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Global Issues: Harmful Economic Systems--the Major Barrier to People's Welfare and Development

For last year's articles, see Harmful economic systems 2010

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 four 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.

 International aspects/imperialism

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.

In Agbogbloshie, a slum in Accra, the capital of Ghana, adults and children tear away at computers from abroad to get at the precious metals inside. Left, David Akore, 18, and other foragers. At the dump, the machines are dismantled and often burned to extract metals for resale. The equipment in this digital cemetery come mainly from Europe and the United States, sometimes as secondhand donations meant to reduce the "digital divide'' — the disparity in computer access between poor nations and rich. Photo: Pieter Hugo/New York Times

A global graveyard for dead computers in Ghana (Photo slideshow) New York Times  August 15, 2010

World Bank warns on farmland grab: Foreign investors target countries with weak laws, buying arable land on the cheap and failing to deliver on promises of jobs and investments Javier Blas Financial Times July 27, 2010

Tom Albanese, Rio Tinto’s chief executive, after meeting Monday with Prime Minister Wen Jiabao at the Great Hall of the People. Pool Photo: Feng Li/Pool photograph

Tom Albanese, Rio Tinto’s chief executive, after meeting Monday with Prime Minister Wen Jiabao at the Great Hall of the People. Pool Photo: Feng Li/Pool photograph

Rio Tinto executives in China admit taking bribes David Barboza New York Times March 22, 2010 See article on Transparency International's Corruption Perceptions Index 

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 parcelling 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

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

Mali leases 395,000 acres to foreign investors, setting aside farmers' fears that they will be pushed off the land IRIN News  December 2, 2009

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

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

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:

Pakistan

US drone strike kills 60 in Pakistan Pir Zubair Shah and Salman Masood New York Times June 23, 2009

Somalia

US sends weapons to Somalia BBC News June 26, 2009

U.S. government links to Somali government warlords and to the Ethiopian invasion of Somalia  BBC News  June 18, 2007 (You will leave this site.) U.S. troops went into Somalia after raid. No top targets confirmed dead. Stephanie McCrummen Washington Post  January 12, 2007 (You will leave this site and be required to register [once] with the Post.) Somalia at the crossroads (commentary)   Harun Hassan January 13, 2007 Somali Capital Awash in Anger At Ethiopia, U.S., Interim Leaders  Stephanie McCrummen   Washington Post  January 11, 2007  U.S. air strike in Somalia targets Al-Qaeda figure  Karen DeYoung  Washington Post  January 9, 2007 Ethiopia urged to leave Somalia  BBC News  December 27, 2006 (You will leave this site.)  SOMALIA: Continuing fighting forces hundreds more to flee homes  IRIN  December 21, 2006 (You will leave this site.)  Somalis 'at war' with Ethiopia  BBC News  December 13, 2006 (You will leave this site.)

Africa

Study says Pentagon's Africa Command needs to refine mission, citing fears that it will militarize US foreign policy in Africa Eric Schmitt New York Times March 25, 2009 

Africom: the new US military command for Africa Daniel Volman African Security Research Project November 15, 2007 See Africom's home page The new military frontier: Africa Frida Berrigan Foreign Policy in Focus September 18, 2007 AFRICOM: wrong for Liberia, disastrous for Africa Ezekiel Pajibo and Emira Woods Foreign Policy in Focus July 26, 2007 Into Africa Conn Hallinan Foreign Policy In Focus  March 15, 2007 U.S. military assistance for Africa: a better solution James Jay Carafano and Nile Gardiner  Heritage Foundation October 15, 2003

Other

New military base in Colombia would spread Pentagon reach throughout Latin America John Lindsay-Poland America's Program, Center for International Policy May 28, 2009

How the U.S. lost a vital air base in Kyrgyzstan  Baktybek Abdrisaev Washington Post February 16, 2009

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 question as to who and what  is responsible for African underdevelopment can be answered at two  levels. Firstly, the answer is that the operation of the imperialist system bears major responsibility for African economic retardation by draining African wealth and by making it impossible to develop more  rapidly the resources of the continent."

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Impact on Development

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.

A security guard standing at the entrance of a Mercedes Benz dealer in Islamabad. Photo: Kuni Takahashi/New York Times

A security guard standing at the entrance of a Mercedes Benz dealer in Islamabad. Photo: Kuni Takahashi/New York Times

Controlling the government, Pakistan’s elite pay few taxes, widening the vast gap between rich and poor, hindering development, and creating conditions that have sparked insurgency Sabrina Tavernise New York Times July 18, 2010

Many North Koreans lack food and basic medical care, a report by Amnesty International said this week Photo:Gerald Bourke/AP

Many North Koreans lack food and basic medical care, a report by Amnesty International said this week Photo:Gerald Bourke/AP

North Korea's giant leap backwards: Last year's disastrous currency reform wiped out savings and caused healthcare to collapse--now many fear another famine  Barbara Demick The Guardian July 17, 2010

Water need is high in Fertile Crescent: Government regulations not heeded IRIN News June 23, 2010

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

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! 

