53 Million in ‘Emerging Markets’ Plunged into Poverty by Great Recession

A World Bank study has projected that the global financial crisis and resulting recession will plunge some 53 million people across “emerging markets” —like China and India— into absolute poverty, in 2009 alone. In China, tens of millions of people have lost jobs related to the export-dependent manufacturing sector. Such a collapse in private fortunes for millions in the developing world could lead to major political instability, so China and other nations are on the lookout, ramping up security operations and domestic crackdowns on dissent or public gatherings.

Unrest in China’s western Xinjiang province tied to repression of the Uighur muslim minority also has a socio-economic component, as Beijing steers Han Chinese merchants into Xinjiang with subsidies, while Uighurs remain poor. It is thought the upheaval in response to Iran’s apparently manipulated vote, indeed the manipulations themselves, may be rooted in failing economic fortunes, as foreign wealth to invest in commodities like petroleum shrinks and jobs and wealth across the Islamic Republic are threatened.

The World Bank study also finds that some 400,000 additional children will die each year through 2015, as a result of fallout from the current global recession. Foreign Affairs reports that unstable governments in Africa—like the Central African Republic, the DR Congo or Zimbabwe—could be further destabilized by popular unrest following the near total collapse of investment or lending.

Foreign reserves in sub-saharan Africa are so low that DR Congo, a nation already beset by economic chaos and a multi-front conflict that has taken over 5 million lives, may soon be unable to import basic economic life-supports, like food and fuel. The Central African Republic has no funds to pay government employees, a sign its central authority could collapse and the system come apart amid spreading poverty.

Zimbabwe  earlier this year hit the practically meaningless estimated rate of 230 million % inflation. Its fragile coalition government, between the Zanu-PF party of Pres. Robert Mugabe and the Movement for Democratic Change (MDC) of his arch-rival and prime minister Morgan Tsvangirai, has struggled to act with unity or implement major fiscal reforms. Both parties have routinely sniped at each other throughout the process of forming a unity government and attempting to govern. Their rivalry has hardly been put aside, and observers continue to fear the violent crackdown against the MDC could resume if Mugabe feels his authority threatened by circumstances.

In the 1960s, architect and philosopher R. Buckminister Fuller delivered a series of lectures compiled in the still highly relevant book Utopia or Oblivion: the Prospects for Humanity, in which he lays out the argument that throughout history, the ratio of easily accessible commodities to human population meant that only about 1 in every 100 people could achieve a comfortable standard of living, but that by the mid 20th century, this logic of scarcity had become obsolete.

Fuller’s argument was that political systems and traditional forms of administering power over people and markets continued to focus on the need for specific entities (cohering geographically, politico-militarily or commercially) to accumulate the largest possible reserves of everything, to the detriment of all others. His suggestion was that with the new efficiencies achieved by the most advanced societies by the mid 20th century, the only sustainable collective goal for human civilization would be “to make the world work for 100% of  humanity in the shortest possible time through spontaneous cooperation without ecological offense or the disadvantage of anyone”.

Radical free-marketeers have long wrestled with such an idea, both claiming that the totally open market, unconstrained by any regulation whatsoever, would best achieve that goal, while openly decrying such a goal as inherently adverse to the interests of the so-called “free market” (always in truth a partially free or freely programmable market). But such an approach to global economics need not be totalizing or degrading to human freedom in any way; Fuller offers no ideology in his vision, only the scientific fact that human civilization had evolved dangerous enough weapons, large enough populations and enough diversity to allow for either a state of permanent brinksmanship and dangerous conflict or a cooperative international system in which human ingenuity bring dignity and freedom to all people.

The success of campaigns like the ONE campaign, the Global Fund or the Clinton Global Initiative, in refocusing international trade policy and the fiscal and lending policies of the world’s wealthiest governments, at the Gleneagles G8 conference, for instance, shows that such a goal can become part of a viable international system of negotiation among free societies, with the specific aim of spreading relative historical affluence to populations around the world. 

But Roger Altman aptly notes in Foreign Affairs that “globalization”—which some view as a complicated attempt to realize something like Fuller’s cooperative vision through capitalist liberalization, while others view it as either the creation of a “global village” or the extension to planetary scale of the reach of multinational firms and wealthy economies—is in fact in retreat. Altman’s view of China is telling: he suggests that “Beijing’s unique capitalist-communist model appears to be helping China through this crisis effectively”, adding that “measured by its estimated $2.3 trillion in foreign exchange reserves, no nation is wealthier”.

There are significant problems with this view: one is that China’s “capitalist-communist model” embodies some of the worst flaws of both systems at their most radical, and its current position on the global stage is also owing in many ways to historical accident as it is to anything resembling responsible stewardship. It has the nakedly nationalistic policies that seem helpful to insulate against fiscal contagion, and its relationship with the US has allowed it to build up those massive foreign reserves, but this does not a sustainable future make.

China’s example is also one of devastatingly high risk in terms of resource management: it’s western deserts are expanding across the northwest of the country at extremely worrying rates, allowing severe dust storms to reach Beijing and beyond, and eroding arable land area at dizzying rates. China now imports more grain than it exports, despite being one of the largest grain producers in the world. Its infrastructure development plan is car-centered, which may help rig its GDP to continue escalating, unless there is a radical price-distorting environmental collapse that could lead to something like the 1930s dust bowl and Great Depression in the United States, which, like the 1930s, would spread to other nations and contribute to the collapse of China’s needed international trade sector.

With 23 million migrant workers now jobless in China and an escalating rate of unemployment among urban Chinese—figures that do not include migrants—, some observers estimating as many as 50 million Chinese workers may have lost jobs since last fall, when global demand for Chinese manufacturing started to sharply decline and major banking support for foreign investment collapsed. Altman observes that “Global economic and financial integration are reversing”. He adds that the state is acquiring increasing prominence in the shaping of economic policy the world over.

Protectionism is a risk, and voters are demanding solutions. While Altman and others argue that GDP growth must continue to be the focus of government policy, it is increasingly clear that this is a parallel consideration to whether or not international fiscal policy helps or hinders the extension of relative historical affluence—higher standard of living and access to resources—to the world’s poor.

Failure to effectively manage major resources like arable land, fresh water, forests and mineral distribution, will continue to increase the pressure on GDP that results from challenges to the economic stability of billions of poor and working families around the world. Their instability is the instability of communities, regions, markets, and nations.

Altman suggests Obama should use “the enormous global goodwill he enjoys” to lobby for further globalization through market liberalization, but Obama’s task is really far more complex than that. And he appears to understand it as such. He must lobby for global cooperation and for the virtues of human enterprise and democracy, but he must fashion a vocabulary which does so while espousing the need to prevent massive marginal populations from falling into desperation and disarray.

Fuller’s philosophy of cooperative innovation and “world-around” knowledge and resource distribution is instructive, and may blend well with Obama’s message of democratic change and grass-roots enabled reform. But the escalating pressure on human populations around the world, who are threatened with the collapse of their economic life-supports, must be a central concern of all ongoing negotiations on trade, fiscal policy and international lending.

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Originally published August 15, 2009, at TheHotSpring.net

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