Global Issues: Harmful Economic Systems 2009--the Major Barrier to People's Welfare and Development
The standard economic model of how things work is that people produce and exchange goods. Governments exist to provide “government goods”— things that people cannot provide for themselves, such as national defense. Thus the standard economic view is that activities are essentially productive. While this view has made for a thriving profession of economics, it is not a correct view of reality. The principal difficulty is that there is economic activity that is unproductive and harmful (from the point of view of those being harmed), and that this is a key feature of the economic organization of societies. What follows is a brief analytical description of these societies.
Many societies are run on this basic set of principals. Take and maintain control of the government. Use powers of the government to obtain income. Key elements of this process are described in five sections:
A fifth section International aspects/imperialism discusses international aspects of harmful economic systems, which many would say is the key part of harm. A sixth section discusses the Impact on development. A final section Reducing harm gives a too brief discussion of what people are doing to improve matters.
The influence on development of poor nations is profound. For many governments, the government/people in the government, in spite of lip service to the contrary, are not principally engaged in helping the people of the country, but rather in helping themselves. This has had and continues to have a disastrous effect on development and the incomes of poor people. The final section of this article discusses this more fully. This article exists to provide an analytical framework to understand the situation and events in many countries, which, considered separately, may be confusing.
The basic idea and activity in productive societies is helping to produce goods— things that are useful to someone— food, light bulbs, cars— and then exchanging the income received for goods that are desirable to you. This fundamental economic mechanism exists in “harmful” economic societies as well. Unfortunately, also existing, and why we describe these societies as harmful, a certain strata— usually the top— also exists to obtain goods through means which may be described as unproductive or extractive.
The principal ways in which income is obtained in a harmful economic system are twofold: 1) obtain it through the government, or, 2) use the government to maintain, consolidate and increase sources of income that are (apparently) obtained in other ways. The first is most typical or at least most evident in developing countries.
Armed conflict--typically the fight for control of the government or territory, frequently with natural resources, by groups deserves a separate discussion, because it has been throughout history the principal way in which harmful economic societies have been established and because of its importance in the world today.
Obtaining income through the government There are a wide variety of means in which government officials and others obtain revenue from the government. The first thing to recognize is that people at the top of government, or those who have significant control over the government but who are not government officials--often entrepreneurs or corporations) can and do plunder resources coming into the government. Government revenue is often not devoted to productive services but siphoned off by those in control of the government. A nation expects that its national resources will be used for the benefit of the nation. However very large amounts of such revenue are often used to enrich those in charge of the government. People at lower levels of government can plunder resources too, by not providing services which they are paid to provide, by charging for services which they should provide, or by taking goods, such as medical supplies or automobiles/trucks, which should be used for government service.
Use the government to maintain, consolidate and increase sources of income that are (apparently) obtained in other ways. This is more difficult to understand. Slavery would be an important and relatively clear example. The slave-owner is able to obtain an increased income from his slave's labor. This income is not income from the government. Nonetheless, a government--the United States before the Civil War, for example--is necessary to maintain a legal, administrative and police/military structure to permit and enforce slavery.
Land ownership would be another key example. In many countries there is highly unequal distribution of land. This ownership is typically derived from a period of conquest where land ownership was based on military force or other aspects of power. Land ownership, in spite of the passage of many years, has continued in a highly unequal fashion, essentially due to the continuance of highly unequal access to sources of power and wealth.
Forms of slavery--now without a strong basis in law--has continued to this day. In the present, a key term is "forced labor." An invaluable International Labor Organization report, Forced Labor describes the various types of forced labor. More than 12 million are trapped in forced labor worldwide. ) Certainly other aspects of society such as religion, prejudice, or 'scientific thinking' can reinforce the governmental role. For example, the Indian caste system is a system of stratification of human beings, with the Dalits or untouchables being the lowest caste, and this system has a strong religious component, as well as also being sustained by the people that benefit from the system (Wikipedia Dalit, Caste system in India).
There is also "private enterprise" harmful economic activity, where individuals, groups, and firms play a key role.
Drug cartels are a very important subset of "private enterprise" harmful economic activity where activities such as bribery, intimidation and murder are frequently employed.
