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Asean Affairs   24 October 2012

The readers of AseanAffairs are familiar with the 5 articles by an Anonymous American. They graphically detail some of the major problems with the United States.  Much more could be added – the slaughter of Native Americans, the enslavement of Africans, the aggressive use of military power to take land from Mexico, the secret campaign of the CIA to murder leaders of other countries etc.
But the human task cannot stop at chronicling the evils and mistakes that a country commits. The human task requires us to ask what causes a country to do such things. Is there a solution? What mistakes must all countries avoid in order to have a human and peaceful world?
Such a task is immense. Some may think it is impossible. Whether it is possible or not, we can only find out if we try. Not to try, guarantees failure. To try, leaves open the door to success – in whole or in part.
In this paper, I want to ask what are the fundamental principles for a successful global economy – or at least a minimally successful global economy? As many wars – if not all – are caused by competition between economies, such a discussion could be a fruitful beginning. For other issues, my book “The Most Important Crisis Facing the 21st. Century” addresses some of those.
 Discussion of the fundamental principles for a minimally successful global economy is notable by its glaring absence. Economists and others spend almost their entire time talking about such important matters as monetary and fiscal policy but never address the following even more important  fundamental issues.
1.    What would constitute a minimally successful global economy?
2.    Do we currently have a minimally successful global economy?
3.    What are the necessary and essential principles to be followed in order to have a minimally successful global economy?
I recognize that it is one thing to talk about principles and another to implement them in practice. But unless we have a road map of where we want to go in the world, our journey will never be completed.
1.    What would constitute a minimally successful global economy?
Everybody having an IPhone 5? To the child who is about to die in 5 seconds from malnutrition – and a child does die from malnutrition every 5 seconds – the answer is clear.
A minimally  successful global economy is when every man, woman and child has adequate food,  housing, clothing, education and health care. What “adequate” means may not always be easy to define. But we know what it is not. It does not mean “extreme poverty” or “poverty”.
2.    Do we currently have a minimally successful global economy?
The short, simple, sad and tragic answer is no.
Approximately 1 billion people live in “extreme poverty”. When they wake up in the morning, they literally do not know where their food is going to come from that day. To put it in an American perspective, the World Bank in 2005 defined extreme poverty as living in the U.S. on $1.25 a day. You can buy a burger at McDonald’s for 99 cents (no drink included). With tax at 8 cents, that leaves you 18 cents to pay for your other food, housing, clothing, education and health care that day.
As stated above, a child dies every 5 seconds from malnutrition and starvation, and the diseases caused by these conditions. When a child is brought to a clinic in, for example, sub-Saharan Africa, the medical personnel measure the child’s upper arm. If it is less than 11 cm, the chances are overwhelming that the child will die.
At least another 2 billion people live on less than $2 a day.
But the horror does not end there. Among vast swaths of humanity, the current unsuccessful global economy leaves people with serious deficiencies in food, housing, clothing, education and health care. This results in such things as stunted growth – both physical and intellectual – shortened life expectancy, greater susceptibility to disease, exploitation, greater chance of being victims of crime, low self esteem and much, much more.
The figures are overwhelming. On a global scale, 0.5% of the world's population controls over 35% of the world's wealth. 2% of the world's population owns 50% of the world's wealth. India has 55 billionaires worth $250 billion. That is about one sixth of the annual economic output of the entire country. (The Haves and The Have-Nots, p. 118, Branko Milanovic)  Putting it another way,  the top 10% of income recipients receive 56% of the world’s income, while the poorest 10% receive a mere 0.7% of global income.  The former have 80 times more income than the latter. (Milanovic p.152)  To put this in perspective, it would take the poor two hundred years to make what the rich make in a year.
The richest 1% in the world number about 60 million. 29 million of these are Americans, 4 million Germans, 3 million each of British, French and Italian,  2 million Canadians, Koreans, Japanese and Brazilians, 1 million Swiss, Spaniards, Australian, Dutch, Taiwanese, Chileans and Singaporeans. There are no statistically significant numbers from Africa, China, India or East Europe. (Milanovic p. 169).
