Summer Economics/ CS 2006

A Historical, Global Epidemic (History - Chris Alm)
For Hawaii, America, and the entire world, poverty has always been a problem. For many countries, poverty has been caused by both external and internal influences. From continents that are obviously poor, such as Africa, to continents, such as Europe, in which it is not so apparent, poverty has persisted throughout the ages.
Africa is a continent made up of 54 nations which can be annually found on lists of the world’s poorest countries. But why has Africa always been counted among the globe’s most impoverished nations? The causes can be found both from sources outside the continent and from within the nations themselves. One of the main external reasons for why Africa is in its current state of poverty is the colonial period which occurred from the 15th century all the way until the middle of the 20th century. (4) During this time, 90.4% of the Africa continent was controlled by European nations. These included Great Britain, France, the Netherlands, Germany, Belgium, and more. (5)

Colonial Africa.

The European nations indulged in the natural resources and riches of the African nations, often giving back nothing to the natives in return. Another lasting effect of European colonization which led to problems in Africa was the fact that the European countries themselves set up the borders of the African nations when they colonized the continent and gave no regard to ethnic groupings or cultural differences. This made unity among people in African countries a problem later. The slave trade also affected countries in Africa, as families were separated from each other and many Africans were forced to leave their homes for faraway places, such as the Americas and the Caribbean. Finally, one of the major problems about colonialism in Africa which helped lead countries to become impoverished later on, was that the European nations which participated in the colonialism often set up little to no infrastructure in the African countries. This posed a problem because when African countries began to gain their independence, mainly in the 20th century, those countries were unable to advance very far economically because they did not even have the most basic necessities in place, such as good roadways, clean water, plumbing, electricity, and heating, not to mention that housing was usually horrendous and education definitely lacking. Without an infrastructure in place, African nations were unable to move their economies forward and as a result, most Westernized nations were uninterested in becoming economically involved with countries in Africa. With almost no help from the West, most African countries have not grown very much, even to this day. (9)
However, all of the poverty problems in African countries cannot be solely blamed on the period of colonialism and its following repercussions. Many of the current poverty problems in Africa stem from internal sources, one in particular being, corrupt and inexperienced governments and leadership. There have been many cited cases of unskilled, often militaristic leaders who took control of Africa countries soon after their independence from European colonizing nations and simply dominated the country. These leaders were free to do as the pleased, often pocketing most of the wealth generated by a country either by means of production or by foreign aid. Also, many of the leaders of African countries often chose to not make the much needed repairs to the weak infrastructures of the various African nations, if those infrastructures existed at all, that is.
An example of this is President Paul Biya of Cameroon. He rose to power in 1982 and has held his position until the current day. As stated by a man living in Cameroon, President Biya receives 90% of the popular vote in each election, although it is clear that 90% of the population of Cameroon does not vote for him. Also, it can be seen that the president does not care much for the infrastructure of his country as he leaves roads in disrepair for time periods of almost twenty years. It was also stated that if he chose, President Biya would be able to take half the income on a new power generator and simply keep it for himself, without regard to what effect that would have on his country. (1) President Biya is not an isolated case. Another example can be seen in the country of Malawi when Dr. Hastings K. Banda declared himself president for life in 1971. Banda stated, “one party, one government, one leader, and no nonsense about it.” While Banda was in power, he maintained close relations to former colonizers and the white government of South Africa. (2) An estimate by a BBC African analyst estimates that corruption costs the continent 150 billion dollars a year. (3)

President Paul Biya.

