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What you won’t be told about global poverty

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Special to the Daily Californian

SEPTEMBER 08, 2023

In 2020, the average income of the global top 10% was 38 times higher than the bottom 50%, nearly identical as 1910. Half the world lives on below $6.85 per person per day. With over 60 years since decolonization in most countries, over $4 trillion spent on foreign aid since 1960 and the rise of the internet, I wanted to know how global poverty persists. What I learned in “GPP 115: Global Poverty: Challenges and Hopes” astonished me. 

European colonizers destroyed all Indigenous economic activity and forced colonies to produce raw goods, sell them for artificially low prices and buy finished goods at inflated prices. Colonizers reaped immense profits from colonies’ labor and resources. This hasn’t changed, and it’s predominantly because of neocolonialism and its master, the United States. 

After World War II, there was an explosion of independence movements worldwide. After former superpowers Britain and France decolonized, the United States assumed global superpower status. 

Independent countries broke the colonial economic arrangement by implementing the developmentalist measures the U.S. once used: tariffs, subsidies for local industry, labor and environmental protections, public education and healthcare. 

It worked. From the 1950s to 1970s, the gap between the wealthiest and poorest nations narrowed for the first time. For the West, this was catastrophic. Western companies in the Global South were taken over by governments, outcompeted by local industry, expelled and taxed. The CIA worked relentlessly to overthrow leaders who refused to allow Western companies to pillage their countries, replacing them with dictators who would. When coups failed, the CIA allegedly turned to assassinations. 

Furthermore, after World War II, countries sought loans to develop their economies. The World Bank and Western banks capitalized, using inflated growth projections to persuade countries into taking out enormous loans they could never repay.

In the 1980s, countries began to default. The banks panicked, terrified they wouldn’t get their money. The International Monetary Fund, or IMF, devised a scheme, offering loans to help countries repay their World Bank debts. In exchange, these countries adopted Structural Adjustment Programs, or SAPs. 

SAPs required countries to eliminate tariffs, capital controls (which had restricted money transfers to the West), food and local industry subsidies and many regulations. They also forced countries to cut health and education and sell government services like railroads, airports and even water to repay Western banks.

The result was a Global South Great Depression. Global poverty increased from 40% in 1980 to 62% in 1993. Cuts to food subsidies caused skyrocketing starvation. The flood of Western goods destroyed local industry, forcing millions into unemployment as farms and factories closed. Large land purchases by Westerners, followed by the eviction of its inhabitants, led to mass migrations to cities.

Decimated local competition, nonexistent environmental and labor regulations and a desperate labor pool allowed Western corporations to exploit developing countries’ people and resources. Developing countries became dependent on exporting to the West, importing Western products and foreign investment. Their governments are controlled by coups, assassinations or military invasions — Washington’s last resort. 

This hasn’t changed. Argentina is in fiscal crisis as it struggles to repay debts to Western banks and the IMF. Pakistan, to avoid fiscal calamity, received limited IMF debt relief and reduced trade barriers — a mini SAP. In 2019, the U.S. dominated Organization of American States removed socialist Bolivian President Evo Morales on false voter fraud claims. Meanwhile, Western companies continue to exploit developing countries’ people and resources unimpeded. 

China is now also engaging in neocolonialism through predatory lending, charming and coercing more countries into its sphere of influence and flexing its military might. But the West is still on top — for now. The often-cited argument that foreign aid will cure poverty is a white savior’s fairy tale. In 2021, developing countries paid double to the West in debt repayments than they received in foreign aid. Annual debt repayments have no end in sight. 

Before taking GPP 115, I didn’t know any of this. UC Berkeley students benefit from this system: the cheap products made in U.S. run sweatshops, the companies that employ us with money from exploiting developing countries, the capital available to American businesses from banks whose funds come from never-ending debt repayments and our 401(k)s with investments in exploitative companies. They are buying our ignorance and silence.

Many students come to Berkeley because they want to change the world. However, until neocolonialism is eliminated, we will always fall short. UC Berkeley has been a catalyst for so many movements that have transformed the globe. Students can boycott corporations whose products derive from exploitation, teach other students about the reality of this economic system and elect candidates who will help developing countries take their power back. 

Today’s UC Berkeley students will be tomorrow’s leaders — heading nonprofits, newsrooms, academia, Silicon Valley startups, Fortune 500 companies and governments. What starts here on campus will have a lasting impact on the world, but it begins with knowing what we are up against. GPP 115 opened my eyes and showed me my role in the fight to end global poverty. It changed my life. It will change yours, too.

Eric Heilmann is a UC Berkeley alumnus. Contact the opinion desk at [email protected] or follow us on Twitter.

SEPTEMBER 08, 2023