Damn good one to pass on: 'Mystery: How Wealth Creates Poverty in the World'.

[chaska]

http://www.commondreams.org/views07/0216-30.htm

Mystery: How Wealth Creates Poverty in the World
By Michael Parenti

There is a “mystery” we must explain: How is it that as corporate investments and foreign aid and international loans to poor countries have increased dramatically throughout the world over the last half century, so has poverty? The number of people living in poverty is growing at a faster rate than the world’s population. What do we make of this?

snip

The transnationals push out local businesses in the Third World and preempt their markets. American agribusiness cartels, heavily subsidized by U.S. taxpayers, dump surplus products in other countries at below cost and undersell local farmers. As Christopher Cook describes it in his Diet for a Dead Planet, they expropriate the best land in these countries for cash-crop exports, usually monoculture crops requiring large amounts of pesticides, leaving less and less acreage for the hundreds of varieties of organically grown foods that feed the local populations.

By displacing local populations from their lands and robbing them of their self-sufficiency, corporations create overcrowded labor markets of desperate people who are forced into shanty towns to toil for poverty wages (when they can get work), often in violation of the countries’ own minimum wage laws.

snip

The savings that big business reaps from cheap labor abroad are not passed on in lower prices to their customers elsewhere. Corporations do not outsource to far-off regions so that U.S. consumers can save money. They outsource in order to increase their margin of profit. In 1990, shoes made by Indonesian children working twelve-hour days for 13 cents an hour, cost only $2.60 but still sold for $100 or more in the United States.

snip


They are forced to open their forests to clear-cutting and their lands to strip mining, without regard to the ecological damage done. The debtor nations also must cut back on subsidies for health, education, transportation and food, spending less on their people in order to have more money to meet debt payments. Required to grow cash crops for export earnings, they become even less able to feed their own populations.

So it is that throughout the Third World, real wages have declined, and national debts have soared to the point where debt payments absorb almost all of the poorer countries’ export earnings---which creates further impoverishment as it leaves the debtor country even less able to provide the things its population needs.

Here then we have explained a “mystery.” It is, of course, no mystery at all if you don’t adhere to trickle-down mystification. Why has poverty deepened while foreign aid and loans and investments have grown? Answer: Loans, investments, and most forms of aid are designed not to fight poverty but to augment the wealth of transnational investors at the expense of local populations.

There is no trickle down, only a siphoning up from the toiling many to the moneyed few.

snip

[unblock]

1. this exposes a few american business myths

some examples:

1) that a businesses retail prices must accurately track its costs.

this is false. economic theory (aka, capitalism mythology) teaches only that this is true in the long run. but of course, in the short run, anything is possible. the theory is that if a company cuts its costs (e.g., by outsourcing) it will get outsized profits, which in turn brings in more competitors, which in turn forces price competition, which in turn brings the profits back down to a risk-adjusted norm. unfortunately, not only does this process take time, during which the outsized profits continue, but companies and governments can forstall -- sometimes indefinitely -- any significant competition via barriers to entry, product differentiation/specialization, etc.

2) a rising tide lifts all boats.

false. nice metaphor, but capitalism is all about efficiently serving paying markets. if you can't pay, you're screwed, and if you can pay more, you're better served. one of the fundamental differences between government services and private services is that the government is (supposedly, anyway) interested in serving every person equally, whereas the private sector is interested in serving every dollar equally.

an example is mail delivery (this example might be outdated, i haven't kept up with fexed's policies lately):

the u.s. postal system will deliver mail to any address in the country. doesn't matter if the mail carrier has to travel by fan boat or by dogsled, nor how far, it's still the same $0.39. fedex, on the other hand, makes a cost-benefit decision about each market/location. if they can't make money delivering to the boonies, then they won't do it.

and so it is with agriculture in the original post.if they find farmland needed to feed the locals, but it pays more to grow cotton or tobacco for export, then that's what they'll do. as far as they're concerned, the locals can import their food (hah!)

[blondie58]

11. true facts about the Post Office

One thing that a lot of people don't realize is that we (the Post Office) are not ALLOWED to make a profit. We are just supposed to meet our costs, through the sale of our products and services. And yes, we all complain about 'junk mail', but it does keep the prices down. That is the reason why postage is usually raised only a penny or two at a time, after a lengthy request into the powers that be that we can appeal a rate hike to.

We need to protect this vital part of Americana. You can bet that if the mail services are ever privatized, costs will go up substantially and Grandma in Podunk, USA probably won't even have mail service or it will be very costly at the least.


And yes, I am a postal employee and proud of the job we do.

