How Wealth Creates Poverty In The World

[StickyFingaZ 0]

How Wealth Creates Poverty In The World
by Michael Parenti

Countercurrents.org



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.

[ExAFO 0]

And Socialism and Communism creates laziness. Fuck you, I'm here to take care of myself and my loved ones. I am not responsible for the livelihood of someone else..

The world's ills are neither my responsibility nor my obligation to alleviate.

Illinois needs a CCW Law. NOW.

[willard 0]

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And Socialism and Communism creates laziness. Fuck you, I'm here to take care of myself and my loved ones. I am not responsible for the livelihood of someone else..

My thoughts exactly.

[skydyvr 0]

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And Socialism and Communism creates laziness. Fuck you, I'm here to take care of myself and my loved ones. I am not responsible for the livelihood of someone else..

My thoughts exactly.

Cesar Millan would say that capitalists are the Alpha males in the pack.

. . =(_8^(1)

[billvon 2,426]

>Fuck you, I'm here to take care of myself and my loved ones.

It is ironic that you would choose today to post this, on a day when we honor people who most decidedly did NOT have that attitude. I am glad they are in the majority.

[willard 0]

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>Fuck you, I'm here to take care of myself and my loved ones.

It is ironic that you would choose today to post this, on a day when we honor people who most decidedly did NOT have that attitude. I am glad they are in the majority.

What does Memorial Day have to do with the subject of the article? Kinda stretchin' things there Bill.

[ExAFO 0]

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>Fuck you, I'm here to take care of myself and my loved ones.

It is ironic that you would choose today to post this, on a day when we honor people who most decidedly did NOT have that attitude. I am glad they are in the majority.

I'm a Vet. I did my piece for the US. Rethink your stance.

Illinois needs a CCW Law. NOW.

[billvon 2,426]

>What does Memorial Day have to do with the subject of the article?

Memorial Day is a day we remember the people who saw a responsibility to more than themselves and their loved ones, and who made the ultimate sacrifice for people they'd never even met. Indeed, we call these people heroes.

[joedirt 0]

That's funny how this author thinks a lack of child labor laws in India are the fault of the U.S., even though we DO have child labor laws here. How about we blame the people, or government, in THAT country. Of course not. He also does not mention all the foreign capital coming INTO the U.S.

[Guest]

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That's funny how this author thinks a lack of child labor laws in India are the fault of the U.S., even though we DO have child labor laws here. How about we blame the people, or government, in THAT country. Of course not. He also does not mention all the foreign capital coming INTO the U.S.

I agree. A Marxist rant. No sources, no footnotes. Didn't even spell a company's name right.

Not worth reading - I just skimmed it and saw the usual anti-American diatribes...{yawn}

mh
.

"The mouse does not know life until it is in the mouth of the cat."

[dorbie 0]

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>What does Memorial Day have to do with the subject of the article?

Memorial Day is a day we remember the people who saw a responsibility to more than themselves and their loved ones, and who made the ultimate sacrifice for people they'd never even met. Indeed, we call these people heroes.

Yep and a lot of them did it for their capitalist society vs. communist ones. It's quite surprising to see you co-opt them to your cause in yet another fataly flawed analyis and impugn a veteran in the process.

While you were earning your stock options at Qualcomm etc. exAFO was serving yet you have the cheek to equate his attitude in support of capitalism and in opposition to a flawed & corrupting philosophy to a lack of self-sacrifice.

The people we remember on memorial day did not merely throw their lives away for strangers, they fought in support of ideas bigger than themselves. The sacrificed in the service of freedom and other noble causes.

[philh 0]

Staright away this article is suspect because it does not give a static defintion of poverty. In fact it does not define it at all. Having not defined poverty it does not provide any statistics to back up the claim that poverty is increasing. Quite frankly this is the sort of thinking even a child should be able to rise above.Perhaps with meanigfully defined statistics we can start a meaningful dicsussion on the topic. Without that, its a big waste of time.

[willard 0]

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>What does Memorial Day have to do with the subject of the article?

