Blog Directory Economic Injustice: "WE WERE ROBBED...... " - International Observation

Economic Injustice: "WE WERE ROBBED...... "

Democracy defines the American vision which is increasingly being adopted by fellow nation-states.  What role does ‘money’ play in our attempt to fulfill that vision?  Is it democracy that we are so vigorously pursuing, or is it something else?  Stating “we were robbed” provokes the question(s).... Is it an economic injustice or a democratic one?  

A reader commented on a previous post with the following statement:

I read your article carefully. By "Western Regions" I think you mean America in particular. In fact we already give, both thru government & private giving, many, many billions of dollars to the developing countries you refer to. This is what the climate treaty meeting was all about...the re-distribution of wealth (ours).


As promised, here is my response:


Financial support and intervention is not always the most viable option.  With corruption abound in developing nations; it also evolves into international politics.  The European Union pledged in 2002 $7-8 billion in aid to stimulate economic growth and reduce poverty in states that adopt sound policies (Carbaugh, 2007).  These intentions include stopping corruption, increasing education, and promoting free trade.  The idea is that these countries will attract foreign investment and will be more successful.  The United States adopted a similar strategy.  However, the U.S. took a more biased approach and was deeply rooted with political ties.  Israel and Egypt received forty percent of the aid, while Africa only ten percent.  Twenty-five percent was disbursed for military assistance.  The remainder was split amongst several various countries. Also stated is that “aid often funds prestigious projects such as airports and big hotels with little impact on sustainable development for the poor (Karns & Mingst, 2004).”  Bolivia, a country who depends on cocoa as eighty percent of its cash crop relies solely on the United States for aid, advisors, and strategies.  Yet, their needs are often neglected.
              With subsidies in the form of aid to developing countries being distributed in bias, and with political economics involved it has often fostered bureaucracies, bad governments, favored the wealthy, or just been squandered away.  Often, it given to political allies instead of the beneficiaries of which it was intended.  Aid is often accused of interfering with attempts to combat poverty, as the U.S. while providing aid to developing countries will counteract with subsidies to U.S. farmers, which helps lower the prices worldwide of vital cash crops in which developing countries depend (Carbaugh, 2007, pp 237 & 250).  It seems illogical that aid would be given for the purpose of development, but then thwarted with efforts to combat the threat of a competitive import.  How then can a developing nation realistically expect to succeed should it take the aid and invest it into a different product?
Structural Adjustment Programs were formulated by the IFIs, such as the World Bank and IMF, as a means to manage the development processes and strategies of developing countries. These programs have been under heavy scrutiny for being highly ineffective in that they failed to solve the problems faced by the developing countries as they were accelerated into democracy and capitalism prematurely which often times drove them further into impoverishment. IFIs and Westernized democracies that were established in capitalist markets held the assumption that foreign capital investment and a sound infrastructure laid the foundation for development.
This theory of modernization neglects to recognize cultural, social, and political differences that existed in developing and underdeveloped states which would further repress economic growth in a capitalist market. While corruption, failed institutions, and a lack of local market reforms contributed to the ultimate failure of SAP’s, the World Bank shifted its focus on the implementation of programs that address the poor people and actively engaged them in the interaction of political, social, and other institutional processes. Simply throwing money at them and proclaiming democracy was not the answer, and although IFI’s recognized their fallacy, their enlightenment and advancement towards collaboration never came to full fruition. The deepened divisional divide that democracy and capitalism had created between the elites and impoverished meant that the societal elites often bore little concern for the poor. The IFIs reliance on national SAP’s left the poor essentially at mercy of the rich. Without international intervention in policy making and establishing a sound infrastructure success is futile. 
A lack of a democratic system and economic distress are primary stressors for developing countries.    Economic growth, according to “Westernized” principles, relies on a liberal, capitalist system which stems from their perception of a democratic state.    Developing countries often argue that capitalism suppresses the population as it creates class divisions which further separate the poor from the rich.  The division that results from capitalism creates an atmosphere of “elitism”.   The government is supported and elected by these high society elites, which hinders equality and the advancement of the social welfare of the state.  With an economy steadily on the decline, the state feels pressure to further depend on international forces.  Instability is fostered in this sort of environment.  The HD Report of 2002 notes the differences as “unjust” and claims that “for politics and political institutions to promote human development and safeguard the freedom and dignity of all people, democracy must widen and deepen.” 
Latin American Countries have long sought more attention to development needs and preferential treatment in trade and finance, while the United States maintains that development is a national responsibility, as opposed to an international one (Therien, Fortmann, and Gosselin, 1996, pg 230).  To the contrary, this seems to be an issue of international governance that requires cooperation among all nations, and the aggressive pursuit of a resolution.  The blame game is not one to be played in these affairs, as not only the economics of the world are heavily involved, but an enraging world health crisis is on our hands.  So what are we doing about it?
A bilateral approach is needed in U.S. foreign policy that benefits both parties in order to be effective.  Hector Morales, Coordinator to the U.S. Summit of the Americas states that “democracy and development will not be sustainable or long-lasting if there’s not going to be a secure environment (Green, 2008).”   In 2005, the General Assembly enacted the Declaration of Florida, along with Resolution 2154, which together provide initiatives for regional cooperation.  The aim is to strengthen implementation of the Democratic Charter in order to proactively address threats to democracy (Castaneda, 2006).  Conversely, Cuba remains one of two communist states in the world and lies only 90 miles from the United States border.  If the U.S. cannot promote democracy within a state that is incredibly close in proximity, how can it manage to promote democracy across the hemisphere?
There is a growing gap between the developed and less developed countries.  “The international community is doing too little to narrow this gap” claims Nobel Peace Prize winner Joseph Stilglitz (Carbaugh, 2007).   The area of economics consists of looking not merely at the immediate but at the longer effects of any act or policy; it consist in tracing the consequences of that policy not merely for one group, but for all groups (Hazlitt, 1979).  Therefore, it is critical that we approach the growth and development of these countries with intentions for long term remedies as a collaborative.
Throwing money into a corrupt government can be considered more of a “fix” than a strategic level of aid or support.  It is proven that saving, capital accumulation, and investment activity improves the long run economic conditions and progress as it serves the interest of the future.  Essentially, it is inevitable that man will seek a solution to the short-term effects of poverty, rather illegal or not.  Mismanagement of foreign policy and support will only suppress him further with many encumbrances that drive him deeper into the shadows of darkness.  Show him the light at the end of the tunnel, the way to achieve long-term happiness and he will make it his pursuit.
References:
Carbaugh, Robert (2007). International Economics. Mason, Ohio: The Thompson Corporation
Castaneda, J. (2006, May/June).A Tale of Two Lefts.  Foreign Affairs.  
Corruption Perceptions Index. (2009). Transparency International: The global coalition against corruption. 
Green, E. (2008, December 9).  Summit of the Americas Highlights U.S. Commitment to Hemisphere.  America: Engaging the World.
Hazlitt, Henry (1979).  Economics in One Lesson. New York, New York: Three Rivers Press
Karns, Margaret & Mingst, Karen (2004). International Organizations: The Politics and Processes of Global Governance.  Boulder, Colorado: Lynne Rienner Publishers, Inc.
Therien, Fortmann, and Gosselin 1996 study (as cited in Karns & Mingst, International Organizations, 2004).


