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The market won’t save the world

There is no doubt amongst conservatives that the market system is the best way to create wealth by encouraging everyone to look out for their own best interests.

But the market system was not designed to share wealth, to support the vulnerable, or to protect the environment. The market does not recognise intrinsic worth but rather views everything and everyone as a commodity judged by its productive capacity.

So, as it stands, the market system enriches the wealthy, impoverishes the poor, and endangers the planet.

In last autumn’s essay, Evangelii Gaudium, Pope Francis wrote that:

“Just as the commandment ‘Thou shalt not kill’ sets a clear limit in order to safeguard the value of human life, today we also have to say ‘Thou shalt not’ to an economy of exclusion and inequality. Such an economy kills … Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalised: without work, without possibilities, without any means of escape. Human beings are themselves considered consumer goods to be used and then discarded.”

Rightwing politicians argue that overcoming inequality robs the rich of incentives to invest and the poor of incentives to work and is counter-productive, but there is an increasing body of evidence challenging this view.

Last year the IMF, which advises governments on sustainable growth, released a discussion paper which found that countries with high levels of inequality suffered lower growth than nations that distributed incomes more evenly. Further, an analysis of various efforts to redistribute incomes showed they had a neutral effect on GDP growth.

Lifting people out of poverty, improving their health and education, and increasing their buying power, has a positive economic benefit that outweighs any small negative from the rich having a slightly smaller share of the pie.

“Rather than a trade-off, the average result across the sample is a win-win situation, in which redistribution has an overall pro-growth effect, counting both potential negative direct effects and positive effects of the resulting lower inequality,” they said.

It warned that inequality can also make growth more volatile and create the unstable conditions for a sudden slowdown in GDP growth.

The World Bank Group announced twin goals of ending poverty by 2030 and promoting shared prosperity.

The first goal is to essentially end extreme poverty, by reducing the share of people living on less than $1.25 a day to less than 3 per cent of the global population by 2030. The second goal is to promote shared prosperity by improving the living standards of the bottom 40 per cent of the population in every country.

Three key elements are considered to be of particular importance: greater investment in human capital, judicious use of safety nets, and steps to ensure the environmental sustainability of development.

In the past few decades, substantial progress has been made in reducing global poverty. Between 1990 and 2011, the number of people living in extreme poverty has halved, to around one billion people, or 14.5 per cent of the world’s population.

According to the 2011 estimates, almost three-fifths of the world’s extreme poor are concentrated in just five countries: Bangladesh, China, the Democratic Republic of Congo, India, and Nigeria. Adding another five countries (Ethiopia, Indonesia, Pakistan, Madagascar, and Tanzania) would encompass just over 70 per cent of the extreme poor.

Percentage of people living in extreme poverty:figure_2-3

The world’s most populous countries, China and India have played a central role in the global reduction of poverty as measured by the $1.25 poverty line. Together they lifted some 232 million people out of poverty from 2008 to 2011

In many low- and lower middle-income countries, there is significant overlap between those living in absolute poverty and the bottom 40 per cent of the population. In 26 countries the number of people living in extreme poverty is equal to or more than 40 per cent of the population in 2011. These countries account for about a quarter of the world’s extremely poor people.

All these countries except Haiti and Bangladesh are in Sub-Saharan Africa, and all except for Bangladesh, the Democratic Republic of Congo, Nigeria, and Tanzania have a population of less than 30 million people. Therefore, their high poverty rates do not make a significant contribution to the total number of the extremely poor at the global level. Nevertheless, reducing poverty in these countries is a moral imperative and as important as poverty reduction in any other country.

Many poor people may become “trapped” in poverty because of failures in credit, land, or other key markets, governance failures, or because low levels of education, skills, or health prevent them from availing themselves of new opportunities arising from a general expansion of economic activity. The remaining poor may be in hard-to-reach pockets of the population, for example because they live far from centres of economic activity or because they suffer exclusion due to ethnicity or language. Also, many poor people live in countries experiencing conflict, which may not participate in any global expansion of economic activity.

