According to UN sources, which vastly underestimate the seriousness of the water crisis, one billion people worldwide (15% of the World population) have no access to clean water "and 6,000 children die every day because of infections linked to unclean water" (BBC News, 24 March 2004)
A handful of global corporations including Suez, Veolia, Bechtel-United Utilities, Thames Water and Germany's RWE-AG are acquiring control and ownership over public water utilities and waste management. Suez and Veolia hold about 70 percent of the privatized water systems Worldwide.
Meanwhile, the markets for bottled water have been appropriated by a handful of corporations including Coca-Cola, Danone, Nestlé and PepsiCo. These companies not only work hand in glove with the water utility companies, they are linked up to the agribusiness-biotech companies involved in the food industry. Tap water is purchased by Coca-Cola from a municipal water facility and then resold on a retail basis. It is estimated that in the US, 40 percent of bottled water is tap water. (See, Jared Blumenfeld, Susan Leal The real cost of bottled water, San Francisco Chronicle, February 18, 2007)
In India, Coca-Cola has contributed to the depletion of ground water to the detriment of local communities:
"Communities across India living around Coca-Cola's bottling plants are experiencing severe water shortages, directly as a result of Coca-Cola's massive extraction of water from the common groundwater resource. The wells have run dry and the hand water pumps do not work any more. Studies, including one by the Central Ground Water Board in India, have confirmed the significant depletion of the water table.
When the water is extracted from the common groundwater resource by digging deeper, the water smells and tastes strange. Coca-Cola has been indiscriminately discharging its wastewater into the fields around its plant and sometimes into rivers, including the Ganges, in the area. The result has been that the groundwater has been polluted as well as the soil. Public health authorities have posted signs around wells and hand pumps advising the community that the water is unfit for human consumption....
In developing countries, the hikes in fuel prices have increased the costs of boiling tap water by households, which in turn favors the privatization of water resources.
In the more advanced phase of water privatization, the actual ownership of lakes and rivers by private corporations is contemplated. Mesopotamia was not only invaded for its extensive oil resources, the Valley of the two rivers (Tigris and Euphrates) has extensive water reserves.
Concluding Remarks
We are dealing with a complex and centralized constellation of economic power in which the instruments of market manipulation have a direct bearing on the lives of millions of people.
The prices of food, water, fuel are determined at the global level, beyond the reach of national government policy. The price hikes of these three essential commodities constitute an instrument of "economic warfare", carried out through the "free market" on the futures and options exchanges.
These hikes in the prices of food, water and fuel are contributing in a very real sense to "eliminating the poor" through "starvation deaths". The sugar-coated bullets of the "free market" kill our children. The act to kill is instrumented in a detached fashion through computer program trading on the commodity exchanges, where the global prices of rice, wheat and corn are decided upon.
The global food crisis, characterized by major hikes in the prices of basic food staples, has spearheaded millions of people around the World into starvation and chronic deprivation.
The price of rice has tripled over a five year period, from approximately 600$ a ton in 2003 to more than 1800$ a ton in May 2008.
"The most popular grade of Thailand rice sold for $198 a ton, five years ago and $323 a ton a year ago. In April 2008, the price hit $1,000. Increases are even greater on local markets — in Haiti, the market price of a 50 kilo bag of rice doubled in one week at the end of March 2008. These increases are catastrophic for the 2.6 billion people around the world who live on less than US$2 a day and spend 60% to 80% of their incomes on food. Hundreds of millions cannot afford to eat" (Ibid)
The main actors in the grain market are Cargill and Archer Daniels Midland (ADM). These two corporate giants control a large share of the global grain market. They are also involved in speculative transactions in futures and options on the NYMEX and the Chicago Board of Trade (CBOT). In the US, "the world's largest grower of GM crops, Cargill, ADM and competitor Zen Noh between them control 81 per cent of all maize exports and 65 per cent of all soyabean exports." ( Greg Muttitt, Control Freaks, Cargill and ADM, The Ecologist, March, 2001)
Background of Agricultural Reform
Since the early 1980s coinciding with the onslaught of the debt crisis, the gamut of neoliberal macroeconomic policy reforms have largely contributed to undermining local agriculture. Over the last 25 years, food farming in developing countries has been destabilized and destroyed by the imposition of IMF-World Bank reforms.
Commodity dumping of grain surpluses from the US, Canada and the European Union has led to the demise of food self-sufficiency and the destruction of the local peasant economy. In turn, this process has resulted in multibillion-dollar profits for Western agribusiness, resulting from import contracts by developing countries, which are no longer able to produce their own food.
These preexisting historical conditions of mass poverty have been exacerbated and aggravated by the recent surge in grain prices, which have led in some cases to the doubling of the retail price of food staples.
The price hikes has also been exacerbated by the use of corn to produce ethanol. In 2007, global production of corn was of the order of 12.32 billion bushels of which 3.2 billion were used for ethanol production. Almost 40 percent of corn production in the US will be channeled towards ethanol
Genetically Modified Seeds
Coinciding with the establishment the World Trade Organization (WTO) in 1995, another important historical change has occurred in the structure of global agriculture.
Under the articles of agreement of the World Trade Organization (WTO)), the food giants have been granted unrestricted freedom to enter the seeds' markets of developing countries.
The acquisition of exclusive "intellectual property rights" over plant varieties by international agro-industrial interests, also favors the destruction of bio-diversity.
