and high levels of distress.
Each winter, hundreds die of the cold. In 2000-01, well over 300 died in Moscow alone of hypothermia. But in that same season sales of Mercedes Benz cars in Moscow leaped by one-third. And Giorgio Armani opened a new salon in the city, to be welcomed by old friends Versace and Bulgari who had already set up store there. (The Herald Tribune referred to Armani’s delayed arrival as ‘Giorgio-come-lately’.)
China, long one of the most egalitarian societies in the world, now has countless dollar millionaires. Yet, the gap between rich and poor, coastal and interior China has grown worse. Also, the effects of certain kinds of development show up in other ways. Two giant and rapidly growing sectors catch the eye. Both are misery related. One, according to China’s own People’s Procurate, is corruption. The other is prostitution.
Would you believe that Afghanistan had the fastest growing economy this year? Not too difficult if your earlier growth was sub-zero. The Afghan economy grew at 20 per cent. But more than 50 per cent of that came from the opium crop. And what of Africa? Ask Nobel Laureate Joseph Stiglitz (who was dismissed from the World Bank for heresy against market fundamentalism). As he points out, the African continent, subjected to forcibly imposed policies of the IMF, has lost nearly a fourth of her income. Even as African cotton farmers who grow the cheapest cotton in the world go bankrupt, American cotton farmers get an annual subsidy of about a million dollars each.
So great is Africa’s overall crisis that its skilled personnel are leaving in alarming numbers. According to the Financial Times, the entire continent in 2001 had just 20,000 engineers and scientists to serve a population of 600 million. The result: there are more African scientists and engineers working in the United States than in all of Africa, says the Geneva-based International Organisation for Migration (OIM). This drain of skills is making poverty reduction almost impossible. This goes on intensifying, with not a word of protest. Yet, in today’s world, if 400 low-paid American jobs were to go to Africa, the squawking in the US would last for months in the media.
In Latin America, long the world’s most unequal region, inequality rose sharply in the ’90s. In this part of the world, 100 million people fell below the poverty line in the 1980s. So the shock of the ’90s came atop that misery. In Mexico alone, an additional 11 million people fell below the poverty line between 1990-96.
Worldwide, as FAO Director General Jacques Diouf pointed out (at the same meeting where Wolfensohn saw the light), in the last 15 years, as rich countries increased subsidies to their farmers, poor countries went from being net exporters of food to net importers.
India is a classic example of engineered inequality. On 20 October, The New York Times had a front page lead celebrating the birth of a class of people in India who spend their weekends at malls. It failed to mention that this year, India slipped three places in the human development ranking of the United Nations. We now stand at rank 127. This year’s UN Human Development Report had found that for the bulk of the Indian population, living standards are lower than those of Botswana – or even the occupied territories of Palestine. So while some of the richest people in the world live in India, so do the largest number of the world’s poor.
The euphoria over one good monsoon (actually, we’ve had several these past 15 years) seems to have erased any debate in the media on what’s happening in Indian agriculture. Small farms are dying. Investment in agriculture is down. Rural credit has collapsed and debt has exploded. Many are losing their lands as a few celebrate at the malls. In March this year, as Professor Utsa Patnaik points out, the per person availability of foodgrain was lower than it had been during the notorious Bengal Famine of 1942-43.
Thousands of farmers have committed suicide since the late 1990s. In a single district of Andhra Pradesh, Anantapur, more than 2400 farmers have taken their own lives since 1997. Elsewhere in India, like in Gujarat or Mumbai, the loss of countless jobs in industry is boosting religious fundamentalism. In the 2002 violence in Gujarat in which over 1500 lives were lost, many of the rioters were workers from shut-down textile mills.
The huge new inequalities are feeding into existing ones: For instance, in a society where they are already disadvantaged, hunger hits women much harder. Millions of families are making do with less food. In the Indian family women eat last. After they have fed their husbands and children. With smaller amounts of food being left over now, poor Indian women are eating even less that they did earlier. The strain on their bodies and health becomes greater. Yet, health care is ever more expensive.
So what sort of a society are we building in the new, confident India? We are closing small health centres and opening super luxury hospitals that 90 per cent of Indians cannot afford; shutting down primary schools and opening colleges based on exorbitant donations for admissions; closing libraries and opening multiplexes; winding up bus depots and services as we expand the airport systems.
Thousands of rich Indians now patronise weight loss clinics to shed some of their prosperity – during a period when the foodgrain available per person sharply declined. The salaries of CEOs are up, even as the pathetic real wage of landless workers sharpens their misery. We are closing fair-price food shops and opening food boutiques. We complain ritually each year of the ‘century’s greatest drought’, but build hundreds of water parks and golf courses.
Even in the basic needs of people, the divides are startling. Mumbai faced a severe water problem this summer. You wouldn’t know this if you live in the rich colonies. But in the slums countless women line up for water every morning. From four in the morning they begin positioning their buckets in line to stake their place in the queue. Sometimes, they might not get the water they wait for, which is no more than 40-50 litres a day.
