Penaflor, Philip
Poverty and the Mediated Global Economy
by Philip Emmanuel C. Peñaflor, MNSA
What is the mediated global economy? It is a whole discourse in itself, but simply, from my layman’s point of view, a mediated economy is a transaction or exchange of commodities between individuals or groups with the use of a standard measure or instrument considered to be a more durable good. In ancient time this mediation has been in the form of silver or gold after the barter period. When trading became broader and more complicated, money was later invented to become a more simple and quicker means of mediation. Ever since then, everything and every good and transaction has been measured in terms of its money equivalent. In a way it is good because it made trading simpler. On the other hand this form of mediation is disadvantageous to those who do not understand how it works and who have no access to it. Therefore the money economy became a monopoly of the elite. And the rest of the mediated global economy is a history of the rise of the corporations and the elites and the marginalization of the poor. And so is the history of colonization and neo-colonization and the exploitation by the rich countries of the poor countries.
If we are still missing the point, the global poverty, the international financial crisis, and terrorism in all its forms, are all interrelated issues resulting from an uncontrolled free market economy which is actually mediated by greed in the form of money.
But what really is the poverty of the poor that many development organizations are so concerned about? Here are some of the facts from the Mercy Corps website[1]:
Each year, more than 8 million people around the world die because they are too poor to stay alive.
Over 1 billion people—1 in 6 people around the world—live in extreme poverty, defined as living on less than $1 a day.
More than 800 million go hungry each day.
Over 100 million primary school-age children cannot go to school.
The World Bank has categorized poverty into a) extreme poverty – those living on less than $1 a day, 2) moderate poverty – those earning about $1-2 a day, and 3) relative poverty – those household incomes just below the national average. Based on these definitions nearly half of the world's population are considered poor, and majority are unable to meet the most basic necessities to survive, thus more than 8 million people around the world die each year because they are too poor to stay alive.
So while the US government is trying to pump back cash into the mortgage lending process so that the Americans could continue to afford credit cards and auto loans, elsewhere around the world millions of people are enduring unimaginable suffering that keep them from fulfilling their most basic needs.
But will the world listen to the cries of the poor given the global meltdown? For now the main concern of developed countries is their own. Barack Obama has made earlier pronouncements to give incentives to US corporations who would invest within the US so that they could generate more local jobs and employment. The Organization for Economic Cooperation (OECD) is forecasting eight million people more to be displaced out of work by 2010 in the OECD areas. Currently there are now about 34 million unemployed in the OECD areas. Therefore the European Union is also in the rush to rescue its members’ economies out of recession. The European Commission Chief Juan Manuel Barroso suggested that the rescue package should at least be one percent of the EU output which would be equivalent to about 130 billion Euros.
The impact of the international financial crisis on the poor and on global development in general could be much worse than its impact on the rich which has already gone from bad to worse. Giant corporations are on the meltdown. In fact, the main issues of the Conference agenda on Financing for Development In Doha would be: “What will happen to developing countries as a result of the international financial crisis? Will donors cut their aid?”[1]
The November 26, 2008 issue of the USA Today headlines the US$800B Federal Plan in programs “designed to relieve severe pressures in financial markets, and ensure that mortgages, student loans, car loans and other forms of consumer credit remain available at reasonable prices”.[2] The Federal Reserve intends to buy up to $600B in mortgage-related assets, and would lend up to $200B to securities dealers and firms. Such a very staggering amount has made the UN High Commissioner for Refugees Antonio Guterres to lament on the measly $7B he is trying to raise for some 360 UN and non-governmental agencies helping the poorest of the poor in some 31 countries, pointing to an earlier announcement of a single bank bailout of the Citigroup, worth $20B by Washington[3].
So back to the issue of financing for development, what happens to the ODA? In the Monterrey Consensus, developed countries agreed to allot 0.7 percent of their Gross Net Income (GNI) in ODA. While EU has previously committed to reach the 0.7 percent commitment by 2015, some other countries have not yet set their timeframes on when they would reach their 0.7 percent except for the G-8 countries which have affirmed to generate US$130B by 2010.
