Bush's Challenge: Globalization Good for The Poor

George Bush has thrown down the gauntlet, issuing a public challenge to the anti-corporate globalization movement. When hundreds of thousands last month demonstrated against the G-8 meeting of rich country leaders in Genoa, Italy, George Bush decried the activists, saying it was the advocates of corporate globalization who genuinely are seeking to advance the interests of the world's poor.

It's not enough to mock Bush's pretension of being a defender of the poor by pointing out that, through his giant tax cut, the president has overseen one of the history's great transfers of wealth to the rich in U.S. history. Critics must respond to his claims.

Unfortunately, that turns out to be a remarkably easy challenge to meet. The last 20 years of corporate globalization, even measured by the preferred indicators of the International Monetary Fund (IMF) and World Bank, have been a disaster for the world's poor.

Over the last two decades, Latin America has experienced stagnant growth, and African countries have seen incomes plummet. The only developing countries that have done well in the last two decades are those Asian countries that ignored the standard prescriptions of the IMF and World Bank.

The Washington, D.C.-based Center for Economic and Policy Research (CEPR) has published compelling data comparing growth rates from 1980 to 2000 (during the period of ascending IMF/World Bank power, when countries throughout the developing world adhered to the IMF/Bank structural adjustment policy package of slashing government spending, privatizating government-owned enterprises, liberalizing trade, orienting economies to exports and opening up countries to exploitative foreign investment) with the previous 20 year period (when many poor countries focused more on developing their own productive capacity and meeting local needs).

The results: "89 countries -- 77 percent, or more than three-fourths -- saw their per capita rate of growth fall by at least five percentage points from the period (1960-1980) to the period (1980-2000). Only 14 countries -- 13 percent -- saw their per capita rate of growth rise by that much from (1960-1980) to (1980-2000)."

CEPR found that the growth slowdown has been so severe that "18 countries -- including several in Africa -- would have more than twice as much income per person as they have today, if they had maintained the rate of growth in the last two decades that they had in the previous two decades. The average Mexican would have nearly twice as much income today, and the average Brazilian much more than twice as much, if not for the slowdown of economic growth over the last two decades."

A follow-up CEPR study used a similar methodology to look at social indicators. CEPR found that progress in reducing infant mortality, reducing child mortality, increasing literacy and increasing access to education has all slowed during the period of corporate globalization, especially in developing countries.

The CEPR global comparisons across time show the bottomline, combined effect of the specific policy components of corporate-friendly policies imposed by the IMF and World Bank and enforced by free trade agreements. These include the following:

* Trade Liberalization -- The elimination of tariff protections for agriculture and industries in developing countries often leads to mass layoffs and displacement of the rural poor. In Mexico, for example, opening to U.S. agriculture imports has forced millions of poor farmers, who find themselves unable to compete with Cargill and Archer Daniels Midland, off the land.

* Privatization -- IMF and World Bank structural adjustment policies typically call for the sell off of government-owned enterprises to private owners, often foreign investors. Privatization is regularly associated with layoffs and pay cuts for workers in the privatized enterprises.