The Global Crisis: This terrible agenda of inequalities

`The poor world tried to copy the Asian tigers. Look what happened'
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The Independent Online
REPRESENTATIVES OF the rich world have travelled to one of Europe's most expensive ski resorts to discuss a global economy in crisis. The irony would not be lost on the fifth of the world's population that goes to bed hungry every night.

Not that most of them will have heard about the 29th Annual Meeting of the World Economic Forum in Davos. And not that there is anything on the agenda speaking much to their interests.

True, many of the world's poorest live in regions hit by the global capital crisis - South-east Asia and Latin America. But the response to the past 18 months of economic turmoil has been designed to make things worse, rather than better, for the poor and destitute.

The implosion of a Third World economy takes a disproportionately high toll on its poorest people. The devaluations that follow - sometimes as much as 60 or 70 per cent in a short period - have a swift impact on food production in countries where all agricultural inputs, such as fertiliser, are imported. In Indonesia, the number in dire poverty has doubled over the past year. Starvation is rising.

The debate at Davos is between those who say that globalisation is just a bigger market, which cannot be bucked, and those who want to put a brake on the huge amounts of money sloshing around on a scale that is knocking out one national economy after another: Thailand, Indonesia, Brazil, who next?

Advocates of controldistinguish between speculation and genuine investment. They insist that the world must build sea-walls against the monetary tidal waves produced by increasingly crazed movements of speculative capital. The alternative is the kind of protectionism Malaysia has introduced.

But even talk of control comes within a bigger agenda, which is to increase corporate power. The poor world needs a lot more. It needs more than a Tobin Tax (a small levy on all currency transactions, to discourage speculation at the margins). It needs the ability to discriminate in favour of those who want to invest for the long term rather than the short term.

This runs counter to the West's liberalisation agenda. It requires the kind of measures that the IMF made poor nations dismantle. Chile had a hefty tax on money invested in the country for less than 12 months. It was told to scrap it.

The truth is that themodel Davos had for Third World development has failed. Copy the Asian tiger economies, they advised. Much of the poor world tried: look what happened.

So deregulation is not the only area where the poor need a change in policy. The IMF must modify the economic "structural adjustment packages" it imposes, which axe public spending and whack up interest rates with the intention of creating stability but which in fact provoke recession. It is like trying to cure an illness by provoking a coma.

Instead of encouraging every developing country to grow more agricultural products - which has just increased supply, and caused prices to fall - they need help to diversify their economies.

They need anti-monopoly measures to regulate the handful of companies that dominate world agriculture. They need fairer treatment in the forthcoming World Trade Organisation negotiations on agricultural trade. They need a more sensible attitude to the mountain of Third World debt. But they will get none of this. Davos will only concern itself with what is, in effect, the domestic agenda of the rich.

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