16 comments:

Wikintel said...

This is very well written and argued, but allow me to pursue it from another approach.

1.One can speak of capitalism and democracy, it is interesting the countries which demonstrate the least amount of corruption with a high level of democracy on your map are those which chose welfare-capitalism, a hybrid of two seemingly incompatible economies which fare well.

2. Someone once said that the nation-state is cognizant of only one principal in foreign policy: There are no permanent allies, there are no permanent enemies, there are only permanent interests.

3.If any country finds it in their best interest to support a corrupt regime, even if the supporting nation is free of its own corruption, it will to some extent support that country.

4. A country may give 60% support to one region and 40% elsewhere, unless it is in their best interest to reverse the aid based on changing alliances or necessity or if one supported country or countries are becoming too powerful in that region for the donating country's foreign policy comfort level.

I personally think, and not to sound blithe or supportive of the idea, that this may not be "the best of all possible worlds," and perhaps the world is bested by its own opportunities, but the world will always take the best for itself based on any given possibility.

Regards,

Lloyd Wedes
http://lbwedes.wordpress.com

Dyck Dewid said...

I would like to have access to the TV special Bill Moyers did many years ago on PBS about something like, Democracys of the World. I recall it being remarkable that there are many democratic societies in Africa and maybe elsewhere that are far more functional (and much less economic) than ours.
Dyck Dewid

Helena said...

Dyck,
I am actually working on a comparative analysis of these countries and hope to post tomorrow a discussion on the democratic peace theory. I hope that you have the opportunity to read it because democracy exists everywhere, but the problem is that we have locked in on a certain set of Westernized principles that define democracy which undermines the efforts of others. A reader sent me an email and asked: what is U.S. democracy.... and I've been working on giving everyone a response that I hope will allow for some enlightenment.

I searched PBS archives and could not find Bill Moyers broadcast that you mentioned, but there are pages and pages of them so it is possible I overlooked it. If you go to: www.pbs.org then Bill Moyers, then archives you might come across it, perhaps under another title.

Thanks for your input!

Helena said...

Lloyd,
I certainly agree with your assessment that the welfare-capitalist state does defy the fundamental beliefs of democracy as only being feasible through free trade and capitalism. Yet, we are also not a purely capitalist economy either, although we so proudly claim to be. Reforms, such as health care, the new job bill, and others indicate that the U.S. pursuit of free-market capitalism has begun to crumbled thus requiring social readjustment and social policy reform. These reform initiatives highlight the welfare state of the U.S. government which it is attempting to transform into capitalist democracy.

On your other notes, political realism is synchronous with power politics, not just for the U.S. but abroad as well. The rights to sovereignty also includes the right to self-determination. Self-determination in the "real world" is essentially defined by political realism which you so accurately described in points 1, 2, and 3 of your statement.

Thanks for reading and input on this topic!

Wikintel said...