The economic benefit, and moral obligation, of lifting people out of poverty is inextricably linked with so many other global problems.

Overpopulation must be addressed. It has been shown that educating and empowering women has a significant effect on reducing the size of families. Also we need proper resourcing of voluntary family planning services, which still receive less than one per cent of world aid for reproductive health, and the removal through education and the media of the many barriers that continue to stop millions of women from having the choice to access methods of contraception.

Religions have a role to play here and should reconsider their opposition to many practices such as contraception, abortion, euthanasia, same-sex marriage and divorce. Procreation should not be the considered the inevitable purpose of relationships.

The OECD identifies climate change as a serious risk to poverty reduction which threatens to undo decades of development efforts. As the Johannesburg Declaration on Sustainable Development states, “the adverse effects of climate change are already evident, natural disasters are more frequent and more devastating and developing countries more vulnerable.” While climate change is a global phenomenon, its negative impacts are more severely felt by poor people and poor countries.

The economic importance of climate-sensitive sectors (for example, agriculture and fisheries) for these countries, and their limited human, institutional, and financial capacity to anticipate and respond to the direct and indirect effects of climate change, makes developing countries more susceptible. The countries with the fewest resources are likely to bear the greatest burden of climate change in terms of loss of life and relative effect on investment and the economy.

Climate change will further reduce access to drinking water, negatively affect the health of poor people, and will pose a real threat to food security in many countries in Africa, Asia, and Latin America. In some areas where livelihood choices are limited, decreasing crop yields threaten famines, or where loss of landmass in coastal areas is anticipated, migration might be the only solution.

Increasingly, poverty and the destruction of land through climate change, natural disasters or conflict will add to the tsunami of displaced people around the world. To denigrate someone as an “economic migrant” seems churlish when their alternative is starvation.

As we face increasing competition for food, water and dwindling resources, conflict seems inevitable unless we can all accept that we must be part of the solution.

Every individual must try to reduce their environmental footprint.

We must put aside our greed and demand that we increase foreign aid and take urgent action to mitigate climate change.

Governments must recognise their responsibilities as global citizens and regulate and legislate to protect us against the voracious quest for profit at any cost that the market encourages. They also have a moral obligation to more fairly share the world’s wealth and resources.

‘We have not inherited the earth from our grandparents, we have borrowed it from our grandchildren.’

 

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24 comments

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  1. Sir ScotchMistery

    It wasn’t that long ago that in ABC News report finished with the sport results and the weather report.

    Over the years that is changed and now every news report finishes with a market report. Why?

    In Kaye Lee’s as usual well researched and cited posting, she points out that conservative politicians, in fact conservative thinkers, see the value of the dollar as being the ultimate measure of the success or failure of the economy and that has been something that’s been placed upon us by major globally structured organisations whose primary focus is shareholder happiness, and takes no account of the intrusions on social capital of the “Reaganomics” process, also widely known as the “trickle-down effect”.

    I can’t say why or even if there is a correlation between the nature of the Reagan inspired focus on shareholder happiness, and the rise of “quiet terrorism”. Where those who are disenfranchised in the east by the actions of the West, and those’s likewise disenfranchised in Africa by the actions of the northern hemisphere, but it seems to me that in terms of timing, they have gone hand-in-hand.

    I often find myself contemplating the nature of this “new terrorism”, where we see the rise of organisations like Boco Haram, ISIS and like minded groups worldwide; all of whom seem to have a disagreement with their respective governments and seek to destabilise those governments on the pointy end of an AK-47.

