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Harmful Economic Systems: the Major Barrier to Peoples' Welfare and Development
THIS PAGE IS NOW BEING UPDATED ELSEWHERE--PLEASE CLICK HERE TO BE TAKEN TO THE NEW PAGE
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:
And a sixth section Reducing harm gives a brief discussion of what people are doing to improve matters
The influence on development of poor nations is profound. The government/people in the government, in spite of lip service to the contrary, is/are not 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.
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.
Corruption. One name for the unproductive allocation of resources is corruption. Corruption basically means that government officials get extra-official payments (frequently very large but also often very small) for duties that they are paid for and obliged to perform as their duties as government officials. See the most recent Transparency International annual report on corruption worldwide. Reprinted here are the Corruption rankings of the countries of the world (PDF file).
Pay for little or no work. Another concern is that government officials receive pay without delivering (often anything near) an adequate level of services. What they have done is support the current political system, not deliver government services.
Allocation of resources. The government frequently allocates resources, such as land and other natural resources such as oil, and and business opportunities, directly to itself and its supporters.
An example of this process in China and the reaction of people in one city to it is given in A Chinese city's rage at the rich and powerful: beating of student sparks riot, looting Edward Cody Washington Post August 1, 2005 (You will leave this site and be required to register [once] with the Post.)
Also Bushmen in Botswana say they were forcibly evicted from village Craig Timberg Washington Post October 16, 2005 (You will leave this site and be required to register [once] with the Post.)
In another example, the Zimbabwean government is removing many poor people from their small patch of land, probably to then give the land to influential people in the Zimbabwean government. UN condemns Zimbabwe slum blitz BBC News July 20, 2005 (You will leave this site.)
Also Bombay Moves to Push Out the Poor: Slums Are Razed as Plans Envisage Reinvented City Rama Lakshmi Washington Post May 12, 2005 (You will leave this site and be required to register [once] with the Post.) Hunger Notes would be surprised if quite a few rich people do not profit from the elimination of a few square meters of housing for many thousand of very poor people.
A very large part of this allocation/corruption is diversion of revenues from goods exported from or imported to the country.
The big ticket item is natural resource exports, including oil. One would think that discovering oil and being able to export it would enable governments in developing countries to provide sufficient resources for assisting poor people in that country to have education and health services and to provide productive employment. NOT! In fact what HN has described as harmful economic systems mean that very little---a token amount-- gets to poor people. The following brief article and link to the full report describe the (mis)use of oil revenues in developing countries .The African Oil Boom: Peril or Opportunity for Africa's Poor People? Catholic Relief Services (November 8, 2003)
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.
Armed Conflict. Unfortunately there are many examples of armed conflict in the world today. Examined more closely this conflict is typically over control of the government or territory--often territory with natural resources. Thus this conflict is over who will establish a harmful economic system 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.)
This article describes one long-running attempt to control territory for the gain of the armed group. Net tightens around northern Uganda's brutal rebel militia: Lord's Resistance Army unchecked for 20 years Emily Wax Washington Post October 8, 2005 (You will leave this site and be required to register [once] with the Post.)
This article describes the impact on poor people of conflict. In the words of the old African saying: "When the elephants fight, the grass gets trampled." Armed Conflicts Now the Leading Cause of Hunger Emergencies, FAO Says (May 23, 2005)
Keeping People Oppressed/Preventing Revolution
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.
A principal 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 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). 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. Sometimes legitimate regimes take power. The response of harmful economic regimes will be to try to maintain its sources of power, in preparation for a counter-revolution. Both Liberia and Serbia (and Iraq) are examples.
Case lifts Nigerian police veil of impunity. Nigerian police kill six young people in car, plant weapons in the car, and pass deaths off as 'fight with dangerous criminals.' Surprisingly, commission of inquiry is called. Craig Timberg October 10, 2005 (You will leave this site and be required to register [once] with the Post.) Nigerian police clash with Nigerian troops BBC News October 5, 2005 (You will leave this site.) Six years after a return to civilian rule, Nigeria's police still routinely torture detainees, a new report says Anna Borzello BBC News, Lagos, July 27, 2005 (You will leave this site.) See the Human Rights Watch summary and full report
A second way is to subvert the democratic process. Two ways are electoral fraud and rewarding your supporters/punishing your opponents.
Zimbabwe gives an example of both these techniques. Mugabe's Party Sweeps to Victory BBC News. April 1, 2005 In Zimbabwe, Withholding of Food Magnifies the Hunger for Change Craig Timberg Washington Post, March 30, 2005
A third way is to establish a dynastic tradition. The one in Togo did not work out, in terms of the son taking power after the father died, but there still is a ruling elite in Togo that includes the military. Togo's President--the Former President's Son Who Used the Military to Take Over After His Father's Death-- Steps Down After Strong International Pressure BBC News February 27, 2005 (You will leave this site.) In Togo's Dynastic Transition, An Echo of Yesterday's Africa Craig Timberg Washington Post February 8, 2005 (You will leave this site and be required to register [once] with the Post.)
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. Put in another way, how is a structure of harm maintained?
