Economics

"Profit Beats Poverty"

Farmers and Street Peddlers from India and Africa March for Free Trade

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Johannesburg—"Profit Beats Poverty," "Say No to Eco-Imperialism," "Free Trade Is Fair Trade," and "People or Pandas?" were just a few of the placards carried by 300 or so protesters at the Sandton Convention Center, where delegates from 190 countries are meeting at the World Summit on Sustainable Development (WSSD). The marchers, pushing a broken-down sound car, wound through the swank Sandton business and shopping district north of downtown Johannesburg.

Sandton is where the Johannesburg Stock Exchange is located and is populated mostly by whites who have fled the central city. Its office towers and shopping malls look and feel almost exactly like the upscale shopping and business conurbations found throughout southern California. One could almost be in Newport Beach except for all the security and electric fences and signs warning that trespassers will be met with an "armed response." Clearly, United Nations meetings aimed at helping the world's poor are not modest nor inexpensive affairs. The contrast between the well-groomed WSSD delegates inside the convention center perimeter and the poor farmers and tradespeople outside was striking. In keeping with the South African government's determination not to let the WSSD become "another Seattle," a massive number of police dressed in riot gear ringed the protesters.

The protesters included farmers from India who had forced their government to let them grow genetically improved pest-resistant cotton, members of the Farmers Association of Africa, and local informal peddlers who are members of the Union of Gauteng Street Hawkers. The demonstrators delivered a memorandum to a representative of the President of the Summit, demanding, among other things, that poor farmers and traders be given the freedom to buy or sell their goods to whomever they wish, freedom to grow any crop of their choice and freedom of access to the best available technologies. They also demanded that the United States, Japan and the European Union open their markets to goods produced in poor developing countries.

Protester Barun Mitra from the Liberty Institute in New Delhi announced a special "Bullshit Award" for the many environmentalist non-governmental organizations (NGOs) which he claimed "are trying to sustain poverty." Winners included Greenpeace International and the Third World Network—with a special mention of India's "own divinity of poverty," Vandana Shiva, the strident eco-activist who once opposed American food aid to 10 million Indians left homeless after a typhoon because the food contained genetically improved corn and soybeans. The award consisted of a wooden placard displaying nicely laminated heaps of dung.

To the dismay of multinational environmental activist groups from rich developed countries who are gathered here to lobby the delegates, protests like the farmers' march are highlighting the central importance that trade issues have taken on at the WSSD. Earlier in the week, Marcelo Furtado from Greenpeace International protested, "This is a summit on sustainable development, not a summit on trade and commerce." But even activists at a press briefing for EcoEquity, a coalition of some of the world's richest and most powerful multinational environmental lobbying groups, conceded that this was wishful thinking on Furtado's part.

"Trade has climbed to the top of the WSSD agenda," said Remy Parmentier from Greenpeace International. Activist Yolanda Kakabadse from International Union for the Conservation of Nature (IUCN) accused the United States and other developed nations of "hijacking the Summit and turning it into little more than an extension of the World Trade Organization." Friends of the Earth International's Bobby Peek complained that "neoliberal economic policies are undermining the WSSD process."

Ideological environmentalists find "trade a very important issue," according to Bjarne Pederson from Consumers International, because trade "has encouraged unsustainable patterns of consumption and production." The activists claim that the WSSD is not "Rio + 10," that is, a global environmental summit 10 years after the Earth Summit in Rio de Janeiro, but is instead becoming "Doha + 10," a global trade summit 10 months after the WTO ministerial meeting Doha, Qatar last year.

Political environmentalists are right that international trade is central to the future sustainability of the natural world and to the eradication of poverty, but they have it exactly backwards. Trade and commerce are precisely the processes through which development and eventual environmental improvement occurs. Overseas development aid from developed countries amounts to $50 billion per year, while direct investment in poor countries from businesses in developed countries amounts to nearly $300 billion annually. Those developing countries that have opened themselves to investments from multinational corporations have seen often spectacular improvements in their people's living standards.

