Saturday, October 21, 2006

Diseases of Poverty, Diseases of Affluence

I've been meaning to blog again about the rising rates of diabetes in India. My previous discussion, with some links to other bloggers' views on the issue, can be found here and here.

I think there is no doubt that the rise of diabetes is, in part, a function of changing lifestyles among the relatively small part of the Indian population that is reaping the benefits of the country's economic growth. There is another potentially important factor, and I will blog at greater length about that soon.

In this post I want to point out the dialectical nature of globalization (or economic liberalization, if you like). Only under the logic of globalization can a country experience both diseases of affluence and diseases of poverty. In a Marxian sense, this may be another important historical contradiction, or perhaps simply another manifestation of the central contradiction of capitalism (its simultaneous need to expand and its unsustainable exploitation of labor). Globalization, after all, as some argue, is merely the latest phase of capitalism.

This idea occurred to me as I read "The Hungry Bellies of South Asians..." at pass the roti. Commenting on the 2006 Global Hunger Index, a report issued by the Deutsche Welthungerhilfe and the International Food Policy Research Institute that uses three indicators to measure the extent of hunger in 97 developing countries and 22 countries in transition, Desi Italiana quotes the following from an article at Outlook
“Another value of the index is to demonstrate which countries have not been able to use their available economic resources effectively in reducing under nutrition,” Ms. Wiesmann noted.” High income inequality is one of the factors that causes countries to have higher levels of hunger and under nutrition than would be expected based on the gross national income per capita.”
Weisman, the IFPRI researcher who developed the index, does not go on to explain why high income inequality would exacerbate the problems of malnutrition and hunger. Perhaps the reason is obvious, but I will state it anyway: income inequality translates into disparities in power (not just economic, but political and even cultural power); and those with power work to maintain the status quo.

>Look at this optimistic headline from the Hindustan Times: "India shows improvement in tackling malnutrition: Index." But the article goes on to note that:
The hunger index for India has shown that from a score of 41.23 in 1981, it dropped to 32.73 but is holding steady at 25.73 for the years of 1997 and 2003. Bangladesh on the other hand would show its hunger index dropping from a score of 44.40 in 1981 to 28.27 in 2003.
I would be willing to bet that there is a pretty close correlation between the beginning of India's economic rise (and thereby the beginning of its growing income inequality and power disparity) and the slowing of the decline of its score on the Global Hunger Index. I am not arguing that globalization does not reduce poverty. I believe it does. But I also believe that it reduces poverty at a slower rate than alternative approaches.

Consider the following quote, from an article on Expat that draws from Welthungerhilfe’s f="">press release on the report:
Ingeborg Schaeuble, Welthungerhilfe's chairwoman, said stable countries like Ghana have managed to reduce hunger, malnutrition and the child mortality rate ... "It is, however, wrong to think that economic progress alone is enough to reduce hunger," said Schaeuble, who is the wife of German Interior Minister Wolfgang Schaeuble.

"These countries cannot make headway without investing in agriculture, health and education. This is particularly applicable to countries which have endured acute crises and war," she said.
This is precisely my point. Currently, India's investments in agriculture largely benefit the economic elite, and its investments in health and education are dismally inadequate. Now, back to diabetes. Type 2 diabetes, at least to the extent that it is linked to the diet and lifestyle of affluent people, is likely to get the attention of India's political leaders.

Globalization is slow to reduce poverty because it operates under the same logic of, or arguably is the same as, capitalism. This logic privileges continued growth of the system above all else. Social or environmental problems are never dealt with sufficiently unless there is the potential for profit in their solutions. Yet in the constant push for growth, internal conflicts emerge. Marx focused on class struggles. Perhaps coexisting diseases of poverty and affluence are part of the synthesis of the dialect.

For Marx, or Hegel for that matter, dialectics consist of a thesis, antithesis, and synthesis (a term not preferred by Hegel). The coexistence of diseases of poverty and diseases of affluence could be viewed as part of the dialectic nature of globalization. But it might be that their coexistence is actually part of the synthesis of the dialectic of capitalism. In other words (bear with me as I simplify some of Marx's thoughts), the ever increasing exploitation of the labor class by the capitalist class, and the ever increasing income inequality that comes with this exploitation, is resolved through universal sickness.

The ultimate resolution, of course, will depend on whose sickness does them in first. Presumably, the "haves" will use their economic power to manage their diseases of affluence while the "have nots" continue to suffer. This is certainly, more or less, what the medical system in the U.S. looks like. Perhaps India will follow a different path.

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Friday, October 13, 2006

As long as everyone is blogging about Grameen Bank...

As most of the globally conscious citizens of the world know by now, Dr. Muhammad Yunus, the founder of Grameen Bank, the original microfinance bank, has won the Nobel Peace Prize (technically he won half the prize while the Bank itself won the other half).