In and around the same Mumbai, in the same period, there were 24 amusement water parks using 50 billion – that’s right, 50 billion – litres of water a day for the entertainment of the rich. In the desert state of Rajasthan, plagued by actual scarcity of water for five years, more water parks and golf courses were planned. A single golf course takes 1.8 to 2.3 million litres of water a day through the season. On that amount of water, over 100,000 villagers in the state could have all their water needs met for the entire summer season.
Worldwide, water is shifting from farmland and food crop to swimming pools, amusement parks, water slides, golf courses and gardens. We go ahead with this even as we know ours is a century where wars will be fought over water.
Health and living conditions: As health care gets dismantled, or privatised and more expensive, there is a lot of SARS by other names waiting to happen. The number of deaths due to SARS worldwide was about 800-odd. In four months. That’s less than half the number killed by tuberculosis in India each day. But SARS got a lot of attention because it affected the flying classes. The same with our ‘plague’ of 1994-95. It killed fewer than any major disease in India, but it frightened the beautiful people. Plague germs are notorious for their non-observance of class distinctions. They don’t require passports and visas. They board aircraft and fly club class to New York.
Why was China the worst hit by SARS? It has much to do with the economic philosophy of the past couple of decades. In China, you accessed your health care through workplace, your factory or school, or related networks. This went up in a chain from bottom to top. The small medical post at the local level posting a problem to the laboratory at the next level. When thousands of these enterprises were shut down, millions lost their access to health care. Many of these little health posts ceased to exist. When SARS broke out, China’s early warning system had been dismantled. The Chinese were taken by surprise. SARS cost the economy billions. Hong Kong Singapore, many others also found themselves hurt by SARS.
But why only China? This year, the government of France confirmed officially that nearly 15,000 people had died from a heat wave in August. That is far more devastating than SARS. Those dying were overwhelmingly elderly, senor citizens. This was not the first year France has seen a heat wave. What happened was that health care had seen serious cuts in recent times, particularly affecting the elderly. Several French parliamentarians have demanded a special debate on the so-called health reforms.
In America, tens of thousands of elderly, aging Americans are crossing the border into Canada in order to be able to buy affordable drugs. The same drugs are sold both sides of the border. But in America, the corporations marketing them have total control over pricing. Now the American state and police are intervening. Not on behalf of the poor and elderly, but on behalf of the corporations. Police are raiding pharmacies and chemists in Michigan, confiscating genuine but cheaper drugs.
In Africa, thanks to the intellectual property arrangements presided over by the WTO, millions dying of AIDS were denied cheaper drugs. The American companies controlling the patents threatened Indian companies producing the cheaper version with legal action leading possibly to their closure. After an international outcry, a compromise was reached. But the drugs are not as cheap as they could have been. Corporate profits took precedence over the lives of poor Africans.
What SARS shows you, though, is that the damage visited on the poor, the helpless, the elderly, come back to visit us. China saved some money in shutting down health care for poor rural people. It paid billions in lost tourism and other factors due to SARS. Health issues will be further complicated by the living standards built into the current dispensation. According to the latest report of the UN Habitat, one in every three human beings will live in a slum by 2030. What do we call that? From global village to global slum? The globalisation of squalor? Imagine the kind of health complications we are looking at when a third of humanity lives in slums.
The military dimension: Global inequality expresses itself in the military sphere, too. In no period of history has the gap between one power and the rest been so enormous. Yet, while the military dimension is overwhelming, it often turns out to be neither decisive nor final as the Americans are finding out in Iraq. The increasing use of military force, coupled with changing geo-political realities, also raises anew the questions surrounding military bases, such as those in Okinawa. An internal conflict in the Philippines has been globalised and soldiers from bases in Okinawa and Guam are being used for that purpose. And as the Japanese begin to find out the costs of carrying American baggage in Iraq, one Japanese anti-base protestor put into four words, what volumes of security studies do not honestly tell you: finally, bases mean war.
War is a part of this form of globalisation, not an aberration. It has already seen the seizing of resources and the looting of whole countries. The world’s second largest oil reserves are now reserved for a few corporations. The ‘axis of evil’ idea that further destabilised the Korean peninsula saw military power as a decisive mechanism. This illusion has also led to a dangerous nuclear brinkmanship between India and Pakistan. And underscores Israel’s brutality in the occupied territories. Corporate-driven globalism generates insecurity and trauma. It speaks global, but promotes local xenophobia and national chauvinism. All countries will have to cope with these.
This military dimension is built into and based on the inequalities of our time. Yet, it is this dimension that is increasingly being resorted to in our time (and not just by the United States). The free market in Iraq is simply and plainly a military construct. Crushing Afghanistan in military terms was easy. Now the US has to face the reality that opium cultivation is higher than it ever was during the time of the Taliban. And that Hamid Karzai is President of a few rooms of the palace in Kabul. Little else.
The privatisation of everything: Another central tenet of market fundamentalism dominates our times. The privatisation of everything – from industry to intellect. The huge, rapid privatisation in Russia, with rigged auctions and fraudulent sales, led to the rise of what even the government there calls ‘gangster capitalism’. A battle now rages between elected government and mafia oligarchs. Interestingly, even while supporting the arrested corporate chief, the western media do not conceal that they were and are essentially corrupt mafioso.
