[In fact, so many new boutiques in fashion… fashion boutiques and designer stores have opened in Moscow that when Armani opened his designer store, in Moscow, the international world…] mocked him gently saying he was Giorgio come lately, because everyone else, Versace, Bulgari, all of them were already there and all this time people were dying of hypothermia in the city.
China. Long one of the most egalitarian societies in the world, is now seeing gaps between its coastal areas and its rural interior that it has not seen perhaps in 100 years. The Chinese people’s procuratorate – a watchdog body of their communist party, the People’s procuratorate of China, towards the end of 2003, came out with a report saying that two of the … I mean, report on various things, in which it had mentioned… that two of the giant and rapidly growing sectors of the economy are – one is corruption and the other is prostitution. That was the watchdog body of the Communist Party of China speaking.
It forced them, in fact to have a special session in their last Congress on this issue of inequality.
It’s in China. It’s in India. It’s in Russia.
But by the way, harking back to the… but all this doesn’t gain ground, because you see every night on every single one of your television channels – the giant soothsayer industry. “It’s getting better. Things are actually getting a lot better”
You know, it’s the baseline statistical, the baseline game. If you draw the baseline in the last ice age, everybody is doing better. And it’s also the statistical averaging game, which we won’t get into here.
But just to give you an idea of the way of looking at growth for instance… which do you think was the fastest growing economy in 2003 in the world?
Afghanistan was the fastest growing economy in the world at 21%. See Afghanistan’s GNP doubles if you just stop bombing. You build one school. It’s a vast improvement. But by the conventional measures of growth, that was the fastest growing economy in 2003 and the United Nations however humbly added that 50% of the growth came from the cultivation and sale of opium.
Because you have destroyed any other means of livelihood for poor people in that country. They just cannot earn another way.
What about Africa? How did Africa do in all this?
Ask Joseph Stiegler. Former chief economist of the World Bank sacked for his incompatibility or incompetence, which of course immediately qualified him for the Nobel Prize.
As he points out, the African continent, subjected to forcibly imposed policies of the IMF and the World Bank has lost nearly a fourth of her income. Even African cotton farmers who grow the cheapest cotton in the world go bankrupt. American cotton producers – not farmers – because these are corporations, not farmers get an annual subsidy of a million dollars each.
No one can compete against that. So great is Africa’s overall crisis today – and I think it is worth considering this point in view of all the amount of concern about outsourcing – that today, according to the Financial Times, the entire continent of Africa has just 20,000 engineers and scientists to serve a continent of six hundred million people, because today, there are more African scientists and doctors and engineers working in the United States than in all of Africa and much of this drain of medical personnel has come from South Africa – the country facing the world’s largest AIDS pandemic.
So when you are talking about outsourcing, let’s look at this reverse factor as well. Let’s look at what’s happening.
Let’s look at the millions of manufacturing jobs lost in China by the new process of liberalization, privatization and globalization that’s taken place.
200 jobs lost here. Phenomenal outcry – and yes – what’s being promoted – and that should be the view – the way of viewing it – is the race to the bottom.
Keep finding people who will work cheaper and cheaper and cheaper until you drive them into the ground.
That’s the game – it’s a race to the bottom. It’s not jobs stolen from one set of poor people by another set of poor people.
In India, in the last few years, the inequality has – that’s why I started with the theme weddings – the inequality has reached such proportions… let me tell you some truths about the tiger economy.
I speak very bravely these days, because I have an election of 2004 behind me. Every time I spoke before that – My God! it used to infuriate people if I told them “This is what the government data shows”.
At a time when India was being promoted as the emerging tiger economy, its per capita food availability in 2003 was lower than it had been during the Bengal famine of 1942-43. You can check that figure in the pre-budget economic survey – a document that the government of India places in parliament at the time of the budget session of Parliament.
Amartya Sen’s figures will show you that the per capita availability of foodgrain in the Bengal famine was 147.5 kilogrammes per Indian. In 2003 it was 141.7 kilogrammes per Indian. Seven kilogrammes less than in the Bengal famine.
In this period, they were still implementing the structural adjustment policies of export led growth. In a period when per capita availability of foodgrain was so low, India exported 30 million tons of foodgrain in 18 months at a price far lower than that at which she sells it to poor people in her own country.
We exported that grain to overseas markets at 5 rupees 40 paise a kilogram, while selling it to poor people in Andhra Pradesh at 6 rupees 45 paise a kilogram. And then we boasted “Look at our mountains of foodgrain” Mountains of foodgrains existed because the structural adjustments programme had so effectively destroyed the purchasing power of the poor that they could not buy food at those prices.
It was that hunger that drove the kind of election results you saw last year.
Once we entered the brave new world of liberalization, privatization, India cut development expenditure from her budget. Cut development expenditure from her plan outlays. From 14.5% of gross domestic product, to 5.9% of her gross domestic product. That is a cataclysmic fall of about 30,000 crores, which is about 7 billion dollars.
We removed 7 billion dollars from development expenditure, but we didn’t just remove 7 billion dollars. When 7 billion dollars is invested in the Indian rural economy, it converts to about 30-35 billion dollars of rural income. We blew that income away and that’s when the crisis began, that’s when the farmer suicides began. That’s when our agrarian crisis took off. That’s when thousands of farmers committed suicide between 1997 and 2003 becoming the lead issue in at least 2 or three states in the elections – the suicides of thousands of farmers, which I’ve had the misfortune – the total misfortune – of being the mug who has to cover.
Don’t think that farmer’s suicides are something that happen only in India. They happen right here in the United States. Maybe they don’t all get reported as suicides because there are two problems associated with the reporting of suicides all over the world. One is stigma, second, in USA is insurance.
