Wage war on poverty

by David Ransom

New Internationalist magazine, November 2001


James Wolfensohn, President of the World Bank, appeared on television in Britain shortly after the catastrophe on 11 September and concluded that poverty is now the greatest economic challenge facing the world. He is one of very few metropolitan mandarins to have broken ranks and opened up debate in recent weeks. For the most part the pillars of the global economy have seen it as their duty to remain unruffled, to radiate confidence.

Not so at 'Ground Zero' on Wall Street. Here dealers precipitated the biggest stock-market crash since the Great Depression. Fears grew that the destruction of the Twin Towers would tip an already 'teetering' world economy over the brink into full-blown recession. Manic uncertainty prevailed.

If there's one racing certainty, however, it is that the cost of any recession would fall most heavily on those least able to bear it. In the Great Depression of the 1930s the privations in poor Southern countries far exceeded those in the North. More recently, during the 1989 currency crisis in Argentina, the incidence of poverty all but doubled, to an astonishing 47 per cent of the population; in Russia it increased from 22 per cent to 33 per cent following the collapse of 1998.'

Lest we forget, half of humanity already lives on the equivalent of just two dollars a day or less. More than a billion people live on less than one dollar a day. This outrage visits agonizing death on millions of innocent people, including children, every day. As things stand, there is no prospect of a remedy within the meagre life expectancy of its billions of potential victims. Rather, inequalities are spiraling out of control, to what the UN Development Programme calls 'historically unprecedented' levels. This represents an ocean of humiliation and suffering, of violence against the dignity of human life, from which indiscriminate outbursts of homicidal rage are surely more - and certainly not less - likely to surface.

Yet, by any orthodox economic measure, the world economy was until quite recently in rude good health, particularly in the US. We are now being told that only the mighty consumers of America can save us from recession - by consuming even more. Unfortunately, their ability to do so rests on an over-inflated bubble of consumer credit, and on the ability of the US to run a ballooning trade deficit, thereby consuming the rest of the world's resources as well.

No wonder the US Government therefore feels compelled to project military might. But, as the days passed after 11 September, calls for a military 'firework display' became strangely muted. Consumers were urged to 'go shopping for freedom', but their loss of confidence evidently related quite as much to the prospect of an endless, ill-defined 'war on terrorism' as to terrorism itself

Gigantic sums of public money have now been spirited into existence as if from thin air: $40 billion for 'reconstruction', $15 billion for 'airlines'; $18 billion for the 'military-industrial complex'; untold support for insurance and finance houses; $500 million by way of a bribe to the military dictatorship in Pakistan; a blank cheque for the war on terrorism itself. The anticipated US Government budget surplus of $173 billion was 'made available' within a matter of days.

In practice, this money goes straight into the pockets of the already rich and powerful. It is, nonetheless, three times what the UN says is required to eliminate the very worst kind of poverty from the world - a sum which the wealthiest nations have sagely dismissed as impossibly vast up to now. The resources, it is evident, are not lacking. What we lack is the political will to fight a war on poverty, rather than terrorism. But that political will could emerge once it becomes clear that a war on terrorism is impossible either to fight or to end. A war on poverty would, after all, be more effective in restraining terrorism - and more likely to succeed. It would be waged against an easily identifiable enemy: and a start could be made by cancelling the $59 million a day the world's poorest people are still required f to give their creditors.

But a serious war on poverty would also entail some check on the increasingly liquid movement of money around the world. Here there is a sickening twist. Immediately prior to 11 September dealers with foreknowledge were evidently making fortunes for the terrorist cause on financial markets. In its wealth and sophistication Osama bin Laden's al-Qaeda group has, like the drug cartels, come to resemble a transnational corporation. All such financial transactions will have to be brought under much stricter democratic control in future. Hitherto this has been rejected as both undesirable and impossible. If it turns out to be possible after all, then so are desirable democratic measures like a 'Tobin' tax on speculation, properly deployed to reverse the downward spiral of inequality.

A strategy that pins our fate to a war on terrorism backed by excessive consumption in America - or anywhere else for that matter - will ultimately blow up in our faces. A war on poverty, on the other hand, can and must be won.


David Ransom is a co-editor of the Nl based in Oxford. davidr@newint.org

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