Thursday, 02 October 2014 / TRUTH-OUT.ORG

What's Really Driving Inequality?

Friday, 25 April 2014 10:21 By Alnoor Ladha and Martin Kirk, Truthout | Op-Ed

2014 0425bank(Image: World banking via Shutterstock)

Truthout is accountable to our readers, not big business or billionaire sponsors. You can sustain our work by clicking here to make a tax-deductible donation!

Global inequality is a topic du jour. It's on the lips of everyone from the NGOs to the UN to the Davos set, and rightly so. Oxfam's recent unearthing of the fact that the richest 85 people have the same wealth as the poorest 3.5 billion is truly shocking to anyone with a conscience. Unfortunately, none of them is prepared to seriously tackle the mother of all causes: perpetual economic growth. In fact, they are all slaves to it.

It's not difficult to pinpoint some of the more visible structures and decisions that have led to this situation. You could argue that we have been on this path since the creeping start of capitalism during the Industrial Revolution, all the way through to the latest dramatic rise following the deregulation frenzies of the 1980s. Any way you look at it, though, behind today's particularly egregious situation is a host of decisions or structures including tax havens; corporate exceptionalism under the law (think "too big to fail"); the flooding of politics with money, particularly in the US; and trade rules heavily rigged in favor of those with the most money and lawyers.  

Supporting it all is the creation known as the hyper-consumer, whose compassion is dulled and whose competitive instincts are permanently primed thanks to ubiquitous demands to buy, buy, buy and then the continuous glorification of the idea that happiness is what you own. What else is the $1 trillion advertising industry for? Taken altogether, the global economy is essentially now a wealth extraction system; ruthlessly efficient at drawing financial and resource wealth away from the majority of people and piling it up in the Cayman bank accounts of the 1%. 

The reasons for all this are, of course, many and complex. But stand far enough back, and it's also quite simple. Essentially it boils down to the fact that the corporate capitalist system is governed by incentives and rewards that are unable to directly register anything but economic value. The system is deaf, dumb and blind to climate destruction and mass human suffering. It would be like asking a human being to hear dog whistles. In other words, by just doing what it does, left to obey its own logic, the economic system will grow until it destroys itself - and Mother Earth in the process. It will consume resources until there is nothing left. It will grind over humanity, causing and excusing human rights abuses on whatever scale is necessary for it to keep growing, even until all the energy of humanity is exhausted and the system collapses. It is, at this stage, far bigger than any government or corporation. It is, to all intents and purposes, a living force. It's not alive in any traditional sense, of course, but it is undoubtedly possessed of an energy beyond our control. Unless the logic driving it is changed, we are hurtling toward a planetary emergency, as Truthout's Dahr Jamail has so vividly described.

Complaining about the system can be therapeutic, but we must also be able to isolate strategic weak points and offer positive alternatives. So here is an example of how the logic of perpetual economic growth is powering one more hidden but strategically critical driver of inequality, and what can be done about it.  

The World Bank's mission is to "end poverty within a generation and boost shared prosperity." They had their PR problems a few years ago, when their infamous Structural Adjustment Programs were shown to create more harm than good, but since then they have had a fundamental re-think, right? Wrong. The problem is, because they can't see, or don't know how to begin to counteract the toxic logic of "growth at all costs," they're peddling the same snake oil today with new packaging.  

Through a system called the "Doing Business" rankings, the Bank uses its considerable financial and political power to force developing countries to make it as easy as possible for land to be grabbed by foreign corporations or local elites. It works by awarding points to countries when they act in favor of the "ease of doing business" and then publishing how countries rank against each other annually in a report they are very proud to claim "has served as an incomparable catalyst for business reform initiatives." The report has become the bank's most influential publication, and the ranking system is a powerful tool for forcing countries to initiate regulatory "reforms," driving a quarter of the 2,100 policy changes documented since it was launched. 

In other words, policies that service the needs of intensive, large-scale international business are rewarded and ones judged to stand in its way are punished. For example, the fewer regulations there are on land purchase, the higher the rating, with maximum points being awarded to countries with total freedom of purchase. More modest corporate taxation gets some reward; most points are awarded for zero corporate taxation. Countries are even punished for offering their workers minimum wages. It is the neoliberal blueprint for economic development: low corporate taxation, low worker wages and protection, maximum privatization and minimal standards of environmental protection: everything, in other words, to maximize wealth extraction and concentration. 