Although it is true that Africa is very impoverished, as many people stereotype, the more wealthy, Western nations are not without poverty problems of their own. Take Europe for example. During the 20th century, that continent was ravaged by two of the greatest wars in history, and between those two wars by a cataclysmic event which originated halfway around the world. As a result of the first World War, which ended in 1919, all of the European nations which had been involved had to go about rebuilding their damaged countries and repaying war debts, mainly to America. The country which had to worry about this in particular, was Germany, one of the losing nations of World War I.
Because of the Treaty of Versailles, Germany was forced to relinquish much of its land holdings in Europe, over one million square miles, and the country also had to give up its colonies in Africa. In addition to territorial losses, Germany was also blamed the most for the war and therefore was forced to pay the largest amount of war debts by the other European nations. (6) In order to pay back all of these war debts the German government printed large quantities of money. However, this large influx in cash made inflation rise far too high and made German money practically worthless. The United States tried to implement a program called the Dawes Plan which would help Germany pay its war reparations. However, America had stopped the Dawes Plan in 1929, right around the time when a disaster struck America and then spread to the rest of the world. (7)
This disaster was known as the Great Depression and lasted from 1929 all the way until World War II. Although it’s a well known fact that the Great Depression was terribly damaging to the American economy, it hit most other countries in the world hard as well, Europe included. The reason for this was that since the economy of the world’s greatest power, that is, America, had collapsed, all the other countries which America was helping with money and aid, that is, Europe, among others, also collapsed. Countries such as Britain and France were hurt because they had not yet recovered from the first World War, however, their damages were nothing compared to Germany’s.

A breadline in Paris during the Great Depression.

The Great Depression hurt the businesses in Germany and caused massive unemployment. (8) This destruction of Germany’s economy lasted until they elected a new leader, Adolph Hitler, who began military production and promised the Germans that they would get what they deserved in the world.
The history of world poverty is vast and far reaching. Talking about colonization and government corruption in Africa and impacts of World War I and the Great Depression in Europe is only scraping the tip of the Ice Burg. There are many other countries which suffered and continue to suffer to this day from poverty brought upon them by both internal and external sources.

Sources
(1) http://www.reason.com/0603/fe.th.why.shtml
(2) http://www.infoplease.com/ipa/A0107747.html
(3)http://worldnews.about.com/gi/dynamic/offsite.htm?zi=1/XJ&sdn=worldnews&
zu=http%3A%2F%2Fnews.bbc.co.uk%2F2%2Fhi%2Fafrica%2F2265387.stm
(4) http://encyclopedia.com/html/A/Africa.asp
(5) http://www.mtholyoke.edu/acad/intrel/pol116/colonies.htm
(6) http://www.schoolshistory.org.uk/ASLevel_History/week4_versailles.htm
(7) http://www.u-s-history.com/pages/h1371.html
(8) http://en.wikipedia.org/wiki/Great_Depression#Italy_and_Germany
(9) http://worldnews.about.com/od/africa/tp/africachallenge.htm

Global Poverty- The Current Situation (Current Situation - Samantha Ng)

East Asia:
Currently, the number of people in poverty in East Asia is declining. Since 2001, the World Bank claims that over 50 million people in this region have been “lifted out of poverty. In 1997, studies showed that approximately half of China’s population lived on less than $2 a day.(7) The World Bank estimated that by the end of 2004, only about one third of the population would be in that situation. While this is still 437,991,237 people, it is a drastic decrease from 656,986,856 people living on less than $2 a day.(8) One reason for this improvement is an increased economy. “Exports from the region have almost doubled over the last three years”, causing a boom in many East Asian countries. The avian flu is a major threat to many poultry farmers, yet the illness has not had a significant effect on the countries’ overall economies.
South Asia:
Southern Asia accounts for half the world’s population in poverty and has 500 million people living on less than $1 per day. This region also has the highest illiteracy rate in the world: 44%. Major natural disasters such as the earthquake in Pakistan in October 2005 and the devastating tsunami in December 2004 have prevented this region from improving its poverty problem, and have left hundreds of thousands of people homeless. However, South Asia has had a steady increase in its GDP rate. It has increased an average of 5.5% every year for the past fifteen years. Hopefully, this increase will continue and will perhaps result in more job opportunities that will help to bring some people out of poverty. AIDS/HIV is another major issue in this area of the world. South Asia has the second highest number of people living with AIDS in the world. Like East Asia, this region also must deal with the avian flu, which causes problems for many poor farmers. Many countries in South Asia, such as Afghanistan, have had very unstable governments in the past, which have lead to more even more poverty. A newer, more democratic government system has recently been set up in Afghanistan. This will hopefully lead to a more stable and safe environment for its people and a reduction in poverty. If Afghanistan’s population has more trust in its government, perhaps more people, especially women, will feel safe enough to try to find work and improve their financial situation in the near future.(3)