Memorial Day is a day we remember the people who saw a responsibility to more than themselves and their loved ones, and who made the ultimate sacrifice for people they'd never even met. Indeed, we call these people heroes.

Yes, I realize that. That is a very good description of what Memorial Day is all about. But still, what does it that have to do with the subject of the article, which is blaming others for not sharing their wealth? Did not those men and women also fight and die to protect our right to earn and keep our own money and to do with it as we wish (for the most part)? For our right to earn as much money as we want or can?

[kallend 1,644]

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>What does Memorial Day have to do with the subject of the article?

Memorial Day is a day we remember the people who saw a responsibility to more than themselves and their loved ones, and who made the ultimate sacrifice for people they'd never even met. Indeed, we call these people heroes.

Yes, I realize that. That is a very good description of what Memorial Day is all about. But still, what does it that have to do with the subject of the article, which is blaming others for not sharing their wealth? Did not those men and women also fight and die to protect our right to earn and keep our own money and to do with it as we wish (for the most part)? For our right to earn as much money as we want or can?

No man is an island, entire of itself; every man is a piece of the continent, a part of the main; if a clod be washed away by the sea, Europe is the less...any man's death diminishes me, because I am involved in mankind... John Donne

...

The only sure way to survive a canopy collision is not to have one.

[kallend 1,644]

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And Socialism and Communism creates laziness. Fuck you, I'm here to take care of myself and my loved ones. I am not responsible for the livelihood of someone else..

The world's ills are neither my responsibility nor my obligation to alleviate.

When do you graduate from law school? You have a fine career ahead of you as a lawyer.

...

The only sure way to survive a canopy collision is not to have one.

[willard 0]

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>What does Memorial Day have to do with the subject of the article?

Memorial Day is a day we remember the people who saw a responsibility to more than themselves and their loved ones, and who made the ultimate sacrifice for people they'd never even met. Indeed, we call these people heroes.

Yes, I realize that. That is a very good description of what Memorial Day is all about. But still, what does it that have to do with the subject of the article, which is blaming others for not sharing their wealth? Did not those men and women also fight and die to protect our right to earn and keep our own money and to do with it as we wish (for the most part)? For our right to earn as much money as we want or can?

No man is an island, entire of itself; every man is a piece of the continent, a part of the main; if a clod be washed away by the sea, Europe is the less...any man's death diminishes me, because I am involved in mankind... John Donne

Neither a borrower nor a lendor be, for a loan oft lose both itself and friend.
To thine ownself be true.
William Shakespeare

[kallend 1,644]

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>What does Memorial Day have to do with the subject of the article?

Memorial Day is a day we remember the people who saw a responsibility to more than themselves and their loved ones, and who made the ultimate sacrifice for people they'd never even met. Indeed, we call these people heroes.

Yes, I realize that. That is a very good description of what Memorial Day is all about. But still, what does it that have to do with the subject of the article, which is blaming others for not sharing their wealth? Did not those men and women also fight and die to protect our right to earn and keep our own money and to do with it as we wish (for the most part)? For our right to earn as much money as we want or can?

No man is an island, entire of itself; every man is a piece of the continent, a part of the main; if a clod be washed away by the sea, Europe is the less...any man's death diminishes me, because I am involved in mankind... John Donne

Neither a borrower nor a lendor be, for a loan oft lose both itself and friend.
To thine ownself be true.
William Shakespeare

May I take it, then, that you've never had a mortgage or a savings account?

...

The only sure way to survive a canopy collision is not to have one.

[willard 0]

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>What does Memorial Day have to do with the subject of the article?

Memorial Day is a day we remember the people who saw a responsibility to more than themselves and their loved ones, and who made the ultimate sacrifice for people they'd never even met. Indeed, we call these people heroes.

Yes, I realize that. That is a very good description of what Memorial Day is all about. But still, what does it that have to do with the subject of the article, which is blaming others for not sharing their wealth? Did not those men and women also fight and die to protect our right to earn and keep our own money and to do with it as we wish (for the most part)? For our right to earn as much money as we want or can?

