By Guillaume Signorino
Jason Hickel is an anthropologist at the London School of Economics and Political Science (LSE). He works on globalization, development, and economic policy as it affects the global South, and primarily southern Africa, where he is originally from. In addition to his academic research, Jason also contributes to Al Jazeera, Le Monde Diplomatique, Global Policy, Monthly Review, The Africa Report and other online outlets.
The Paris Globalist: The Millennium Development Goals expire at the end of this year. Have we really been successful in terms of poverty reduction? Are we using the right tools to measure poverty, such as the 1.25$ a day International Poverty Line?
Jason Hickel: It depends on what you’re looking at. The MDGs show impressive improvements in child and maternal mortality, for instance, and that’s good. But the Campaign also claims substantial gains in the fight against absolute poverty, and this is much more tenuous. The MDG metrics have been massaged to support a poverty-reduction narrative by focusing on proportions rather than absolute numbers, by shifting the poverty line downward in real terms, and by claiming China’s gains against poverty in the 1990s. But if we look instead at absolute numbers, and if we take China out of the equation, we see that the global poverty headcount is exactly the same today as it was in 1981, with more than 1 billion people living in extreme poverty.
And that’s using the Campaign’s own poverty line of $1.25 per day. A growing number of scholars are beginning to insist that $1.25 per day is simply not adequate for human existence. In India, for example, children living just above this line still have a 60% chance of being malnourished. One study has shown that if people are to achieve normal life expectancy, they need roughly triple the current poverty line, or a bare minimum of $3.70 per day. If we were to measure global poverty at this more realistic level, we would see a total poverty headcount of about 3.5 billion people, which is more than three times what the Millennium Campaign would have us believe, and nearly half the world’s population. We would also see that poverty is getting worse, not better, even with China factored in: around 500 million more people have been added to the ranks of the extremely poor since 1981. That’s eight times the population of France.
As far as I’m concerned, if the new Sustainable Development Goals are to have any credibility, they will have to use a poverty line of at least $2.50 per day, if not higher. This number is already in use by the World Bank, so it wouldn’t be difficult to make the change.
TPG: You wrote that “poor countries are effectively developing rich countries”. Can you briefly explain why?
JH: This should not be a surprising claim. Consider the massive flow of mineral wealth from colonies in Latin America into Europe during the 16th century, for example, which provided the primary capital for the Industrial Revolution in Europe. And then the Atlantic slave trade up into the 19th century, which transferred some 400 million hours of free labor from Africa into mostly European hands. And then the scramble for resources in India and Africa during the most recent period of European colonialism. The wealth of the global South has long flowed into the coffers of the European metropoles.
This pattern continues today in a number of forms. Consider tax evasion, for instance – one of the biggest media stories of the past few years. Global Financial Integrity calculates that up to $900 billion flows out of the developing world into Western accounts each year through trade misinvoicing, and Raymond Baker estimates that probably another $900 billion flows out through abusive transfer pricing. On top of this, poor countries pay about $600 billion to rich countries in debt service each year, much of it on the compound interest of loans accumulated by illegitimate rulers long since deposed.
These figures alone amount to nearly 18 times the size of the aid budget; we can safely say that the global South is a net creditor to rich countries. So the Millennium Campaign isn’t actually delivering any aid at all – it’s just compensating for a very small fraction of what is being extracted from poor countries each year.
These reverse flows of aid are relatively well known. But much less discussed – and much more serious – is the fact that rich countries benefit from artificially cheap labour in poor countries, largely as a result of globalization, which exerts downward pressure on wages. Samir Amin calculated that, in 1966, developing countries lost $161 billion (in today’s dollars) each year through undervalued labour. Gernot Kohler updated this figure for 1996, and found that annual losses had risen to $2.66 trillion – a hidden transfer of value that amounts to 20 times the size of todays’ aid budget, and dwarfs the flow of foreign direct investment by a factor of four.
So the Millennium Campaign completely misses the point about poverty and underdevelopment, and obscures the real issues at stake. Poor countries don’t need our aid, they need us to stop the plunder.
TPG: How can the mitigation of tax evasion help developing countries? Why is it a major issue and how can we promote action against tax havens?
JH: I would say that it doesn’t make any sense at all to talk about aid until we deal with the problem of illicit financial flows, at the very least. Stemming illicit financial flows would translate directly into greater tax revenues for developing countries. This does not guarantee that they would use the funds for development, of course… but in most cases it would significantly bolster public expenditures on, say, health and education, many times more than the aid supplied by the Millennium Campaign.
TPG: At the World Bank or the IMF, developing countries hold little voting power. Could the BRICS Development Bank make a significant change in the global economic order?
My hope is that the BRICS bank will allow the developing world to have access to loans without subordinating themselves to economic policies formulated by (and in the interests of) Washington. But the success of the BRICS bank as an alternative to the World Bank will be contingent on the extent to which (a) it operates according to democratic principles, and (b) it abandons neoliberal economic conditionalities attached to loans. If not, then it will likely become an instrument of sub-imperialism: a chance for the BRICS countries (and particularly China) to get in on the game of exerting power over poorer countries through debt.
TPG: For the past few months, debates around Thomas Piketty’s book shed light on inequalities and created important discussions in international organizations and among economists on this issue. For instance, the OECD recently recognized the role of inequalities in the current economic slowdown. Is a major theoretical shift actually taking place? Are global institutions and policymakers willing to promote public policies in favor of inequalities reduction?
JH: Inequality is becoming a serious issue. A decade ago there were a few people who were raising the alarm about inequality, and no one paid any attention. Now it’s everywhere in the media, even in the pages of the Financial Times. People in power are paying attention for two reasons: (a) because it’s becoming clear that inequality is a primary driver of economic crisis and stagnation (because it has led to a collapse of aggregate demand), and (b) because it will rapidly lead to social upheaval and perhaps trigger a turn to leftist politics, as we’re seeing in Spain and Greece right now. So, yes, I think that policymakers will continue to focus on reducing inequality, but not necessarily for the reasons that they should. For them it’s not about justice, or about re-imagining a fairer global economy; it’s about preserving the status quo against the threat of instability.
TPG: You are a regular contributor to the grassroots movement “/TheRules”. This movement is highly critical of international aid and current poverty alleviation policies. What are the main objectives of this civil society movement? How is it really different from existing movements and why could its campaign have a real impact on policymaking?
To answer this question, I will quote Martin Kirk, Director of Campaigns for /TheRules:
“The main objectives of this movement are to help bring about new ways of understanding poverty and inequality; why they exist and therefore what can be done about them. The dominant logic right now – as seen in mainstream media around the world – is that they are somehow natural, inevitable, ‘just the way the world works’. If you start from this position, what you believe can be done about them is considerably less bold and radical, and less concerned with root causes, than if you believe they are created by the system we live within. We do this by telling stories, creating memes, and running campaigns with existing social movements around the world who share our belief that poverty and inequality on the scale we see them today are the inevitable byproducts of the current neoliberal system. Our critique of aid, and the majority of standard development responses are that they start from the limiting assumption described above, and that they therefore cannot help but only prescribe incremental responses that do not touch on the root causes. We become highly critical of particular aid agencies – be they NGOs, the World Bank or corporations – when they promote themselves and their ideas as being in any way about solutions (i.e. Make Poverty History, End Poverty 2030 etc). They are not; they are about responding to symptoms with incremental change. By “root causes” we mean the rules that govern the global system. We break these down into Money, Power, Secrecy & security, Ideas & propaganda, and Ownership (commons vs. private).”Featured Image Credit: Gates Foundation, Flickr CC. License available here.