By Ameer Ali –
A systematic and unrelenting attack by neo-liberal economic orthodoxy on New-Deal-modelled economic structures built after WWII has made poverty systemic and left the onus of its eradication in the hands of private charity. Governments’ shift of priorities and programs from people to market, from households to corporations and from welfare to growth has created this horrendous outcome. The public sector has been progressively denigrated and rolled back to make way for private sector to expand and encroach into what was once consensually accepted as the legitimate terrain of state management, such as education, health care and welfare of the old and vulnerable. This radical transformation in economic priorities was undertaken in the name of economic efficiency and growth. In the course of this conversion even the vocabulary of budgetary allocations to health and education has been changed from investment to expenditure. In short, the neo-liberal phase of capitalism ushered in in the 1980s under a more fashionable cliché of globalization has made economic growth and poverty inseparable twins.
The global economic record of the past four decades – since this orthodoxy was enthroned by ‘Washington Consensus’ and its comprador intellectuals as the most desirable economic design ever invented by humanity – has exposed the hollowness of its promise of prosperity for all on the one hand and the stark reality of a class war pushed from the top by governments backed by a powerful corporate elite. However does one care to read the available economic and income data one cannot escape the horrible fact that the richest 20 per cent of the world population consumes 90 per cent of goods produced, while the poorest 20 per cent shares just 1 per cent. The Credit Suisse Research Institute in its 2013 report on wealth distribution among the world’s adult population carries this startling truth: Of a total 4,666 million adults and a total wealth valued at 241 trillion, a staggering 83 per cent of the latter is owned by a tiny 8.4 per cent of adults leaving the rest 91.6 per cent to share the remaining 17 per cent. An Oxfam report points out further that the wealth of the 85 richest people in the world is equal to the wealth of the poorest 3.5 billion, and that since late 1970s, tax rates for the richest have fallen in 29 out of 30 countries for which data are available. It is now public knowledge that the giant corporations do not fulfil their tax obligations in the jurisdictions in which they earn their profit. Their transfer pricing mechanism is a deliberate device to dodge taxes.
While the rich are able to employ experts in creative accounting at great cost to minimize (if not evade altogether) tax obligations the ordinary citizen is called upon by politicians to make sacrifices to balance national budgets. Governments’ inability or unwillingness to make the rich pay and their readiness to burden the masses with oppressive levies and diminutive benefits is also endorsed by comprador intellectuals and corporate media as responsible acts to protect the enterprising and eliminate the culture of entitlement. “There is no free lunch” is the modern cliché propagated by these champions which in reality sanitizes the economic injustice embedded in neo-liberal economic philosophy.
Zygmunt Bauman, the Professor Emeritus of Sociology at the University of Leeds, captures this development in his typical style: “almost everywhere in the world inequality is growing fast and that means that the rich, and particularly the very rich, get richer, whereas the poor, and particularly the very poor, get poorer – most certainly in relative, but in a growing number of cases in absolute, terms” (Bauman 2013: 10). While the rich enjoys a virtuous circle of affluence in the sense that they are richer because they are rich, the poor suffers from a vicious circle of poverty in the sense that they are poorer because they are poor. Inequality has deepened because of its “own logic and momentum” (Bauman: ibid.)
While the so called free market has created jobless growth in several nations, governments on the other hand have given up on targeting full employment as a worthy objective and instead are opting for a loosely defined concept of natural rate of unemployment, which also has another convoluted moniker, non-accelerating inflationary rate of unemployment (NAIRU). The latter obviously aims at inflation control over unemployment reduction thereby protecting capital from value erosion at the expense of employment growth.
Balancing budgets, freeing markets, privatizing public utilities and enterprises, maintaining credit ratings, and broadening tax base have become the essential ingredients of neo-liberal growth mantra. Diminution of foreign aid to poorer nations in the name of opening opportunities to free trade is another dimension of this recipe. The masses of poor, the involuntarily unemployed and the under privileged are the unfortunate collaterals in this economic avalanche.
Where is the salvation for the impoverished and immiserized? They are left to the tender mercies of private altruism. Whether it is the Salvation Army, the Anglicare, the Red Cross, World Vision or any other celebrated NGO, all of them ultimately depend on private philanthropy and individual contributions for resources. Charity has been privatised while poverty has become systemic.
Is there an alternative? From the anti-G7, anti-IMF and anti-WB protests that started in Berlin in 1988 to Occupation Wall Street in 2011 and to the anti-austerity marches in Europe in 2013 public discontent against neo-liberal economic regimes is spreading. The economy of Greece which is on life support is being forced by EU to sacrifice and control the discontent if it were to be resuscitated. In complacent Australia too, student protests against an ideology driven budget in 2014 has added to the worldwide discontent. Private charity cannot cope with systemic poverty. Pope Francis described the system as “madness’. Without destroying the foundations of the current economic system and replacing it with an economic structure that puts people’s welfare above economic growth there is no salvation to the immiserized and impoverished. Economic policy priority should shit from growth to people. Take care of the people GDP will take care by itself.
*Dr. Ameer Ali – School of Management and Governance, Murdoch University, Western Australia