Acting on behalf of a handful of biotech conglomerates GMO seeds have been imposed on farmers, often in the context of "food aid programs". In Ethiopia, for instance, kits of GMO seeds were handed out to impoverished farmers with a view to rehabilitating agricultural production in the wake of a major drought.
The GMO seeds were planted, yielding a harvest. But then the farmer came to realize that the GMO seeds could not be replanted without paying royalties to Monsanto, Arch Daniel Midland et al.
Then, the farmers discovered that the seeds would harvest only if they used the farm inputs including the fertilizer, insecticide and herbicide, produced and distributed by the biotech agribusiness companies. Entire peasant economies were locked into the grip of the agribusiness conglomerates.
The main biotech giants in GMO include Monsanto, Syngenta, Aventis, DuPont, Dow Chemical, Cargill and Arch Daniel Midland.
Breaking the Agricultural Cycle
With the widespread adoption of GMO seeds, a major transition has occurred in the structure and history of settled agriculture since its inception 10,000 years ago.
The reproduction of seeds at the village level in local nurseries has been disrupted by the use of genetically modified seeds. The agricultural cycle, which enables farmers to store their organic seeds and plant them to reap the next harvest, has been broken. This destructive pattern – invariably resulting in famine – is replicated in country after country leading to the worldwide demise of the peasant economy.
The FAO- World Bank Consensus
At the June 2008 FAO Rome Summit on the food crisis, politicians and economic analysts alike embraced the free market consensus: the outbreak of famines was presented as a result of the usual supply, demand and climatic considerations, beyond the control of policy-makers. "The solution": channel emergency relief to affected areas under the auspices of the World Food Program (WFP). Do not intervene with the interplay of market forces.
Ironically, these " expert opinions" are refuted by the data on global grain production: the FAO forecasts for world cereal production point to a record output in 2008.
Contradicting their own textbook explanations, World prices are, according to the World Bank, expected to remain high, despite the forcasted-increased supply of food staples.
State regulation of the prices of food staples and gasoline is not considered an option in the corridors of the FAO and the World Bank. And of course that is what is taught in the economics departments of America's most prestigious universities.
Meanwhile, local level farmgate prices barely cover production costs, spearheading the peasant economy into bankruptcy.
The movement in global prices on the New York and Chicago mercantile exchanges bears no relationship to the costs of producing oil. The spiraling price of crude oil is not the result of a shortage of oil. It is estimated that the cost of a barrel of oil in the Middle East does not exceed 15 dollars. The costs of a barrel of oil extracted from the tar sands of Alberta, Canada, is of the order of $30 (Antoine Ayoub, Radio Canada, May 2008)
The price of crude oil is currently in excess of $120 a barrel. This market price is largely the result of the speculative onslaught.
Fuel enters into the production of virtually all areas of manufacturing, agriculture and the services economy. The hikes in fuel prices have contributed, in all major regions of the World, to precipitating tens of thousands of small and medium sized businesses into bankruptcy as well as undermining and potentially paralyzing the channels of domestic and international trade.
The increased cost of gasoline at the retail level is leading to the demise of local level economies, increased industrial concentration and a massive centralization of economic power in the hands of a small number of global corporations. In turn, the hikes in fuel backlash on the urban transit system, schools and hospitals, the trucking industry, intercontinental shipping, airline transportation, tourism, recreation and most public services.
Inflation
The rise in fuel prices unleashes a broader inflationary process that results in a compression of real purchasing power and a consequent Worldwide decline in consumer demand. All major sectors of society, including the middle classes in the developed countries are affected.
The commodity markets dictate these price movements. They are the result of speculative trade in index funds, futures and options on major commodity markets including the London ICE, the New York and Chicago mercantile exchanges.
The dramatic price hikes are not the result of a shortage of fuel, food or water.
This upheaval in the global economy is deliberate. The State's economic and financial policies are controlled by private corporate interests. Speculative trade is not the object of regulatory policies. The economic depression contributes to wealth formation, to enhancing the power of a handful of global corporations
According to William Engdahl;
"... At least 60% of the 128 per barrel price of crude oil comes from unregulated futures speculation by hedge funds, banks and financial groups using the London ICE Futures and New York NYMEX futures exchanges and uncontrolled inter-bank or Over-The-Counter trading to avoid scrutiny. US margin rules of the government's Commodity Futures Trading Commission allow speculators to buy a crude oil futures contract on the Nymex, by having to pay only 6% of the value of the contract. At today's price of $128 per barrel, that means a futures trader only has to put up about $8 for every barrel. He borrows the other $120. This extreme 'leverage' of 16 to 1 helps drive prices to wildly unrealistic levels and offset bank losses in sub-prime and other disasters at the expense of the overall population. (See More on the real reason behind high oil prices, Global Research, May 2008)
Among the main players in the speculative market for crude oil are Goldman Sachs, Morgan Stanley, British Petroleum (BP), the French banking conglomerate Société Générale, Bank of America, the largest Bank in the US, and Switzerland's Mercuria. (See Miguel Angel Blanco, La Clave, Madrid, June 2008)
British Petroleum controls the London based International Petroleum Exchange (IPE), which is one of the world's largest energy futures and options exchanges. Among IPE's major shareholders are Goldman Sachs and Morgan Stanley.