[unblock]

15. here's another one: the post office has integrity

every once in a while, you hear about some letter that the post office delivers 40 years late because it fell behind some equipment and was only recently discovered. the media usually cover this sort of thing in a mocking tone, as if this somehow proves how incompetent and ridiculous government-run enterprises are. nevermind how many gazillions of pieces of mail the post office delivers successfully and reliably.

three guesses as to what fedex would do if THEY found an ancient, undelivered piece of mail.

that's right, they'd chuck it quietly to avoid the bad publicity. nevermind how priceless that piece of mail might be to its recipient and/or sender.

[argyl]

18. You should be proud of your work.As a muni utilities employee I

hear a lot of BS about what we do.You know,the typical "One guy working,three standing around watching." Our department does generate a profit that is returned to city funding but our primary purpose is to meet a public need while adhering to state and national regulations.And meeting regulations isn't sufficient to our staff.We look to exceed them.Customer service and environmental impact are primary;any profit is incidental.

There are large companies who contract with municipalities to provide the service we do and with profit as the reason for their existence they look to cut operations and maintenance cost as much as possible to stay within regulations. They can and do hire lobbyists to influence legislators to give them breaks on environmental regs.

I'd rather be concerned with quality over monetary gain.I'm proud of the job we do too.

Keep up the good work.

[DBoon]

12. "in the long run" is the biggest lie of economics

as Keynes said, "In the long run we shall all be dead."

[unblock]

14. exactly. the short run is what business is all about

[starroute]

2. That's only half an explanation

It explains how the world can get richer while most of its population gets poorer -- but it doesn't explain what's happening to the wealth that's being squeezed out.

Back in college, they taught us that 6000 years ago, when egalitarian peasant societies turned into hierarchical states, the effect was to make most people work a little harder at farming so that a small number could devote themselves full-time to government, commerce, science, and the arts. That's a simple, comprehensible trade-off.

With the coming of the Industrial Revolution 200 years ago, there was a similar trade-off. Many people worked long, hard hours in factories, and the fruits of this excess labor were invested in building up present-day industrial society and all the infrastructure necessary to maintain it. I can understand that too, more or less.

But by the early 20th century, as it became obvious that the use of machinery was reducing the need for human labor, it started to seem logical that in the future, everyone would be able to work less yet still receive more. The work-week would be shorter, people would be able to retire at an earlier age, and so forth. That expectation was behind most of the social legislation of the mid-century.

Only it hasn't happened that way. Instead, a large part of the world's population is without sufficient work to maintain themselves, while those who do have jobs are having to work harder and longer to keep them, and just a handful become unprecedentedly wealthy.

But why? Why should this be happening? Where is the benefit?

More specifically, what is all the excess wealth that is created as productivity goes up and up and wages lag behind actually being *used* for? CEO's are making many times what they need to live in a state of luxury that would be the envy of any Bronze Age monarch. We're not seeing a great frenzy of infrastructure development as we did in the late 19th century -- here in the US, infrastructure is actually decaying. So where is the money that is being wrung out by the exploitation of the billions *going*? If it is being invested, what is it being invested *in*? Land? Increasingly scarce resources? Maintaining standing armies to protect the system of exploitation itself, in a kind of pointless ciruclarity?

Trickle-down economics assumes that the rich will ultimately spend their money in ways that benefit the poor. But if that isn't happening, then why not? If the money isn't being *spent* in any recognizable way, where is it actually going? Being carried off by aliens to invest in the Martian stock exchange? Being squirreled away Uncle Scrooge-fashion so the wealthy can throw it up and have it land on their heads and burrow through it like porpoises?

Or am I hopelessly naive in thinking of money as a *thing* that actually exists and has to *be* somewhere? Is the real secret that the planet is already incapable of supporting its present population -- and the whole farce of wealth-on-paper a kind of false front to keep people from noticing that fact?

And if it is . . . then what?

[glitch]

10. You could be projecting your own rationality on the pathological.

They need money to acquire and keep power. More money = more power. They need power so that their ideology reigns supreme. Why do they need their ideology to reign supreme? I think that may relate to any typical psychopath's need for control.

Maybe their feedback loops got screwy from traumatic childhoods. Maybe they were born that way, or it's pathology induced from longterm drug and alcohol abuse, or all of the above. They need help, and rest. Especially rest.

A civilized society would get them the help the need. ;)

[eridani]

13. Maybe money is just expressed in the wrong units

What if the world standard for currency was the kilocalorie? One thing for sure is that our notions of "wealth" have gotten seriously disconnected from reality. In the real world, we can do anything we want, provided we have the energy, the raw materials and the human skill base to do it. That having money determines things that we can and cannot do which have no relationship to material reality is a situation begging for correction.