    It seems passing strange to me that while America quotes 9/11 as the beginning of so-called “global terrorism”, the major impact of that attack (or perhaps those attacks), was against big finance, banks and organisations which were a party to the movement of global capital. Whilst that attack occurred in America the end product was actually felt worldwide, particularly I believe in places like Switzerland and Israel just simply because of the incredible number of people who were killed who were involved in the banking system.

    http://archive.fortune.com/magazines/fortune/twintowers/ indicates that probably 35% of the organisations hardest-hit, possibly with the exception of the Port authority, were banks, futures organisations, insurers and re-insurers and a couple of fund managers. I suppose I would posit that if one were to look at the buildings in New York city which by their destruction would have the greatest effect on global banking, the twin towers fall into a class of their own.

    At some stage all of us need to understand that greed and jealousy go hand-in-hand, and the search to squeeze just one more dollar out of one’s investment may well have physically detrimental effects on those who suffer at the grinding wheel of hard labour, in an effort to maximise the profits of the major companies whilst doing their utmost to reduce the one cost which has no real effect on the global bottom line-the cost of wages.

    In a recent conversation with a tax office collection agency, I noted that the operation appears to be in India. Whilst I don’t have a particular problem with talking to Indians about my tax debt, I don’t understand which bottom-line the positioning of that office in Delhi would affect the most.

    I find it interesting that people like Optus, Telstra, Vodafone etc locate their call centres in low-wage zones such as India and Manila and wonder if any of them ever contemplate the “Walmart effect”, because it seems to me that that is the road we are currently walking. Eventually, even the people who work for the organisations involved won’t be able to afford their products and at some point shareholders themselves have to understand that if they are going to go down the road of shareholding in big banking, telcos and the like, that all their data will be at risk of theft by those very organisations which reach out offering the massive “efficiencies” of low-wage zones being used not to offer better service to their clients but to offer better returns to their shareholders.

    It would not be the first time somebody suggested that the bigger the gap in real wages and shareholder returns the more unrest one could expect, but having experienced credit card loss by the simple expedient of the credit card number being stolen from within a call centre in India, if that behaviour becomes widely known then I think it’s reasonable to expect that we will all suffer that loss at some stage.

    Perhaps it is only by shareholders losing by the simple theft of their credit cards, as the companies try desperately to increase the bottom line and improve the dividends, will shareholders realise that at the end of the day they are the problem and outsourcing is not the best solution.

    The often repeated line “one man’s terrorist is another man’s freedom fighter”, can only continue to get worse if we don’t take account of social capital and do our utmost to improve the lives of the sort of people who jump onto leaky boats, sometimes 700 people at a time, and chug slowly over the horizon seeking a better life simply because they can’t afford to feed their children.

    Global terrorism does not exist in a vacuum. It exists because the needs of the many are placed a far distant second to the financial returns of a few.

  2. Thomas Brookes

    Great article Kaye Lee, but you missed one important factor. The promotion of war particularly by the USA, who outspends on Defence (a questionable term) every other other country in the world combined by a substantial margin, and a government controlled and run by the “Industrial Military Complex”.

    The damage the USA and its western Allies (including Australia) has done has been horrific in human terms, in financial terms and has certainly contributed (if not the major cause) to the extreme refugee problem around the world today.

    In environmental terms the US military by just studying its financial appropriations, uses over four million litres of fuel an hour every day 24/7. During the Iraq war it used double that amount.

    The US military is by far the worlds single biggest buyer of oil. Over 20 Billion dollars per year. If it were a country, the US Military would rank 34th in the world in average daily oil use, even coming in ahead of countries like Sweden and just behind Australia.

    But here is the kicker. If the USA dropped its military spending to the same level as China or Russia, in financial terms, world poverty would be eliminated in a just one week.

  3. Pingback: The market won’t save the world. #Auspol #ClimateChange | jpratt27

  4. Kaye Lee

    So many of our problems can be linked back to poverty, including terrorism as you point out. And I agree that defence spending is an enormous waste. The terrorists are getting their guns and bombs from somewhere. I would like to see a CBA done on our spending on defence and national security.