According to Der Spiegel, Morgan Stanley is one of the main institutional actors in the London based speculative oil market (IPE). According to Le Monde, France's Société Générale together with Bank of America and Deutsche Bank have been involved in spreading rumors with a view to pushing up the price of crude oil. (See Miguel Angel Blanco, La Clave, Madrid, June 2008)
The sugar coated bullets of the "free market" are killing our children. The act to kill is unpremeditated. It is instrumented in a detached fashion through computer program trading on the New York and Chicago mercantile exchanges, where the global prices of rice, wheat and corn are decided upon.
Poverty is not solely the result of policy failures at a national level. People in different countries are being impoverished simultaneously as a result of a global market mechanism. A small number of financial institutions and global corporations have the ability to determine, through market manipulation, the standard of living of millions of people around the World.
We are at the crossroads of the most serious economic and social crisis in modern history. The process of global impoverishment unleashed at the outset of the 1980s debt crisis has reached a major turning point, leading to the simultaneous outbreak of famines in all major regions of the developing World.
There are many complex features underlying the global economic crisis pertaining to financial markets, the decline in production, the collapse of State institutions and the rapid development of a profit-driven war economy. What is rarely mentioned in this analysis is how this global economic restructuring forcibly impinges on three fundamental necessities of life: food, water and fuel.
The provision of food, water and fuel is a precondition of civilized society: they are necessary factors for the survival of the human species. In recent years, the prices of these three variables have increased dramatically at the global level, with devastating economic and social consequences.
These three essential goods or commodities, which in a real sense determine the reproduction of economic and social life on planet earth, are under the control of a small number of global corporations and financial institutions.
Both the State as well as the gamut of international organizations --often referred to as the "international community"-- serve the unfettered interests of global capitalism. The main intergovernmental bodies including the United Nations, the Bretton Woods institutions and the World Trade Organizations (WTO) have endorsed the New World Order on behalf of their corporate sponsors. Governments in both developed and developing countries have abandoned their historical role of regulating key economic variables as well as ensuring a minimum livelihood for their people.
Protest movements directed against the hikes in the prices of food and gasoline has erupted simultaneously in different regions of the World. The conditions are particularly critical in Haiti, Nicaragua, Guatemala, India, and Bangladesh. Spiraling food and fuel prices in Somalia have precipitated the entire country into a situation of mass starvation, coupled with severe water shortages. A similar and equally serious situation prevails in Ethiopia.
Other countries affected by spiraling food prices include Indonesia, the Philippines, Liberia, Egypt, Sudan, Mozambique, Zimbabwe, Kenya, and Eritrea, a long list of impoverished countries, not to mention those under foreign military occupation including Iraq, Afghanistan and Palestine.
Deregulation
The provision of food, water and fuel are no longer the object of governmental or intergovernmental regulation or intervention, with a view to alleviating poverty or averting the outbreak of famines.
The fate of millions of human beings is managed behind closed doors in the corporate boardrooms as part of a profit driven agenda.
And because these powerful economic actors operate through a seemingly neutral and "invisible" market mechanism, the devastating social impacts of engineered hikes in the prices of food, fuel and water are casually dismissed as the result of supply and demand considerations.
Nature of the Global Economic and Social Crisis
Largely obfuscated by official and media reports, both the “food crisis" and the “oil crisis" are the result of the speculative manipulation of market values by powerful economic actors.
We are not dealing with distinct and separate food, fuel and water "crises" but with a global process of economic and social restructuring.
The dramatic price hikes of these three essential commodities are not haphazard. All three variables, including the prices of basic food staples, water for production and consumption and fuel are the object of a process of deliberate and simultaneous market manipulation.
At the heart of the food crisis is the rising price of food staples coupled with a dramatic increase in the price of fuel.
Concurrently, the price of water which is an essential input into agricultural and industrial production, social infrastructure, public sanitation and household consumption has increased abruptly as a result of a worldwide movement to privatize water resources.
We are dealing with a major economic and social upheaval, an unprecedented global crisis, characterized by the triangular relationship between water, food and fuel: three fundamental variables, which together affect the very means of human survival.
In very concrete terms, these price hikes impoverish and destroy people’s lives. Moreover, the worldwide collapse in living standards is occurring at a time of war. It is intimately related to the military agenda. The war in the Middle East bears a direct relationship to the control over oil and water reserves.
While water is not at present an internationally trade commodity in the same way as oil and food staples, it is also the object of market manipulation through the privatization of water.
The economic and financial actors operating behind closed doors are:
- The major Wall Street banks and financial houses, including the institutional speculators that play a direct role in commodity markets including the oil and food markets
-The Anglo-American oil giants, including British Petroleum (BP), Exxon Mobil, Chevron-Texaco, Royal Dutch Shell
-The biotech-agribusiness conglomerates, which own the intellectual property rights on seeds and farm inputs. The biotech companies are also major actors on the NY and Chicago mercantile exchanges.
-The water giants including Suez, Veolia and Bechtel-United Utilities, involved in the extensive privatization of the World's water resources.
-The Anglo-American military-industrial complex which includes the big five US defense contractors (Lockheed Martin, Raytheon, Northrop Grunman, Boeing and General Dynamics) in alliance with British Aerospace Systems Corporation (BAES) constitutes a powerful overlapping force, closely aligned with Wall Street, the oil giants and the agribusiness-biotech conglomerates.
Continued.. This campaign of conquest seems to have had its roots in the 1963 assassination of President John F. Kennedy, who intended to bring a new era of peace through rapprochement with the Soviet Union, restraint of Israel’s nuclear ambitions, withdrawal of combat forces from Vietnam, and dismantlement of the CIA as an agency of covert warfare. Kennedy's brief presidency coincided with an amazing period of social and spiritual renewal among America’s youth in the 1960s.