Soldiers moved into Ciudad Juarez to try to regain control of a city in which more than 2,000 people have been murdered over the past year. Officials say they intend to have 7,000 troops and police in position by the end of the week. Photo: Associated Press
Mexico troops enter drug war city BBC News March 2, 2009
Guinea-Bissau assassinations: Is Colombia's drug trade behind them? Scott Baldauf Christian Science Monitor March 3, 2009
Crime and looting are examples of harmful economic activity in which poor people can participate. Crime, frequently a terrorist activity--using terror to obtain income ("your money or your life")--happens everywhere. Even legitimate governments such as in the United States typically deal only partially with crime. Many neighborhoods in the United States are subjugated to gangs that sell drugs, kill people, and maintain control of their activities through intimidation and murder. This is frequently even more true in developing countries. Not only neighborhoods, such as Brazilian favelas, but also broad areas of a country can fall under the control of groups that essentially use force and intimidation to maintain control, though they may set forth an ideological justification for their actions. Colombian paramilitaries are an example.
El Salvador grapples with rising bloodshed--per capita homicide rate is 10 times US Tracy Wilkinson Los Angeles Times May 13, 2009
Armed killings cost nations billions of dollars each year, UN-Swiss study says Elaine Engler Associated Press/Denver Post September 12, 2008 See study executive summary and main webpage.
A high level of "private enterprise" violence can lead to the desire for a more authoritarian government, a government that may restrict personal freedom, but also provides a more orderly society. As crime increases in Kabul, so does nostalgia for Taliban Pamela Constable Washington Post September 25, 2008 (You will leave this site.)
The Somali pirates have been an interesting new development in privately-run harmful economic activity, which very possibly caused by fishing fleets from various developed countries fishing illegally in Somali waters and depriving coastal Somalis of their livelihood. Behind the bare brick walls of a desolate former British colonial prison, five jailed Somali pirates didn't seem very fearsome at all. Anarchy in Somalia has not only meant pirates but also vessels from countries such as France, Spain, Indonesia, and South Korea illegally gobbling up hundreds of millions of dollars' worth of fish from Somali waters, leading to destitution among Somali fisherman, and consequently piracy Shashank Bengali Christian Science Monitor May 5, 2009 Piracy symptom of bigger problem: Somalis have faced hunger and violence for many years BBC News April 15, 2009 Somalia: Inside a pirate network IRIN News January 13, 2009
In essence, there is part of the population that is living well because of their control of assets and people. The people whose assets and income have been reallocated don’t like this and thus there is the threat of revolution— overturning the minority in benefit of the majority. This is prevented in a number of ways.
One favorite way of maintaining oppression is to stay in power for a long time, frequently by manipulating or subverting an ostensibly democratic legal framework. Election fraud/rigged elections is a principal way of staying in power. A second way— certainly a very clear way— of keeping people oppressed and unable to move to a situation that might be characterized as democratic, is terrorizing the subject population, including beatings, murder and torture. Especially important is killing leaders of the subject population(s) or otherwise keeping them from being a source of unrest (by such means as imprisonment, exile, or bribery). Controlling how people are able to communicate, including tracing what they say for possible reprisal, is also important.
Leading Chinese dissident, Liu Xiaobo, gets 11 year term for subversion after he helped draft a petition known as Charter 08 that demanded the right to free speech, open elections and the rule of law Andrew Jacobs New York Times December 24, 2009 With harsh sentence of Liu Xiaobo, China threatens democracy and human rights activists and signals to the West that its concerns don't matter much Andrew Jacobs New York Times December 25, 2009
Leonel Gómez, 68: Salvadoran activist led probe into killing of 6 Jesuit priests Patricia Sullivan Washington Post December 15, 2009 T
Three accused in 1981 murder of Chilean president Alexei Barrrionuevo New York Times December 7, 2009
Gunman kill union leader in Mexico Elisabeth Malkin New York Times November 1, 2009
North Korea's military gets priority over civilians for essential supplies. It also keeps the government in power. Photo: AP
UN envoy calls North Korea's human rights record abysmal, saying one-third of the country's population was going hungry needlessly, principally because of its 'military first' policy BBC News October 22, 2009 The murky process of hereditary succession in North Korea seems to be suspended for now due to leader's improved health Blaine Harden Washington Post September 11, 2009
In a cellphone photograph given to The New York Times, soldiers surrounded a woman on the ground on Sept. 28 in Conakry, Guinea. Several images appear to show attacks on women.