    Quite a while ago I read that 16% of the world’s population consume 80% of its resources. We have heard recently that the world’s richest 85 people have as much wealth as the bottom 50% of the population (over 3.5 billion people). That is obscene.

    While people the world over struggle for daily survival, Gina Rinehart fights to keep every cent of her tens of billions and control over, not only her children’s inheritance, but the governments of our country. How utterly unconscionable for Barnaby Joyce to interfere in his official capacity. Gina paid for his election campaign and his trip to India. He is obviously her representative in more than just family matters.

    I am an atheist who had a religious upbringing and often find myself quoting the bible. Consider the seven deadly sins:
    wrath, greed, sloth, pride, lust, envy, and gluttony.

    Think of our PM – the man who thinks you should throw the first punch to be the best, the man who keeps the caucus waiting while he has his photo taken so he can claim expenses for attending a private party, the man who doesn’t read reports, the man who was “destined” from childhood to be Pope or PM, the man who would do anything except “sell his ass” to get the job, the man who lauds Rupert Murdoch and Gina Rinehart as two of the greatest Australians in history, the man who gorges himself on the feast of power, bestowing privilege on his loyal followers.

    Then think of the people you admire.

  5. stephentardrew

    Another excellent article Kaye:

    Interestingly the Millennium Goals have been around for decades centered on research at the Earth Institute at Stanford University providing broad solutions based program for the reduction of poverty. Many major universities world wide participate. It is a rigorous program covering a vast number of topics to do with poverty, inequality, economics, sustainability, global warming etc. There are also a variety of academics involved in working towards a steady state economy however, as usual, the politicians hold the purse strings and willingly use threats to mute academics critical of the status quo. Solutions have been developed so all we need now is the political will to redistribute wealth. Hans Rosling’s Gap Minder offers the statistical tools for monitoring health, population and many other trends internationally so the body of academic evidence necessary to solve poverty has been in place for several decades. The evidence for global warming and a thorough academic evidence based summary is available at Skeptical Science. The body of evidence supported by Modern Money Theory demonstrates that we do have the capacity, and resources, to solve endless cycles of boom and bust it is simply conservative fear of a loss of power and control of wealth and resources that is holding us back.

    I am not a conspiracy theorist nevertheless the massive wealth held by the one percent, or less, is being used to destroy anyone critical of neo-conservative goals of greed and self-interest based upon the fallacious and discredited notion of survival of the fittest.

    It seems to me that progressives will be forced to become more and more radical to counter this trend with the subsequent response by the oligarchs of vilification and condemnation through their control of the main stream media, governments and by default militarised police forces.

    After all that is why sites like AIMN exist.

    Well we certainly have a battle on our hands.

    The question is, as usual, how to wage it through non-violent means?

  6. Kaye Lee

    We have a variety of weapons at our disposal.

    We should insist on transparency about companies so we can reward those who embrace sustainable practice, equality, and who pay fair wages and taxation and boycott those who exploit cheap labour, are energy and resource greedy, and who evade/avoid tax.

    More groups like churches, universities and superannuation funds are emphasising investing ethically.

    We also own the labour. I hesitate to go back to the days of strikes but people should remember than unions are a negotiating voice for the people. (The factional powerbrokers/king makers should be turfed out)

    We have independent and social media to spread the word.

    We have the right of peaceful protest (in some states)

    And ultimately, we vote for them.

  7. Möbius Ecko

    Don’t forget the Vulture Capitalists/Funds role in deliberately entrenching and inducing poverty to increase their wealth. Also don’t forget Malcolm Turnbull has shares in a particularly nasty Vulture Fund.

  8. stephentardrew

    Totally agree Kaye.

    Union empowerment is critical and boycotts an effective tool.

  9. simple-touriste

    The stupid, it burns!

    “The market does not recognise intrinsic worth but rather views everything and everyone as a commodity judged by its productive capacity”

    The market is not a thing.

