Reflections on World Health Day

Martin Khor

What is the most precious thing in the world which unfortunately we take for granted and realise its true value when it is impaired? Good health, of course.

In the last Global Trends, I wrote about the importance of water on World Water Day.

On April 7 we celebrated World Health Day. Water and health are the most critical things in our daily life.

In the 1980s, the World Health Organisation’s director-general Half­dan Mahler steered through a declaration with the popular slogan “Health for all by the year 2000”.

We crossed into the 21st century without realising that noble goal. Although health has improved in most countries, due mainly to cleaner water and sanitation and also better treatment, much remains to be done.

In recent years, the slogan “Health for All” has been strengthened by the recognition in the United Nations of health as a human right. It has been further boosted by the adoption of the principle of universal healthcare.

This means that no one should be deprived of healthcare, even if he is too poor to afford it.

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Globalization and the End of the Labor Aristocracy, Part 1

This is part one of a four-part article, first published in the March/April 2017 special “Costs of Empire” issue of Dollars & Sense magazine. Subsequent parts will appear on Triple Crisis over the next three weeks.

Economist and Triple Crisis contributor Jayati Ghosh argues that imperialism has not disappeared, but changed shape. The direct military conquest and control of economic territory by the great powers has given way (at least some of the time) to control through multilateral agreements and international institutions. Economic territory may still mean the seizure of land, mines, or oil fields—but it also may mean privatization of public assets and services, or the extension of intellectual property rights to new realms. Where the “labor aristocracy” of the imperialist countries once shared in the bounty of empire, the new incarnation of empire as “globalization” has helped grind away the incomes and status they once enjoyed.

Jayati Ghosh

Twenty-first century imperialism has changed its form. In the 19th century and the first half of the 20th century, it was explicitly related to colonial control; in the second half of the 20th century it relied on a combination of geopolitical and economic control deriving also from the clear dominance of the United States as the global hegemon and leader of the capitalist world dealing with the potential threat from the Communist world. It now relies more and more on an international legal and regulatory architecture—fortified by various multilateral and bilateral agreements—to establish the power of capital over labor. This has involved a “grand bargain,” no less potent for being implicit, between different segments of capital. Capitalist firms in the developing world gained some market access (typically intermediated by multinational capital) and, in return, large capital in highly developed countries got much greater protection and monopoly power, through tighter enforcement of intellectual property rights and greater investment protections.

These measures dramatically increased the bargaining power of capital relative to labor, globally and in every country. In the high-income countries, this eliminated the “labor aristocracy” first theorized by the German Marxist theorist Karl Kautsky in the early 20th century. The concept of the labor aristocracy derived from the idea that the developed capitalist countries, or the “core” of global capitalism, could extract superprofits from impoverished workers in the less developed “periphery.” These surpluses could be used to reward workers in the core, relative to those in the periphery, and thereby achieve greater social and political stability in the core countries. This enabled northern capitalism to look like a win-win economic system for capital and labor (in the United States, labor relations between the late 1940s and the 1970s, for example, were widely termed a “capital-labor accord”). Today, the increased bargaining power of capital and the elimination of the labor aristocracy has delegitimated the capitalist system in the rich countries of the global North.

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Most Financial Inflows Not Developmental

Jomo Kwame Sundaram

Recent disturbing trends in international finance have particularly problematic implications, especially for developing countries. The recently released United Nations report, World Economic Situation and Prospects 2017 (WESP 2017) is the only recent report of a multilateral inter-governmental organization to recognize these problems, especially as they are relevant to the financing requirements for achieving the Sustainable Development Goals (SDGs).

Resource outflows rising

Developing countries have long experienced net resource transfers abroad. Capital has flowed from developing to developed countries for many years, peaking at US$800 billion in 2008 when the financial crisis erupted. Net transfers from developing countries in 2016 came close to US$500 billion, slightly more than in 2015.

Most financial flows to developing and transition economies initially rebounded following the 2008 crisis, peaking at US$615 billion in 2010, but began to slow thereafter, turning negative from 2014. Such a multi-year reversal in global flows has not been seen since 1990.

Negative net resource transfers from developing countries are largely due to investments abroad, mainly in safe, low-yielding US Treasury bonds. In the first quarter of 2016, 64 per cent of official reserves were held in US$-denominated assets, up from 61 per cent in 2014.

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Economics, Equity, and the Environment

Announcement and live stream of 2017 Leontief Prize presentation from the Global Development and Environment Institute (GDAE):

GDAE will award its 2017 Leontief Prize for Advancing the Frontiers of Economic Thought to James Boyce and Joan Martinez-Alier. This year’s award, titled “Economics, Equity, and the Environment,” recognizes Boyce and Martinez-Alier for their ground-breaking theoretical and applied work that has effectively integrated ecological, developmental, and justice-oriented approaches into the field of economics.

