Social inequality and poverty increasing worldwide

                    By Michael Conachy
                    "Global inequalities in income and living standards have reached
                    grotesque proportions," according to the latest annual United Nations
                    Human Development Report (UNHDR), published last month.

                    While 1.3 billion people struggle to live on less than $US1 a day, the
                    world's richest 200 people doubled their net worth between 1994 and
                    1998 to more than $1 trillion. The world's top three billionaires alone
                    possess more assets than the combined Gross National Product of all the
                    least developed countries and their combined population of 600 million

                    About 840 million people are malnourished, and close to one billion find
                    it difficult to meet their basic consumption requirements. More than 880
                    million people lack access to health services, and 2.6 billion people have
                    no access to basic sanitation.

                    Far from narrowing, the gulf between rich and poor is growing. "Some
                    have predicted convergence. Yet the past decade has shown increasing
                    concentration of income, resources and wealth among people,
                    corporations and countries," the report states.

                    The income gap between the fifth of the world's population in the
                    wealthiest countries and the poorest fifth of the world's population was
                    74 to one in 1997, up from 60 to one in 1990, and 30 to one in 1960.
                    Those living in the highest income countries have 86 percent of world
                    Gross Domestic Product (GDP), 82 percent of world export markets,
                    68 percent of foreign direct investment and 74 percent of world
                    telephone lines. Those living in the poorest countries share only one
                    percent of any of these.

                    OECD countries, with 19 percent of global population, control 71
                    percent of global trade in goods and services, and consume 16 times
                    more than the poorest fifth of the globe.

                                  Polarisation of wealth and income

                    These overall figures do not take into account the huge social inequalities
                    within the wealthiest countries themselves. Some figures taken from the
                    Human Development Indices attached to the report illustrate the income
                    polarisation within both the industrialised and the poorest countries.

                    In the United States, for example, real GDP per capita in 1997 was
                    $29,010, compared to an average for the least developed countries of
                    $992. However, in the US, real GDP per capita for the poorest fifth of
                    the population was only $5,800—almost six times below the average,
                    and nine times below the figure for the wealthiest fifth of $51,705. Based
                    on figures from 1989-95, the indices demonstrate that 14.1 percent of
                    the American population subsist on just $14.40 a day.

                    Similar inequalities are to be found in all the industrialised countries. In
                    Germany, with an average real GDP per capita of $21,260 in 1997, the
                    poorest 20 percent were five times below average at $3,963. The richest
                    20 percent were almost ten times better off with a real GDP per capita of
                    $38,164. In the United Kingdom the average was $20,730, with the
                    poorest fifth recording $3,963—while the richest fifth recorded $38,164.
                    Just over 13 percent of the population of the UK lives on $14.40 per
                    day, as does 11.5 percent of the population of Germany.

                    While figures are not available for all the poorest countries, the
                    inequalities are even starker. In Zambia, the average real GDP per capita
                    in 1997 was $960. However, the poorest fifth of the population had a
                    real GDP per capita of only $216, while the wealthiest fifth had $2,797.
                    As many as 84 percent of the population subsist on one dollar a day or
                    less. In Guinea-Bissau, ranked one of the ten poorest countries in the
                    world, average GDP per capita was $810. For the poorest fifth it was
                    $90, and for the richest fifth $2,533. At least 87 percent of the
                    population live on less than one dollar a day.

                    The UNHDR indices assess human poverty in the industrialised countries
                    by a combination of factors: percentage of people not expected to
                    survive to age 60, the adult functional illiteracy rate, the percentage of
                    people living below 50 percent of median personal disposable income,
                    and the long term unemployment rate. On this basis, Germany is ranked
                    third among the 17 industrialised countries with a poverty rate of 8
                    percent, while the highest poverty levels are recorded in the United
                    States (16.5 percent), Ireland (15.3 percent) and the United Kingdom
                    (15.1 percent).

                    Some countries have recorded growth in average per capita income over
                    the past decade, but more than 80 countries have lower per capita
                    income than at the beginning of the 1990s. Fifty-five countries have
                    declining per capita incomes. The most substantial declines have taken
                    place in the former USSR and Eastern Europe. In the countries of
                    sub-Saharan Africa, there has been a continuing fall in per capita income
                    from $661 in 1980, to $550 in 1985, then $542 in 1990 and $518 in
                    1997 (expressed in 1987 US dollars).

                    Again taking sub-Saharan Africa as a whole, 50 percent of the
                    population have no access to safe water and 56 percent have no access
                    to sanitation. One third of children aged five are underweight and more
                    than a third of the population are not expected to reach the age of 40.

                    While masses of people eke out an existence without basic social
                    infrastructure, mergers and acquisitions have concentrated vast resources
                    in the hands of a few transnational corporations. By 1998, the top 10
                    companies in pesticides controlled 85 percent of the $31 billion global
                    market, and the top 10 in telecommunications controlled 86 percent of a
                    $262 billion market. In other sectors, the top 10 corporations control
                    market shares of almost 70 percent in computers; 60 percent in
                    veterinary medicine; 35 percent in pharmaceuticals; and 32 percent in
                    commercial seed.