Europe and Central Asia:
Since the fall of the Berlin Wall in 1989, most European and Central Asian countries have experienced steady growth in their economies. However, one of the main problems in this region is unemployment. This issue, combined with a decreasing population in Bulgaria, the Russian Federation, and other countries, has resulted in poverty in many areas, especially in small towns and rural regions. Compared to other areas of Asia and Africa, Europe and Central Asia do not have that huge of a poverty problem. The main issue that this region should improve upon is having a sufficient number of job opportunities for those who are living in poverty.(3)
(5)

Latin America:
“In 2004, Latin America and the Caribbean experienced the strongest growth performance in 24 years, with growth of 6.3 percent up from 1.9 percent in 2003.” However, an estimated one fourth of the region’s population is living in poverty, or living on less than $2 a day. Over 50 million are living on less than $1 a day. Inequality between classes and races is one of the largest contributors to poverty in Latin America.(3) The gap between the rich and the poor is extremely large and will only grow unless something is done to stop it. The World Bank’s goal to improve poverty in this region is to reduce the inequality and improve education, health, environmental protection, social inclusion, and social protection programs.(1)
Middle East and North Africa(MENA):
Countries in the Middle East and North African have recently been experiencing large economic growth, mostly due to the high oil prices. Most of the economy is based on oil production, so when oil is in high demand, these countries can raise prices and increase their economies greatly. “Recently, the MENA region has experienced exceptional economic growth, buoyed by record high oil prices. Over the last three years, economic growth in the region has averaged 6.1 percent a year [1], the strongest growth in the region in nearly three decades. This is up from an average annual growth of 3.7 percent over the 1990s.” Like Europe and Central Asia, one of the larger contributors to poverty in this region is unemployment. Another major issue in this region is the availability of fresh water. While 5% of the world’s population lives in the Middle East and North Africa, these countries only account for 1% of the total fresh water supply. Before this region can think about employment issues, I believe it must find a way to get fresh clean water to its people. Without water, humans cannot survive, and they certainly cannot work to earn a living and escape from poverty.(3)

(4)

Sub-Saharan Africa:
Sub-Saharan Africa has the highest number of people living with AIDS in the world: over 7%. This region also has the worst poverty problem in the world. “More than 314 million Africans live on less than $1 a day—nearly twice as many as in 1981. The continent is home to 34 of the world's 48 poorest countries and 24 of the 32 countries ranked lowest in human development.” Malaria is also a huge problem in Sub-Saharan Africa, killing 2,800 people every day. Hunger and starvation is another issue that contributes to the problem of poverty in this area. One of the worst countries, in terms of poverty, in this region is Niger. According to the CIA World Factbook, approximately 63% of Niger’s population lives in poverty. The literacy rate was estimated at 17%, one of the worst literacy rates in the world.(3)
(6)

The World Bank is an organization that is supposed to help those in poverty all around the world. It provides low-interest loans and interest free credit to many developing countries, in order to help them improve their health, education, infrastructure, communication, and many other needs.(3)

Sources:
1)http://www.globalissues.org/TradeRelated/Poverty.asp
2)http://hdr.undp.org/statistics/data/indicators.cfm
3)http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/0,,contentMDK:20243429~menuPK:337018~pagePK:148956~piPK:216618~theSitePK:336992,00.html
4)http://www.das-fotoarchiv.com/portfolio/gordon/19991101_poverty2_rkg_059.jpg
5)http://www.cosatu.org.za/images/poverty.gif
6)http://www.dokus.com/PapersontheWeb/figure06.jpg
7)http://news.bbc.co.uk/2/hi/business/3994521.stm
8)https://www.cia.gov/cia/publications/factbook/geos/ch.html#People

One Earth's Dream: What Sould Be Done in the Fight Against Global Poverty (What Should Be Done - Mark Ohara)
The question has been asked time and time again. What would we do if we had unlimited resources and control. Many would say stop global poverty. However, I do not believe that poverty is a problem we can throw money at in order to make it go away. It is a very complex issue rooted deeply in the history of mankind and it does not appear to be slowing down anytime soon. We need to find causes so that we may find ways to defeat it.

