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/
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.