Four months after Israel’s war against Hamas in Gaza, Suad Khadir and her family are still living in a tent. To escape the heat, they often seek refuge under the rubble. Photo: Ashraf Amra./New York Times

Four months after Israel’s war against Hamas in Gaza, Suad Khadir and her family are still living in a tent. To escape the heat, they often seek refuge under the rubble. Photo: Ashraf Amra./New York Times

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

Dadaab, in north-eastern Kenya, is the world's biggest refugee camp, home to 260,000 people. It was built in 1991 for Somalis fleeing thefighting that erupted with the collapse of Siad Barre's militaryregime. Eighteen years on, conflict is still raging and Somaliscontinue to seek safety there. Mohammed Nur Hajin arrived in 1992 with his wife and daughter and has since had six more children. Photo: BBC

Dadaab, in north-eastern Kenya, is the world's biggest refugee camp, home to 260,000 people. It was built in 1991 for Somalis fleeing the fighting that erupted with the collapse of Siad Barre's military regime. Eighteen years on, conflict is still raging and Somalis continue to seek safety there. Mohammed Nur Hajin arrived in 1992 with his wife and daughter and has since had six more children. Photo: BBC

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.

Continued Devastation over Centuries

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 

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 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.

Dispossessing Africa's Wealth  Patrick Bond  November 24, 2005

"The question as to who and what  is responsible for African underdevelopment can be answered at two  levels. Firstly, the answer is that the operation of the imperialist system bears major responsibility for African economic retardation by draining African wealth and by making it impossible to develop more  rapidly the resources of the continent."

Contemporary Africa  For a discussion of how structures of harm have continued, see  The influence of ideas and the power relationships that lead to those ideas on development in Africa Issa G. Shivji Pambazuka News October 22, 2005

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Reducing Harm

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

Villagers work at a road construction site under a government program in Andhra Pradesh, India. In decades past, fraud and waste have sapped efforts to help the poor. Rajiv Gandhi, a former prime minister, famously estimated that only 15 percent of every rupee spent on the poor actually reached them. Photo: Kuni Takahashi/New York Times  

Villagers work at a road construction site under a government program in Andhra Pradesh, India. In decades past, fraud and waste have sapped efforts to help the poor. Rajiv Gandhi, a former prime minister, famously estimated that only 15 percent of every rupee spent on the poor actually reached them. Photo: Kuni Takahashi/New York Times  

The Indian state of Andhra Pradesh empowers the poor to fight corruption Lydia Polgreen New York Times December 2, 2010

Brazil elects a woman president: Brazilians vote strongly in favor of continuing the economic and social policies of current president Lula da Silva Alexei Barrionuevo New York Times October 31, 2010

Upstarts chip away at the power of Pakistani elite Sabrina Tavernise  New York Times August 28, 2010

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

Zimbabwe prime minister Tsvangirai says that his efforts to restore democratic freedoms and the rule of law to Zimbabwe have so far failed  Al Jazeera May 31, 2009 More Zimbabwe stories

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

  • keep the economic structure of the country intact, meaning a very high degree of income going to the rich, and a high degree of assets (such as land, factories, and stock) owned by the rich

  • emphasize private enterprise (as noted above, owned by the rich)

  • 'free' trade (which in practice has meant dismantling of developing country trade barriers while keeping key developed country trade barriers), and

  • restrictions on government spending relative to government income (typically imposed by the IMF and the World Bank, as these countries owed money to the Fund and the Bank, and thus were under obligation to them) to help provide country economic stability. 

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.

Bolivia halts US anti-drug work BBC News November 2, 2008   Bolivia set for vote on new constitution BBC News October 22, 2008

A riot police officer keeps watch over residents shouting slogans outside the military airport in El Alto, where the governor of the northern province of Pando was to arrive after being detained on genocide charges. Photo: Aizar Raldes/AFP/Getty Images

A riot police officer keeps watch over residents shouting slogans outside the military airport in El Alto, where the governor of the northern province of Pando was to arrive after being detained on genocide charges. Photo: Aizar Raldes/AFP/Getty Images

Negotiators inch forward in Bolivia Patrick J. McDonnell Los Angeles Times September 17, 2008 Bolivia expels US ambassador on grounds of encouraging the country's breakup BBC News  September 4,  2008 (You will leave this site.)  Bolivia sets date for referendum on new constitution in face of strong opposition by 5 state governors--land distribution to poor people, control of oil and gas revenues key issues BBC News August 29,  2008 (You will leave this site.)

n the mostly indigenous city of Warisata, President Evo Morales greets a crowd of several thousand people commemorating Bolivia's National Day of the Indian on Saturday. Photo: Evan Abramson/Washington Post

In the mostly indigenous city of Warisata, President Evo Morales greets a crowd of several thousand people commemorating Bolivia's National Day of the Indian. Photo: Evan Abramson/Washington Post

Bolivia sets date for referendum on new constitution in face of strong opposition by 5 state governors--land distribution to poor people, control of oil and gas revenues key issues BBC News August 29,  2008 (You will leave this site.)   Bolivia referendum keeps both President Morales and opposition state governors in office--deep divisions continue BBC News August 12,  2008 (You will leave this site.)   2008 Bolivia stories

Harmful economic systems 2009  Harmful economic systems 2008

Harmful economic systems 2007  Harmful economic systems 2006 

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