In a Guinea seized by violence, women are prey Adam Nossiter New York Times October 4, 2009 Guinea protests will continue after 150 people killed by army BBC News September 29, 2009
Web censoring widens across southeast Asia--technical means, coercion and intimidation are used in efforts to suppress criticism. China, Myanmar, Thailand, Malaysia, Vietnam are among countries doing so. James Hookway Wall Street Journal September 14, 2009
There are two powerful ways of changing a harmful economic system--through revolution, or through democracy. Revolution has been the most common way to attempt to do so in the past--though frequently thwarted by successful opposition by the existing government and its allies or by a revolutionary movement evolving into an oppressive government. Currently the most frequently used method is by democratic change. See the further discussion under Reducing harm below.
This is very similar to preventing revolution. However, what is emphasized in this section is preventing overthrow by others who would maintain a structure of harm. There are two important issue areas:
The struggle for control of the government
Armed Conflict. There are many examples of armed conflict in the world today. Examined more closely this conflict is typically over control of the government or specific territory--often territory with natural resources. Thus this conflict is over who will establish control over government/territory and subsequently over control over resources, including the power to tax, arrange oil leases, and so on. In conflict, in addition to the struggle for control over resources, there is typically great harm done to ordinary people, such as murder, amputation of limbs, rape, taking of family food and other resources. (This can be so bad that an end to conflict, even if it then means establishment of an organized system of oppression, is preferable to people.)
Revolution against an unjust government (see section above) also causes conflict. It is often difficult to decide if armed conflict is a way to gain resources, or a reasonable reaction against injustice, or a reasonable reaction by government to what is viewed as dismemberment of its territory. This in a particular circumstance is usually debatable, however it is possible to form an opinion based on the evidence. Were severe human rights violations in Bosnia, or Rwanda and Burundi justified for example? Who is correct, the government of Sudan or the people of Darfur? What is the current conflict in Somalia about?
Armed conflict is ongoing in Sudan, principally in its Darfur region. The conflict has multiple roots and extends to Chad and the Central African Republic. Making sense of Chad by Alex de Waal (February 7, 2008) does a good job of describing the roots of the regional conflict. Also see Hunger Notes section Darfur on this region for further 2008.a and Chad.
The conflict in Somalia also has ethnic and multi-country roots. See Hunger Notes section on Somalia.
Coup d'etats, 'revolutions,' and other means
There is a substantial amount of more or less violent, more or less legal, rearrangements of governments.
Paraguay president sacks army head BBC News November 5, 2009
Deal set to restore ousted Honduran president Ginger Thompson and Elisabeth Malkin New York Times October 25, 2009
Pakistan's real battle: government vs. Army. Though the situation in Swat Valley is improving, the military's success is upsetting Pakistan's fragile internal balance of power. Kathryn Allawalla Christian Science Monitor July 21, 2009
President Joao Bernardo Vieira had ruled intermittently since 1980. Guinea-Bissau is one of the world's poorest states. It has a history of coups and has become a major transit route for smuggling cocaine to Europe. Photo: BBC
Guinea-Bissau president shot dead by soldiers--an apparent revenge attack for the killing of the army chief BBC News March 2, 2009 Guinea-Bissau assassinations: Is Colombia's drug trade behind them? Scott Baldauf Christian Science Monitor March 3, 2009
How is a structure of harm maintained?
One way is by installing supporters in key areas.
Ahmadinejad reaps benefits of stacking agencies with allies Neil MacFarquhar New York Times June 24, 2009 This article describes how the President of Iran has created a pervasive network of important officials in the military, security agencies, and major media outlets.
Honduran president Zelaya dismisses the armed forces chief after he refused to give logistical support for a referendum on constitutional change BBC News June 25, 2009 This story describes how the Honduran president wants to hold a referendum that would allow him to serve a second term. Both the courts and the legislature have said the referendum is illegal, and when the armed forces chief of staff refused to provide logistical support for the referendum, he was fired.
As noted above, a key way is by killing, imprisoning, or otherwise marginalizing opponents.
A second key way is by controlling sources of wealth and then distributing the resulting income. Those who are responsible for maintaining the structure of power get paid.