                    As a result of this concentration of resources, the world's poor benefit
                    little from increasing technology and knowledge. Just 10 countries
                    account for 84 percent of global research and development expenditures
                    and control 95 percent of US patents. Research is ever more determined
                    by profit as opposed to social needs. "In defining research agendas,
                    money talks, not need—cosmetic drugs and slow-ripening tomatoes
                    come higher on the priority list than drought resistant crops or a vaccine
                    against malaria," the report states.

                    Increased trade, new technologies, foreign investment and expanding
                    communications networks are not evenly or fairly distributed on a world
                    scale. Foreign direct investment (FDI) reached $400 billion in 1997, but
                    58 percent of it went to industrialised countries and just five percent to
                    the so-called transition economies of Central and Eastern Europe. Of the
                    FDI which went to developing and “transition” economies in the 1990s,
                    more than 80 percent went to just 20 countries, mainly to China.

                                         Financial crises

                    With a massive US$1.5 trillion a day exchanged on world currency
                    markets, the report notes that global financial markets produce for many
                    people "sudden and hurtful disruptions in the pattern of daily life". Far
                    from being isolated incidents, financial crises resulting from rapid
                    build-ups and reversals of short-term capital flows are "now recognised
                    as systemic features of global capital markets."

                    The East Asian financial turmoil of 1997-99 resulted in capital outflows
                    equivalent to 11 percent of the GDP of Indonesia, South Korea,
                    Malaysia, the Philippines and Thailand. The human impact included the
                    loss of 13 million jobs across the region and a decline of real wages of
                    between 40-60 percent in Indonesia.

                    Job insecurity is not confined to the crisis-stricken regions of the globe.
                    Global competition has undermined legal protection for jobs all over the
                    world, and millions work with no contracts whatsoever. In Europe,
                    sustained economic growth has not resulted in any decline in
                    unemployment, which has remained at 11 percent for the past decade,
                    affecting 35 million people.

                    In the poorest countries, debt servicing payments combined with
                    declining tax revenues have led to further cuts to state-provided services
                    such as health and education. Tanzania, for example, spends nine times
                    as much on debt servicing as on health, and four times as much as on
                    primary education.

                    Health and environmental problems are growing. More than 16,000
                    people are infected with the HIV/AIDS virus each day, with 95 percent
                    of new cases being in developing countries. Nine countries in Africa are
                    projected to have a loss of 17 years in average life expectancy by the
                    year 2010 as a result of the virus, taking them back to the levels seen in
                    the 1960s. Every year nearly three million people die from air pollution,
                    and more than five million die from diarrhoeal diseases caused by water

                    Economic and social insecurity results in a breakdown of community and
                    political cohesion, the report noted. Of the 61 major armed conflicts
                    fought between 1989 and 1998, only three were between different
                    states, the rest were civil conflicts.

                    The report also points to the growth of organised crime. It estimates that
                    six major crime syndicates control some $1.5 trillion, rivaling
                    transnational corporations for assets and economic influence. The illegal
                    drug trade accounts for an estimated 8 percent of world trade, ahead of
                    trade in motor vehicles or iron and steel. Money laundering is thought to
                    be the equivalent of 2-5 percent of the world's GDP.

                                 Markets incompatible with equality

                    Subtitled Globalisation with a human face, the UN report emphasises
                    the growing interdependence of the world's population resulting from the
                    globalisation of economic processes. The authors view with some
                    concern the exclusion of poor people, countries and entire regions from
                    the benefits of this process.

                    Globalisation "is being driven by market expansion—opening national
                    borders to trade, capital, information—outpacing governance of these
                    markets and their repercussions for people”. They point out that current
                    economic debate and decision making neglects "broader human
                    concerns" such as life, liberty, justice, equality and tolerance.
                    "Competitive markets may be the best guarantee of efficiency, but not
                    necessarily of equity ... And markets are neither the first nor the last word
                    in human development,” the authors comment.

                    But while criticising the excesses of the market, the authors have little to
                    offer other than a few pleas for its regulation and control. Their
                    standpoint is summed up in the report's foreword, penned by UNDP
                    administrator Mark Malloch Brown. "In listing the negative impacts of
                    markets on people, it is important not to appear to be rejecting markets
                    as the central organising principle of global economic life. Markets need
                    institutions and rules—and too frequently in the global setting they are not
                    yet adequately subjected to the control of either."

                    What is lacking in the report, however, is not only an alternative but any
                    means for implementing any global economic regulation in conditions of
                    sharpening national rivalries. Having presented what amounts to a
                    staggering indictment of the operations of the capitalist market, the UN is
                    incapable of drawing the obvious conclusion: in order to abolish poverty
                    and inequality, it is necessary to replace the anarchy of the market and
                    production for private profit with a new organising principle for global
                    economic life—the planned use of the world's immense resources to
                    meet the social needs of mankind as a whole.