    Free people interact. Free people recognise “worth”, or “intrinsic worth” whatever it means.

    The rest of the article is worthless I-am-better-than-you liberal progressive crap.

  10. Rosemary (@RosemaryJ36)

    In some ways the British and other colonialists created terrorism.

  11. Florence nee Fedup

    Simple, you could be right. Yes there is no such thing as free market. Can never exist, as the powerful would always corner it at the expense everyone else.

  12. simple-touriste

    “Yes there is no such thing as free market. Can never exist”

    That is NOT what I wrote.

  13. Kaye Lee

    “The market is not a thing. ”

    “They are casting their problems at society. And, you know, there’s no such thing as society. There are individual men and women and there are families. And no government can do anything except through people, and people must look after themselves first.” – Margaret Thatcher

    The economy is not a thing either.

    “Free people recognise “worth”, or “intrinsic worth” whatever it means.”

    Rich people (and governments) get to dictate to the rest of us and implement what they consider worthy which seems to always involve furthering their own wealth at any cost.

  14. diannaart

    @Rosemary

    Well said, continuing to behave as if we are born-to-rule – yes, all of us in the western world only provides fuel for the dispossessed.

    We don’t like it when the LNP behaves with such an air of entitlement – well I don’t see how the entire lot of us in Australia look any different to the outsider.

    There is no need for a conspiracy if you are wealthy enough – this fact alone means that power is yours simply for being rich enough. To those in the third world we all look like conspirators in greed.

  15. Sir ScotchMistery

    But what you wrote ended up being simple.

    Very Iain Hall IMHO.

  16. Kaye Lee

    Let’s not forget what happened in Iran in 1953. How would you feel if we asked to audit the books of a global corporation, it refused, and then foreign powers overthrew the government, set up a puppet dictator, and bribed everyone in sight purely to have control over our country’s resources? We have since visited on a regular basis to bomb the crap out of them and they wonder why some Iranians might be a tad upset with us.

    “The 1953 Iranian coup d’état, known in Iran as the 28 Mordad coup, was the overthrow of the democratically elected Prime Minister of Iran Mohammad Mosaddegh on 19 August 1953, masterminded by the United States (under the name TPAJAX Project) and backed by the United Kingdom (under the name “Operation Boot”).

    Mossadegh had sought to audit the documents of the Anglo-Iranian Oil Company (AIOC), a British corporation (now BP) and to limit the company’s control over Iranian petroleum reserves. Upon the refusal of the AIOC to co-operate with the Iranian government, the parliament (Majlis) voted to nationalize Iran’s oil industry and to expel foreign corporate representatives from the country.

    With a change to more conservative governments in both Britain and the United States, Winston Churchill and the Eisenhower administration decided to overthrow Iran’s government, though the predecessor Truman administration had opposed a coup. Classified documents show that British intelligence officials played a pivotal role in initiating and planning the coup, and that the AIOC contributed $25,000 towards the expense of bribing officials.

    Following the coup in 1953, a military government under General Fazlollah Zahedi was formed which allowed Mohammad-Rezā Shāh Pahlavi, the Shah of Iran (Persian for an Iranian king), to effectively rule the country as an absolute monarch. He relied heavily on United States support to hold on to power until his own overthrow in February 1979.

    In August 2013, 60 years after, the American Central Intelligence Agency (CIA) admitted that it was in charge of both the planning and the execution of the coup, including the bribing of Iranian politicians, security and army high-ranking officials, as well as pro-coup propaganda. The CIA is quoted acknowledging the coup was carried out “under CIA direction” and “as an act of U.S. foreign policy, conceived and approved at the highest levels of government.”

    http://en.wikipedia.org/wiki/1953_Iranian_coup_d'%C3%A9tat

  17. simple-touriste

    “Rich people get to dictate to the rest of us”

    how?