Kenyan minister resigns (temporarily) over accusations that he sold a government hotel for one-third of its value BBC News July 8, 2008 (You will leave this site)
Sanctions on businessman target Syria's inner sanctum Robin Wright Washington Post February 22, 2008 (You will leave this site, be required to register once with the Post and thereafter sign in using your email address.)
Countries have "elites" and people.
Here is a description of Sudan's elite. Sudan's Unbowed, Unbroken Inner Circle Emily Wax Washington Post May 3, 2005 (You will leave this site and be required to register [once] with the Post.)
A major barrier to entry is limiting access to worthwhile employment, as well as other social advantages such as education and ability to marry outside of one's class.
Johnny Williams has scrubbed his résumé of any details that might tip off his skin color. Photo: Damon Winter/The New York Times
In job hunt, college degree cannot close racial gap Michael Luo New York Times November 30, 2009
For example, the Indian caste system is a system of stratification of human beings, with the Dalits or untouchables being the lowest caste, and this system has a strong religious component, as well as also being sustained by the people that benefit from the system (Wikipedia Dalit, Caste system in India). A 'broken people' in booming India: low-caste Dalits still face prejudice, grinding poverty Emily Wax Washington Post June 21, 2007
African-American Names Penalized During Employment Process, Study Finds Richard Morin Washington Post, August 3, 2003. (You will leave this site and be required to register [once] with the Post.)
Other barriers to entry are lack of education, poor health, not being sufficiently 'presentable'--all 'natural' barriers that arise from poverty.
In prisoners' wake, a tide of troubled kids Erik Eckholm New York Times July 4, 2009
Stopping intellectual genocide in African universities Prince Kum'a Ndumbe III University of Yaoundé, Cameroon July 18, 2007
Another way is "putting people down." Typically minorities/ordinary people have been disparaged in some way--for their supposed (lack of) intelligence, personal appearance or for some other reason. People can be marginalized because of their skin color, ethnic origin, income level or indications of same, such as names This diminishes people's sense of self-worth, and, combined with actual labor market discrimination based on the same sort of factors, is a major barrier to entry. There has been a reaction against this in many ways in many countries, but it still persists.
Ethnic pageants restyle the American beauty contest Robertha Budy heard the insult when she was a little girl, and now, even at Georgia State University in Atlanta, she still hears it. "You're Liberian? Isn't that in Africa? You don't look like it. You're pretty." Darryl Fears Washington Post October 19, 2005 (You will leave this site and be required to register [once] with the Post.)
There are major international aspects to harmful economic systems. In fact many would say that international aspects are the most important. In order to focus attention on these international aspects, we mention these aspects in a separate section. However international aspects could as well have been included in specific sections above.
Farmers in Segou. Rice producer Siaka Daou from Niono, 300km north of the capital Bamako, is among those farmers concerned that they will be reduced to being day laborers for foreign-owned concerns. “The way the government is parceling out land from Office of Niger [region] is worrisome. This will stamp out small producers. We will no longer have land to cultivate and will be forced to work for industrial agriculture producers.” Photo: Phuong Tran/IRIN
African producers may litigate over US cotton subsidies Reuters Africa December 1, 2009 Brazil wins cotton war, but the US cuts no subsidies Ann Crotty Business Report December 2, 2009 Cleaning house at the WTO: the US and other developed countries continue to defend their own interests rather than addressing the development concerns of poorer countries (opinion) Kevin Gallagher and Timothy Wise The Guardian.co.uk December 1, 2009
A mother feeds her malnourished child in the malnutrition ward in a hospital in the town of Kebri Dehar, in the Somali region of Ethiopia. Photo: David Bebber/The Times
Wealthy nations flock to farmland in Ethiopia, locking in food supplies grown half a world away, with alarming implications for hunger in Ethiopia, critics say Stephanie McCrummen Washington Post November 23, 2009
A new megafarm in Western Ethiopia, for palm-oil trees, sugar cane, rice and sesame. All through the Rift Valley region, there are new fence posts signifying the recent rush for Ethiopian land. In the old days, farmers rarely bothered with such formal lines of demarcation, but now the country’s earth is in demand. One fence stretched on for a mile or more, very possibly belonging to Sheik Mohammed Al Amoudi, a Saudi Arabia-based oil-and-construction billionaire who was born in Ethiopia and maintains a close relationship with the Ethiopian Prime Minister Meles Zenawi’s autocratic regime. Photo: Simon Norfolk/New York Times
Is there such a thing as agro-imperialism? Andrew Rice New York Times November 16, 2009 For further information on the takeover of developing country land by developed country investors see the Grain website.