The first cause I would like to focus on is global debt. A huge reason that many poor countries are unable to improve their standard of living is because of their immense national debt to rich countries that lent them money. If the debt of a poor country is lifted, that country can stop constantly worrying about ways they can accumulate the money to get rid of the debt and instead, fix the societies and help their suffering families. This is a proven way to help global poverty and it has recently helped many African countries. An article from CNN.com emphasized this fact when talking about how the rich nations are not completely following through after promising HIV/AIDS help to these same African countries. It stated that, “Relief from burdensome debt payments in Cameroon, Mozambique, Tanzania, Uganda and Zambia has swelled spending on education, health and the battle against HIV/AIDS” (http://www.cnn.com/2006/WORLD/africa/06/29/bono.africa.reut/index.html).

Because of the immense positive effect of removing global debt, if I had unlimited resources and control, I would take away the debts of countries in extreme poverty. This action would affect rich countries because there are still many countries that have not had their national debt removed. The rich countries that were expecting to get money from the poor countries would suddenly be left without any compensation. However, in order to get rid of poverty, this must be done. I would demand the rich nations to relieve the debt, and in turn I would compensate them with resources to help their markets and, if necessary, to help them deal with their problems.

The countries that are relieved of their debt would then have to focus on improving their healthcare and education. If countries improved their healthcare, they would be able to treat diseases that are killing millions of people every day. Two of the most prominent diseases right now are HIV and AIDS. Many poor countries are plagued by HIV and/or AIDS epidemics and they are desperately trying to combat it. However, as I have mentioned before, they are unable to use too many of their resources to fight it because of their debt. However, once their debts are cleared, they can supply their ill with the proper medicine. If I had the control, I would make it necessary for the government of the poor countries to supply, at the very least, the amount of medicine needed in order to cover the amount of people who are infected. This would give the poor countries a fighting chance at getting rid of the HIV and AIDS viruses.

http://news.bbc.co.uk/furniture/in_depth/africa/2000/aids_in_africa/orphans_front.gif

Another thing I would do if I had the control is have the rich countries help provide HIV and AIDS medicine to these countries if they can not afford it. Bono, of the band U2, has influenced some of the G8 to do this already. However, according to the same article I talked about before, many of the rich countries have not lived up to their promises. It said that, “Donors were spending half of what was needed to meet the goal of getting AIDS treatment to at least 4 million Africans by 2010” (http://www.cnn.com/2006/WORLD/africa/06/29/bono.africa.reut/index.html). The G8 would mainly be the ones who would have to help and they would not be able to hold back anything because I would penalize them if they did not meet up to the amount of aid proposed.
One more thing I would do to improve healthcare is fund the leading scientists and doctors trying to discover new ways to treat diseases and viruses. This would benefit all of humanity and potentially save a limitless number of lives.

http://www.cbc.ca/arts/images/pics/IntlMusic2005top.jpg

The other part of getting rid of global poverty after removing global debt is improving education. Poor countries do not have the training and resources to educate their people. That is why many of them are unemployed or they have to work for low wages that will not support their families. For example, in South Africa, the unemployment is incredibly high. According to an article, “The unemployment rate in South Africa is one of the highest in the world, 36% to 42% since the year 2000 using the broad definition. Even according to the narrow definition, which applies a job-search test, 25-30% of adults who wanted work and actively looked for it were unemployed” (http://www.gprg.org/themes/t2-inc-ineq-poor/unem/unem-pov.htm).