No man is an island, entire of itself; every man is a piece of the continent, a part of the main; if a clod be washed away by the sea, Europe is the less...any man's death diminishes me, because I am involved in mankind... John Donne

Neither a borrower nor a lendor be, for a loan oft lose both itself and friend.
To thine ownself be true.
William Shakespeare

May I take it, then, that you've never had a mortgage or a savings account?

As always you attempt to change the subject.
My point was, since you are incapable of grasping it, is that a quote can be found to support any position one cares to take. Just because it is worded eloquently does not make it necessarily true. But, to answer your question, you can assume I never had a savings account or a mortgage if I can assume everything you ever did in you life was for the good of all mankind with no regard to your personal sacrifice.

Of course we all must contribute in some way to society, it is the mark of civilization. But that doesn't mean we can't make $50,000,000,000 from an idea if we want to and are able. To blame the wealthy for the plight of the poor is ludicrous and nothing more than petty envy.

[rehmwa 2]

Did you realize that almost half of the people in the world make less than almost half of the people in the world? really.

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[KidWicked 0]

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>Fuck you, I'm here to take care of myself and my loved ones.

It is ironic that you would choose today to post this, on a day when we honor people who most decidedly did NOT have that attitude. I am glad they are in the majority.

I'm a Vet. I did my piece for the US. Rethink your stance.

He should rethink his stance simply because you are a veteran? I don't see him interpreting your statement. "Fuck you, I'm here to take care of myself" doesn't need much interpretation.

It looks to me like you're just pulling out your "Veteran trump card". Lame.

Coreece: "You sound like some skinheads I know, but your prejudice is with Christians, not niggers..."

[Zipp0 1]

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And Socialism and Communism creates laziness. Fuck you, I'm here to take care of myself and my loved ones.

Well, since nobody else said it...FUCK YOU!

--------------------------
Chuck Norris doesn't do push-ups, he pushes the Earth down.

[Richards 0]

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That's funny how this author thinks a lack of child labor laws in India are the fault of the U.S., even though we DO have child labor laws here. How about we blame the people, or government, in THAT country. Of course not. He also does not mention all the foreign capital coming INTO the U.S.

If we outsource work to countries who will expolit child labour just to keep our own costs down then we are responsible for keeping up the demand for child labour.

My biggest handicap is that sometimes the hole in the front of my head operates a tad bit faster than the grey matter contained within.

[billvon 2,426]

>While you were earning your stock options at Qualcomm etc. exAFO was
>serving . . .

Yep, and I admire him for that. He was (fortunately) not just taking care of himself and his loved ones, but putting his life on the line for people he had never met.

>The people we remember on memorial day did not merely throw their lives
>away for strangers, they fought in support of ideas bigger than
>themselves. The sacrificed in the service of freedom and other noble
> causes.

Agreed 100%. I am glad they did not have a "fuck you, I'm here to take care of myself and my loved ones" attitude.

[joedirt 0]

Speak for yourself. A corporation exists for only one reason... to make a profit. The men who run corporations have only one job... to make a profit any way they can within the law. All we can do is pass laws in our own country, to control how these corporations operate, not elsewhere. George Bush can sign whatever document he likes, but it won't change child labor laws in India or South America, and it wont change China's consumption of petroleum. The U.S. could invade countries and force them to adopt our labor laws... but I'm guessing you wouldn't support that.

[Richards 0]

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Speak for yourself. A corporation exists for only one reason... to make a profit. The men who run corporations have only one job... to make a profit any way they can within the law.

Understood. That is why we need to put legal presure on corporations to conduct themselves in an ethical manner. As a matter of fact even investors can put pressure on a corporation. You should read up on ethical funds and the growing trend of people investing in them.

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All we can do is pass laws in our own country, to control how these corporations operate, not elsewhere.

Again we can stop our corporations from outsourcing to these countries, and we can ban imports.

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The U.S. could invade countries and force them to adopt our labor laws... but I'm guessing you wouldn't support that.

You guessed that right. Does that make me weak?

My biggest handicap is that sometimes the hole in the front of my head operates a tad bit faster than the grey matter contained within.