  18. Kaye Lee

    If Gina wants to flood the market with iron ore, she can. If Clive wants to mine coal and ship it through the Great Barrier Reef, he can. Rich superannuees can bring pressure to bear to protect their concessions. Media moguls can affect elections and convince people that climate change is crap and people on welfare are rorters and foreign aid is a waste of money and asylum seekers are terrorists and/or scammers. Investors and developers can lobby for the privatisation of our assets.

  19. Andreas Bimba

    Thanks for another really good article Kaye, the links are really good too.

    The ‘New Deal’ in the United States, apart from escaping the Great Depression, was probably instrumental in the success of the US industrially, politically and militarily during WW2 and for the following 30 years during the cold war. It also helped win the battle of ‘hearts and minds’ in Europe and Asia following the war and where Communism or Socialism could have become more popular alternatives for the common man. The American dream was a reality for many and all strata’s of society, more or less, were able to improve from that of previous generations. In Australia the Labor governments and the Menzies government also performed well during this same period by following similar public work strategies such as the Snowy Mountains Scheme, industrial development and fairly equitable pay and ever improving but basic social welfare. In the mid 70’s it appears the capital controlling right decided they didn’t want to be bothered by state planning, the welfare state, unions, taxation, environment protection laws and other forms of regulation and the ‘unwashed’ having democratic control over them. After 40 years this ‘wealthy elite’ have now nearly succeeded in seizing effective economic and political control in much of the democratic world. So where to from here?

    The last Queensland election showed that the swinging voters can rapidly swing between neo-liberal team A and neo-liberal team B after one term, a huge parliamentary majority and heaps of ‘tax deductible’ corporate cash for team A, but even then the vast bulk of the electorate did not change their vote and ‘stuck’ to team A and B. The main lobbies knew that team B would provide the bulk of what they wanted so the people were allowed to make their ‘false choice’.

    Bernie Sanders in the US Presidential race that has just started, is picking up a lot of momentum even though the US media is also heavily biased to the plutocrats. Voting for another messiah, which is what Obama was supposed to be, may be a way of ‘unsticking’ voters from the failed old parties.

    Going from the failed two party system to a plethora of minor parties would probably also increase the probability of sound government but a proportional representation voting system like the Tasmanian Hare-Clark system for the lower houses of all parliaments would have to be put in place as otherwise these small parties will wither away (as the system was probably designed to do).

    And plenty of protest marches and attention grabbing media stunts in the lead up to elections will help and don’t forget that good old fashioned marketing and advertising can be very effective even on a limited budget.

    I think the utter bastardry of the current Coalition government should also be before the High Court as well, as not acting in accordance with the will of the people is in violation of our constitution. Is the following by rote of the agenda of unseen, undemocratic external organisations such as the IPA or the Minerals Council, constitutional? Are the receipt of massive political donations from lobbyists constitutional? Is the revolving door between vested business interests and government constitutional? Is endangering all human beings and all life on earth by frustrating all attempts to limit global warming constitutional? Is the appalling abuse of asylum seekers constitutional? Such much needed legal challenges could also provide a means of capturing the attention of the public, encouraging them to think and provide some Watergate style political theatre.

    https://ipa.org.au/library/publication/1345447840_document_be_like_gough.pdf

    http://www.peoplesmandate.iinet.net.au/your_will_be_done.pdf

  20. Antechinus

    To “simple-touriste”…. I’d rather read liberal progressive crap than right-wing conservative crap anyday. Perhaps if you don’t like the articles here you could find a nice right-wing blog to vent your hatred of the left. Here ya go, start with this…. http://australianconservative.com/

  21. Sir ScotchMistery

    I had a couple of interesting interludes with some antichinus on the weekend.

    Wonderful creature.

  22. Harquebus

    I read crap. A lot of it from here. How else does one learn to identify and argue against it?

  23. Sir ScotchMistery

    @Harkey – can I point out that you don’t only read crap here.

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