In short, microfinance is the ultimate antithesis to World Bank-style lending. Rather than massive loans given to governments of developing countries to undertake colossal mega development projects like dams, microfinancing finds single individuals, or sometimes a small group of individuals, and provides extremely small loans. Through a number of clever strategies, legitimate microfinance institutions like Grameen Bank are able to achieve extraordinary repayment rates. The individuals assuming the loans not only pay back the borrowed money, but develop skills to reinvest the surplus capital earned through the initial investment of the loan.

Here's what a few bloggers have been saying about Yunus and Grameen winning the award:

From Shobak, on the inspiration Grameen offers the world:
Current politics is a death-bound roller coaster, and the passengers can't disembark. People are always banging on about the resulting short supply of optimism. The stories are there, inside and outside the borders - vested with the Innovative NGOs, Tireless Activists, Young Turks and Culture Agitators."
The Globalization Institute Blog jumped on the optimism bandwagon, noting that the Institute "has been advocating a greater emphasis on microfinance in the international development community so we are delighted by this appointment. And we're doing research on how to take microfinance forward."

Kamla Bhatt has a nice summary of some of the major media coverage in her entry, including the following quote from an editorial by Gabriel Rozenberg, Economics Reporter for The Times:
Grameen shows us the poor and the destitute not as pitiable charity cases condemned to their lot, but as thwarted entrepreneurs who just lack the means to improve their families' lives. It is a profoundly optimistic view of human nature. With this inspired choice the Nobel Committee has lit a path that could lead to the eradication of poverty in our time.
And then, just in case there is too much optimism out there, we have The Economist offering its reaction in an editorial titled "Losing its lustre":
Friday October 13th, the Norwegian part of the Nobel Institute ... named the recipient of the 2006 peace award ... [T]he award was given to Muhammad Yunus and Grameen bank in Bangladesh, which promotes lending to the poorest, especially women ... [b]ut the Nobel committee could have made a braver, more difficult, choice by declaring that there would be no recipient at all ... This year’s winner is an admirable anti-poverty campaigner, but it is a stretch to call him or the Grameen bank peacemakers.
When The Economist also questions last year's winner, Kenyan environmentalist Wangari Maathai, claiming that "she has done a lot to plant trees in Kenya, but not much to promote peace," it becomes apparent that there are those who fail to understand how poverty, which emerges out of resource scarcity, is linked to conflict. "Peace," The Economist must not realize, is much more than the absence of war.

Now, what does microfinance have to offer the average citizen of a developed country who wants to help in the fight against global poverty? Most of us place some sort of vague trust in charitable and philanthropic organizations, believing that their modest work will somehow make a difference in the face of widespread poverty. Others believe that institutions like the U.N., or even the World Bank, are responsible for, and dealing with, the problems of poverty and inequality.

But these institutions are large and faceless, and if they are not working effectively to eradicate poverty, the average citizen feels powerless to change them. Many people might perceive microfinance as a tool of similarly large (though not as large as the World Bank) and faceless institutions, and therefore assume no ability to become involved. But the beauty of microfinance is that it is micro. This means that loan amounts are so small, on average, that even a lower-middle class American can contribute a small percentage of her or his annual earnings to a lender that can, in turn, make a loan to a farmer, shopkeeper, or other entrepreneur in need of a cash jumpstart.

But still, how would one find a bank engaged in microfinance, and do these banks give individuals an opportunity to make investments that can be turned around in the form of loans? They may, but there's a major obstacle in that few want to do the research to find out. There's an impressive organization, called Kiva, that has figured out a way to remove the obstacles. Kiva uses the Internet to allow people like me to lend money directly to a person in the developing world. This cuts out the massive overhead of a large bank. It gives me, the "lender," a sense that my money is actually making a difference in someone's life. If I'm happy with my investment, when my loan is repaid I can have Kiva roll right back into the lending pool so that I can help someone else.

At first I was skeptical about whether this was really a viable solution to global poverty. From the information on its website, including glowing endorsements from such media outlets as NPR, ABC News The Wall Street Journal, and Business Week, Kiva seems to have a solid foundation and a model that is already proving effective. I'm sure the most cynical among us can find reason to criticize Kiva's model of microfinance. The Economist, after all, found it rather easy to criticize Yunus and Grameen for not doing enough peacemaking to deserve a Nobel Peace Prize.

But I have to wonder, if such a model were in place six or seven years ago, when many cotton farmers in India began going deep into debt, with usurious interest rates, to buy Bt cotton from Monsanto and other biotech companies, would it have made a difference? In this case, probably not. The reason is that Bt cotton, and all of the other industrial inputs required to grow and harvest such volumes of cotton (or any other crop), are far more expensive than typical microfinance loans would cover.