Nicaragua offers an interesting case study in how a structure of harm, or perhaps we should just say power, is maintained. In Nicaragua, the Sandinistas fought a war to overthrow the Somoza government, a dictatorship of 20 years or so, and took over the Nicaraguan government. The United States government thought that the Sandinista government was too leftist, and during the Regan administration financed a war (U.S. side the Contras) during the 1980s. A truce was arranged and the Liberals took power. However, the Liberals and the Sandistas have followed in the footsteps of the Somoza government and indeed the typical developing country government) in being more interested in aggrandizement, than for social justice (in the case of the Sandinistas) or for economic growth and human freedom (in the case of the Liberals). Bolanos was elected in 2002, defeating the Sandinista chief Daniel Oteaga, through the power of the Liberals. But when his government jailed the previous President, and Liberal Party head, Arnoldo Aleman for corruption, the political tables slowly turned against Bolanos, as both parties thought they had more to gain by continuing their past 'cosy' powersharing relationship, than permitting Bolanos to continue an anti-corruption, and presumably less corrupt, policy.
Nicaragua 'creeping coup' warning--the two principal political parties, Sandinistas and Liberals, combine against honest President Bolanos to possibly force him out of office--Bolanos had imprisoned Aleman, Liberal Party leader, for past corruption BBC News September 30, 2005 (You will leave this site.)
Charles Taylor is a former President of Liberia who is trying his best to maintain influence including a possible return to power.
Liberian ex-President Charles Taylor doing business as usual in Nigeria: international war crimes prosecutors, human rights groups and U.S. officials concerned Craig Timberg October 9, 2005 (You will leave this site and be required to register [once] with the Post.)
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.)
Uganda endured many years of tyranny under Milton Obote and Idi Amin, when thousands were killed. Youri Museveni, the present ruler of Uganda, established his control by conquest--really the only way--but has indicated his support for democracy. His government has been marked by "no-party" democracy--a democratic system which did not permit political parties to be part of elections. The reason for doing so was to quiet ethic and political divisions in the country. Now Museveni has reached the end of the constitutionally defined term limits to his presidency. A concern, based on the behavior of previous and current African presidents, including the president of Zimbabwe, Robert Mugabe, is that Musevini will not leave office and become "president for life." These stories describe a step in the possible transition back to multi-party democracy. Uganda backs multi-party return. BBC News August 1, 2005 Ugandan Referendum on Return to Fuller, Multi-party Democracy to be Held BBC News May 5, 2005 (You will leave this site.)
There is also slavery or serfdom which amazingly continues to exist throughout the world Freed Slaves Rebuild Their Lives in India Sanjoy Majumder BBC News May 11, 2005 (You will leave this site.) Born to be a Slave in Niger! Hillary Andersson BBC News February 11, 2005 (You will leave this site.)
A major barrier to entry is limiting access to worthwhile employment.
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.)
The following story describes the lack of economic mobility in Brazil through one man's story. "A study by the Brazilian Institute of Public Opinion and Statistics shows that Brazilians are nearly four times less likely to improve their economic standing from one generation to the next than Canadians or Swedes, a level comparable to South Africa. Americans are somewhere in between. Immobility, academics agree, is a conspiracy of bad schools and bad homes, inadequate health care, a loan or patch of land that is too often out of reach. So poor is the quality of Brazilian public elementary and high schools that, until rigid quota systems were implemented this year, nearly 90 percent of all admissions to competitive and lauded public universities were graduates of costly, superior private high schools.
"Quite simply, said David Lam, an economics professor at the University of Michigan, "neither the state nor any of its public institutions work very well for the poor."
Poverty & the Lack of Economic Mobility in Brazil: One Family's Story John Jeter (Washington Post, November 13, 2003. You will leave this site and be required to register [once] with the Post.)
Another way is "putting people down." Typically minorities or ordinary people have been disparaged in some way--for their (lack of) intelligence, personal appearance or for some other reason. This diminishes people's sense of self-worth, and, combined with actual labor market discrimination, is a major barrier to entry. There has been a reaction against this in many ways in many countries, but it still persists.
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.
War, basically 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.
Where is there major armed conflict now? These countries include the Sudan, the Congo, Israel/Palestine, Iraq, Afghanistan, Sierra Leone, Liberia, Northern Uganda, and Colombia, Nepal, Kashmir (conflict between groups allied with Pakistan and India, as well as the countries themselves).
Where has there been major conflict in the past which is now somewhat abated but which has still greatly affected the society and its progress? Sri Lanka, Peru, El Salvador, Guatemala--to name a few.
Subjection and Devastation over Centuries
There has been subjection of large groups of people and devastation of their lives over centuries. Two clear examples are Africans and African Americans.
Africa and Africans
The people of Africa--Sub-Saharan Africa-- have been injured greatly by the operation of the world economic/political system. This can be divided into three parts, slavery, "classical" imperialism, and the modern world.
Slavery. How many slaves were taken from Africa? What kind of social system--in Africa and in the world--permitted them to be taken? (Under what circumstances would you give your daughter or son up to slavery And if the answer is never--what circumstances would make your answer irrelevant?)
Slavery and the accompanying social system imposed on Africa began in the 1600s and continued until the late 19th century and, to some real extent, even today.
Imperialism. In addition of course to slavery there was a dividing up of the whole continent by England, France, Belgium, Spain, Portugal and Germany. Why should this be allowed! Well of course it was, due to superior arms and organization, not to mention control of the relevant international organizations which "sanctioned" such things. So the people of the continent spent 100 plus years benefiting these developed nations through such means as exporting resources--gold, diamonds, and metals.