I had a long day at work. I go back home turn on the TV and they talk. They talk about war, unemployment, naxalism, corruption and poverty. Such a sad world!
I don’t have to carry the weight of the world on my shoulders. I possibly don’t have time to think about 1 billion people who might have to sleep hungry tonight. I deserve a hot delicious meal after a tiring day like this. We have created institutions and governments who promise to fight the battle on our behalf.
One such institution which I adored was World Bank. They define “extreme poverty” as living on less than $1.90 per person per day. Don’t worry, they are equipped to fight this battle. This is their millennium development goal. One of the way, they tell us, we have to open up our markets believe in free enterprise and welcome capitalism. They say capitalism is the cure, it pulled millions of people out of the poverty. Since the very introduction of economics in my life, I have been told how capitalism is the one stop solution to poverty, it is a fact. You don’t think about facts, just believe in them. So if you want some capital, you just have to open your door to free enterprise and then World Bank gives you aid to develop your country. Just the way World Bank helped Bolivia!
In 1998 the IMF made privatization a requirement for Bolivia to receive loans to control inflation and fuel the economy. It became a prerequisite if Bolivia wished to receive any aid. The Western powers were forcing Bolivia to accommodate the wishes of large multinational corporations. These corporations had a great deal of money, influence, and power, so they had the funds to invest.
In 1999 the Bolivian government signed a forty-year contract to transfer the operation and distribution of Bolivia’s water supply from the municipal drinking water and sewer services to a multinational company. Just at the moment capitalism was in action. Water became a commodity. Prices rose. Many people could not afford water anymore. Relax, said the world bank there has been some glitches in implementation. The free market will correct itself. They call it “invisible hand” in economics. Till then some people might die, but it is going to be fine. Violence and protest shook the confidence of the local government and the “savior” company was forced out. By the way, this savior company was Bechtel Corporation, the largest construction and civil engineering Company in the United States. In 2000 Bechtel made an annual revenue of over $14 billion, whereas Bolivia's national budget at the time was only $2.7 billion. This is called profit maximization, the governing rule of capitalism.
I recall that my textbook mentioned one of the main causes of poverty as lack of natural resources. Yet in the list of poor nations African countries top the chart. I must confess, back then I didn’t bother to think. Thoughts never gave you good grades, facts does. Now that I don’t need grades because I have a job, I think and I think of Guinea, you must have heard about this country during Ebola outbreak. One of the largest producers of bauxite in world, is one the poorest countries. This is an example of modern colonialism. Western governments are not supposed to wield commercial and political power at the same time, and certainly not to use one to benefit the other. In colonial states, The British would develop a relationship with a small group of local people who would fuse political and commercial power to control the economy.
After they left, the giant multinational companies along with corrupt state officials kept doing the same. Colonialism, was just an extension of capitalism. You conquer lands for cheap labour, natural resources and later on use the colony to dump your products. Since by this time, the colony is so dependent on you that you are even selling it needles!
I might not be totally wrong to say that it was the poor countries that made the rich countries rich. Through debt repayment and through their resources. Did the rich kept the poor, poor?
Which brings me to next thought, the rich will keep getting richer and all the mechanism will be designed in such a way that the wealth remains concentrated in hands of a few. I shall give you facts and figures unlike me think about it. In the U.S, 1984, the top .1 % had 9.6% of wealth distribution of country. The bottom 90 % had 35% wealth. In 2012, top .1% had 21.6% of wealth distribution and bottom 90% had 25.6%. While the super-rich are growing their piece of the pie, just about everybody else’s portion is shrinking. Think of your organization. Do you see the difference, not big enough? Good, now think of recession in 2008, while many workers were handed a pink slip. The big bankers were bailed out receiving more than $700 billion. The inequality in income in the wall streets is more than we can think of. These banks are too big to fail.
At this point, you may think I am against capitalism and pro communism. Of course not! Just like you, I am waiting for my next increment. We all want to make more money. There is nothing wrong with it. But think how many cars do you really need? Capitalism has helped us so far, but now it has outlived its life. It needs a change in definition. How about profit maximization with some conditions applied? The problem is capitalism has no sense of right or wrong. So a cheap labour is a cheap labour even if he is teenager working in hazardous conditions in textile mills of Bangladesh.
Some 6 years back Mr Rangarajan defined poverty for us. He said anyone living under Rs 47 per day in urban india and Rs 33 per day in rural india is poor. This made 3 out of 10 Indian poor. So if you are reading this after a good meal you are probably not one of them, but imagine what if you have to spend a day with just Rs 47? May be then we will think, think deep.