Globalization, Debt, and Transnational Corporations: the Unfinished Health and Human Rights Agenda - PowerPoint PPT Presentation

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Globalization, Debt, and Transnational Corporations: the Unfinished Health and Human Rights Agenda

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  1. Globalization, Debt, and Transnational Corporations: the Unfinished Health and Human Rights Agenda Timothy H. Holtz, MD, MPH Montefiore Medical Center July 14, 2005

  2. Outline • Economic, social, and cultural rights • Globalization and its discontents • Overview of myths of growth • Background on debt, structural adjustment, trade, and aid • Impact of transnational corporations (non-state actors) on health

  3. What are economic rights? • Right to a standard of living • Right to work, just and favorable conditions of work, protection against unemployment, fair wages • Right to social security • Right to own property • Freedom of peaceful assembly

  4. What are social rights? • Right to marry and form a family • Freedom of religion/expression • Right to rest and leisure • Right to education

  5. What are cultural rights? • Everyone has the right to freely participate in the cultural life of the community, to enjoy the arts, and to share in scientific advancement and its benefits. (Article 27, UDHR) • Everyone is entitled to a social and international order in which the rights and freedoms set forth in the Declaration can be fully realized. (Article 28, UDHR)

  6. Do we really live in a “global village”?*Marshall McLuhan

  7. How does one define the concept of “globalization” that we hear about every day? What does it mean that we live in a “global economy.” Does anyone know what this really means?

  8. Free markets make free men. Milton Friedman University of Chicago Nobel Laureate, Neoliberal Economics

  9. Globalization “Globalization is the growing interdependence of the world’s people through shrinking space, shrinking time, and disappearing borders.” Markets, the HDR states, have been allowed to dominate the process, and the benefits and opportunities have not been shared equally. The result is that “global inequalities in income and living standards have reached grotesque proportions.” 1999 Human Development Report, UN Development Program

  10. Rats and roaches live by competition under the laws of supply and demand; it is the privilege of human beings to live under the laws of justice and mercy. Wendell Berry

  11. Development • Is growth necessary for a just and fair globalization? • Is economic growth necessary for social development? • Is growth in GDP our only measure of success in reducing poverty?

  12. GNP and life expectancy 1979 Data

  13. GNP and life expectancy GNP per capita and Life Expectancy at Birth, 1994 74 52 From Development as Freedom, Amartya Sen 1999. Figures from Country Data World Bank, World Bank Development Report, 1996

  14. Globalization is…. “When the profit motives of market players get out of hand, they challenge people’s ethics – and sacrifice respect for justice and human rights.” “More progress has been made in norms, standards and policies for open global markets than for people and their rights.” “Patent laws pay little attention to the knowledge of indigenous people. The result – a silent theft of centuries of knowledge from developing to developed countries.” 1999 Human Development Report, UN Development Program

  15. Globalization also is... • “The collapse of space, time, and borders may be creating a global village, but not everyone can be a citizen. The global, professional elite now faces low borders, but billions of others find borders as high as ever.” • “The new rules of globalization – and the players writing them – focus on integrating global markets, neglecting the needs of people that markets cannot meet. The process is concentrating power and marginalizing the poor.” 1999 Human Development Report, UN Development Program

  16. Growth • Myth: neoliberal capitalism is the only way to achieve economic growth (Does everyone “know this to be true?”) • Myth: Growth will automatically translate into greater prosperity for all • Myth: Growth is an sufficient objective • Myth: Economic laws and markets function independently of politics

  17. Golden Age of Growth • 1945-1970 was golden age of capitalism, industrialized countries grew at 5% annually • Managed growth by governments (Keynes) • High trade flows, low currency flows (restrict mobility of capital) • Oil crisis of 1973 heralded end of age • Stagflation (high rates of inflation and unemployment) • Election of anti-state governments in UK and US

  18. Globalization = neoliberal capitalism • High debt burden • Promotion of “free markets” • Relaxation of trade barriers • Reduction of subsidies for the poor • Privatization of public assets • Weakened role of government • Growing dominance of western-based transnational capital • Continued high military expenditures

  19. The “global economy” • Crushing debt burdens on poor countries • “Free trade” theory elevated to dogma • Diminished aid from rich countries to poor countries • Accelerated capital flows and increased influence of privatization of public assets • Increasingly important role of transnational corporations

  20. I. Debt crisis (1982 to present) • Commercial banks loaned vast amounts of capital to developing nations at high interested rates, not predicting…. • Changes in international economy • Expanded bank lending, fueled by oil prices • Increased government borrowing …many countries stretched to thin - July 1982 Mexico defaults, heralding beginning of crisis

  21. The crippling burden of debt • Countries of Sub-Saharan Africa spent an average of $12 billion annually on debt repayments from 1990-1995, while their total debt increased by $33 billion. • For 27 highly- indebted nations, debt is greater than their GNP. • Tanzania’s debt service payments are nine times what it spends on primary health care and four times what it spends on primary education. • Mozambique has a debt burden nine times the value of its exports. 1998/9 Human Development Report, UN Development Program

  22. Neoliberal diagnosis • State playing too large a role • Markets are being inhibited, state intervention is preventing markets from being efficient • Government should stick only to property rights and enforcing contracts

  23. Neoliberal prescription • Reduce role of state relative to the market • Allow floating currency rates, and wages to be determined by market forces and interest rates • Lift all barriers to trade and investment (opposite of Adam Smith’s “invisible hand” – free movement of labor but not capital)

  24. International Financial Institutions • “Bretton Woods Institutions,” NH, July 1944 • World Bank (WB) • Support embedded liberalism • “Free trade”, restrictions on capital mobility, and domestic social contract • Provided loans to countries for development projects • International Monetary Fund (IMF) • Prevent currency fluctuations/devaluations • Contain 1930-style economic crisis • GATT – General Agreement on Tariffs and Trade