It is a pleasure to read your material.
I am surprised at the number of seniors who attack "socialized" medicine yet depend upon Medicaid which, had they not had it, would go broke.
On the subject of political realism, I am not optimistic of some emerging countries to ever become altogether mergent as they are too uncomfortably close to nations which would prefer them not to create their own foreign policy or compete with them in the market place. I always felt that Ukraine and Poland were pretty well 'dead in the water' on that issue based on their location.
Anyway, keep up the good work.

Regards,

Lloyd Wedes
http://lbwedes.wordpress.com

Helena said...

Thanks for your input Lloyd! It is typical across many domains to witness absurd contradictions. The one you mention about opposition to socialized medicine while at the same time relying on government assistance is a very good point as it hits so close to home!

Christel said...

Very well said, Helena.
Moving forward requires balance, most definitely.
Americans through greed have become their own worst enemy in the economy. We have been as a people too trusting of the words of others and not looked beyond what is reported for actions. I hope the spirit of American generosity does not wane in spite of the lesson.
Democracy may be a hard concept for some nations to grasp but I believe it is innately intuitive to most people as the moral high ground for governing and therefore worthy of support.
Yes, of course we have made mistakes as a country; show me one that has not. The difference is that democracy offers a system where lessons learned can be used as stepping stones to a more fair way of governing for the present and in the future.
Our nation is built on laws and common sense; the real Golden Rule, where one treats others the way one wants to be treated. It should not be the "He who has the Gold rules"! We are still a young nation and learning and I believe in our system, though it is not perfect.
Striking a balance between domestic and international affairs is hard because democracy itself is challenging. No wonder there are bumps in the road. It will still work and I support democracy as a citizen and the USA.

dena said...

At this point, I am not sure how we can separate the two: economic vs. democratic. It is both. The two have become so entrenched that they seem to have created a third model. This is problematic because it seems that the core values of the democratic vision we have adopted and the capitalistic dream that we as a nation work towards are often at odds with each other. This third approach has worked in such a way that the one hides behind the other, producing a false reality that we supposedly all have access to and work and function within.

Anonymous said...

We need to increase jobs. Period. EXPORT to get out of debt. Yesterday!!

Wikintel said...

The way to export is to drive the dollar to a low level and make ensure the Euro and other currencies remain higher. China is another issue but too long to discuss now.
Pushing the dollar downward has its own set of foibles and hardships, but it will increase exports since the US still manufactures quite a bit of goods.

Regards,

Lloyd Wedes
http://lbwedes.wordpress.com

Helena said...

Thanks for your feedback Lloyd. I'm going to be posting "China Rising: A looming threat?" early next week I believe. Keep an eye out for it, I think you'll like it!

Sandy said...

Ironically, however, we're experiencing at this moment just the opposite of "Democratic Capitalism" in China. They've created something being called "Autocratic Capitalism" and whether we like or not, it's working. They are absolutely forcing collaboration, depleting resources and would seem to have limited interest in long-term sustainability, but for the moment this is helping China to easily outpace the rest of the planet.

AD said...

Having lived briefly in china i must say that a large part of their economics is completely laissez faire - all the small business operate completely free of any government interference. I think that is part of the reason why they can do such autocratic capitalism in some areas - because they leave a lot of room for people who don't like it to go elsewhere.

Rick said...

To try to think of Capitalism and relate it to Democracy, the very first consideration should be market economics, and not governmental controls.

Helena said...

My thoughts are that democracy and capitalism are two separate things and may mix well like honey and milk or can have an entirely different outcome like oil and water. I think that alot of it has to do with how you mix it and how its managed. Just as Alexander mentioned that China is succeeding in Autocratic Capitalism (which I've studied a good bit on China's economical position) we can equally say that the Western States are failing at democratic capitalism. Does that make China's method any better? Certainly not! But it means that they are focused in their ideology and have a clear plan for action. This may in part be to a lack of the people's voice as they are a communist country and therefore a collective, but then again maybe not.
Yet, for every action there is a reaction and what I feel we are witnessing with today's global economic meltdown is a direct result of mismanagement. Mismanagement on both the micro- and macro- level. Am I guilty? Yes, and I can assure you that most of the U.S. is as well, which is evidenced by the collapse of the housing market as people overspent and now can't pay their mortgages.

I have never heard of PROUT and their thoughts on economic democracy.

But I can say that democracy at its core derives from the Greek word "demos" which means "the people." A government run by the "people' is justifiably democratic. If the people choose to infuse it in the sense of a cooperative then it is no less democratic, as long as it represents the people and their interest.

Anonymous said...

I agree with all of your topic discussion except one point. Western Democracies and capitalism is failing because its not true capitalism. It has been tinkered with and manipulated since the early 20th century. Capitalism works best when left alone to evolve naturally. I like your Milk and Honey analogy as it represents the combination well. also, the oil and water scenario is just , as the oil represents manipulated capitalism. Our system is failing due to the leadership (on all fronts) trying to manipulate the system for their personal gain. The housing bubble was a great example. hand out loans to people with no credit, no job, no documentation and think it wouldn't collapse. DaHaHa.

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