With the killing of Kennedy, the dogs of war were unleashed. After America’s disastrous war in Vietnam ended in 1975, President Jimmy Carter tried to introduce a policy of civility and restraint in domestic and world political affairs, but he was swept away in the election of 1980 by the "Reagan Revolution," whose catastrophic legacy we see today.
President Ronald Reagan set in motion the current mudslide of worldwide cataclysms through his huge military build-up, the "Reagan doctrine" of proxy warfare in third-world countries, the pathologically paranoid Strategic Defense Initiative-"Star Wars"-program, and the deregulation of the financial industry. Since our economy is the largest in the world, such action was bound to affect every other nation in making them subservient to the U.S. bankers and financiers who organized themselves in such institutions as David Rockefeller's Trilateral Commission.
Bill Clinton, elected in 1992, did little to stem the tide of barbarism. He completed the destruction of the U.S. as an industrial democracy by signing the legislation for NAFTA and opening the floodgates to foreign control of U.S. business. He also completed the deregulation of the financial industry by repeal of the Glass-Steagall Act which had prohibited the merger of investment and deposit banks. But Clinton still was attacked by the right-wing who wanted him to unleash a new military assault against Iraq.
When George W. Bush became president in 2000, the grand strategy of Middle East occupation was facilitated by the skillful exploitation of the 9/11 attacks as the excuse for military mobilization to be financed by the housing bubble and the forced sale of U.S. Treasury debt to foreign investors. The historic jack-up of petroleum prices-including the most recent ones that have brought gas at-the-pump in the U.S. to $4 a gallon-are clearly a de facto tax on the American public to pay for these wars.
It has become obvious in recent months-even as Bush et. al. plot a possible attack on Iran before the end of his presidency-that the rest of the world is heartily sick of U.S. arrogance. Even our allies in NATO have refused to allow us to build a defensive missile shield virtually to the borders of Russia.
And there are indications that the European financial community-headed by the Bank of International Settlements-may force the Federal Reserve to start raising interest rates again to stem inflation, even if this drives the U.S. domestic population into an economic depression. Recent signs from the Council on Foreign Relations are that the U.S. will accept that the dollar can no longer reign supreme as the world's sole reserve currency and that it must give way to the Euro and the Chinese Yuan in sharing this role. Thus the U.S. political leadership seems to have begun to realize that we will no longer be allowed to posture as the unchallenged bully of the world.
What we may be seeing-even as the U.S. military has extended its reach to the insertion of uniformed personnel in 135 nations-is the end of the Anglo-American Empire and the birth of a multi-polar world. It appears that the more level-headed among the U.S. and worldwide elite are tilting toward Barack Obama as the best choice to manage America 's inevitable decline.
This decline is by no means a bad thing. Through graceful acceptance, America may even have a chance someday to regain its soul. A good place to start would be to establish a National Historical Truth Commission to investigate such historical puzzles as the real causes of U.S. entrance into the wars of the past century; assassinations-such as JFK, Senator Paul Wellstone, and RFK, Jr.; and 9/11. Another worthwhile proposal is for a tribunal on "International and Domestic Crimes Committed by High U.S. Government Officials," which will be discussed at a national conference planned for Andover, Mass., in September.
Can anything else be done to ease the shocks to come? If people took the trouble to read the available literature, they would see that hundreds of potential economic and political reforms have been presented and discussed-at least in books and on the internet-that could make our society more just, functional, and humane and not just the ugly police state it is rapidly becoming.
In the mind of this writer, a viable economic solution would be policies based on government control of credit treated as a vital public utility, rebuilding of our public and private infrastructure, radical reduction of pollution and dependence on foreign oil through green energy R&D, enactment of a basic income guarantee, and implementation of a national dividend which would monetize productivity and savings.
The theory of a national dividend, not dependent on either taxation or government borrowing, is sound and was worked out decades ago by the British Social Credit movement. It can be seen on a small scale in the annual residents' stipend provided by the Alaska Permanent Fund. Such a program would be more in accord with the largely successful social welfare policies of the Western European democracies and less with the leanings, for instance, of the American Libertarians. The manner in which they view with suspicion any action taken by representative government to benefit the general welfare-misleadingly labeling it "socialism"-is an ideological dead end.
Of course the mainstream media ignore any real reform proposals, because they are afraid to suggest that there are any alternative political structures to ones that are controlled by usurers and war-mongers.
Ultimately, we are all responsible for the current state of affairs, because we have profited from it in one way or another so must reap the consequences. There is no use worrying about how we might escape the wave of events while everyone else goes down with the ship. But those who at least recognize what is going on have an obvious advantage. From there the only conscionable approach is what it has always been-diligence, honesty, and prudence in all our affairs.
Ultimately, mankind must grow up and became more humane and compassionate. This includes the angry white male American conservatives who-under the tutelage of conniving European-born intellectuals like Kissinger and Brzezinski-have been the real global terrorists for the past generation.
Philosophically, we need to realize that we live in an infinite universe of abundance where all God's children can be provided for, rather than one of scarcity where we can only survive by taking away what belongs to our neighbor. We can all choose to begin seeing the world in this manner.
We need to understand that we are at an early point of a new age of humanity. If enough people attain a sufficient degree of enlightenment-and it won't take that many-real change in social, economic, and political relations will follow, just as the flowers bloom in the spring.