You might well ask why a supposed development agency favors large corporate interests so blatantly. The reason is simple. The World Bank is controlled by rich governments, and so, perhaps unsurprisingly, it believes that what's good for growing corporations - most of which are from rich countries - is good for the world. In perfect harmony with the G8, the bank behaves as if corporations' ability to maximize profit and shareholder value is at the root of all prosperity - not just the prosperity of the rich - and is therefore more important than supporting the smallholder farmers who are currently feeding 70 percent of the world; more important that ensuring industrial activity doesn't contribute to climate change; and more important than letting democratic countries set their own economic policy.

In Al Jazeera, "The New Shock Doctrine: 'Doing Business' with the World Bank," Dr. Jason Hickel says, "The well-being of the people, the health of the land, the fairness of the society; none of these counts in the brave new world of business. Countries are compelled to ignore the interests of their own citizens in the global competition to bolster corporate power." He goes on to state an important implication of the "Doing Business" rankings: "The rankings not only inform investors' decisions, they also determine the flow of development aid, as some aid agencies use them to give preferential support to countries that make progress in the rankings. Forget measures of health, happiness and democracy. Forget gains in growth and employment. In the end, what counts most is the "ease of doing business." The rankings are essentially a modern, covert version of the infamous Structural Adjustment Programs - economic rape and pillage, disguised as development.

In a world where farmers, pastoralists and indigenous peoples are facing increasingly harsh conditions, and where the richest 85 individuals have the same wealth as the poorest 3.5 billion people combined, it is unconscionable that an organization that is supposed to help increase everyone's well-being uses its power to support the already rich at the expense of the majority.

Inequality is a defining problem of our times; we all know that. In order to truly start to address it, we must expose the essential drivers behind it, especially when the perpetrators are masquerading as saviors.

To join the campaign demanding the abolition of the rankings, please visit: ourlandourbusiness.org.

Copyright, Truthout. May not be reprinted without permission.

Martin Kirk

Martin is the Global Campaigns Director at /The Rules and has worked extensively across private, public and NGO sector on government relations and engaging the public on global issues.

Alnoor Ladha

Alnoor Ladha is a co-founder of /The Rules, a global collective of activists and organizers focused on addressing the root causes of inequality and poverty. He is also a board member of Greenpeace International, USA.


Hide Comments

blog comments powered by Disqus
GET DAILY TRUTHOUT UPDATES

FOLLOW togtorsstottofb


What's Really Driving Inequality?

Friday, 25 April 2014 10:21 By Alnoor Ladha and Martin Kirk, Truthout | Op-Ed

2014 0425bank(Image: World banking via Shutterstock)

Truthout is accountable to our readers, not big business or billionaire sponsors. You can sustain our work by clicking here to make a tax-deductible donation!

Global inequality is a topic du jour. It's on the lips of everyone from the NGOs to the UN to the Davos set, and rightly so. Oxfam's recent unearthing of the fact that the richest 85 people have the same wealth as the poorest 3.5 billion is truly shocking to anyone with a conscience. Unfortunately, none of them is prepared to seriously tackle the mother of all causes: perpetual economic growth. In fact, they are all slaves to it.

It's not difficult to pinpoint some of the more visible structures and decisions that have led to this situation. You could argue that we have been on this path since the creeping start of capitalism during the Industrial Revolution, all the way through to the latest dramatic rise following the deregulation frenzies of the 1980s. Any way you look at it, though, behind today's particularly egregious situation is a host of decisions or structures including tax havens; corporate exceptionalism under the law (think "too big to fail"); the flooding of politics with money, particularly in the US; and trade rules heavily rigged in favor of those with the most money and lawyers.  

Supporting it all is the creation known as the hyper-consumer, whose compassion is dulled and whose competitive instincts are permanently primed thanks to ubiquitous demands to buy, buy, buy and then the continuous glorification of the idea that happiness is what you own. What else is the $1 trillion advertising industry for? Taken altogether, the global economy is essentially now a wealth extraction system; ruthlessly efficient at drawing financial and resource wealth away from the majority of people and piling it up in the Cayman bank accounts of the 1%. 

