|Issue No. 181
|06 June 2003
History: Nest of Traitors
Interview: A Nation of Hope
Unions: National Focus
Safety: The Shocking Truth
Tribute: A Comrade Departed
History: Working Bees
Education: The Big Picture
International: Static Labour
Economics: Budget And Fudge It
Technology: Google and Campaigning
Review: Secretary With A Difference
Poetry: The Minimale
Satire: Howard Calls for Senate to be Replaced by Clap-O-Meter
The Locker Room
Response to Gould
Aged Policy Looks Hairy
God Save Billy Deane
More Bad Language
Letters to the Editor
Blowing Holes in Gittens
Dear Workers Online,
Ross Gittens last Saturday repeated his mantra about globalisation and its supposed benefits for the underdeveloped world. He, also as usual, slammed environmentalists and the left for opposing globalisation, saying they preferred to keep the poor poor rather than ruin the environment.
A paper blowing holes in the World Bank reports that claim inequality is lessening should be Gittens required reading for the next few weeks, rather than the tiresome economic rationalist documents he usually relies upon that are pushed his way by Treasury, the Productivity Commission, free traders like Alan Oxley (who also sent us a missive about the US Australia free Trade Talks).
George Monbiot points us towards the paper by economist Sanjay Reddy and the philosopher Thomas Pogge demonstrates that the World Bank's methodology is so flawed that its calculations cannot possibly be correct.
Monbiot says "the Bank's calculations suffer, the paper suggests, from several fatal deficiencies. The most obvious of these is that its estimate of the purchasing power of the poor is based on the measure of their ability to buy any of the goods and services an economy has to offer: not only food, water and shelter, but also airline tickets, pedicures and personal fitness training. The problem is that while basic goods are often more expensive in poor nations than they are in rich ones, services tend to be much cheaper, as the wages of the people providing them are lower.
If, for example, one dollar in the US can purchase either the same amount of staple foods that 30 rupees can buy in India, or the equivalent of three rupees' worth of services (such as cleaning, driving or hairdressing), then a purchasing power parity calculation which averages these figures out will suggest that someone in possession of 10 rupees in India has the same purchasing power as someone in possession of one dollar in America. But the extremely poor, of course, do not purchase the services of cleaners, drivers or hairdressers. A figure averaged across all the goods and services an economy can provide, rather than just those bought by the poor, makes the people at the bottom of the heap in this example appear to be three times richer than they are."
The Bank would derive a far more accurate view of the purchasing power of the poor if it measured only the costs of what they buy, rather than those of what richer people in the same economies buy. Complete figures do not yet exist, but Reddy and Pogge's initial calculations, based on the cost of bread and cereals, suggest that the Bank's analysis might have underestimated the number of the world's people living in absolute poverty by some 30-40%.
As the service sector expands in poor nations, the Bank's figures will create the impression that the purchasing power of the poor is increasing, whether or not their real economic circumstances have changed. The same false trend is established by a shift to the service sector in rich nations, as one dollar there will then buy a smaller proportion of the total of available goods and services. The RELATIVE purchasing power per dollar of the people of poor nations is increased by this measure, even though their absolute cost of living remains unchanged. When house prices boom in New York, the shanty-dwellers of Lusaka appear to get richer."
Worse still, the World Bank does not even include China or India in the survey it conducted, so approximately one third of the world's population was left out, the two most populous nations on the planet.
The lesson for all the globalisation gurus is that they have nothing to base their claims of declining poverty as trade expands on. What we have instead is evidence from real people in all countries of the world whose standards of living, rights, quality of water, food and clothing are suffering as multinational companies and a rampant US military assert themselves.
Contra Ross Gittens and many others, anti-globalisation protestors are the true internationalists, seeking equality and fairness, not blood and money.
Gittens article was in the Sydney Morning Herald on 31st May 2003
Monbiot paper is entitled Rich In Imagination. First published in The Guardian 6th May 2003
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