The End of Poverty?
Video Documentary
Global poverty did not just happen. It began with military conquest, slavery and colonization that resulted in the seizure of land, minerals and forced labor. Today, the problem persists because of unfair debt, trade and tax policies — in other words, wealthy countries taking advantage of poor, developing countries.
Renowned actor and activist, Martin Sheen, narrates , a feature-length documentary directed by award-winning director, Philippe Diaz, which explains how today's financial crisis is a direct consequence of these unchallenged policies that have lasted centuries. Consider that 20% of the planet's population uses 80% of its resources and consumes 30% more than the planet can regenerate. At this rate, to maintain our lifestyle means more and more people will sink below the poverty line.
Filmed in the slums of Africa and the barrios of Latin America, The End of Poverty? features expert insights from: Nobel prize winners in Economics, Amartya Sen and Joseph Stiglitz; acclaimed authors Susan George, Eric Toussaint, John Perkins, Chalmers Johnson; university professors William Easterly and Michael Watts; government ministers such as Bolivia's Vice President Alvaro Garcia Linera and the leaders of social movements in Brazil, Venezuela, Kenya and Tanzania. It is produced by Cinema Libre Studio in collaboration with the Robert Schalkenbach Foundation. Can we really end poverty within our current economic system? Think again.http://www.theendofpoverty.com/
Video Documentary
Global poverty did not just happen. It began with military conquest, slavery and colonization that resulted in the seizure of land, minerals and forced labor. Today, the problem persists because of unfair debt, trade and tax policies — in other words, wealthy countries taking advantage of poor, developing countries.
Renowned actor and activist, Martin Sheen, narrates , a feature-length documentary directed by award-winning director, Philippe Diaz, which explains how today's financial crisis is a direct consequence of these unchallenged policies that have lasted centuries. Consider that 20% of the planet's population uses 80% of its resources and consumes 30% more than the planet can regenerate. At this rate, to maintain our lifestyle means more and more people will sink below the poverty line.
Filmed in the slums of Africa and the barrios of Latin America, The End of Poverty? features expert insights from: Nobel prize winners in Economics, Amartya Sen and Joseph Stiglitz; acclaimed authors Susan George, Eric Toussaint, John Perkins, Chalmers Johnson; university professors William Easterly and Michael Watts; government ministers such as Bolivia's Vice President Alvaro Garcia Linera and the leaders of social movements in Brazil, Venezuela, Kenya and Tanzania. It is produced by Cinema Libre Studio in collaboration with the Robert Schalkenbach Foundation. Can we really end poverty within our current economic system? Think again.http://www.theendofpoverty.com/
Posted September 29, 2011
WHY POVERTY PERSISTS
Why does poverty persist after more than a century of sustained global economic growth? Most economists point to economic growth as the primary solution to poverty, on the assumption that increased prosperity will "trickle down" to everyone. Yet, even in advanced industrial countries, growth in recent decades has benefited only a tiny fraction of wealthy people, not the average worker. China and India have grown rapidly also, producing their own billionaires, but those at the bottom of the economic pyramid have benefited only a little. So, what does account for the persistence of poverty in a rich world?
The Legacy of Slavery: both in US and in Africa
Americans like to believe that the past has little relevance for the future. Yet, the legacy of slavery is still with us. On average, Afro-American households have about 10% of the accumulated assets that Euro-American households have, even though the saving rate is the same. The difference lies in history. For working families, it takes generations to build up asset values, and until the end of slavery and then Jim Crow (segregation laws), it was extremely difficult for black families to build assets.
The same holds for Africa. The economic development of Africa was not only stifled. The slave trade from sub-Saharan Africa to North and South America, to India and Arab countries, and to North Africa depopulated Africa, disrupted economic and political organization, and interfered with internal trade. This did not occur just once. It was process that was carried out over at least four centuries. In effect, Africans never had time to recover and rebuild their own societies. The result today, according to economist Nathan Nunn, is that the regions of Africa hardest hit by the slave trade now have the lowest incomes. Thus, slavery in the past directly affects the level of poverty in the present.
Colonialism
Not every part of the world was damaged by slavery, but every continent was affected by colonialism. It is no accident that the countries that controlled foreign territories are generally rich and the countries that lost their autonomy under colonialism are generally poor.
In the 17th and 18th centuries, wealthy Europeans profited from the gold, silver, the products of plantations (notably sugar), being extracted from colonized areas. (Others profited from trade for spices and luxury goods in Asia.) Then, as now, only a small portion of the European population benefited from profits extracted from Asia, Africa, and Latin America.
