[afro-nets] Eliminating world poverty: making governance work for the poor (16)

["George Kent" <kent@hawaii.edu>]

Eliminating world poverty: making governance work for the poor (16)
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Kris, I don't agree. I think transparency can be of some help in helping to reduce inequalities, but it is a mistake to think that inequality is rooted mainly in the lack of transparency. To explain more deeply, let me draw on some lines in my essay, “Globalization and Food Security in Africa,” in Adelani Ogunrinade, Ruth Oniang’o, and Julian May, eds., Not by Bread Alone: Food Security and Governance in Africa (South Africa: Toda Institute for Global Peace and Policy Research/ Witwatersrand University Press, 1999), pp. 17-34. In a section on The Roots of Poverty I say:

/quote/

Analysts of food insecurity in Africa consistently recognize that it is rooted in poverty, but they do not examine the sources of that poverty. They view poverty or "underdevelopment" as something akin to an original state of nature. In their view it is not something that needs to be explained, it is just there. It persists only because something positive hasn’t yet happened. They do not see poverty as resulting form an active process of impoverishment. They do not see underdevelopment as a consequence of de-development.

The ordinary, normal working of the market system creates wealth, but it also leads to poverty, and thus to concentration and to steadily widening gaps. The way in which the market system concentrates wealth and power in the hands of some and impoverishes others is straightforward.

One's bargaining strength depends on the quality of one's alternatives. Those who have greater bargaining strength tend to gain more out of each transaction than do those who have lesser bargaining strength. Thus, over repeated transactions, stronger parties systematically enlarge their advantages over weaker parties. Bargainers do not move to an equilibrium at which the benefits are equally distributed, but instead move apart, with the gap between them steadily widening. Asymmetrical exchange feeds on itself, making the situation more and more asymmetrical.

It has been argued that liberalization in theory should narrow income gaps (UNDP 1997, p. 89), but there is no evident reason for this. Certainly liberalization/globalization may yield substantial benefits for the poor, but this takes place in a process that benefits the rich even more. Progressive social policies (such as transfer payments from top to bottom in the form of social welfare programs) can help to control or compensate for the gap-widening process, but the market itself is intrinsically a gap-widening mechanism.

This pattern of cumulative divergence is visible in the growth of countries. Those that start with higher gross national products rise faster, while those that start lower rise more slowly. For example, in the 1965-1984 period the low-income economies had an average annual growth rate in their GNP per capita of 2.8%; the lower middle-income economies grew at 3.1%; the upper middle-income economies grew at 3.3%; and the industrial market economies grew at 2.4%. Expressed in these terms, it may appear that the growth rates were more or less comparable, with the industrial economies growing at a slightly lower rate than the low-income countries. However, these figures are percentages of very different baseline levels of GNP per capita. In 1984, for example, the low-income economies had average per capita income gains of $7.28, while the industrial market economies had average per capita income gains of $274.32. The gains in industrial market economies were more than 37 times those in low-income countries (WDR 1986, pp. 180-181). If we take economic growth to be the indicator of development, then it is the rich countries that are the developing countries!

In voluntary transactions both parties must get some benefit, for any party that did not benefit could refuse to trade. Both parties benefit in the exchange process, but unequally. The rich get richer and the poor get richer too, but more slowly.

When the exchange process is accompanied by inflation, however, the real gains to both parties are diminished. The gains to the poorer, weaker party, being smaller, may as a result become negative. This is especially likely because inflation rates tend to be much higher for poor countries than for rich countries. Thus with the combination of trade plus inflation it is likely that the rich get richer and the poor get poorer. The apparent gains from trade for the poor are likely to be wiped out by inflation.

Poverty is endlessly recreated. It is the product of an ongoing marginalization process, not a static condition. If it were not, then surely, with all the development programs that have been undertaken, it would have been eradicated by now. The important forces that cause the persistence of poverty are not only economic but also political, social, and cultural. Those with low bargaining power are likely to remain marginalized because those with whom they interrelate have greater bargaining power.

/unquote/

I make related arguments in "Africa's Food Security Under Globalization," African Journal of Food & Nutritional Sciences, Vol.  
2, No. 1 (2002), available at   http://www2.hawaii.edu/~kent/AFRICAS%20FOOD%20SECURITY%20UNDER%20GLOBALIZATION.pdf and also in my book,  Children in the International Political Economy, at pp. 18-20.

I'll inject some comments below to try to clarify my views.

On Jul 24, 2006, at 4:53 AM, Kris Dev wrote:

> Transparency can be a great leveller and flatten inequalities.
>
> A poor man cannot admit his child who is very sick to a hospital  
> giving bribe as there is a shortage of beds; the rich man can give  
> bribe and admit the child even for a minor ailment. The poor man's  
> child dies, putting everyone to grief.
>
> If bribe system is removed thro' transparency, then equal  
> opportunity can be created for all. This will remove inequalities  
> and the consequent discord and disharmony.

(gk) If you have full transparency and the elimination of bribes, you will still have huge differences in opportunities faced by the rich and the poor. I don't see any reason why transparency would result in the elimination of all inequalities.

> Similarly for schooling, college, employment, promotion, housing, etc.
>
> The rich are getting richer and the poor are getting poorer. Be it 
> individuals, families, communities or nations. Transparency can  
> remove the inequalities.

(gk) I agree that transparency can reduce some inequalities, but not all of them.

> Most of the international borrowing by poor countries are wasted in  
> various ways and the result is continued poverty. This can be  
> eliminated thro' transparency.
>
> Terrorism can be eliminated if there is all round equal opportunity  
> and prosperity and transparency in various dealings.

(gk) I see no reason to believe that the increase in transparency could being about equal opportunity and prosperity.

> Instead of spending on arms race and high security cover thro' war  
> and other means, the health, education, employment, etc. of poor  
> nations and communities, if attended to can remove inequalities.

(gk) I don't understand this. Sure, if the rich help the poor, the poor will become better off. The problem is that the rich are not very motivated to help the poor. If they were really motivated to do that, hunger and poverty could have been eliminated long ago.

> Transparency's ultimate objective must be to create all round peace  
> and prosperity for the whole world. Lest, like the human body, even  
> a small wound in any part of the body, can affect the whole body.

(gk) How can one speak of transparency as having an objective? I agree that we should seek peace and prosperity for all, but I do not see any reason to limit ourselves to one particular tool in the toolbox.

I support the idea of pressing for great transparency in public life, but I think it is important to make only modest claims for what it can accomplish. If we suggest that it can cure all the world's ills, we risk losing credibility.

Aloha, George

--
Professor George Kent
Department of Political Science
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