  25. World Bank program of “Structural Adjustment” of the world’s poorest countries • Re-orienting economies toward export production, away from self sufficiency • Removing restrictions on foreign investment • Reduction of wages • Cutting tariffs • Imposing consumption taxes (value added tax/VAT) • Eliminating price subsidies on essentials like food and housing • Devaluing local currency • Privatizing state enterprises • Deregulating gov’t oversight of economic activity

  26. Structural adjustment report card • 75 countries had received loans by 1991 • 30 in SSA, 18 in Latin America • Overal debt increased, both official debt and commercial debt • Did not reduce debt, reduce poverty, or increase growth • New category HIPC – Bolivia, Burkina, Ivory Coast, Guyana, Moz, Uganda

  27. Growth for whom? • Only 33 countries achieved sustained three percent annual growth in gross national product (GNP) per capita during 1980-1996. • For 59 countries, mainly in sub-Saharan Africa and the countries of the former Eastern Bloc, GNP per capita declined from 1980 to 1996. 1999 Human Development Report, UN Development Program

  28. Revised poverty agenda - 1990 • Labor intensive growth, invest in human capital, promote social safety nets • Enhanced Structural Adjustment Facility (ESAF) • Enhanced Heavily Indebted Poor Countries Initiative (HIPC) led by the G8 • Reduction of tariffs, elimination of state support for industry, privatization of infrastructure to foreigners, removal of capital controls, opening up of service sector to foreign investors • Goal was to bring debt burden to “sustainable level,” although HIPC failed to achieve goals • Progress has still not been achieved, as many sub Saharan African countries’s growth has been static for the past 15 years

  29. Investing in Health, World Bank 1993 • Promoted cost-efficiency approach to health care in developing countries in a world awash with capital. • Medical care defined as a commodity, and health defined as the absence of disease. • The concept of disability adjusted life years (DALYs) promoted. • Marked the entry of the World Bank in funding large health care projects in poor countries, such as vertical vaccine campaigns, TB control, etc.

  30. What are the health effects of the IFIs? • ESAFs have failed to significantly raise GDP of participating countries • ESAFs have failed to reduce external debt burden of most highly indebted countries • Social safety nets are nonexistent: for education, health, housing, social security • “Cost-effectiveness” calculus further hurts the most vulnerable populations, violates their social rights, and results in continued stagnating health outcomes

  31. II. World Trade: separate worlds • 48 poorest countries account for 0.4% of global exports • Share of world’s exports by least developed nations fell from 15% in 1968 to 13% in 1998 • Transnational trade (globalized economy) reaches AT MOST only 1/3 of the world’s population

  32. “Free trade” • More trade between nations in late 1800s than there is now • 46% of world trade is between EU, US, and Japan (OECD) • Actually 30-40% of “trade” consists of transactions within same TNC, trading with their own affiliates

  33. More on trade • Most new manufacturing growth comes from NICs (SK, HK, RoC, Sing.) • Single commodity exports account for half of export earnings for many countries • The record shows, however, that the US, Rep of S Korea, Taiwan, & Japan ALL developed under restricted and protective trade laws

  34. World Trade Organization • WTO created in 1990 to supersede GATT • Set up to manage world trade system • Extensive set of regulations and rules are required (free is a misnomer) • Many argue these rules are set up to benefit the powerful, the TNCs, big finance capital from West • All meetings held closed door

  35. III. Diminishing aid from the West • US is steadily decreasing its annual contribution in foreign development aid, which is now at 16 cents for every $100 • Many other countries, especially Scandinavia, devote over 80 cents/$100 of their GNP for foreign aid • Blair proposal is to increase aid to 70 cents for every $100 by 2015 • Given historical US rates, we will never achieve that level

  36. IV. Global finance capital • Dramatic increase in movement of capital • Principle of free trade to capital? • Daily trading in foreign exchange is over $2 trillion per day • Control of capital is increasingly centralized

  37. Transnational Capital Flows • Currency flows reach trillions of dollars every day, mainly between developed countries. • Foreign direct investment (FDI) reached $XXX billion in XXXX • FDI is dominated by TNCs • 58% of it went to developed nations, and just 5% to the transition economies of Central and Eastern Europe

  38. Foreign Direct Investment (FDI) • FDI in developing countries increased from $18.3 billion in 1983 to $149 billion in 1997 • FDI to developing countries is highly concentrated: 80% went to only 10 countries, with China as the largest recipient • The 100 smallest countries received less than 1% of worldwide FDI • Only 5% of FDI to developing countries goes to Africa

  39. New poverty agenda – 2000s • Caps on health and education expenditures, esp staffing • User fees • Liberalization of imports • Export driven growth • Structural adjustment in disguise?

  40. G8 (G7?) Communique – July 2005 • Bilateral Debt cancellation • Limited number of countries (18) • Conditionalities • Strict surveillance and transparency requirements • “Good governance” (aka “anti-corruption”) • “Free trade” • Further liberalize economy • Lower trade barriers • Increasing development aid? • Bush left without any further commitment of funds

  41. Alternative Global Equity Agenda - 2005 • Complete multilateral debt cancellation • Unconditional cancellation of all sovereign developing country debt • Cap on debt servicing level • Fair trade justice • End of conditionalities on trade and tariffs • Ending of agricultural subsidies • Adequate aid (> 0.7%) to meet need

  42. Source: Adbusters

  43. “I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. Corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed.” President Abraham Lincoln, November 21, 1864, letter to Colonel William F. Elkins.

  44. V. Transnational CorporationsTNCs • “Non-state actors” • Characteristics • Economic power • International character • Impact of activities • Regulatory difficulty in LDCs