If I had the resources, I would train teachers already in Africa and improve the schools there. Also, Punahou has a program that sends some of our highly experienced teachers to help the educators in Africa. By creating more programs like this and introducing better teaching methods to the African communities, we would improve the quality of the poor countries education thereby allowing them to find a vast amount of jobs with better wages.

http://www.usaid.gov/about_usaid/presidential_initiative/afreducation2.jpg

According to an article about world hunger and poverty, one of the main causes of poverty is because, “colonialism, and later subtle monopoly capitalism, dispossessed hundreds of millions of people from their land; the current owners are the new plantation managers producing for the mother countries” (http://www.globalissues.org/TradeRelated/Poverty/Hunger/Solutions.asp). In order to get rid of global poverty, we have to help the native people of a country who have been overpowered by the colonists by either restricting how many of these outsiders are allowed within the country, or by helping them establish their own means of competition and production so that they will not be left in the dust. If I had unlimited resources and control, I would help the people of the poor countries find means of employment and establish affirmative action laws so that the government will know if the natives are being hired.

There is always a possibility that we can achieve a world without poverty. We have seen the power of those who are willing enough and even though we may not have the resources and control now, someday could be the day when the world comes together to help each other and find solutions.

Let's Steal From The Poor And Give To The Rich: Why We Need To Defeat Global Corruption To Defeat Global Poverty (What Can Be Done - Garret Nakata)

Foreign Aid
Before, when I talked about poverty on the local and national scales, I started off with education. As important as an issue as that is, for the global picture, there are more pressing matters. First and foremost, poor countries need money to attain the technologies they need to overcome geographical obstacles, such as drought, mountains that hinder or prevent trade, or just bad soil. Money is simply essential to a nation’s well-being. But one may ask, “But aren’t we giving money to poor countries already? Isn’t that enough for them?” Research by the FrameWorks Institute shows that Americans believe we are giving 15 percent of our budget to foreign aid. The actual figure runs from 0.1 to 0.7 percent. (1) That’s not even a single percent of our total wealth. To American economist Jeffrey Sachs, director of the Earth Institute at Columbia University and Annan’s special adviser on the Millennium Development Goals, this is appalling. He said, “It’s a stunning marker that the rich world won’t spend less than one percent of its income on behalf of the world, and yet expects a congenial community and peaceful world … it’s completely untenable.” He recently wrote a book entitled, The End Of Poverty: Economic Possibilities Of Our Time, and argues that if all countries were to double their foreign aid, by 2015 world poverty would be halved. (2) Unfortunately, just dumping money into poor countries isn’t going to erase this problem. There are obstacles that deplete this money or flat out try to prevent it from getting to its destination.

Corruption - Bribery
The one thing, and by far the most difficult thing, that must be defeated to alleviate global poverty is corruption. When most people think of corruption in connection to poverty, they’d think of the leaders within poor countries as the ones as corrupt. And it is true that they are a cause of the poverty that their citizens experience. But, this is not the corruption I am focusing on right now. This deals with corruption abroad and corporations from wealthy nations, or more specifically, bribery. Dr. Susan Hawley is a research consultant who has been working on issues of corruption for several years and says that, “For multinationals, bribery enables companies to gain contracts (particularly for public works and military equipment) or concessions which they would not otherwise have won, or to do so on more favourable terms. Every year, Western businesses pay huge amounts of money in bribes to win friends, influence and contracts. These bribes are conservatively estimated to run to US$80 billion a year—roughly the amount that the UN believes is needed to eradicate global poverty.” But, these bribes hurt the world in more ways than simply depleting money that could go to foreign aid. Dr. Hawley lists the impacts of this corruption:

-They undermine development and exacerbate inequality and poverty.

-They disadvantage smaller domestic firms.

-They transfer money that could be put towards poverty eradication into the hands of the rich.

-They distort decision-making in favour of projects that benefit the few rather than the many.

-They also
-Increase debt
-Benefit the company, not the country
-Bypass local democratic processes
-Damage the environment
-Circumvent legislation
-Promote weapons sales

Unfortunately, as horrible as this bribery is, its hard to detect and was even legal in some countries. Dr. Hawley reports that, “Until recently, bribery was seen as a normal business practice. Many countries including France, Germany and the UK treated bribes as legitimate business expenses which could be claimed for tax deduction purposes.” (3) And there is still even more corruption that must be dispelled.