Poverty emerged in the colonized countries for several reasons. First, as in Ireland, the colonial government actively destroyed or interfered with local crafts production, thus stifling the kinds of activities that led to industrialization in Europe. Second, land that had been used for growing food for household use and for exchange in local markets was confiscated for plantation agriculture, just as happened in Ireland. Peasants became tenants, and permanent relationship of dependency arose. Third, instead of establishing a complex, integrated domestic market, the colonizers created an export-oriented economy, often based on monoculture (such as tea or sugar or coffee), that failed to develop the internal linkages that make a modern economy strong.
Even after the end of colonial rule, these economic weaknesses remained impediments to internal development. For example, in many countries, the railroads built by the colonial powers are all designed to transport raw materials to the coast for export. The rail system is seldom useful for internal trade.
Land Appropriation
The loss of land rights by small-scale farmers was not only an economic catastrophe. It also undermined cultural and political development as well.
Economically, the destruction of small-scale farming and the creation of plantation agriculture prevented the development of a class of people who were economically capable of buying the crafts that an industrializing society is capable of producing. This stunted the growth of the middle class and led to the creation of societies plagued with mass poverty instead.
Socially, massive land appropriations created a stratified society, in which a few landowners dominated the lives of numerous workers. This created a mentality of subservience that has continued to the present.
Culturally, the connection to land has religious significance and is a factor in maintaining continuity of traditions. Land dispossession thus led to cultural poverty that is hard to measure, but which is just as important as income poverty.
Politically, any society that fails to sustain a large base of people who have some degree of economic independence cannot be self-governing. People who are economically dependent are very unlikely to be politically independent. Thus, even in the absence of colonial rule, the loss of land rights and the concentration of land ownership destroyed the basis of self-governance in many countries.
Trade
The proponents of economic liberalism speak about free trade as if it were the primary solution to poverty. But trade can deepen poverty as well as alleviate it. Trade theory suggests that a balance or equilibrium inevitably occurs, but in fact, it may lead to employment and prosperity in one country, and unemployment and misery in another. That sort of imbalance occurs particularly in the case of trade between countries that are on different levels of development. It may lock an agrarian economy into a permanent condition of low productivity and low wages.
Many countries in the last century have sought to develop behind tariffs until their economy is strong enough to compete with rest of world, just as Europe, Japan, and the US did in the past. The development of the economies of East Asia is the most recent example of how this can actually work. Recently, the United States and European powers through the WTO (World Trade Organization) have prevented Third-World countries from developing behind tariffs and actually imposed tariffs to prevent the import of furnished goods from Third-World countries. The North has promoted "free trade" in developing countries, but it has not practiced what it preaches.
One of the most pernicious practices that deprives poor countries of the income they produce is "transfer pricing". That is a method by which corporations operating in a poor country sell the products for a low price to a subsidiary company that operates in a tax haven, then resell the products for a high price (and high profit) in a rich country. A great deal of "trade" takes this form. It artificially depresses the incomes of people in poor countries and raises the incomes of the stock-holders of the corporations. It also deprives poor governments of tax revenue, which means they are limited in their ability to provide public services, which are of enormous importance to the poor.
Taxation
In order to provide roads, water, schools, and other services normally provided by a modern government, the state must have some means of collecting revenue. It took centuries in Europe for the central government to gain the power to collect taxes, largely because the aristocracy resisted. In the same way, the oligarchs who control the economies of many poor countries limit the state's capacity of impose taxes.
As a result, wealthy members of most countries are able to evade taxes to a great extent. First, they prevent even preliminary discussion or investigation of the possibility of taxing the assets held by the rich (their real estate, business holdings, and financial assets). Second, income taxes are rare and at a low level. Third, the taxes on luxury imports, which were taxed heavily until a few decades ago, have now been lifted.
The primary tax in most countries is now some form of tax on primary commodities: food, drinks, gas, electricity, and other things on which the poor rely. Thus, tax systems have become increasingly regressive, falling more heavily on the poor.
A few countries, such as Venezuela and Bolivia, have undergone virtual revolutions in their tax policies. By wresting control of their natural resources, they have been able to fund public services in large part from the profits or royalties derived from petroleum and natural gas, thus reducing the need for taxing the commodities used by the poor. Although not every government has the option of collecting revenue from hydrocarbons, many could collect more revenue from real estate, which is generally an undertaxed resource.
Debt
In total violation of international law, when countries in the South won their independence, the accumulated debts of colonial governments were transferred to the newly formed governments. By loading debt on the politically independent countries, the old colonial powers ensured that the new nations would remain economically weak and subservient to their wishes. This enabled the North to dictate policies on agriculture, trade, and customs, and give special privileges to foreign corporations, such as monopolies over mineral extraction or monoculture exploitation.