Meanwhile, in country after country, the privatisation of basic services has caused unimaginable distress. Serious inequality has begun to surface in countries that have not known it in a long time. In many of these processes, for instance, Japan has remained relatively unaffected in any significant way. The condition of the lowest 20 per cent of Japanese society would be far better than that same section in, say the United States. Given this, while inequalities grow worldwide, can a Japan remain immune? Unlikely.
For one thing Japan’s national debt is three times her GDP and about 36 per cent of total global debt. For another, new data suggest that even in that prosperous land, at least one-fifth of all households have, in the words of the Asahi Shimbun daily, ‘no financial assets – no savings, no insurance, no investments.’ At the same time, the value of assets for households that did have savings was at its highest ever. So the gaps are showing. Both extremes were visible in the Survey on Financial Assets and Liabilities released last month by a unit of the Bank of Japan.
And it’s going to get more complicated. Especially as Japan contemplates getting on to that privatisation-of-everything bandwagon. If Japan actually privatises management of her 250 trillion yen Postal Savings and 150 trillion yen Simplified Insurance Cover, she could be asking for very big trouble. Waiting in the wings are the very ‘fund managers’ who worked such wonders in the United States. This, after all, is the Age of the Mega Con.
Unravelling time: One thing about the prediction that less than 30 years from now, slums will house a third of humanity. The vast majority of these people will be not in Africa or Latin America but here in Asia. The worse the economic ravages, the greater the growth will be of fundamentalism and neo-fascist trends. We are witnessing the greatest loot and grab sortie in history. Not in one country, but in most. The era of giant collapses has already begun. Enron and WorldCom produced the largest bankruptcies in history. And ruined countless retirees whose pension funds had been invested in them. To MCI goes the honour of the largest accounting fraud in history. But you will see many more.
So What Can We Do? Well, for one thing, we can abandon market fundamentalism for a course that places people, not profits, at the centre of everything.
The money required to address basic problems is smaller than what many might imagine. On an additional $ 28 billion a year the world could provide basic education for every child, clean water and safe sewers to every human, and basic health and nutrition for everyone on the planet. Too costly at 28 billion? Well, every year, Europeans and Americans spend between $ 36-40 billion on cosmetics, ice cream and pet food alone. $ 28 billion is also a tiny part of the wealth of the world’s richest 225 individuals, who have a combined worth of over $ 1 trillion.
Where does the public intellectual, or for that matter any public-spirited human being, stand on these issues? How does he or she respond? Too many are celebrating the new prosperity: The Indian Express newspaper writes editorials asserting greed is good. It speaks of the value of the ‘Greed Dividend’. Many have become private intellectuals, owned by corporations, monopolies and foundations. Call it privatisation of the intellect and soul.
You would think that for something to be global it has to be inclusive and encompassing. Oddly enough, the world we call global is in fact based on exclusion, not inclusion. How does this system include or even need cotton growers in Burkina Faso? Cane cutters in the Caribbean, fishermen in Bali or for that matter Nova Scotia? Where is its place for small farmers in Bangladesh, poor peasants in Honduras, Cambodian woodcutters, Indian fishing communities, indigenous hunter-gatherers, girl students in Afghanistan, wood craftsmen in Zambia, or dam-displaced people in China?
How does corporate-driven globalism in any way need these people or include then? A system that excludes maybe two billion people – maybe far more – cannot be sustained. But here’s the good news: the excluded are responding. In October, Bolivian indigenous people cancelled a corrupt gas deal with the United States. Then they cancelled their president as well. In Venezuela, people saved the president they wanted – in a military coup supported by Washington and a coup which The New York Times wrote an editorial supporting – 24 hours before it collapsed. (The same people are all for democracy in Iraq).
In Britain, a prime minister is on survival notice. In the United States, a president with record popularity ratings enters election year fearful of defeat. There was even a silver lining to the clouds of war. For perhaps the first time in history, huge, giant anti-war movements were on the streets before the war in Iraq began. London saw what was probably its biggest anti-war rally ever – before the war began. It speaks so well of all the anti-war protests that they happened in the face of the most enormous barrage of pro-war media propaganda across the globe.
In Seattle, in Cancun, in Davos and New York. In Washington and Prague, in Genoa and Quebec, the numbers of those protesting the globalisation of inequality grows, it does not diminish. In the World Social Forum at Porto Allegre, in a hundred other forums, people seek transnational public unity against transnational corporate tyranny. Whether they are finding all the answers is another issue. The point is they are addressing many of the right questions.
There are huge energies now unleashed in the global arena. From anti-war to social justice movements. The protestors at Seattle and Cancun can in fact be seen as real globalisers. Only, they seek to globalise not greed but social justice movements. To globalise people’s cooperation against the exploitation of people. From political reform movements and minority rights platforms to basic struggles for democracy and human rights, it’s happening. All those concerns you have heard addressed earlier. Major battles are on for a radical redistribution of resources in several societies. All these are in the global arena. The challenge is how to marry these energies. Another world is possible. Other worlds are possible.