Richard C. Cook is a former U.S. federal government analyst, whose career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, NASA, and the U.S. Treasury Department. His articles on economics, politics, and space policy have appeared on numerous websites and in Eurasia Critic magazine. His book on monetary reform, entitled We Hold These Truths: The Hope of Monetary Reform, will be published soon by Tendril Press.
Much of the world's history over the last century has been dominated by the United States. But by the turn of the millennium in 2000-2001, the "American Century" had begun to descend into a chamber of horrors.
The years since then have been marked by the huge financial bubbles engineered by the U.S. Federal Reserve System and the virus of predatory global capitalism. We have the looming worldwide economic crisis with rising bankruptcies, credit disruptions, and soaring fuel and food prices. Alongside has been the thinly-disguised but continuing attempt by the U.S. to conquer the Middle East by force of arms under the heading of the "War on Terror."
Some have argued that the U.S. at war is nothing new and that we have always been a nation of aggression and militarism. While this may be true, the expansion of the original thirteen states to cover much of the North American continent was done with far less violence than the constant fighting among the European nations over the centuries for domination.
The key event was President Thomas Jefferson's choice to purchase the Louisiana Territory from France in 1803, thus turning America 's energy to westward expansion rather than competition with the European powers for colonial empires. The long-term result has been a nation that has led the world in science, technology, social and political innovation, and individual prosperity and freedom.
Still, there seems to have been a critical change that took place in both America and the world in the early 1900s.
To many, the arrival of the 20th century seemed to be a time of great hope. There had not been a major international conflagration since the Napoleonic Wars which ended with the Treaty of Vienna in 1815. Despite inequities in income, the industrial age showed promise of raising the standard of living everywhere. Four large nations whose territory had been consolidated during the latter part of the 19th century-the U.S., Russia, Germany, and Italy -were flourishing.
But by 1914, the worst war in history-World War I-had begun. A century of conflict and chaos, which has not yet ended, was underway, with hundreds of millions of non-combatants eventually losing their lives through war, famine, epidemics, or genocide. The modern world has seen many holocausts in addition to the one befalling European Jewry during World War II.
Alongside miracles of medicine, agriculture, sanitation, engineering, transportation, communications, and information technology have come terrible weapons of mass destruction, the latest being depleted uranium. There have been appalling refinements in the diabolical arts of assassination, torture, propaganda, mind control, and political manipulation.
Economic crime has occurred on an epic scale, including currency manipulations, privatization of public resources, the aforesaid financial bubbles, involvement of governments in the illicit drug trade, attacks by financiers on national economies, the creation of offshore tax havens, money laundering, destruction of entire industries to benefit global capitalism, human trafficking, cornering of markets on food and other vital commodities, speculative hedge funds whose managers earn a billion dollars a year, and looting of private companies and pension funds by highly-paid CEOs and executives..
What then happened, especially during the latter part of the "American Century," to turn so much promise into the continuing spectacle of prosperity for some side-by-side with recurrent catastrophes for others? Likely this question will be debated for centuries.
It would appear, however, that once it became apparent how much wealth the industrial revolution was capable of generating, the world's economies began to develop so fast that the traditional means of resolving the distribution of power and wealth among and within nations and social classes fell apart. Because human beings were not capable of exercising the wisdom, generosity, fairness, and restraint to master the industrial genie that was now out of the bottle, the worst inclinations of individuals and society exerted themselves. The history of the 20th century and the battles among nations and blocs for supremacy resemble nothing so much as neighborhood gang wars among Mafia dons, the latest being the Bush-Cheney cabal that has controlled the U.S. government since 2001.
Another gang has been those among the world's money-lenders who became experts at parasitic high finance and got rich through the explosive growth of fractional reserve banking. These people have dominated the economies of nations through such institutions as the Bank of England, the Federal Reserve System, the Bank of International Settlements (BIS), and other central and commercial banks, currency and commodity exchanges, and stock and bond markets.
The bankers on the one hand and the political racketeers on the other merged over a century ago under the oversight of figures associated with the creation of the Anglo-American Empire, such as Cecil Rhodes, Lord Milner, Colonel House, Winston Churchill, the House of Windsor, and, as examples of families involved, the Rothschilds, Schiffs, Morgans, Harrimans, Rockefellers, Myers, and Bushes. Among the major projects of the empire in recent decades have been the creation and maintenance of both the kingdom of Saudi Arabia and the state of Israel as Western bridgeheads of influence, power, and wealth in the Middle East.
This has led to the ongoing campaign by the U.S. to exercise complete military control of that region, with Israel the principal beneficiary. It is an astonishing spectacle to watch the "world's greatest superpower" bankrupt itself financially and in its world reputation because its politicians are too corrupt and cowardly to take a stand against the domestic Jewish lobby.
Today, globalisation affects every aspect of our society and that is why an agenda to try to make globalisation work has to be comprehensive in scope. In the book I lay out reforms in trade, intellectual property, how we manage natural resources, how we manage the environment, financial markets and a host of other areas in which reforms are needed if we are going to make globalisation work better.