In Niger and Mali, 9 out of 10 people live on less than $2 per day. This has to cover food, clothing and shelter. There is nothing for medical care and education. In the dark alleys that lie behind the glitz of Hong Kong, tens of thousands live in "cage homes" or "coffin homes", which average about 15 square feet in size. Meanwhile, high end properties go for $10,550 per square foot.
In the U.S., 1% of the population owns approximately 50% of the wealth. Their fellow Americans have to share the remaining half. But the figures are even more disturbing regarding the super-rich - those who make at least $2 million a year. Though they comprise only 0.1% of the population, they control 10% of the economy and their wealth is increasing dramatically. The 400 richest people in the U.S. own about 1/8 of its wealth.  Despite all this, 90% of the $1.3 trillion in Bush's 2001 income tax cuts went to the top 5% of the country.
Why this disparity?
Jacob Hacker, a Yale political science professor, believes it is because this group pressured Congress to deregulate the financial services industry, allowing it to engage in extreme risk-taking and bigger profits. In effect, as three Citigroup analysts wrote in 2005, a plutonomy - an economy controlled by the rich - emerged. Despite the recession and despite being significantly responsible for causing that recession, the big guns on Wall Street took home more than ever in 2010. In 1988, the average income of a taxpayer was $33,400 according to the IRS.  20 years later in 2008, the average income fell to $33,000 - and the price of everything has risen.  The income of the richest Americans has risen 33% during the same period. In 2006, Merrill Lynch paid $500 million in bonuses to just 100 employees.
Even though the economic picture in the U.S. is dire, much of the rest of the world would be only too glad to have it. On a global basis, the U.S. owns about 25% of the world's wealth -  $50 trillion of an estimated $200 trillion. Yet it has only about 4.5% of the world population. Of the 1000 people on planet earth who own more than $5 billion, 3 out of 4 live in the U.S. It is estimated that if everybody lived on the same standard of living as Americans, it would require 9 planet earths to do that.
World Bank economist Branko Milanovic in his book, The Haves and the Have-Nots,  states that approximately half of the richest 1% in the world – about 29 million – live in the U.S.  These numbers could be replicated endlessly.
Leaving aside any considerations of morality, is this a desirable situation? Clearly not. As the capitalistic economic engine relies on growth, growth is ultimately stymied by the fact that the 3 billion plus who live on less than $2 a day cannot purchase a T.V., a toaster - or any similar product. When one tosses morality into the equation, the conclusion is a no-brainer. Any economic system that is based on greed is both practically and ethically wrong.
Ethically, all human beings are entitled to an equal share of the planet's resources. No God or law granted a lion's share to the few. Everybody is entitled as a  matter of right to that amount of the resources of the planet sufficient for proper food, housing,  clothing, education and health care. Currently, that is clearly not the case on planet earth.   Every day, for instance, children die of malnutrition - their distended bellies a grotesque sign not of too much food, but of too little and of too poor a quality.
            Greed also pits one human against another. Inevitably, this creates strife, conflict and war. We are all in one lifeboat together. We must all work together. One person cannot throw another overboard in order to secure a better position for him or herself. Everybody has a right to be in that boat. The ultimate, inevitable consequence of adopting a policy of every person for himself, is that the boat will capsize and all will drown. The very existence of enough nuclear weapons to destroy planet earth 100 times over is a grim reminder that this possibility is no more than 20 minutes away - the time for one nuclear missile to reach an adversary's homeland.
            The fact is that we are meant to work together, not fight against each other. Competition that is fueled by greed is short-sighted and ultimately destructive. Yes, it might make a better widget here and a better gadget there in the short run, but ultimately, the only true benefit is when the insights and ingenuities of all are able to be contributed to the human endeavor. How many inventions, how many cures, how many great pieces of music or art, are forever lost because those people were not allowed to contribute to the system because of its inequalities? At the end of the day, greed makes us poorer, not richer.