Columbia University development economist, Jeffrey Sachs, speaking at a seminar on science and technology policy here, pointed to China, which has drawn in tens of billions of dollars in foreign investment since it opened to the world in 1978. China's economy has grown at about nine percent per year for more than two decades. The result is an eightfold increase in the average Chinese citizen's income in less than a generation. And now a more prosperous China is beginning to take steps to clean up its air and water and protect its forests. Economist Zmarak Shlazi pointed out at a World Bank briefing that historically, once a country begins the process of development, it takes about two generations to rise from poverty to affluence. "This happened for Denmark, Sweden, and Japan and it's happening for China and Mexico now," he noted.

Whenever one talks with an African at the summit, it is not long before one hears the refrain that Africa is a continent rich in resources and that all the multinational corporations want to do is plunder the resources and get out. Bjarne Pederson from Consumers International echoes this sentiment with the added twist that "developing nations in the South actually suffer most from resource depletion due to over-consumption in the North."

Africa is indeed a continent rich in human and natural resources, but it has failed to develop because as Jeffrey Sachs noted, "Capital is a coward." It will not flow to countries that are unstable, unhealthy, and illiterate. "The poorest of the poor countries are not suffering from globalization," declared Sachs. "They are suffering from being excluded from globalization."

It is true that multinationals operating in Africa often do just extract gold, oil and copper and leave little behind. But why does this occur? Because extractive industries like mining, oil and timber companies, must go wherever the resources are located. They can't choose to open a gold mine or oil field just anywhere. This means that they are forced to deal with the governments of the countries where natural resources are found, no matter how corrupt or unstable they may be. And companies invest as little as they can get away with because they can't count on being able to prevent their investments from being plundered by local despots. However, manufacturing corporations—such as textile companies, car manufacturers, and software developers— need labor, and have the luxury of choosing to site their facilities in countries that make them welcome. As Sachs pointed out, multinational companies choose to invest in those countries that have healthy, educated citizens and stable governments.

Africa's development problems are illustrated by a cruel but telling joke that makes the rounds among development economists. It involves two young men, one from Asia and another from Africa, who become friends while training overseas in a developed country university. They both go back to their countries, where they become leaders. Years later the Asian invites his African friend for a visit. The African arrives at a sparkling airline terminal and is met by a driver in a Mercedes Benz, which whisks him along new freeways lined with gleaming factories to his friend's beautiful sprawling home. After they greet one another, they settle down over drinks and the Asian says, "I guess you wonder how I got all this," waving his hand to indicate his huge, well-appointed study overlooking the swimming pool. "Well, you saw the airport?" he asks. "Yes," replies his impressed African friend. "Ten percent," says the Asian. "And you saw the freeway? " he asks. "Yes." "Again, ten percent," says the Asian. "Also you noticed the factories?" "Yes," "Also, ten percent."

After a pleasant stay the African returns home. Some time later his friend from Asia comes to visit him. The Asian arrives at the airport, which is basically a collection of tin shacks. However, a fleet of a dozen shiny new limousines meet him to take him to his friend's home. The convoy crawls along a potholed track lined with poor shanties until at last it arrives at the gate of his friend's walled compound. Once inside the gate, the Asian sees perfectly manicured gardens stretching on for acres. The house is not just a mansion, it's a palace; and instead of one swimming pool there are three. His African friend greets him and they quickly settle in to talk in the African's sprawling reception room. "You're probably wondering how I got all this?" asks the African. "Of course," replies the Asian. "Well, you saw the airport?" "Yes," responds his puzzled Asian friend. "And the road?" asked the African. "Yes," answers the Asian. "And the shanties, too?" continued the African. "Yes," says the thoroughly mystified Asian. "Well, all of them, one hundred percent," declares the African. Economic development and environmental improvement and protection arise from the prosperity produced by economic development. That can only take place where there is good governance and stable property rights. These are the minimum conditions the poor farmers and peddlers who were protesting at the WSSD need in order to begin the process of creating a world in which their grandchildren live prosperous lives in a clean and healthy natural environment.

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