To take but one example – intellectual property. One might ask why is intellectual property part of the globalisation agenda and the answer is, because we made it. The Uruguay Round that was completed in 1993 and signed in 1994 included important provisions on intellectual property; a set of agreements called TRIPS – Trade-Related Intellectual Property. But it wasn’t just trade-related, it was all intellectual property. The reason the words “trade-related” were inserted into the agreement was that there
already was an international organisation called WIPO – the World Intellection Property Organisation. There was an attempt to shift the agenda from WIPO to the WTO because certain interests believed they could get a better deal within the WTO. I was on the Council of Economic Advisers to President Clinton at the time these issues were being discussed. Both the Council of Economic Advisers and the Office of Science and Technology Policy were opposed to the set of reforms that were embedded in TRIPS. We thought that the version of intellectual property that was embedded in TRIPS was not good for America, was not good for American science and innovation, not good for global science and innovation and particularly not good for the developing world. And yet it was pushed, pushed by America and Europe’s pharmaceutical industries and America’s entertainment industry. They pushed an agenda that focused on getting as strong intellectual property rights as they could because it would enhance their profits.
Economies have long recognised the importance of getting a balanced intellectual property regime. Intellectual property is different from ordinary property. Intellectual property actually causes a major inefficiency in the economy. Knowledge is a public good. That is to say, when one person receives knowledge from another it doesn’t diminish from the knowledge that the first person has. There is, to use a technical term, zero marginal cost. Thomas Jefferson, the third president of the United States, put it much more poetically than economists do when he said that knowledge was like a candle – when one candle lights the other it does not diminish from the light of the first. That means that it is inefficient to restrict the use and dissemination of knowledge. But that’s what intellectual property does. In fact it’s even worse, because it gives a single firm a monopoly over the use of knowledge – it may only be for a limited period, but still a monopoly. And monopoly is one of the worst inefficiencies in the economy.
Why do we not only allow, but actually condone, these major inefficiencies in the economy? Hopefully, because we believe that it will spur innovation; that the profits generated will provide impetus to more creative and innovative activity. But intellectual property is defined by a host of specific terms and considerations. For instance, the length of the terms of the patent; whether it’s 17, 20 or could be even longer; what can be patented; the standards for novelty. In recent years, the scope, the breadth, the depth of patents has increased. There are now patents on genes – genes that are part of everybody’s body. The international community was engaged in decoding the genes, the genetic code of human beings. It was a process that was well under way, but private companies decided that if they could discover the gene just an hour, a day or a few months before this global scientific group discovered it, they could get a patent. The benefits to society were nil. The cost to society have been enormous. Because what would have been within the public domain has now been privatised. A company, for instance, now owns the gene that can be used to detect the likelihood of getting breast cancer. A firm offered, as a matter of public policy, of public interest, to devise a test that would identify whether a woman had this particular gene for this disease which is so devastating, so costly, but the owner of the gene was not interested. It wanted to charge prices that, in some cases, are in the thousands of dollars – prices that are beyond the capacity of those without insurance to pay. So today, thousands of women do not have access to this test because of intellectual property.
The intent of these strong intellectual property provisions in the TRIPS agreement of the Uruguay Round was precisely to reduce access to medicine. They didn’t say it that way, but it was designed to make it more difficult for those in developing countries to have access to generic medicines. The reason the drug companies care, of course, about the generic medicines is that they are so cheap. They drive down the price of brand-name drugs and they steal customers away from brand-name drugs. But that’s exactly why they’re so important for developing countries. Brand-name treatment for AIDS can cost $10,000 - the new treatments even more - $10,000 per year. The generic versions of those drugs can be produced for under $200 a year. If your income is $300 or even $3000 you’re not going to be able to afford a $10,000 treatment. And so, in making access to these generic medicines no longer possible, the trading ministers when they were signing that agreement in Marrakesh were, in effect, signing the death warrants of thousands of people who would no longer have access to these life-saving medicines.
To be sure, there were included in the agreement some, what are called, flexibilities – provisions that have said that in principle compulsory licences could be issued. But obstacles have been put in the way of issuing these compulsory licences, pressure has been put on countries that have tried to issue these compulsory licences, and the result of it is that what the drug companies wanted they’ve gotten - access to generic medicine has been reduced and people have not had access to these inexpensive medicines that they otherwise would have had. That was the intent and that was the consequence.
What have developing countries got in return? Unfortunately, the drug companies spend more money on advertising and marketing than they do on research. More money on research and lifestyle drugs – like how to grow more hair – than they do on life-saving drugs. And almost all of the money they spend on life-saving drugs goes to the diseases that prevail in advanced industrial countries. It’s not surprising because that’s the way the market mechanism is designed. One of the problems of being poor is that you don’t have money. And you don’t have money to buy drugs. If you don’t have money to buy drugs, there is no way that the drug companies can get a return for doing research on diseases, like malaria, that affect hundreds of millions of people in the developing world. And that is why so little research has been done.
So those in developing countries have been paying a high price but they’ve been getting very little benefit.
The thrust of my book is that there are alternative ways of organising each of the major areas in which globalisation has intruded. Here, I talk about an alternative – a medical prize fund. The international community could get together and say we will provide a prize for those who come up with a vaccine or cure for the kinds of diseases that afflict those in developing countries. With that prize there would be incentives for drug companies and researchers all over the world to do research to find the cures and vaccines against these diseases. But then, once the cure or the vaccine has been developed, we would use the force of the competitive marketplace. Under the current intellectual property regime, monopoly dominates, so that high prices restrict usage. In the competitive market place there would be low prices and each would be using whatever they could do to make sure the drugs are disseminated as widely as possible at the lowest cost possible. That is what competitive markets are strong at doing. So by opting out for a monopoly system we have opted for a system which has resorted to diverting money to advertising and marketing, which has restricted usage of knowledge that we have and which unfortunately has not directed scarce resources of research to areas that are of concern to hundreds of millions of people all over the world.
