The Divide: A Brief Guide to Global Inequality and its Solutions

by Jason Hickel

And in early 2017, as the World Economic Forum met in Davos, Oxfam announced that the richest eight people had as much wealth as the poorest 3.6 billion.

It is now widely acknowledged by scholars that structural adjustment was one of the greatest single causes of poverty in the global South, after colonialism. But it proved to be enormously beneficial to the economies of the North.

For instance, global South countries would have to abolish their agricultural subsidies, but the United States and the European Union would be allowed to continue paying subsidies to their own farmers, enabling them to undercut the market share of global South producers in the one sector in which they are supposed to have a natural competitive advantage.

The problem is not that poor countries are having difficulty hoisting themselves up the development ladder; the problem is that they are being actively prevented from doing so. The development industry likes to refer to poor countries by the passive adjective ‘underdeveloped’. But perhaps it would be more accurate to make the term a transitive verb, ‘under-developed’: to have had one’s development intentionally obstructed, undone or reversed by an external power.

Three trillion dollars in total net outflows per year is twenty-four times more than the annual aid budget. In other words, for every dollar of aid that developing countries receive, they lose $24 in net outflows.

Yes, some aid goes a long way towards making people’s lives better, but it doesn’t come close to compensating for the damage that the givers of aid themselves inflict. Indeed, some of this damage is caused by the very groups that run the aid agenda: the World Bank, for example, which profits from global South debt; the Gates Foundation, which profits from an intellectual-property regime that locks life-saving medicines and essential technologies behind outlandish patent paywalls; and Bono, who profits from the tax haven system that siphons revenues out of global South countries.

Rich countries aren’t developing poor countries; poor countries are effectively developing rich countries – and they have been since the late 15th century.

aid serves as a kind of propaganda that makes the takers seem like givers, and conceals how the global economy actually works.

Comparing aid to various outflows (dark grey) and structural costs/losses (light grey).32

The aid paradigm allows rich countries and individuals to pretend to fix with one hand what they destroy with the other, dispensing small bandages at the same time as they inflict deep injuries, and claiming the moral high ground for doing so.

A casual observer might be impressed: American taxpayer money offered generously, in the spirit of humanitarianism, to assist impoverished Palestinians struggling to survive in the desert. But Palestine doesn’t have a shortage of water. When Israel invaded and occupied the West Bank in 1967, with the backing of the US military, it asserted total control over the aquifers beneath the territory. Israel draws the majority of this water – close to 90 per cent – for its own use in settlements and for irrigation on large industrial farms. And as the water table drops, Palestinian wells are running dry. Palestinians are not allowed to deepen their wells or sink new ones without Israeli permission – and permission is almost never granted. If they build without permission, as many do, Israeli bulldozers arrive the next day. So Palestinians are forced to buy their own water back from Israel at arbitrarily high prices.

It’s not that they lack water, as USAID implies; it’s that the water has been stolen from them. And it has been stolen with US support.

Poor countries don’t need our aid; they need us to stop impoverishing them.

By redefining the goal, the Millennium Campaign is now able to claim that poverty has been halved when in fact it has not.

The good-news narrative about poverty reduction only works because the goalposts have been shifted.

How did the World Bank’s poverty numbers change so suddenly from a rising trend to a falling one? To put it simply, they changed the international poverty line. In 2000, they shifted it from the original $1.02 level to $1.08.

He shows that given our existing economic model, poverty eradication can’t happen. Not that it probably won’t happen, but that it physically can’t.

if we want to have any hope of eradicating poverty without destroying our ability to inhabit this planet, we will need to adopt a completely different economic model – one that provides for a much fairer and more rational distribution of our wealth.

The emergence of the landless working class added a final piece to the great transformation of England’s economy: they became the world’s first mass consumer population, for they depended on markets for even the most basic goods necessary for survival: clothes, food, housing, and so on. It was these three forces – enclosure, mass displacement of peasants and the creation of a consumer market – that provided the internal conditions for the Industrial Revolution. The external conditions, as we have seen, had to do with the colonisation of the Americas and the slave trade.