“It is essential to address the ecological crisis generated by the old-paradigm economy,” said GDAE Co-Director Neva Goodwin. “James Boyce and Joan Martinez-Alier have highlighted the relationship between economic systems, resources (materials and energy) and social issues. Their particular focus on the intersections among economics, poverty, and inequality has strongly informed GDAE’s thinking on these issues.”

GDAE awards the Leontief Prize each year to leading theorists who have developed innovative work in economics that addresses contemporary realities and supports just and sustainable societies.

The live stream will begin at 4:00 on Tuesday, March 28, 2017

Leontief2017Live

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Quantitative Easing vs. Fiscal Policy

Philip Arestis and Malcolm Sawyer

The use of “quantitative easing” (QE) has been a notable feature of monetary and financial policies conducted by many central banks (including the U.S. Federal Reserve, Bank of England and European Central Bank) in the past decade. The precise forms of QE have differed over time and country, but the central feature of QE has been the purchase of financial assets by the central bank through the issue of central bank money with the extent of those purchases set out (rather than using open market operations to maintain a target interest rate). The creation of money involved under QE has led a number of commentators to say, in effect, that the money could be used to greater effect by government (or central bank) spending. Descriptions such as “green quantitative easing” and “people’s quantitative easing” have been used, and others have invoked the idea of “helicopter money.” The term “helicopter money” invokes the story told by Friedman (1969) to illustrate the effects on the economy of an injection of dollars (dropped from a helicopter), which are then spent by the lucky recipients.

Van Lerven (2016) uses the term “public money creation” to encompass a range of proposals. (He uses the term by way of contrast with private money created by private banks as part of the loan process.) Van Lerven distinguishes three sets of proposals on how the “central bank’s ability to create money could be used.” There is, though, little reason why the use of money should be limited to these proposals. The three sets are “[1] proposals that advocate using central bank money to directly finance lending to large businesses, SMEs [small and medium enterprises], social enterprises, co-operatives and local governments; [2] proposals that advocate using money that is newly created by the central bank to finance infrastructure investment (via lending or spending); [3] proposals that advocate using newly created money to finance either a tax cut, or direct cash transfers to households, such as a one-off ‘citizen’s dividend’ (a non-repayable grant to every citizen).” A fourth set is added which offers a mix of the three just outlined. The key argument here is that if those forms of public expenditure are socially desired and desirable, then they should be undertaken using the established routes, and not reliant on the adoption of some form of “quantitative easing.”

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The Global Industrial Working Class

Immanuel Ness is a professor of political science at Brooklyn College the City University of New York and the author of Southern Insurgency: The Coming of the Global Working Class (Pluto Press, 2015). In November 2016, he talked with D&S co-editor Alejandro Reuss about the present and future of the world’s industrial working class. News of its death, Ness argues, is greatly exaggerated—in fact, the global industrial proletariat is bigger than ever—and he expects larger and more political struggles to come. (The audio version of the interview, previously posted on Triple Crisis, is available here.) Read the rest of this entry »

Here Come the Robots; Your Job Is at Risk

Martin Khor

The new automation revolution is going to disrupt both industry and services, and developing countries need to rethink their development strategies.

A news item caught my eye last week, that Uber has obtained permission in California to test two driverless cars, with human drivers inside to make corrections in case something goes wrong.

Presumably, if the tests go well, Uber will roll out a fleet of cars without drivers in that state. It is already doing that in other states in America.

In Malaysia, some cars can already do automatic parking. Is it a matter of time before Uber, taxis and personal vehicles will all be smart enough to bring us from A to B without our having to do anything ourselves?

But in this application of “artificial intelligence”, in which machines can have human cognitive functions built into them, what will happen to the taxi drivers? The owners of taxis and Uber may make more money but their drivers will most likely lose their jobs.

The driverless car is just one example of the technological revolution taking place that is going to drastically transform the world of work and living.

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Brexit and Sterling: Disaster in the Eye of the Beholder

John Weeks

Brexit and Sterling: The Disaster Hypothesis

Many, and especially Brexit opponents, point to the sharp depreciation of sterling as evidence of imminent economic turmoil leading to disaster. For some depreciation itself is disaster, “The pound is the share price of UK plc,” according to David Blanchflower, former member of the Bank of England Monetary Policy Committee.

More analytical than this rather mercantilist “strong currency equals strong country” syllogism or anxieties over more expensive holidays are fears of the impact of sterling depreciation on employment and living standards, made by one of the UK’s most distinguished economists Robert Skidelsky, as well as sometime sterling speculator George Soros.