This is but one example. Let me turn to another one. I have referred on a couple of occasions to the international trade regime – the unfair trade regime that was made more unfair by the Uruguay Round. The good news was that in November 2001 the advanced industrial countries recognised that the previous rounds had been unfair to the developing world. They committed themselves to a development round. A round of trade negotiations that would redress the imbalances of the past. But unfortunately, the advanced industrial countries have reneged on those promises. The United States actually doubled its agricultural subsidies, when the intent and understanding was that the United States would reduce those agricultural subsidies. Now it talks about reducing their subsidies – but to levels that are actually higher than they were at the time of the end of the Uruguay Round. Like a store raising prices so that it can claim that it is having a sale. Today that would be called a deceptive practice – and what the United States has been doing can be labelled the same. Indeed, a closer examination of what is called the Development Round shows that it does not deserve that name. No wonder the developing countries are balking at signing another agreement. At this juncture it is unlikely that another agreement will be signed. But even if it is signed it will have failed to live up to what was promised in Doha just five short years ago.
There is, in fact, a rich agenda of reforms in trade – not just in agriculture, but in a host of other areas that would make such a difference to developing countries. To give you but one example, the tariff structures, the taxes that are imposed on imports of the developed countries, are designed to impede development. They impose relatively low tariffs on raw materials, but higher taxes on processed goods, making it very difficult for those in the developing countries to move up the value added chain – to move from producing just raw materials to producing more value added – an essential step if they are to going to join the ranks of the developed countries, if they’re going to reduce their poverty and increase their incomes.
This is just one example of what could be done, what needs to be done, to make globalisation work.
I spend some time in the book talking about global warming. Global warming is, of course, our most important global environmental challenge. The reason I do is because it illustrates the problems of global governance, the difficulties of the international community getting together to solve the collective problems that face us. I argue in the book that one of the essential problems is that economic globalisation has out-paced political globalisation. Economic globalisation means that the countries of the world have become more integrated. As they become more integrated, they become more inter-dependent. As they become more inter-dependent, there is greater need for acting together, for collective action. But we have not developed either the institutions or the mindsets that enable us to act together collectively, effectively, democratically.
This is becoming of critical importance as we face the problem of global warming. Even if we solve the world’s economic problems; if our environment continues to deteriorate, if the dangers that the scientific community has pointed out are realised, it may be for little or naught. In the book, I outline what can be done. The United States claims that it cannot afford to do anything about global warming, to cut the emissions of greenhouse gasses that have contributed so much to global warming. But that is not the case. There are countries – in Europe, Japan, all around the world - with emission levels that are but a fraction of those of the United States per dollar of GDP and they live just as well.
The issue is not whether the United States can afford it. The issue is that not paying attention to this important, what economists call, externality imposes costs on others which the United States doesn’t pay. And that gives American producers a competitive advantage over other producers. That is an unfair advantage.
The WTO was created to ensure that there was a level playing field, and being able to produce with high levels of greenhouse gas emissions is effectively a hidden subsidy. What I try to argue is that this kind of subsidy should no longer be allowed and explain how, within the WTO framework, there are actually provisions suggesting that this is not allowed. The United States imposed tariffs against shrimp that were caught in nets that resulted in the killing of turtles that were an endangered species. When Thailand objected, it eventually went to the appellate body of the WTO and they sustained the United States’ position. The United States’ position was that environmental issues trump these other trade issues and that it was unfair to allow Thailand to continue to catch shrimp with these turtle-unfriendly nets.
But, if it is permissible to impose a trade restriction – trade sanctions in effect – to protect an endangered species of turtle, surely it is permissible to use trade sanctions to save our planet. In the book I lay out a variety of other reforms that would go a long way to addressing the problems of global warming.
Let me conclude with the message that I said before. The problems of globalisation are not inevitable. They are the result of the way we have managed globalisation and globalisation can be managed, can be governed, in a different way. It is only if we make these changes, however, that globalisation can live up to the promises that were held out when the modern era of globalisation began some fifteen or twenty years ago. Only if these reforms are taken will globalisation have a chance of living up to its promise and its potential of improving the living standards, not just for the rich and the richest in the world, but the rich and the poor in both the developing and the developed world.
Joseph Stiglitz, the ColumbiaUniversity professor and Nobel Prize-winning economist, talks about globalisation's role in growing inequalities
Globalisation has been a double-edged sword. To those able and willing to seize the opportunities and manage globalisation on their own terms, it has provided the basis of unprecedented growth. China and India, two countries with, together, 2.4 billion people, have for more than a quarter century been growing at historically unprecedented rates with hundreds of millions of people moving out of poverty. They have taken advantage of globalisation of knowledge and globalisation of markets.
Tom Friedman has written a very influential book, entitled “The World is Flat.” But the world isn’t flat and in many ways is getting less flat. Where Friedman is right is that there has been a huge change in the global economic landscape. China and India had the education, the technology, the resources, to take advantage of the new technology, to close the gap between them and the advanced industrial countries.
But elsewhere, matters have not worked out so well. There is growing disparity between the richest countries and the poorest countries and growing inequalities within most countries around the world and globalisation, as it is managed, has played an important role in both of these disturbing trends. The number of people in poverty in Africa has doubled in the last two decades and globalisation has contributed to these problems. Africa was left, by its colonial legacy, with neither resources nor the education, for instance, to take advantage of the new technologies that make such a difference in India and China. But making matters worse is the fact that the last trade agreement – the Uruguay round, signed in Marrakesh in the spring of 1994 - was so unfair that the poorest countries of the world, including sub-Saharan Africa as a region, were actually made poorer. The North insisted that the South remove their trade barriers, open up their markets to the goods produced in the North and eliminate their subsidies, but the North did not fully reciprocate.