What's at issue here is the use of technology at a human scale. For example, a hydroelectric dam is not a technology at a human scale. Huge institutional investors, and a stable government infrastructure for managing costs and overseeing construction, are central components to any large-scale dam project. Can a technology, whether a dam that produces electricty or a genetically engineered seed that produces increased yields, really benefit a person if he or she has little or no control over it, and in using it becomes severely dependent on others?

One of the ideas behind microfinance is that it gives people at the bottom of the pyramid a little bit of control over their lives. Not too many mega-dams have made profoundly positive impacts on people's lives. Nor have we heard many promising stories about genetically modified seeds leading to beneficial economic transformations in people's lives (the African farmers in my last post not withstanding). But the stories that come out of the microfinance community are truly amazing.

There are already plenty of organizations in India engaged in microfinance (see here for a thorough article on implementing the concept of microfinance in India, drawing on examples from elsewhere in South Asia). With time, hopefully, the legitimate and credible organizations that are doing good work will rise to the top and those that only aim to take further advantage of people will fall by the wayside. For now, I'm headed back over to Kiva to see if I can find a Ugandan barber, or a Kenyan street vendor, or an Indian tailor who need a small loan to invest in some improvements that will help grow their businesses.

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Thursday, October 05, 2006

Monsanto: Africa's Johnny Appleseed?

For readers who may not know who Johnny Appleseed is, let me explain. Johnny Appleseed is an American legend. Say Johnny Appleseed, and almost any American who attended school in the U.S. or watched cartoons will know who you are talking about. The legend is based on an actual person, John Champan, who traveled around much of the American Midwest in the early 1800s spreading his apple seeds. Basically, he taught people how to grow apple trees. He became a legend, according to his wikipedia entry, "largely because of his kind and generous ways."

Well, according to a post at The Globalisation Institute's blog, it sounds like Monsanto is becoming the Johnny Appleseed of Africa. In all fariness, "How global business is inceasing crop yields in Africa," the title of the entry, merely reports on the results of a study by the Enterprise Africa! project, part of George Mason University's Mercatus Center. According to the report, "the 'combi-pack' - a package containing hybrid maize seed, fertilizer and herbicide for subsistence farmers - is helping to tackle hunger in Africa."

From the report's summary, the benefits of the combi-pack sound unassailable:
Farmers in KwaZulu-Natal and Mpumalanga provinces who use Combi-Packs along with no-till, or minimum-till, agriculture have increased maize yields. Now, the farmers raise enough maize that they can feed their families and then sell the excess, earning money to fix homes, buy clothes, and pay school fees.

Furthermore, Combi-Packs combined with no and minimum till agriculture have had beneficial effects for the environment, reducing erosion, and conserving water. Swelekile Alina Nkosi, a farmer in Mlondozi in rural Mpumalanga, enjoys these benefits. “I’m so happy with this way of farming. What will happen when I’m old I don’t know, but one thing is good, and that is now there’s no water cutting through, so my soil is conserved.”
If you doubted the benevolence of the combi-pack, here's the clincher: "Farmers call the combi-pack 'Xoshindlala,' a Zulu word that means "chase away hunger."

But wait, what is the most incredible thing about the combi-pack?
The striking thing about the combi-pack is that it is not produced or distributed by aid workers - it is sold by the Monsanto Company to the farmers for a profit. Many critics of globalisation argue that multinationals will never help the poor, because it is not in their financial interests to do so - but Monsanto is proving them wrong. The sale of combi-packs is a mutually beneficial transaction: both parties are made better off by the sale than they would have been otherwise. It is also an excellent example of markets helping the poor.
I don't want to be too cynical, so I'm not going to suggest that anything about this report is untrue. But with just a little digging, I discovered that among Enterprise Africa!'s partners are several free-market think-tanks like the Free Market Foundation and the Institute of Economic Affairs. With a little more digging, I wonder if one might discover that Enterprise Africa! gets a little of its funding from Monsanto or some of Monsanto's "philanthropic" partners.

And even if it is all true, the cynic in me is saying that there must be some sort of catch. At the very least, as these farmers earn income from the surplus that the combi-pack helps them grow, I suspect Monsanto will be right there waiting to sell them the next level of seed/fertilizer/herbicide pack, with the promise that they can grow, and earn, even more.

If the combi-pack is everything that this report makes it out to be, and if my suspicions are wrong, then let's hope Monsanto is developing a combi-pack for India's farmers. Oh, and as long as Monsanto is being so magnanimous, perhaps they can compensate all of the people around the world who have suffered the health effects of exposure to some of the toxic chemicals Monsanto has blessed us with.

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