So a lot of them, if you speak to the farm unions here, they will tell you that a number of suicides are not necessarily reported as suicides, but as accidents, because you don’t want to deny the family insurance.
In India there are at least seven ways in which you can undermine the suicide figures and that was the investigation I did between 2001 and 2004 in Andhra Pradesh, which I am now doing in Kerala and finding out that the number of rich district of Wyanad, Kerala is as intense as the poor district of Anantapur in Andhra Pradesh, because cartels have emerged at the global level, which are controlling and rigging commodity prices.
Commodity prices have collapsed at the level of the producer, at the level of the wholesale, at the level of the small farmer. They haven’t changed much at the global level. Each time one of you goes out there and buys a cup of coffee, one twentieth of what you pay for that cup of coffee goes to that guy who spends his life growing coffee in Wyanad or in Brazil.
The rest goes to Sara Lee, to Kraft, to Nestles, to Starbucks and to the big boys. That’s how the world of commodities is now rigged. Now, the prices of commodities are falling for the producer right in this country.
In the United States, between 94 and 99, consumer prices at the market actually rose 2.8%, but family farm prices crashed 37.5% in this very country. We’re just slaughtering the small farms, the small households across the world.
If you look at your farm subsidies which are leading to suicides in Africa, for instance. They didn’t go to small farmers in the United States. They went to 26 Fortune500 corporations. I was delighted to find who your struggling small farmers were when I checked the Associated Press database on this story.
I cried buckets when I realized that poor old guys standing in the line for handouts of agricultural subsidies in the United States included Ted Turner and Scottie Pippen and not to forget, David Rockefeller. They are all listed as recipients of agricultural subsidies in this country, whereas your small farmer is going bust.
I worked for a semester while teaching in a university of Iowa in the late 90s – in 1998. Where every day in the paper I read about another family farm going belly up. More foreclosures. More farms closing. And once the farmers of Iowa had a spectacular protest where they came and released lots of hogs in the streets of one of the towns nearby and explained that while the price of pork on the supermarket had not fallen one cent on the pound, their prices had collapsed.
So somewhere…. the money was going somewhere. Where was it going? This is happening in the United States.
Farmer suicides are occurring in the United Kingdom up to the 2001 for which figures are available, at two and a half a week on average. They are occuring in Burkina Faso and Mali in Africa where cotton growers of Burkina Faso are getting wiped out by the subsidies of the UN and the United States.
All over the world, that small farmer is getting wiped out to the benefit of corporations. That’s the kind of situation that you’re looking at.
In Latin America, long the world’s most unequal region, inequality rose so sharply in the 90s, which was terrible for a continent that had seen a hundred million people fall already below the poverty line in the 1980s. They had two rounds of shock therapy.
There is an Oxfam figure that tells us that in Mexico alone, an additional eleven million people fell below the poverty line between 1990 and 96.
Worldwide, as FAO director general Jacques Diouf points out, in the last fifteen years, in which rich countries increased subsidies to their farmers or agricultural producers, poor countries went from being net exporters of food to net importers.
India is the country that produces the best spices of pepper in the world. They come from Malabar. Many explorers from the West and the medieval ages used to sail to India looking for Malabar pepper. Malabar pepper is premium grade pepper as against four other lower grades of pepper. Malabar pepper has collapsed, because the new laws allow people to import third grade, fourth grade pepper into India, remix it with Malabar pepper and re-export it to rich markets.
So farmers in that very rich district of Wayanad, that is the source of most of the Malabar pepper are committing suicde in very large numbers.
In coffee. The coffee prices have collapsed by a factor of ten, pepper prices have collapsed just through the floor. Vanilla prices have collapsed. cardamom prices have collapsed, but if you get on to the multi commodities exchange websites, you’ll find that at the global level, the prices have not fallen so much.
Somebody is making the money and those are corporations. These are the driving force of the new inequality that’s going on. India is a classic example of engineered inequality.
The New York Times had, some time ago, a front page article celebrating the birth of a class of people who spend their weekend at the mall. Isn’t that delightful? And some of the letters that came in from India were also illogical, you know?
I noticed a few NRI exchanges proudly about “have you seen this article? Everybody is spending time at the mall in India” It would have to be a VERY BIG MALL.
While all this celebration was going on, per capita food availability was falling. At a time when the tiger economy was being painted, India’s position in the rank of nations, in the human development index of the United Nations fell from 124 to 127, which places us below – for the poor people – not for the rich people, because India’s rich are richer, I think than some of North America’s rich.
However, it places you below – for the quality of life for poor people – places you below el Salvador. It places us below Botswana and the occupied territories of the Palestine.
So here, the greater – it’s pretty much like the Tsunami model. The greater the misery of the poor, the greater the achievement of the markets. The greater the misery of the poor, the better the rich are doing.
Here we come to this thing of, what does that inequality growing in every – I’ve traced it for you even now in Africa, Europe, wherever. It’s happening in Japan, again one of the more egalitarian societies in many senses. It’s growing very rapidly in Japan, where the Japanese are under severe pressure to privatize their pension funds, to privatize their providend funds, to privatize their simplified life insurance and postal insurance and postal savings. And who are the ones forcing them to do the privatization? Same bunch of corporations.
Now the kind of gaps that are coming up between rich and poor – in 2002 in this country, Prof. Paul Krugman of Princeton wrote that essay on inequality and there’s also another brilliant essay by Jamie Galbraith on the perfect crime – inequality in the global age, where Krugman argues, quite correctly in my opinion, that obscene levels of inequality don’t nearly threaten economic well being. They threaten and undermine the existence of democracy.
[contd in part 5]