3.    What are the necessary and essential principles to be followed in order to have a minimally successful global economy?
            In simple terms, an economy deals with the transformation of raw materials into objects to serve human purposes.
First, those objects must first provide for adequate food, housing, clothing, education and health care for all people irrespective of income. Anything above these basics is classified as a luxury. As long as some people do not have basics, nobody should have luxuries.
The latter part of this principle will send shivers down some spines. Yet, hard as it may be to stomach this, that has to be the unflinching ethical conclusion. If we were starving, what would we think of those who used their money to buy, for example, a Ferrari, instead of using that money to prevent us from starving?
            Second, this transformation of the raw materials of the planet into usable items for humanity must not destroy the very planet from which they come. The current use of fossil fuels that is producing global warming is but one example.
            Obviously, it makes no sense to destroy the planet which enables us to survive. Exactly what standard of living the planet is able to support is not an easy answer. For example, if solar power can be harnessed to meet our energy needs,  then that changes a  calculation based on our current reliance on non-renewable fossil fuels.
            Can our planet provide adequate food, housing, clothing, education and health care for all people at this time? While no such assessment has been made for all 5 items, experts claim that there is sufficient food on the planet to feed everybody adequately. Gandhi said that nature will provide for our needs, but not our greeds.
            Third, all according to their ability, should contribute to providing these basics.
            For those who quiver at the thought of some super-welfare state where billions sit around waiting for handouts, this principle clearly requires that all who are able to contribute, should work to provide adequate food, housing, clothing, education and health care for all. Clearly, some may be able to make only a small contribution, some none at all. Nevertheless, they are entitled to adequate food, housing, clothing, education and health care.
            Is it possible to get all who are able to contribute, to do their fair share? Or are some irredeemably lazy? Or are some that way because they have been put in such depressing situations, that they give up?
            We may never know the answer to this question, but it is instructive to look at, for example, Native Hawaiian society, where there was no welfare department, and where everybody who could,  was required to pitch in. It is very rare to find a lazy, young baby. I suspect that when people are faced with the prospect of getting adequate food, housing, clothing, education and health care, they will be buoyed by that hope and pitch in happily and willingly. Most people, when they believe that they will get a fair shake, rise to the occasion and do their part – and more.
            Fourth, there should be equal pay for equal work globally. Article 23 (2) of the Universal Declaration of Human Rights states "Everyone, without any discrimination, has the right to equal pay for equal work."  A person who makes a pair of shoes in Jakarta, should be paid the same as somebody in Los Angeles. This principle alone will eliminate the constant churning that capitalism engages in. Capitalism is constantly seeking areas of low cost labor. For example, some companies are already moving out of China to other countries because the labor is cheaper in the latter. In the last few years, about 1000 shoe manufacturers have moved out of China to Vietnam because the wages are lower there.
Many Americans who hear this principle for the first time may well flinch. Does this mean that their standard of living will go down?
The answer is that it is going down already and the current  system guarantees that it will go down, not just further, but to rock bottom. The question is how far will it fall? This principle of equal pay for equal work ensures that it will fall no further than the standard of everybody else. Without this principle, it would fall even lower.
 When implemented, there will be no more third world countries. Without it , the U.S. will become a third world country. No more SUVs, wide-screen T.Vs, I-Phones, I-Pods, and whatever other I-Things are out there. (It is not uninteresting that Apple has an "I" in front of so many of its products.  It emphasizes the focus on the individual.)
As most wars are about economics, the elimination of the global disparity in wages will diminish radically, if not totally, the existence of that scourge of humanity, war. The trillions spent on armaments can be spent on things that improve the living condition of human beings.
The current rise of China has led to the U.S. stationing 2,500 marines in Darwin, Northern Australia, as well as the positioning of an aircraft carrier group in that area. In a recent policy announcement, the Obama administration has stated that it will now focus more on the Pacific than the Atlantic. China sees that as a threat.