Niger's president, Mamadou Tandja, far right, next to Alain Joyandet, France's secretary of state for cooperation. French president Sarkozy promised “a new relationship” with Africa three years ago, saying it would be “equal, and freed of the scars of the past.” His first cooperation secretary, Jean-Marie Bockel, later reinforced the message, saying he wanted to “sign the death warrant” of the old France-Africa relationship.” But Mr. Bockel was soon out of his post after offending Gabon's President Bongo’s father with his anticorruption declarations. His replacement, Mr. Joyandet, has been careful to moderate his tone when speaking of African autocrats. Photo: Boureima Hama/Agence France-Press — Getty Images
Anger against France grows in countries formerly part of France's colonial empire as France sides with autocratic country rulers and not the people Adam Nossiter New York Times November 10, 2009
Rwanda's move into Congo fuels suspicion: some in mineral-rich region see broader motives than disarming Hutu militiamen Stephanie McCrummen Washington Post February 13, 2009
Spain and South Africa both "gave the green light" for a failed coup in oil-rich Equatorial Guinea, British mercenary tells court BBC News June 17, 2008 (You will leave this site.)
The politics of United States aid in Venezuela Tom Barry Americas Program, Center for International Policy August 7, 2007
US military involvement is extensive in developing countries. Afghanistan is a major example. Others include:
Corruption as a form of gaining income for international firms is described in the Lynch article.
U.N. Panel Says 2,400 Firms Paid Bribes to Iraq. Oil-for-Food Program Report Alleges $1.8 Billion in Payments Colum Lynch Washington Post October 28, 2005 (You will leave this site and be required to register [once] with the Post.) Oil-for-food scandal: key reports BBC News (You will leave this site.)
The Bond article presents the idea that resource wealth has been taken from Africans to the benefit of developed countries.
Dispossessing Africa's Wealth Patrick Bond November 24, 2005
The impact on development of harmful economic systems has been enormous. Try to think about some of the consequences of what has been described above. They include war, continued devastation over centuries, and control of the government and productive resources, that have left hundreds of millions confronting starvation, while those who "govern" and "own" live very well. A recipe for disaster! And we should not blame the victims--poor people across the world. Rather we should think about how we can help them.
Neglect of ordinary people.
Elites, in control of the government, have directed resources toward themselves, and not towards the poor.
Millions in Kenya free primary education funds appear to have been stolen--World Bank, British government suspend funding Afrique en ligne December 19, 2009
25 years after Live Aid, Ethiopia tries to cover up a new famine Times Online November 18, 2009 Also see Ethiopian government inaction, repression, and obfuscation is a major cause of the developing Ethiopian famine (opinion) Alemayehu G. Mariam Huffington Post November 25, 2009 See Hunger Notes special report: Harmful economic systems
High food prices force Kenyan slum dwellers to go hungry IRIN May 27, 2009
The real hunger crisis--persistent poverty in rural Africa and South Asia Robert Paarlberg Foreign Affairs May 24, 2009
Tanzania's ruling elite neglect agriculture and poor farmers Ng’wanza Kamata University of Dar es Salaam May 24, 2009
Half the people in Zimbabwe will be dependent on food aid by the end of the year, humanitarian groups warn Al Jazeera February 7, 2009
Seven-year-old Sinikiwe cradles her young brother Simba. Hunger stalks their family. Their local church, supported by the charity Tearfund provides what little food, clothing and seed they have. Photo: BBC
Disease and starvation in Zimbabwe Paul Martin BBC News January 15, 2009
War War, caused by armed groups seeking to control the government, or territory or resources, has devastated vast regions of the world, and more importantly, vast numbers of the people of the world.
