The Globalisation of Poverty

If Naomi Klein’s book The Shock Doctrine is an eye opener, Michel Chossudovsky‘s The Globalization of Poverty and the New World Order is a truly earth shattering documentation of the wanton destruction of entire countries and human lives that has been prosecuted with the sole objective of accumulating wealth for a select few.

Most of us in the live lives where people behave with some degree of caring for the society they reside within and the people around them. The idea that there are people who have the power, influence and resource’s, let alone the will, to deliberately crash the economies of entire countries for nothing more than their own enrichment is outside most of our experience. Yet, Chossudovsky documents this happening on a global scale. His book constitutes a catalogue of misery and destruction remorselessly inflicted on hundreds of millions of people across the world.

For most of us respected international financial bodies such as the International Monetary Fund (IMF) and the Word Bank are hazily assumed to perform functions connected to promoting the welfare of people of the world. We assume that since WW2 such institutions under the United Nations are there to stabilise weaker economies and promote world progress toward eliminating poverty. In fact, as Chossudovsky documents, nothing could be further from the truth.

The reality is that both of these institutions have been co-opted to an ideological and program that entails the colonialisation of nations through the forces of debt and macroeconomic policies designed to divert massive amounts of wealth into the hands of a select few individuals. The power of these organisations is backed by the political and military resources of the USA, arguably, the world’s only superpower. So that when economics and diplomatic, strong arm tactics do not deliver the desired result, then indirect and direct military force is employed. All of this is supported by the enthusiastic compliance of the corporate-owned mass media that avoids the hard questions and acts as a pure propaganda mouthpiece.

Across the planet, any democracy that has existed has been extinguished through the purchase of politicians, the suppression and marginalisation of dissent, and the spreading of fear so as to justify and even create the conditions for willing acceptance of intrusive, repressive laws that limit personal freedoms. We have elections, but it doesn’t matter who we pick because the outcomes (or, at least, those that matter) are the same.

How is it done?

The economic mechanisms of this destruction are found in the way that national debt is created, sustained and used to gain control over key national institutions in a self-reinforcing system that acts to channel wealth. The seductive language of the “free market” and “free trade” hide a reality where fragile nations are targeted by speculators who create pressures on a country’s currency. When the country seeks help from the IMF and World Bank, consultants from the institutions (who are often current or previous employees of the very banks and that created the speculation situation) are brought into assist.

Their prescription for solving the situation invariably involves floating the national currency. This allows for even more money to flow from the country and the bankrupting of the country as its reserves are used to halt the flow and restore confidence. The consultants then prescribe a package of measures to be implemented to secure support. The central bank to be separated from the political control of the country’s leaders (often under the leadership of another ex-functionary of the IMF).

Austerity measures are proposed that involve the slashing of public sector jobs (including teachers and medical staff) and the sale of public sector owned businesses. Meanwhile, with the currency crashing the savings of the population are ravaged. Farmers are bankrupted as people cannot buy food that is suddenly priced at world market prices while salaries and wages are fixed or reduced in real terms.

Agricultural production is consolidated and converted to the farming of commodity outputs (such as tobacco, maize, coffee), and industries are closed through a planned bankruptcy regime using any remaining local banks that have been now acquired by international financiers and speculators. This crashes the internal market of the nation and renders it open to reliance on imported food and the import of luxury goods from the West to amuse an elite that is able to capitalise on the programme by acting as intermediaries. US food aid programmes flood the internal market with cheap staples that act to further crush local farming. Domestic seed stocks are eliminated and replaced with high-cost GMO and licensed seed stocks that require the import of fertilisers and pesticides sourced from US and European agrichemical corporates.

Imports mean more debt and as the debt spirals, the costs of servicing it mount so that eventually all of the country’s export earnings are diverted to debt servicing. At this point, borrowing is required merely to service the interest payments on the debt and even more onerous measures are prescribed to facilitate this further borrowing. The impoverishment of large portions the population that this programme creates inevitably results in civil unrest. The now puppet leaders of the country are amply supplied with arms and military training aimed at suppressing the malcontents. Arms purchases and the cost of maintaining a large military means more imports and hence more debt.

As western corporates find that they have a source of cheap, and at least initially, educated labour, they move production from high-cost regions in western countries to the now economical poor countries. Workers earning as little as a dollar a day, or less, are set producing goods they will never be able to afford for export to western countries where they are sold for ten times or more the costs of production. As more countries are added to this programme, they effectively compete for the right to host such industries based on their desperation to keep up with the debt servicing payments and their ability to drive even lower costs of production i.e. lower wages for their people.