Of particular concern is agriculture. Seventy per cent of the people in the developing world depend directly, or indirectly, on agriculture. The massive subsidies in the North serve to depress the incomes of those in the South and increase the poverty. To give a couple of examples: the United States subsidises cotton to the tune of $3 billion to $4 billion a year. Twenty five thousand very rich cotton farmers divide that money, most of the money going to about five thousand of these farmers. But the consequence is that the United States, which would not be exporting cotton at all, has become the world’s largest exporter and as it exports more, global prices of cotton fall and 10 million people in sub-Saharan Africa suffer as a result. But it’s not just the United States, Europe also is to blame. The average cow in Europe receives a subsidy of, by some estimates, in excess of $2 a day – a number which has considerable resonance, because $2 a day is the World Bank’s definition of poverty. Some 40 per cent of those in the developing world live on less than $2 a day. So, it is better to be a cow in Europe than to be an average person in the developing world.
In the North, global competition has helped drive down wages of unskilled workers, exacerbating similar trends coming from changes in technology and the weakening of labour unions.
Economic theory never said that everyone would gain as a result of globalisation. In fact, it warned that there could be losers; that, as I mentioned before, unskilled workers from the North would face competition from the South and that competition would have the effect of lowering wages. To see this most clearly, think about a world in which there is perfect economic integration; in which barriers between developed and less developed countries were removed; in which goods and services flowed freely and in which markets worked perfectly. Of course we’re nowhere near that so-called ideal state. But in that so-called ideal state unskilled workers everywhere in the world would be exactly the same, and that would mean unskilled workers in the United States and Europe would receive exactly the same wage as unskilled workers in India and China, and the level of those unskilled wages would be much closer to that today prevailing in India and China, than that prevailing in the United States and Europe today.
What globalisation said was that winners could compensate the losers – not that they would. And they haven’t. In fact, globalisation has often been used as an excuse for taking away social protections. When, last spring, young workers in France went on protest concerning their low wages and weakening job protections they were told globalisation demands it. But then they asked, “you told us that globalisation was going to make us better off. How can lower wages, weakened job benefits, make us better off?” Occasionally the response would come back, “well, in the long run you’ll be better off”. But then, the quip of Keynes comes to mind: “in the long run, we’re all dead”.
In the United States, wages at the bottom have not only been stagnating, they’ve been falling. In fact, wages at the bottom are today about thirty per cent below what they were thirty years ago. More disturbing is that even in the middle wages have begun to decline. Today, real income of the median American family is lower than it was five or six years ago.
Some say that globalisation is inevitable, but that is simply wrong. The extent of globalisation, as conventionally measured for instance by the ratio of trade or capital flows to GDP, was actually stronger before World War I than in the inter-war period and, unless we ensure that globalisation has more winners and fewer losers, there can be a backlash against globalisation. Indeed, in many quarters, especially here in the United States, one can already see such a backlash taking shape.
As I said, often globalisation is used as an excuse for weakening job protections, undermining the welfare state. Scandinavia has shown, however, that there is an alternative. Scandinavia, is a region of Europe, a region of the world, that is perhaps more open than any other but it has managed globalisation in ways to ensure that the benefits are shared more equally to ensure that health and education is provided for all; to ensure that as citizens lose their jobs assistance is provided to help move them in to new jobs. The result of this is that there is greater capacity for undertaking risk and Scandinavian countries have had among the highest rates of growth in the world, the highest penetration of the new technologies. True, they have amongst the highest
tax rates, but what that shows is that taxes by themselves do not necessarily discourage economic growth and economic prosperity. It depends on how those tax dollars are spent and in Scandinavia, by and large, they manage to spend these dollars well.
The result of this is that in the broader measures of well-being, these countries stand towards the top of the list. The UNDP has a measure called the Human Development Indicator, which includes not just GDP per capita., income per capita, but also measures of health, longevity, education, and in those measures the United States is about tenth on the list.
It would be unfortunate if there was a backlash against globalisation because we did not make globalisation work for more individuals. It would be unfortunate both for those in the developed and the developing countries. Standard economic theory emphasises that opening up markets provides opportunities for each country to take advantage of its comparative advantage and provides enhanced scope for efficiency gains from economies of scale. But there is an even more compelling argument for globalisation – the encounters between different cultures, the new opportunities which globalisation brings, as well as the enhanced competition that accompanies, all mean that globalisation can be a tremendous spur for innovation and creativity.
An alternative world is possible. Globalisation can be managed differently. In my recently published book, “Making Globalisation Work”, I explain not only what has gone wrong and why it has gone wrong but, on the basis of this diagnosis, I explain how globalisation can be made to work, or at least work a lot better, for a lot more people.
The problems that have been encountered are not inevitable. They are a consequence of the particular way that globalisation has been managed or, more accurately, mismanaged, especially in the post-Cold War world. I lay out a set of reforms - some small, some large, some that will take years to be brought about, some that are already in the process of being made that will at least make globalisation work better. With these reforms globalisation has a chance of living up to its promise and its potential for improving the living standards not just only for the richest countries of the world, but of the rich and the poor in both the developing and the developed world.
