STWR - Share The World's Resources

19th Jan 07 - Jeremy Clarke, Reuters

Curbing poverty in Third World countries will not only satisfy life and death needs for the poor but also provide security for rich nations, one of the world's best-known economists said on Wednesday.

Jeffrey Sachs, special adviser to the United Nations on the Millennium Development Goals, said extreme poverty was fuelling conflicts in places such as Somalia and Sudan's Darfur region.

If global development priorities are not reassessed to account for massive urban poverty, well over half of the 1.1 billion people projected to join the world’s population between now and 2030 may live in under-serviced slums, according to State of the World 2007: Our Urban Future, released today by the Worldwatch Institute. Additionally, while cities cover only 0.4 percent of the Earth’s surface, they generate the bulk of the world’s carbon emissions, making cities key to alleviating the climate crisis, notes the report.

2007 will be a difficult year in international development, for five reasons.

First, there will be many reminders that poverty remains ubiquitous, that conflict destroys lives and livelihoods, and that environmental pressures are increasing. Though Africa will continue to grow, in aggregate faster than developed countries, it will become clear just how big a share of this is the result of high prices for oil and other commodities - and how little the poor benefit from enclave-based growth. The "resource curse" will be much discussed. Conflict will continue to plague the Horn of Africa, with Somalia adding to the woes of Darfur. 2007 will see more than its fair share of natural calamities.

Second, the developed-country response will be seen to have been less generous than was promised in 2005, the so-called year of international development. Matters will come to a head at the Germany-led G8 summit on 6-8 June 2007, when it will become apparent that Germany and Italy, among others, are failing to meet their promises - this despite chancellor Angela Merkel putting Africa high on the G8 agenda.

The key to understanding why Grameen Bank founder and CEO Muhammad Yunus won the Nobel Peace Prize lies in the current fascination with individualistic myths of wealth and poverty. Many policy-makers believe that poverty is "simply" a problem of individual behavior. By rejecting the notion that poverty has structural causes, they deny the need for collective responses. In fact, according to this tough-love view, broad-based civic commitments to increase employment or provide income supports only make matters worse: helping the poor is pernicious because such aid undermines the incentive for hard work. This ideology is part and parcel of neoliberalism.

For neoliberals the solution to poverty is getting the poor to work harder, get educated, have fewer children, and act more responsibly. Markets reward those who help themselves, and women, who comprise the vast majority of microcredit borrowers, are no exception. Neoliberals champion the Grameen Bank and similar efforts precisely because microcredit programs do not change the structural conditions of globalization—such as loss of land rights, privatization of essential public services, or cutbacks in health and education spending—that reproduce poverty among women in developing nations.

While economists laud the recently deceased Milton Friedman for being “a champion of freedom whose work transformed economics and changed the world,” as a full-page advertisement in the New York Times put it, people in the South will remember the University of Chicago professor as the eye of a human hurricane that cut a swath of destruction through their economies.  For them, Friedman will long be associated with two things: free-market reform in Chile and “structural adjustment” in the developing world. 

Soon after the coup against the government of Salvador Allende on September 11, 1973, Chilean graduates of Friedman’s economics department, who were soon dubbed the “Chicago Boys,” took over the helm of the economy and launched a program of economic transformation with doctrinal vengeance.   In light of his much-quoted assertion about political freedom going hand-in-hand with free markets, the irony that in Chile a free market paradise was being imposed with the bayonets of one of Latin America’s most bloodstained dictatorships could not have escaped the guru. 

Authors: Broad, R.; Cavanagh, J.; World Policy Journal
Produced by: New Rules for Global Finance (2006)

The popular backlash to the Washington Consensus (an agenda of enforced open market policies) has been witnessed in protest marches and anti-globalisation campaigns for quite some time. This revolutionary mood, the authors argue, has been hijacked by the influencial, articulate voices of Jeffrey Sachs and Thomas Friedman. This article presents a critique of these two figures' work, and warns of the risks their policy prescriptions entail.

Arguing that Sachs and Friedman's solutions to ending poverty are over-simplistic, the authors add that such claims are merely loosely-vieled interpretations of the market liberalisation policies of the 1980s and 1990s. Accepted as simple truth by many, these straight-forward answers to poverty eradication are, according to the authors, built upon dubious facts about the poor, aid, trade and the options available to donor countries.