The economic transformation was dramatic. Before the British arrived, India commanded 27 per cent of the world economy, according to economist Angus Maddison. By the time they left, India’s share had shrunk to just 3 per cent.42

As your Ambassador can see for himself, we have not use for your country’s manufactures … Our Celestial Empire possesses all things in prolific abundance and lacks no product within its borders. There was therefore no need to import the manufactures of outside barbarians in exchange for our own produce. But as the tea, silk and porcelain which the Celestial Empire produces are absolute necessities to European nations and to yourselves, we have permitted, as a signal mark of favour, that foreign merchants should be established at Canton, so that your wants might be supplied and your country thus participate in our beneficence … I do not forget the lonely remoteness of your island, cut off from the world by intervening wastes of sea …

Defeated on the diplomatic front, Britain turned to drugs. Desperate to finance their growing trade deficit, they started selling opium – grown in colonial India – on China’s black market. And when Chinese authorities clamped down on this illicit trade, as any sovereign country has the right to do, the British retaliated with a military invasion.

China’s share of the world economy dwindled from 35 per cent before the Opium Wars to an all-time low of just 7 per cent.

And, as in India, 30 million people in China perished needlessly of starvation during the late 19th century, after having been integrated into the London-centred world economy.

In the Western imagination, Africa is stereotyped as a continent plagued by corrupt dictators, with the supposition being that Africans are perhaps too ‘primitive’ to appreciate the virtues of Western-style democracy. But the truth is that ever since the end of colonialism, Africans have been actively prevented from establishing democracies.

The solution to mass poverty turns out to be remarkably simple. Poor people don’t need charity, they need fair wages for their work, labour unions to defend those wages and state regulation that prevents exploitation. They need decent public services – such as universal healthcare and education – and a progressive taxation system capable of funding them. They need fair access to land and a fair share of natural resource wealth. In other words, real development requires the redistribution of power, which then in most cases naturally precipitates a redistribution of resources.

Imagine you walk into Barclays to get a loan for a new business. Now imagine that they will lend to you only if you agree to give them complete control over your household, so that if your interest payments don’t come in fast enough, they can garnish your wages, liquidate your house and force your children to get jobs. Imagine, further, that you are not allowed to declare bankruptcy under any circumstances; if you can’t repay your loan you have to sell everything you own, stop feeding your children, stop buying whatever medicines you might need to stay healthy and channel all that money to the bank. Such an arrangement would never fly.

If the Bank is so committed to reducing poverty, and the IMF so committed to reducing economic instability, then how do we explain the fact that they continue to pursue policies that appear to increase poverty and economic instability?

Rich countries have expensive labour because of a long history of unions and strong labour laws, and have abundant capital because of long-standing tariff protections that allowed them to develop their industries. Poor countries, on the other hand, have cheap labour and no capital because of a long history of colonisation, dispossession, unequal treaties and structural adjustment. Comparative advantage isn’t given, it is created.

How are states to invest in building a zero-carbon infrastructure when they are subjected to austerity and privatisation? How are governments supposed to tax and regulate fossil fuel companies when the very idea of taxation and regulation has been stigmatised as socialist or totalitarian, and even rendered illegal according to some international trade agreements? How are we supposed to subsidise innovation in renewable energies when subsidies have been banned for running against the principles of ‘free trade’ (with suitable exceptions made for US agribusiness and fossil fuels, of course)? How can states ever hope to respond to the impending humanitarian crisis when their budgets have been cut and public services shut down?

in order to be effective at prevention, you need to target upstream causes.

If the US government wants to reduce global poverty, perhaps instead of doling out aid it should work to end structural adjustment, the tax evasion system and unfair trade laws – some of the major forces that cause poverty in the first place.