[cui bono]

16. CEOs also now make over 400 times more than their workers do.

It used to be around 40 times as much. So that explains a lot of it. Workers wages have not kept up with inflation and the cost of living. So now you have families needing to work two jobs or more to buy a house and still living paycheck to paycheck. The answer is greed. CEOs don't need to make that much. And the ironic thing is that it's been shown that when you pay people good wages and give them a stake in the company their productivity goes up so it's a good thing for all.

[Duppers]

22. don't know

Is the real secret that the planet is already incapable of supporting its present population -- and the whole farce of wealth-on-paper a kind of false front to keep people from noticing that fact?


Your thought has crossed my mind too. BUT Al doesn't think so, NOT YET anyway!

Simply put, money is power and that power is not being used to care for the planet. There's the crime.

As my son once said,
"Trickle down-economics makes as much sense as feeding the rich better food, so that the poor will have better shit to eat!"

:crazy:

[doodadem]

3. Good book to read on the subject

"Confessions of an Economic Hit Man" by John Parker.

Very, very, eye opening.........

[Selatius]

4. There's no international level mechanism to redistribute income and wealth

Those mechanisms exist at the national level, but this issueis an international problem.

[rman]

24. There is such a mechanism at the level of CEOs and financiers

That's why they get richer while the rest of us get poorer. WTO, IMF, World Bank are major parts of that mechanism.

But that's probably not what you meant.

[SoCalDem]

5. It also explains the explosion in TERRA-ISM..

As people are forced from their land, they congregate in dirty cities who are loathe to help them. Those children grow up underprivileged, but exposed to the televising of wealth, creature comforts and glamour they will never have.. Enter smooth talking clerics/ministers/pastors/priests/etc and it's not long before many of these young (usually men) see that their only hope may just be in the hereafter..and why not take some "rich devils' with them as they make their move to nirvana/heaven/the hereafter.

It's ALL connected..

poverty breeds disease and terrorism, and NO ONE is immune to the byproducts.

[AikidoSoul]

6. When I hear the expression "trickle down economics" I sometimes imagine a fat cartoon character

with a big cigar standing on a fancy balcony, pissing on poor peasants below begging for food.

Somebody call SwampRat to draw us a picture!

[Duppers]

23. LOL

Yes. AK, I didn't read your post before posting above---we're just thinking along the same lines.

[nam78_two]

7. K&R.nt

[WiseButAngrySara]

8. I'm passing this on. Thanks for posting and knr! ....n/t

[WiseButAngrySara]

9. Kick, so the votes won't exceed the posts! ....n/t

[cui bono]

17. It also has to do with the interest these countries have to pay on the loans

they're getting. They are in debt and unable to pay the loans off, just paying the interest. Like a lot of families. In fact credit cards used to have lower minimum payments just to keep people paying only interest so that they'd never pay down their debt. That's one of the reasons the law was passed to make them raise their minimum payment amount.

[suziedemocrat]

19. Trickle Down = Piss On You n/t

[Mister Ed]

20. Kicked, Recommended, Bookmarked n/t

[Cerridwen]

21. Now add 'vulture funds' into the mix and corporations can

further their stranglehold on financially struggling countries.

Here's a link to a DU thread in which vulture funds are discussed. Think of them as international corporate collection agencies.

On Thursday 15 February a high court judge in London will rule whether so-called vulture fund can extract more than $40m from Zambia for a debt which it bought for less than $4m. (emphasis added) the DU link

[rman]

25. Michael Parenti on The Debt Trap

http://www.youtube.com/watch?v=JNKWBVVSWkc

[FredStembottom]

26. Right there in your first snip.........

The destruction of local markets - or more often the pre-emption of them before they even really get going.

[Gregorian]

27. This was accomplished through ignorance. Via the media.

And once again, just like as we sit here watching the heist in the Middle East, we have the power.

Now we know. And we have great power. As consumers we can create new ways to alter the system and pay those who deserve to be paid for that which we consume.

I believe this is one of the most important goals facing the human race. And it gives me nothing but optimism to think that we can reorganize the structure by rearranging the distribution system.

I only fear that eventually, if this were to all come to be, the military would refocus it's energies on us instead of them. The media and the military are working hard to get what we need and keep us from seeing what they're doing.

Fairness and happiness. Those two things don't occur to a corporation. And without them we end up where we are today. Stealing and war.

I'm anxious to begin paying those who do the work. And I don't care what I have to give up. We will actually gain, in the long run. Those who will lose are the losers running the big monopolies.

[progressoid]

28. marking this for a later read...