16 September 2013 Comments Off on The War Against the Poor

The War Against the Poor

The War Against the Poor
Asad Zaman (asadzaman@alum.mit.edu)

              How to get decent, kind and humane people to participate in exploiting the poor? This has always been the central problem facing those who have waged the war against the poor across the centuries. I will trace some history, successful strategies and countermoves, as well as the recent tides in fortune in this war. The current global economic crisis is a replication of an event which has frequently occurred in the past: too much exploitation breaks the backs of the poor, on which the whole system rests.

Although history identifies numerous similar events on a smaller scale, the French revolution was significant in changing the course of history in Europe. Desperation of the excessively exploited poor led to the overthrow of the established aristocracy and the formation of a peoples government. In this favorable atmosphere, slogans of “Liberty, Fraternity and Equality,” and progressive ideas of Enlightenment thinkers like Godwin, Condorcet led to substantial popular support for social programs to improve the lives of the poor. This was a major threat to the wealthy and the powerful. Malthus executed one of the most brilliant maneuvers in this war by publishing his “Essay on Population.” Working entirely from his imagination, without any support from facts or statistics, he argued that the main reason for poverty, vice, and misery was the high population growth rate of the poor. Schemes to help the poor would be counterproductive because giving the poor more food would only lead them to reproduce faster, creating even more poor.

All of the quantitative elements of Malthusian arguments have proven to be false. For example, Malthus argued that the island of Britain could not sustain a population of 20 million, but 150 years later the population was more than triple Malthus’ ceiling. Also, Nobel prize winner Amartya Sen has shown that supplies of food per capita have been increasing slightly for centuries, and contrary to popular belief, famines are not caused by food shortages. Nonetheless, in an oft repeated historical pattern, the governing classes seized upon Malthusian arguments without bothering to verify them, because their interests were served well by them. Initiatives for social programs to help the poor were curtailed or dropped. Since better conditions for the poor would only help increase their numbers, repressive legislation was passed which worsened the conditions of the poor in England. The blame for poverty was put on the vices of the poor, and Malthusianism  led to the institution of workhouses for the poor, which were meant to be humiliating and degrading, so as to motivate people to not become poor. The sexes were strictly separated to curb the otherwise inevitable “over-breeding”; the cause of poverty according to Malthus.

The current global financial crisis bears an eerie resemblance to the Great Depression of the early twentieth century. Then, as now, financial chicanery was used to transfer wealth from the honest workers and producers to the wealthy parasites via interest, stocks, and other financial gimmicks. The system collapsed because the producers of wealth worked harder and harder to get less and less, while the wealthy got richer without doing any productive work.  While causing tremendous misery to large numbers of people, the Great Depression was an ideological triumph for the poor. No one could deny the clear and incontrovertible failure of free markets and capitalism to provide jobs and foods to all. Keynesian economics provided a theoretical basis for government interventions to provide employment and also social welfare programs. Anti-poor strategists could (and did) argue that helping the poor would only make them worse off, and a large government role in welfare programs would lead to oppressive dictatorships later on; no one was listening.  The stagflation caused by the oil crisis of the 70’s was contrary to Keynesian doctrines and provided the opening for a successful counterattack. The anti-poor theorists explained that Keynes was wrong, and government interventions to help the poor in short run always ended up hurting them even more in the long run. Again, without a shred of evidence for these theories, Reagan and Thatcher rose to power and implemented them in the USA and UK. The centerpiece of these Chicago School stories was that idea that giving wealth to the rich would increase investment and lead to rapid growth. Impoverishing the poor would lead to lower wages and also increase productivity. Welfare programs were dismantled, and tax cuts and other breaks for the rich were enacted. These neoclassical ideologists have dominated policy making to this day, leading to situation reported in the USDA report, Household Food Security in the United States, 2004: “38.2 million Americans live in households that suffer directly from hunger and food insecurity, including nearly 14 million children. That figure is up from 31 million Americans in 1999.”

Mao’s revolution which brought Communism to China proved to be a boon to the rural poor all over the world. The CIA was called to the carpet for its failure to anticipate and frustrate this anti-capitalist phenomenon. They explained that this revolution was based in rural areas, while the CIA had presence only in the urban areas. Some readers will remember the extensive Village Aid program in Pakistan. Similar programs were launched all over the world to gather information, and generally prevent unrest and revolutions in rural areas. As a by product, money was pumped into the really needy rural areas. These programs were dismantled when it became clear that unlike Russia, China did not plan to export its revolution.

The influence of neoclassical ideologists was felt in Pakistan in the 60’s when a group of expert economists from Harvard designed policies for growth at the Planning Commission. Brainwashed by a training in neoclassical economics, the compassionate Mahbubul-Haq went along with the idea that exploiting the poor was necessary for rapid growth, in the belief that short term sacrifice was needed for long term welfare. He wrote: “ It is well to recognize that economic growth is a brutal, sordid process. There are no short cuts to it. The essence of it lies in making the labourer produce more than he is allowed to consume for his immediate needs, and to reinvest the surplus thus obtained.” Much to his credit, he renounced his earlier views when he saw the bad effects of these neoclassical policies. Wealth became concentrated (22 families) and did not “trickle-down.” He wrote that “we were told to take care of  our GNP as that would take care of poverty – let us reverse this and take care of poverty as this will take care of our GNP.” Unfortunately, this remained a pipe-dream. The anti-poor faction has remained in power in Pakistan, and persuaded Musharraf to make the same mistake that Mahbubul-Haq had renounced over forty years yearlier. In his biography “Line of Fire” Musharraf writes that he faced a choice between increasing social welfare programs to help the poor, or working in higher GNP growth, which would alleviate poverty; he chose the second alternative. The current government is preparing to make the same mistake all over again.

Extensive experience with growth projects all over the world led Mahbubul-Haq to the insight that our people are our greatest treasure. If we invest in them, and provide them with lives with dignity, economic security, and justice, they will create progress on all fronts. Our people are our most powerful agents of change, and strategies based on injustice and exploitation will always fail, as has been repeatedly experienced. Haq expressed this insight as follows: “…, after many decades of development, we are rediscovering the obvious—that people are both the means and the end of economic development.”  As the battle against the poor has been waged in the course of the centuries, this central insight has often been re-discovered, and just as often buried under anti-poor propaganda.

A crucial insight for those who would fight for the poor is the following. The cynics who deliberately oppress the poor for personal gain are few; much more damage is caused by sincere people deluded by anti-poor propaganda into believing that it is to the benefit of the poor to exploit them. This propaganda has often taken the following lines: Helping the poor raises wages, reduces production, and hurts the poor in the long run. Helping the rich increases investments, productivity, and is the best way to help the poor in the long run. Sincere and compassionate people are fooled into believing that balancing the budget, privatization, debt relief or other agendas take priority over the problems of the helping the poor lead better lives. Convincing these people to learn from historical experience (instead of repeating it) that we must prioritize human beings over all other things, is a key to achieving success. The current global financial crisis makes it critical not only to spread the message, but also for everyone to personally participate in trying to help those whom we can – we cannot afford to wait for the government or foreigners to come to our rescue.

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