Corruption - The World Bank and the IMF
Organizations that are supposed to help in the fight against poverty are actually making it worse, namely the World Bank and the International Monetary Fund(IMF). These two organizations are responsible for loaning out money to countries so that they can undertake any projects that they need. This sounds like a noble cause, enabling poor countries to improve themselves. Unfortunately they use their need for their own personal gains. As poor countries borrow money from the World Bank, they are offered another loan from the IMF to help pay for their debts to the World Bank, leading to a double payment that only leads to higher debt. And they use this debt as leverage over the other countries. Susan George, an activist and writer for over 25 years against the horrors of the global system, writes in her book entitled A Fate Worse Than Debt that, “Debt is an efficient tool. It ensures access to other peoples’ raw materials and infrastructure on the cheapest possible terms. Dozens of countries must compete for shrinking export markets and can export only a limited range of products because of Northern protectionism and their lack of cash to invest in diversification. Market saturation ensues, reducing exporters’ income to a bare minimum while the North enjoys huge savings. The IMF cannot seem to understand that investing in … [a] healthy, well-fed, literate population … is the most intelligent economic choice a country can make.” And even more horrifying is that the IMF and World Bank tell countries that are in their debt to cut spending on things like health, education, and development. (4)

Basically, the IMF and World Bank are telling them to lower their standard of living so they can pay off their debts. This is something that can’t be tolerated, ever. But the sad fact is it is. This debt prevents poor countries from expanding, forever keeping them down and whipped. We could simply forgive all foreign debt and lift the burden on their backs. But, that still leaves the problem of two corrupt organizations free to do the exact same thing as soon as they get the chance. So let’s talk about dealing with them. Joseph Hanlon and Ann Pettifor, members of Jubilee Research which provides up-to-date, accurate research, analyses, news and data on international debt, write, “Campaigners from around the world, but particularly the South, have called for a more just, independent, accountable and transparent process for managing relations between sovereign debtors and their public and private creditors.
An independent process would have five goals:

-to restore some justice to a system in which international creditors play the role of plaintiff, judge and jury, in their own court of international finance.

-to introduce discipline into sovereign lending and borrowing arrangements—and thereby prevent future crises

-to counter corruption in borrowing and lending, by introducing accountability through a free press and greater transparency to civil society in both the creditor and debtor nations

-to strengthen local democratic institutions, by empowering them to challenge and influence elites

-to encourage greater understanding and economic literacy among citizens, and thereby empower them to question, challenge and hold their elites to account” (5)

By doing this, we place safeguards that don’t allow the World Bank and the IMF to freely commit corrupt acts. Let’s use the example of our own government. We have three branches that each share a portion of power and make sure that no one section gains too much power to abuse. And if our leaders do something wrong, we hold them accountable in the form of approval ratings, re-elections, and even impeachments.

In this article, I mostly talked about things that don’t really require money, as much as they require people to do something about them. When it comes down to it, we as fellow human beings need to want to help others enough that we want to affect significant change in foreign policies and organizations. I know it sounds corny but we need to speak out and be informed about these types of issues. Vote for someone whose policies don’t cripple poor countries just because they can gain something from it. Rally against some corporation that’s oppressing poor countries. Donate to groups that fight against poverty. Tell the people in power your concerns. Do something.

The ONE Campaign is a "new effort by Americans to rally Americans – ONE by ONE – to fight the emergency of global AIDS and extreme poverty."

You can contact the White House and ask them any questions you may have here or your local senators here.

Sources
1) http://www.netaid.org/press/media-coverage/2003/page.jsp?itemID=27006261
2) http://www.science-spirit.org/article_detail.php?article_id=517
3) http://www.thecornerhouse.org.uk/item.shtml?x=51975
4) http://www.tni.org/archives/george/abuses.htm
5) http://www.jubileeresearch.org/analysis/reports/habitfull.htm
6) http://www.globalissues.org/TradeRelated/Poverty/Corruption.asp (Site I used to find the various articles)

Picture Sources
Money Changing Hands - www.cop2p.com/images/bribery.jpg
World Bank Protest - http://www.socioeconomics.com/im/2005/0601-world-bank-protested.jpg