The oil crisis of 1979 and the resulting global depression (triggered by US monetary policy) massively increased borrowing by developing countries. Northern banks holding large reserves of”petrodollars" felt impelled to push loans on developing countries, which were mostly a corrupting influence. Elites in government and business borrowed the money for vanity projects, but when the bill came due, the poor had to pay for the extravagance, directly through taxes, and indirectly through lost development opportunities. The resulting debt repayment has crippled the economies of many countries, because the surplus that might have been reinvested in their own economies is instead transferred to banks and governments of the North.
The developing world still pays $10 to $15 in debt service to the North for every $1 it receives from the North in foreign aid and private transfers by emigrants to their homes. Because the debt these developing countries have accrued over time is so great and the interest is so high, very few countries are able to pay off their debt. In fact, the debt keeps growing. The World Bank and the International Monetary Fund thus have enormous leverage over indebted countries. Through "structural adjustment programs", the financial institutions can then force countries to sell off state assets, charge higher prices for subsidized commodities and services, and raise taxes and user charges on the poor. These austerity programs create misery by raising the cost of living of the poor, but they do not improve overall economic conditions.
WHY POVERTY PERSISTS
Why does poverty persist after more than a century of sustained global economic growth? Most economists point to economic growth as the primary solution to poverty, on the assumption that increased prosperity will "trickle down" to everyone. Yet, even in advanced industrial countries, growth in recent decades has benefited only a tiny fraction of wealthy people, not the average worker. China and India have grown rapidly also, producing their own billionaires, but those at the bottom of the economic pyramid have benefited only a little. So, what does account for the persistence of poverty in a rich world?
The Legacy of Slavery: both in US and in Africa
Americans like to believe that the past has little relevance for the future. Yet, the legacy of slavery is still with us. On average, Afro-American households have about 10% of the accumulated assets that Euro-American households have, even though the saving rate is the same. The difference lies in history. For working families, it takes generations to build up asset values, and until the end of slavery and then Jim Crow (segregation laws), it was extremely difficult for black families to build assets.
The same holds for Africa. The economic development of Africa was not only stifled. The slave trade from sub-Saharan Africa to North and South America, to India and Arab countries, and to North Africa depopulated Africa, disrupted economic and political organization, and interfered with internal trade. This did not occur just once. It was process that was carried out over at least four centuries. In effect, Africans never had time to recover and rebuild their own societies. The result today, according to economist Nathan Nunn, is that the regions of Africa hardest hit by the slave trade now have the lowest incomes. Thus, slavery in the past directly affects the level of poverty in the present.
Colonialism
Not every part of the world was damaged by slavery, but every continent was affected by colonialism. It is no accident that the countries that controlled foreign territories are generally rich and the countries that lost their autonomy under colonialism are generally poor.
In the 17th and 18th centuries, wealthy Europeans profited from the gold, silver, the products of plantations (notably sugar), being extracted from colonized areas. (Others profited from trade for spices and luxury goods in Asia.) Then, as now, only a small portion of the European population benefited from profits extracted from Asia, Africa, and Latin America.
Poverty emerged in the colonized countries for several reasons. First, as in Ireland, the colonial government actively destroyed or interfered with local crafts production, thus stifling the kinds of activities that led to industrialization in Europe. Second, land that had been used for growing food for household use and for exchange in local markets was confiscated for plantation agriculture, just as happened in Ireland. Peasants became tenants, and permanent relationship of dependency arose. Third, instead of establishing a complex, integrated domestic market, the colonizers created an export-oriented economy, often based on monoculture (such as tea or sugar or coffee), that failed to develop the internal linkages that make a modern economy strong.
Even after the end of colonial rule, these economic weaknesses remained impediments to internal development. For example, in many countries, the railroads built by the colonial powers are all designed to transport raw materials to the coast for export. The rail system is seldom useful for internal trade.
Land Appropriation
The loss of land rights by small-scale farmers was not only an economic catastrophe. It also undermined cultural and political development as well.
Economically, the destruction of small-scale farming and the creation of plantation agriculture prevented the development of a class of people who were economically capable of buying the crafts that an industrializing society is capable of producing. This stunted the growth of the middle class and led to the creation of societies plagued with mass poverty instead.
Socially, massive land appropriations created a stratified society, in which a few landowners dominated the lives of numerous workers. This created a mentality of subservience that has continued to the present.
