Island of Properity in a Sea of Poverty

The following is a transcript from a segment on GDAE Podcast Episode 23 from late November 2009.

We've all heard that about 1% of Americans own about 38% of the nation's wealth.... and the bottom 40% own less than 1% of the nation's wealth. These are 2001 statistics and the disparity has certainly grown since then, during the Bush years.

On another scale, the relatively few developed Nations have accumulated a similarly disproportionate share of global wealth, in part at the expense of exploiting the natural resources of the lesser developed nations.

We've commented in the past on GDAE Podcast that this analogy between individuals and nations translates to the financial melt down. A small minority of wealthy elites in the US benefited from the financial bubble at the expense of a super majority of Americans, yet it was the majority of tax payers who bailed out the tiny financial elite when the crash was upon us a year ago.

By analogy, on a global scale, it was a small minority of countries, the Group of 7, or G-7, that created and benefited from the bubble economy; yet it is the other countries being hammered both during the go-go bubble expansion days of wealth accumulation and on the down-side of the global financial crash.

Now, with global climate change, we see the devastating legacy of this wealth disparity that has persisted over the generations: The minority of industrialized countries have accumulated their wealth, in part, by pushing a cost off onto the environment in the form of greenhouse gas emissions. Like the use of slavery, a small minority have gotten rich on the backs of others.

These are illegitimate riches. But where do we find ourselves today? These illegitimate profits have been invested to create even more riches, which have often been passed between generations (can you say "Paris Hilton?"). The wealth has been used to buy influence in all three branches of government, such as removing the Glass-Steagall Act designed to prevent speculative financial crashes from contaminating commercial financial institutions that fund small businesses, home and car loans, student loans, home improvement loans and the like. But now these super rich speculative financial institutions, and the US Government itself, are insolvent, although they won't admit it. [Now the US CAN'T pay global climate pollution reparations ... unless the US takes a loan from China to do so.]

This scenario of wealth accumulation among a tiny elite reminds me of something I recently read in an old National Geographic magazine. I came across a statement by a wise 39-year old Kuwaiti made back in 1975. When oil wealth in the Middle East was accumulating, the Kuwait fund for Economic Development pledged $16 billion to developing countries. According to National Geographic, The fund's director general, Abdlatif Al-Hamad, 39, explained the philosophy behind such generosity. He said:

"We cannot close our doors and say to hell with everyone else. Nothing is clearer than the danger of having an island of prosperity in a sea of poverty."

Kyoto & the Articles of Confederation

A forgotten bit of United States history provides an analogy to what could happen to the Keyoto Protocols in Copenhagen.

The United States had a constitution before the U.S. Constitution. It was called the Articles of Confederation and Perpetual Union, or simply the Articles of Confederation. Article 13 stated that only the Congress of the states could amend the Articles of Confederation.

However, rather than amend the Articles, a series of conferences and conventions were held, which resulted in the Articles being discarded and replaced by the U.S. Constitution. A similar thing appears to be happening to the Kyoto Protocols to the United Nations Framework Convention on Climate Change. Powerful nations are trying to discard the Kyoto treaty and replace it with something else more favorable to corporate interests.

It's instructive to reflect back on what motivated the dismantling of the Articles of Confederation. Following a meeting in Mount Vernon to address navigation issues between Maryland and Virginia, the conveners recommended a convention of all the States for the following purpose:

"to take into consideration the trade and commerce" of the Confederation. [1]

Ah, yes. Commercial interests at work again. According to political scientist David Hendrickson:

When the war ended in 1783, certain special interests had incentives to create a new "merchant state," much like the British state people had rebelled against. In particular, holders of war scrip and land speculators wanted a central government to pay off scrip at face value and to legalize western land holdings with disputed claims. Also, manufacturers wanted a high tariff as a barrier to foreign goods, but competition among states made this impossible without a central government.[2]

So, out with the Articles of Confederation and in with the U.S. Constitution and a central government. The same interests seem to be at work centuries later trying to say out with Kyoto and in with a corporate-directed approach to global climate change. This establishment approach must be challenged.

Sources:

1. C. Tansill (ed.), Documents Illustrative of the Formation of the Union of the American States, H. Doc. No. 358, 69th Congress, 1st sess. (1927)

2. Hendrickson, David C., Peace Pact: The Lost World of the American Founding. (2003)

Hope for the Establishment?

Well, the World Bank is a dirty word in some circles. But I've recently had some experiences that suggest the Global Justice Movement might have influenced The Bank.

Perhaps, the cynic would say, the following statistic is just the Bank engaging in self-promotion the justify their own existence.

According to the World Bank, 75-80 of the effects of climate change are being felt in the developing world. So, you have this inverse relationship between cause and effect.

But another take is that the Bank is, 1) acknowledging the existence of climate change, something the Palinistas won't do, and 2) providing evidence for a legal challenge with reparations as the remedy.

By chance I discussed the changes at the World Bank with someone who is #2 for a particular geographic region. In response to a question about changes at the Bank over the past decade, he said that the Bank has deeply changed it's perspective on two things. First, the Bank recognizes the use of "structural adjustments" as a condition of loans was bad policy, in part because it was coercive. Thus, nations would do what was necessary to secure the loans, but were not really committed to the changes.

Second, and related to the first, was to take a more holistic view of the loans, recognizing distribution issues and social issues. In other words, recognizing that the results of the loans need to affect a broader spectrum of people in the recipient country, with particular attention on impacts of the poorest people.

The purpose here isn't to praise the World Bank as much as it is to point to the success of the Global Justice Movement in helping raise the consciousness of an institution like the World Bank.