Tuesday, 29 May 2012

Why I rant about economic issues

Today's blog post will be aggressive and detailed, but I think it's very important in terms of understanding the world view from which I write. So for this once, I will stash away my snide comments and sarcasm, and address the issue of economic disparity with the seriousness it deserves.

I've always believed that the most important function of a state is to look after the best interests of its people. To ensure that human rights are always respected, that service delivery is fast and efficient and that society is generally safe and pleasant. Economic growth, foreign direct investments and the like are only the means to this end. It really saddens me when state becomes a business, prioritising wealth over the well-being of its people. Natural and obvious consequences of this the growing divide between the haves and the have-nots. The benefit of our great natural resources are benefiting South Africans in a very superficial way: some of people get to work in very dangerous conditions under the guise of "job creation", and some privileged elite get to see their names on the list of board of directors. Other than that, we do not benefit in any meaningful way, since the vast profits all go offshore.

I will quote liberally from an article on the subject of whether or not our social and economic rights under the United Nations International Covenant on Economic, Social and Cultural Rights (like your right to access to medical care, a decent standard of living, proper housing, etc.) will ever get the wings they need to be realised in our country.

Firstly, let us acknowledge the effect of corruption:

According to the Council for the Advancement of the South African Constitution, corruption costs South Africans about 20% of the Gross Domestic Product of the country14. South Africa’s nominal GDP estimate for the year 2010 was R2,7 trillion15. This figure is truly frightening in the face of all the problems that require urgent redress according to the NDP. In fact, since the formation of the first democratically elected government, only a very small percentage of the previously disadvantaged have prospered from the opportunities that were unleashed. Unfortunately, these few have either been the exception to the rule; or more commonly, they have been politically connected or the beneficiaries of nepotism16. The domestic term coined for this group is the “Black Elite”17.

Further, it has been found that 42% of executive public officials are in positions of potential conflict of interest18. Tenders for public contracts are regularly granted through unethical means19; the news of recent scandals involving alleged corruption of officials being is now met with depressing familiarity. For example, in relation to the right to an “adequate standard of living” including “clothing and housing” as outlined in Article 11 of the ICESCR, 1 910 public officials were arrested and R44 million was recovered after an audit task team found these officials to be benefitting fraudulently from housing subsidies20. There are many other such cases of corruption contributing directly or indirectly to the contravention of the socio-economic rights as outlined in the ICESCR21,22,23.

Government corruption is therefore a major obstacle to the realisation of full socio-economic rights for all citizens. As Patricia Carrier notes: “Corruption impedes a state’s ability to use its available resources to progressively achieve the full realization of [socio-economic] rights because national resources are instead diverted into the pockets of public officials, or because development aid is mismanaged, misused or misappropriated”24, 25.

So that's a brief on corruption, but this is definitely not the only thing stopping us achieving what we deserve. Big multinational corporations also present an issue in terms of intellectual property protection, putting protection of their money before protection of human life:

Pharmaceutical companies may hold the right to financially benefit from their innovation in developing life-saving medicines, but the price of these medicines set by the companies may make them unavailable to people that require them and who also hold the right to those life-saving medicines29.  This inherent conflict within these articles, and subsequently with international instruments derived from them30,(refering to international "copyright"rules)  make the proper implementation of these rights problematic. One could even go so far as to argue that the conflict within the document itself makes it a barrier to its own implementation, because there exists an element of mutual exclusivity between the rights contained in it.

So big companies exploit the fact that they too have rights, even if those rights clash directly with my rights and your rights. Then there's the way the world treats poor or developing countries:

Perhaps the most daunting barrier to the realisation of the socio-economic rights guaranteed in the ICESCR is the global economy that is in place. Rajesh Makwana, in the introduction to his article advocating the decommissioning of the International Monetary Fund (IMF) and the World Bank (WB), remarks: “Within the competitive global framework, developing countries are left with little choice other than to comply with the neoliberal agenda. As a result of these countries are often left with crippling debt and a fragile economy. Meanwhile foreign investors and multinational corporations gain control of a significant portion of the world’s resources, finance, services, technology and knowledge. Whilst these multinationals report record profits, around 50 000 people die each day from poverty”. This is the modus operandi of the IMF and World Bank; institutions that have been specifically set up to preserve the economic stability of the countries affected by World War II, countries that are now overwhelmingly considered developed countries. For an underdeveloped or developing state to acquire funding from the IMF, the IMF insists on some economic reforms, typically to make these economies more conducive to Keynesian free market dynamics. These structural adjustments, known as Structural Adjustment Programs (SAP), typically include measures like reducing social spending, government budgets, programs and subsidies for basic goods, eliminating foreign ownership restrictions, increasing interest rates, eliminating import tariffs, and switching from subsistence farming to export economies. These have devastating effects on the state’s ability to provide elementary socio-economic rights, since the state’s power to protect the rights of its constituency is diminished by the preconditions of the loan. South Africa has long been indebted to the IMF, and this includes an estimated Apartheid-incurred debt of US$18 billion. No formal SAP was enforced on South Africa post-Apartheid, but this was largely because of voluntary anticipatory policy adjustments, possibly for appeasement of the money-lenders and investors. These appeasement policies were mainly attributed to the then Minister of Finance, Trevor Manuel, and his apparent friendliness to the policies and philosophies of the private sector earned him a reputation for representing the interests of business over that of the working class.

As long as the fate of South Africa’s economy is effectively controlled by private domestic and foreign corporate interests, it is na├»ve to believe that socio-economic rights will gain any priority. This is the least domestically manageable of all the barriers mentioned, and is thus the most daunting.

So there you go. A lot to process in one blog, but at least you get the idea of where I'm coming from. If you need my sources and references, ask. Otherwise, enjoy the rainy weather.

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