Obviously we are missing the point. Even if the Doha Conference affirms the Monterey Consensus of 0.7 percent in ODA commitments and granting that developed countries honor their commitments, total global ODA may just be a drop in the bucket of the global spending priorities, which means that development is not really a priority, and needless to mention, the poor is not really a priority. So what are the global spending priorities?
The Center for Arms Control and Non-Proliferation has issued a report that the total global military spending for 2008 has reached US$1.473 Trillion of which the US shares 48% equivalent to $711B[1]. What then is the value of $7B that the UN High Commissioner for Refugees is trying to raise to help the poorest of the poor of the world against the total global arms expenditure alone? Yet the whole of the UN system has only a budget of $20B annually, or $3 for each of the world’s inhabitants, but which is tasked to keep the world peace. Still many countries are not able to fulfill their obligations to the UN, the US alone owed it $688M as of November 2007.[2] How many times the world over could $1 trillion feed the poor, or provide clean water, or basic education, or vaccination against malaria and other controllable diseases? Yet many nations of the world are struggling to fulfill their commitments to achieve the Millennium Development Goals by 2015.
Back to Sudan. Only recently there was a news of some Somali pirates that hijacked a Ukrainian ship somewhere in the Indian ocean which turned out to be loaded with tanks and heavy weaponry. According to fabricated stories the ship’s destination was Kenya, but in fact it was supposedly an arms deal with some obscure suppliers by the Sudanese People’s Liberation Movement (SPLM) now primarily responsible for the Government of South Sudan (GoSS). The SPLM forged a comprehensive peace agreement (CPA) with the national government of the Republic of Sudan in 2005, with the end in view of voting for independence by 2011. in the course of the negotiations for the release of the hijacked ship, of which Russia played a key role, the news got lost in the international media as Kenya owned the deal.
There are three angles with which to read this story. One is the alleged weapons deal by the SPLM of which they are not supposed to do according to the CPA, but whether it is true or not is difficult to ascertain. Another is the arms trade itself, which, despite campaigns for peace and more rationalized priorities in global spending, by certain international groups and initiatives[3], continue to become a lucrative trade which benefits those whose economies are dependent on arms. And the third is a look at the Somali pirates in particular, and on piracy and terrorism in general.
While we should condemn terrorism in all its forms, it would also be important to understand the context of these acts. In the Somali context, for example, the Somali fishermen, among the marginalized sectors in Somalia before the collapse of Siad Barre’s regime in 1991, driven by the instinct to survive by the worsening condition of the power vacuum in the country has found solace and salvation in apprehending ships passing through the Somali coastlines and even became bolder to go beyond. This brings us to a discussion of what brings people to commit acts of terrorism?
Is it simply a fanatical religious belief as in the case of those with fundamentalist Islamic overtones such as the Al-Qaeda network which is rejected even by the mainstream Muslim thought? Or is it a reaction to the widening disparity between the powerful corporations and elites who perpetrate the mediated global economic order and the powerless who are being marginalized by this system?
If we want a more genuine development to benefit everyone, we have to rethink the assumptions behind the mainstream economic order and change our books to subscribe again to the ethics of equity, justice and human dignity. Unless this is done, there can be no hope to alleviate the poor from poverty or to end violence and bring about peace.
More to the point, those of us who profess to work with the poor, those of us who are in development organizations, or in the Church or in the academe, those of us in the civil society, including the media, or even those in government, how credible are we in working with the poor when our own lifestyles are tied up with the lifestyles of the elite that only feed the existing global economic order?
[1] Center for Arms Control and Non-Proliferation, February 20, 2008. https://www.globalissues.org/article/75/world-military-spending
[2] UN Financial Crisis. Global Policy Forum
[3] see “Global Priorities, an inter-religious campaign to change budget priorities.” https://www.globalpriorities.org/default.htm
[1] Alula Berthi Kidani (Ed). “UN Conference on Financing for Development: International Donors Credibility Test Conference”. Sudan Vision, International Affairs section. November 27, 2008.
[2] Sue Kirchohoff anf Barbara Hagenbaugh. “$800B Fed Plan targets lending“. USA TODAY, November 26, 2008.
[3] Global Development Briefing – Hungry Man, Angry Man. November 27, 2008.
[1] https://www.netaid.org/global_poverty/global-poverty/