The reasons for all this are, of course, many and complex. But stand far enough back, and it's also quite simple. Essentially it boils down to the fact that the corporate capitalist system is governed by incentives and rewards that are unable to directly register anything but economic value. The system is deaf, dumb and blind to climate destruction and mass human suffering. It would be like asking a human being to hear dog whistles. In other words, by just doing what it does, left to obey its own logic, the economic system will grow until it destroys itself - and Mother Earth in the process. It will consume resources until there is nothing left. It will grind over humanity, causing and excusing human rights abuses on whatever scale is necessary for it to keep growing, even until all the energy of humanity is exhausted and the system collapses. It is, at this stage, far bigger than any government or corporation. It is, to all intents and purposes, a living force. It's not alive in any traditional sense, of course, but it is undoubtedly possessed of an energy beyond our control. Unless the logic driving it is changed, we are hurtling toward a planetary emergency, as Truthout's Dahr Jamail has so vividly described.

Complaining about the system can be therapeutic, but we must also be able to isolate strategic weak points and offer positive alternatives. So here is an example of how the logic of perpetual economic growth is powering one more hidden but strategically critical driver of inequality, and what can be done about it.  

The World Bank's mission is to "end poverty within a generation and boost shared prosperity." They had their PR problems a few years ago, when their infamous Structural Adjustment Programs were shown to create more harm than good, but since then they have had a fundamental re-think, right? Wrong. The problem is, because they can't see, or don't know how to begin to counteract the toxic logic of "growth at all costs," they're peddling the same snake oil today with new packaging.  

Through a system called the "Doing Business" rankings, the Bank uses its considerable financial and political power to force developing countries to make it as easy as possible for land to be grabbed by foreign corporations or local elites. It works by awarding points to countries when they act in favor of the "ease of doing business" and then publishing how countries rank against each other annually in a report they are very proud to claim "has served as an incomparable catalyst for business reform initiatives." The report has become the bank's most influential publication, and the ranking system is a powerful tool for forcing countries to initiate regulatory "reforms," driving a quarter of the 2,100 policy changes documented since it was launched. 

In other words, policies that service the needs of intensive, large-scale international business are rewarded and ones judged to stand in its way are punished. For example, the fewer regulations there are on land purchase, the higher the rating, with maximum points being awarded to countries with total freedom of purchase. More modest corporate taxation gets some reward; most points are awarded for zero corporate taxation. Countries are even punished for offering their workers minimum wages. It is the neoliberal blueprint for economic development: low corporate taxation, low worker wages and protection, maximum privatization and minimal standards of environmental protection: everything, in other words, to maximize wealth extraction and concentration. 

You might well ask why a supposed development agency favors large corporate interests so blatantly. The reason is simple. The World Bank is controlled by rich governments, and so, perhaps unsurprisingly, it believes that what's good for growing corporations - most of which are from rich countries - is good for the world. In perfect harmony with the G8, the bank behaves as if corporations' ability to maximize profit and shareholder value is at the root of all prosperity - not just the prosperity of the rich - and is therefore more important than supporting the smallholder farmers who are currently feeding 70 percent of the world; more important that ensuring industrial activity doesn't contribute to climate change; and more important than letting democratic countries set their own economic policy.

In Al Jazeera, "The New Shock Doctrine: 'Doing Business' with the World Bank," Dr. Jason Hickel says, "The well-being of the people, the health of the land, the fairness of the society; none of these counts in the brave new world of business. Countries are compelled to ignore the interests of their own citizens in the global competition to bolster corporate power." He goes on to state an important implication of the "Doing Business" rankings: "The rankings not only inform investors' decisions, they also determine the flow of development aid, as some aid agencies use them to give preferential support to countries that make progress in the rankings. Forget measures of health, happiness and democracy. Forget gains in growth and employment. In the end, what counts most is the "ease of doing business." The rankings are essentially a modern, covert version of the infamous Structural Adjustment Programs - economic rape and pillage, disguised as development.

In a world where farmers, pastoralists and indigenous peoples are facing increasingly harsh conditions, and where the richest 85 individuals have the same wealth as the poorest 3.5 billion people combined, it is unconscionable that an organization that is supposed to help increase everyone's well-being uses its power to support the already rich at the expense of the majority.

Inequality is a defining problem of our times; we all know that. In order to truly start to address it, we must expose the essential drivers behind it, especially when the perpetrators are masquerading as saviors.

To join the campaign demanding the abolition of the rankings, please visit: ourlandourbusiness.org.

Copyright, Truthout. May not be reprinted without permission.

Martin Kirk

Martin is the Global Campaigns Director at /The Rules and has worked extensively across private, public and NGO sector on government relations and engaging the public on global issues.

Alnoor Ladha

Alnoor Ladha is a co-founder of /The Rules, a global collective of activists and organizers focused on addressing the root causes of inequality and poverty. He is also a board member of Greenpeace International, USA.


Hide Comments

blog comments powered by Disqus