Culturally, the connection to land has religious significance and is a factor in maintaining continuity of traditions. Land dispossession thus led to cultural poverty that is hard to measure, but which is just as important as income poverty.
Politically, any society that fails to sustain a large base of people who have some degree of economic independence cannot be self-governing. People who are economically dependent are very unlikely to be politically independent. Thus, even in the absence of colonial rule, the loss of land rights and the concentration of land ownership destroyed the basis of self-governance in many countries.
Trade
The proponents of economic liberalism speak about free trade as if it were the primary solution to poverty. But trade can deepen poverty as well as alleviate it. Trade theory suggests that a balance or equilibrium inevitably occurs, but in fact, it may lead to employment and prosperity in one country, and unemployment and misery in another. That sort of imbalance occurs particularly in the case of trade between countries that are on different levels of development. It may lock an agrarian economy into a permanent condition of low productivity and low wages.
Many countries in the last century have sought to develop behind tariffs until their economy is strong enough to compete with rest of world, just as Europe, Japan, and the US did in the past. The development of the economies of East Asia is the most recent example of how this can actually work. Recently, the United States and European powers through the WTO (World Trade Organization) have prevented Third-World countries from developing behind tariffs and actually imposed tariffs to prevent the import of furnished goods from Third-World countries. The North has promoted "free trade" in developing countries, but it has not practiced what it preaches.
One of the most pernicious practices that deprives poor countries of the income they produce is "transfer pricing". That is a method by which corporations operating in a poor country sell the products for a low price to a subsidiary company that operates in a tax haven, then resell the products for a high price (and high profit) in a rich country. A great deal of "trade" takes this form. It artificially depresses the incomes of people in poor countries and raises the incomes of the stock-holders of the corporations. It also deprives poor governments of tax revenue, which means they are limited in their ability to provide public services, which are of enormous importance to the poor.
Taxation
In order to provide roads, water, schools, and other services normally provided by a modern government, the state must have some means of collecting revenue. It took centuries in Europe for the central government to gain the power to collect taxes, largely because the aristocracy resisted. In the same way, the oligarchs who control the economies of many poor countries limit the state's capacity of impose taxes.
As a result, wealthy members of most countries are able to evade taxes to a great extent. First, they prevent even preliminary discussion or investigation of the possibility of taxing the assets held by the rich (their real estate, business holdings, and financial assets). Second, income taxes are rare and at a low level. Third, the taxes on luxury imports, which were taxed heavily until a few decades ago, have now been lifted.
The primary tax in most countries is now some form of tax on primary commodities: food, drinks, gas, electricity, and other things on which the poor rely. Thus, tax systems have become increasingly regressive, falling more heavily on the poor.
A few countries, such as Venezuela and Bolivia, have undergone virtual revolutions in their tax policies. By wresting control of their natural resources, they have been able to fund public services in large part from the profits or royalties derived from petroleum and natural gas, thus reducing the need for taxing the commodities used by the poor. Although not every government has the option of collecting revenue from hydrocarbons, many could collect more revenue from real estate, which is generally an undertaxed resource.
Debt
In total violation of international law, when countries in the South won their independence, the accumulated debts of colonial governments were transferred to the newly formed governments. By loading debt on the politically independent countries, the old colonial powers ensured that the new nations would remain economically weak and subservient to their wishes. This enabled the North to dictate policies on agriculture, trade, and customs, and give special privileges to foreign corporations, such as monopolies over mineral extraction or monoculture exploitation.
The oil crisis of 1979 and the resulting global depression (triggered by US monetary policy) massively increased borrowing by developing countries. Northern banks holding large reserves of”petrodollars" felt impelled to push loans on developing countries, which were mostly a corrupting influence. Elites in government and business borrowed the money for vanity projects, but when the bill came due, the poor had to pay for the extravagance, directly through taxes, and indirectly through lost development opportunities. The resulting debt repayment has crippled the economies of many countries, because the surplus that might have been reinvested in their own economies is instead transferred to banks and governments of the North.
The developing world still pays $10 to $15 in debt service to the North for every $1 it receives from the North in foreign aid and private transfers by emigrants to their homes. Because the debt these developing countries have accrued over time is so great and the interest is so high, very few countries are able to pay off their debt. In fact, the debt keeps growing. The World Bank and the International Monetary Fund thus have enormous leverage over indebted countries. Through "structural adjustment programs", the financial institutions can then force countries to sell off state assets, charge higher prices for subsidized commodities and services, and raise taxes and user charges on the poor. These austerity programs create misery by raising the cost of living of the poor, but they do not improve overall economic conditions.
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