Global equality in wages will mean that jobs are no longer outsourced, that Americans and others will not be resentful that their jobs are being taken by Chinese workers. In the U.S., the Border Patrol can be eliminated – or at least drastically reduced – because nobody will be crossing the border to seek higher wages in the U.S.
Industry should be happy also. Instead of a market of about 1 billion for its widgets and gadgets, it will now have a market of 7 billion. Of course, how this will be reconciled with Principle # 2  above, is a situation we will have to address. Can everybody have their own car? If everybody can travel by air, what will this do to the atmosphere? This may be ameliorated by the airlines moving to the use of biofuels.
At the end of the day, it seems to be simple commonsense that there be global wage equality. There is no ethical or logical reason to have it otherwise. How we get there, of course, is another matter, but where there is a will, there is a way. Once again, when human beings believe they are getting a fair shake, they are happier, and happy people do not engage in wars of conquest.
            Fifth, there should be an approximately equal level of wealth for all. Inequalities breed animosities and resentment. U.S. basketball star, Kobe Bryant, made more than $216,000 a game in 2006. It takes the average U.S. grade school teacher approximately 4 years to earn what Kobe Bryant earns in one night, and who serves the more important function in a society? His current income this year is about $34.5 million.
            What should be the maximum income for anybody in a given year? While not an easy problem, economists can work this out on the basis of principles of equity and fairness.
Would such a cap diminish creativity and hard work? Initially in some,  maybe. But when people see that everybody has a decent standard of living and that people are leading happier and more contented lives,  that should be reward enough. The so-called Dark Ages labeled greed as one of the 7 deadly sins. In our “enlightened” era, luminaries such as Alan Greenspan baptized it and called it good.
Greed is not good. It diminishes the human spirit. How can one be happy when one knows that a child dies every 5 seconds from malnutrition. If the so-called Dark Ages realized this, how dark will future generations call our age when they learn that we glorified greed?
Sixth, the individual creativity and enterprise of all should be promoted consistent with the requirements of a just society. No one group, government or private, has or should have a monopoly on creativity and enterprise.
            In a successful global economy, initiative and creativity are welcomed with open arms. With 7 billion people, the world stands a better chance of getting more innovative inventions, more breakthroughs in medicine, more beautiful poems, novels, paintings, music, movies,  etc. No group, government or corporation, should limit the potential that is in each individual. To do so, is to impoverish us all. Maybe somebody in the Sahel in Africa has the ability to cure cancer or compose a great symphony or exhilarate us with his or her jokes. Every person who dies without being able to give full expression to their uniqueness and insights is  a great loss  to all of us.
            Seventh, competition should be encouraged, but can never undermine cooperation. Competition that is not intended to humiliate another or serve the ends of selfishness, can help to stretch our latent abilities and contribute to the richness of humanity. When Usain Bolt breaks the world record in the 100 metres, that lifts us all up, and if it inspires somebody else to do even better, then we are all winners. So often in the last few hundred years, competition has been used for selfish ends. Selfishness does not make for a happier world. We only have to look at Hitler for that.
            As the world becomes increasingly complex in science, technology and medicine, no one person can hope to master the incredible amount of knowledge that these fields generate. We all need to cooperate. The truly great mind is also a humble mind, because it realizes how much we do not know. If knowledge is a ratio between what we know and what we do not know, then we know less today than 100 years ago, because we now know how much more we do not know.
            These principles are a starting point. As we proceed along the road, further insights may be needed. But if we do not start, the road will still lie before us. In the United Nations and other forums, we need to begin to implement these principles with all due speed.
            People who do not have to die, are dying because we have a global economy that does not run on these principles. Nobody needs to die needlessly. As a down-payment  on our commitment to a more just and human world, we can stop NOW the deaths of all those children who currently are dying of starvation.   We currently have the resources and logistical capability to prevent this. Our humanity is deeply flawed if we do not do everything in our power to prevent those deaths NOW – not in some distant, abstract future. It may not be our finest hour to save those children – as that is what we are supposed to do – but at least we have begun to rehabilitate our humanity.
            So, let us just do it – together.

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AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

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