Fifteen years of conflicts have cost Africa around $300 billion--equal to the amount of international aid received Oxfam International October 12, 2007 See the full Oxfam study
Where is there major armed conflict now? These countries include Iraq, Afghanistan, Sudan, Somalia, and Israel/Palestine. Where has there been major conflict in the past which has abated (in varying degrees), but which has still greatly affected the society and its progress? The Democratic Republic of the Congo, Angola, Mozambique, Liberia, Rwanda, Burundi, Sri Lanka, Peru, El Salvador, Guatemala, Northern Uganda, and Colombia--to name a few. Governments, including tax collection, essential public services, and a fair judiciary, are not easily reestablished after a war (if they ever were established in the first place).
How many people live lives of greatly diminished productivity (and happiness) due to conflict!
Misery hangs over Gaza despite pledges of help Ethan Bronner New York Times May 28, 2009
Pakistan seeks aid for 2 million displaced Al Jalazeera May 21, 2009
In Kenya camp for Somali refugees, opened 18 years ago, many people have never left, others arrive daily BBC News May 15, 2009 Some 600,000 displaced in Kenya BBC News February 11, 2008 (You will leave this site.)
Death of rebel leader marks end of years of fighting in Sri Lanka Emily Wax Washington Post May 19, 2009 'More than 1000 civilians killed' in attacks on Sri Lanka safe zone--UN says feared bloodbath has become reality Gethin Chamberlain and Mark Tran The Guardian May 11, 2008
Armed Conflicts Now the Leading Cause of Hunger Emergencies, FAO Says (May 23, 2005) See also the excellent earlier study by Messer, Cohen and D'Costa Armed Conflict and Hunger.
The past five centuries or so have seen considerable hardship for the people living in many (now often past) societies. Africans may be taken as a key example
There has been a struggle for thousands of years by human beings in many different ways against the sort of subjugation described above. To name just one very important example, the world's religions have worked to establish a set of principles for human relationships that were very much against oppression, and though the religions were persecuted for doing so, they did manage to establish at the very least a set of guidelines for human behavior. In all countries of the world there has been a struggle against injustice, and attempts, which have met with increasing success, to establish the societal frameworks for a more just and equitable society. This is a long (and inspiring) story which we cannot recount here. The current efforts in the world to reduce harm include reducing corruption, moving to more democratic governments with established rights and processes (by means such as reducing the influence of the military and improving the fairness of elections--and having them! and reducing police brutality), and, internationally, reducing the advantages which developed nations have assigned to themselves through their control of international institutions, such as United Nations, the World Bank, and the World Trade Organization.
In recent years, there have been important efforts to have elections that express the will of the people and to implement policies that reflect an electoral mandate. Nations are evolving from power structures that have been based on some combination of military, economic and political control to ones that reflect the wishes of the (often very poor) people. This evolution has not been easy. One publication that attempts to track this evolution is Freedom House's annual survey. Survey finds world freedom reduced in 2007 with one-fifth of countries showing declines Freedom House January 18, 2008
Leonel Gómez, 68: Salvadoran activist led probe into killing of 6 Jesuit priests Patricia Sullivan Washington Post December 15, 2009
Bolivian president Morales reelected with 61 percent of the vote; plans to deepen social revolution James Painter BBC News December 7, 2009
The countries of Latin America are countries where a minority have, since the Colonial period, controlled the government and sources of income and wealth. Venezuela, Bolivia and Ecuador are three countries where dissatisfaction with government policies has led to voters installing more populist governments. (Others include Brazil, Argentina, and Peru.) These governments are now under severe strain as they have tried to implement policies favoring the majority.
South America's constitutional battles Monte Reel Washington Post January 18, 2008 (You will leave this site, be required to register once with the Post and thereafter sign in using your email address.)
The policies of the previous governments of these countries (and many others, including Brazil and Argentina) have been described as 'neo-liberal,' meaning ones that
The citizens of a country own the national resources of the country. (This may be difficult for people in the United States to understand, given that the United States has typically given these rights away to individuals and corporations in the United States.) Examples include land, mineral rights (the right to extract what lies under the land--a somewhat strange concept, as it divides up land rights, but nonetheless, one that exists in U.S. law), and the broadcast (radio, TV, and other communications) spectrum. One important issue is that these governments are attempting to improve the benefit that citizens receive from these rights.
Bolivian president Morales reelected with 61 percent of the vote; plans to deepen social revolution James Painter BBC News December 7, 2009