How sterling depreciation affects employment and living standards cannot be predicted with certainty because of the complex relationship between exchange rates and the aggregate economy. The high anxiety over these and other economic consequences comes from the perceived severity of the drop in sterling exchange rates since the 23 June referendum and the presumption that Brexit was the main if not the sole cause.

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Another Somalian Famine

Jomo Kwame Sundaram

Last month, the United Nations declared another famine threat in Somalia due to yet another drought in the Horn of Africa. Important lessons must be drawn from the Somalia famine of 2010-2012, which probably killed about 258,000 people, half of whom were under-five. This was the greatest tragedy in terms of famine deaths in the 21st century, and in recent decades since the Ethiopian famine of the late 1980s.

A 2013 report, for the Famine Early Warning Systems Network (FEWS Net) and the Food Security and Nutrition Analysis Unit (FSNAU), used a variety of sources to estimate the likely death toll. The report – jointly commissioned and funded by FAO and the USAID-funded FEWS Net, and covering the period from October 2010 to April 2012 – was undertaken by independent experts from the Johns Hopkins Bloomberg School of Public Health and the London School of Hygiene and Tropical Medicine.

Early warning, but no early action

Both FEWS Net and FSNAU had been warning of the impending tragedy with increasing urgency for some time, producing numerous early warning alerts besides directly briefing agencies and donor governments. Some critics claim that the early warnings may actually have been late, and even under-estimated the scale of the emerging crisis.

Many insist that the lateness of the intervention was responsible for many deaths. About 120,000 people had already died in the months before the UN declared a famine and intervened from mid-2011 after issuing 16 early warnings to indifferent responses. Many observers feel outraged about the international community’s seeming indifference when it comes to African famine deaths.

If the ‘international community’ had responded quickly, early interventions could have been undertaken to minimize the resulting destitution and starvation. But an entire year of early warnings failed to elicit the needed responses. Donor governments did not increase aid, while most major humanitarian agencies did not step up their efforts. The system only began to act after famine was declared, i.e., long after the window of opportunity to avoid disaster had passed.

Politics in the way

The failure to respond was primarily due to politics. The worst affected areas in Somalia were believed to be controlled by as-Shabaab, which was engaged in a war with the Western-supported Somali transitional federal government (TFG). Western donor governments were reticent in case their aid fell into the hands of their adversary.

US laws imply that humanitarian workers in Somalia would have been liable to prosecution and 15 years imprisonment if the aid they were distributing fell into the hands of as-Shabaab. Such legal and other constraints contributed to the significant decline in aid to Somalia, which fell by half between 2008 and 2011, after the US government decision to significantly reduce humanitarian funding in as-Shabaab-controlled areas from 2008.

The World Food Programme (WFP) Executive Director at the time – Josette Sheeran, a Bush nominee – had a well known history of conflict with Hillary Clinton, then US Secretary of State. Ertharin Cousin, US Permanent Representative to the UN system in Rome for much of the period involved, went on to succeed Sheeran after Clinton blocked a second term for her. Meanwhile, the head of UNICEF, Tony Lake, had been US National Security Adviser at the time of the infamous 1993 ‘Black Hawk Down’ incident in Somalia, imprinted in the American collective memory by the Hollywood movie.

By ignoring early warnings, cutting aid and constraining humanitarian interventions in Somalia, Western governments exacerbated the deteriorating situation, making famine more, not less likely. Instead of trying harder, humanitarian organizations presumed it would be politically unfeasible to raise resources. As-Shabaab’s expulsion of the UN’s World Food Programme in 2010 only made things worse, with another 16 UN agencies and international NGOs suffering similar fates in 2011 for allegedly “illicit activities and misconduct”.

Thus, Western donors prioritized their geopolitical priorities over the urgent need to avoid famine. Rob Bailey, a senior research fellow specializing in food security at Chatham House in London, has even asserted that “In Somalia, western donors made famine more, not less likely”.

As-Shabaab also paid little heed to the Somali population under its control. It not only restricted humanitarian access and rejected emergency aid, but also limited the ability of people to move besides taxing food production and distribution.

Both sides did not prioritize the growing need for massive, early, pro-active initiatives to stem the spreading destitution and to prevent famine. Donor governments only changed their stances after famine was declared, as public attention meant that the governments could not be seen to be the problem.

Lessons learnt?

Although donor governments and humanitarian organizations were quick to announce that they had learnt the lessons of the Somali famine, things are now worse in some respects. In recent years, both the US and the EU have imposed strict sanctions on remittances to Somalia, which have cut the meagre resources available to destitute households. As income from such remittances served to mitigate the devastating impact of the last famine, it would be worse this time without them.

Meanwhile, aid and other humanitarian interventions remain highly politicized. While early warning systems are under critical scrutiny, there is nothing to ensure that early warnings lead to early action despite the existence of early warning systems and resources needed to prevent famine.

Originally published by Inter Press Service.

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