Posts Tagged ‘South Africa’

polyp_cartoon_rich_poor_neoliberal

To read National Public Radio’s [ht: ja] article on the latest World Bank report on Poverty and Shared Prosperity: Taking on Inequality, you’d think the problem of global poverty was well on the way to being solved.

Is that just wishful thinking?

In terms of the headline numbers, the author of the article is correct:

In 2013, fewer than 800 million people lived on less than $1.90 a day. That’s less than 11 percent of the global population. As recently as 1990, about 35 percent of all people lived in such extreme poverty.

That means about 1.1 billion people rose out of extreme poverty.

But, before we get too excited, there are 3 key issues to keep in mind.

First, the World Bank itself follows the presentation of the numbers with a note of caution:

Although this represented a noticeable decline, the poverty rate remains unacceptably high given the low standard of living implied by the $1.90-a-day threshold.

That’s right. The threshold is a miserly $1.90 a day, an update taking into account inflation of the previous limit of $1 a day. If they used anything more reasonable—say, an absolute level of $5 a day or, even better, a relative level of 50 percent of mean income—the level of global poverty would be much higher.*

top-incomes

Second, while it’s never mentioned in the article, the actual focus on the World Bank report is inequality. And there the results are, at first glance, bewildering: global inequality has fallen while average within-country inequality is greater now than 25 years ago. But it can be easily explained: Rising incomes in China and India alone, given the size of their populations, have led to a reduction in between-country inequality. However, in many countries, the income share of the top income groups has been expanding—in the United States, of course, but also in Argentina, India, the Republic of Korea, Taiwan, and China. And in South Africa, the top income share roughly doubled over 20 years, to levels comparable to those observed in the United States!

Finally, we need to understand what is actually causing the reported declines in global poverty and inequality. The World Bank singles out five countries—Brazil, Cambodia, Mali, Peru, and Tanzania—as the best performers. And here the NPR article is just plain wrong. The policies the World Bank itself cites are the following “building blocks of success”:

prudent macroeconomic policies, strong growth, functioning labor markets, and coherent domestic policies focusing on safety nets, human capital, and infrastructure.

This is exactly what one would expect from the World Bank: more growth—in other words, business as usual—will solve the problems of poverty and inequality.

The Peruvian example (based on reading the World Bank report and the background research papers) is particularly instructive. The “remarkable” improvement in living conditions among the poor and bottom 40 percent mostly occurred through the labor market (which explains about three-quarters of the reduction in extreme poverty).

What does that mean? Extreme poverty in Peru declined because more people, men and women, joined the labor market. Some left rural areas and migrated to cities; others exited the informal sector and went to work for larger enterprises. In both cases, more Peruvians were forced to have the freedom to sell their ability to work to someone else and, as a result, received more cash income in the form of wages—and then, of course, could use those wages to purchase more commodities.

So, as far as the World Bank is concerned, more Adam Smith development—a faster growing wealth of the nation—was both a condition and consequence of expanding the labor market and reducing poverty. The World Bank’s much-vaunted “shared prosperity” is just another name for more markets and more people working to make profits for a tiny group of employers at the top.

That’s the key point the article missed and the reason the World Bank, in the report, is so keen on celebrating the progress toward achieving the goal of eliminating extreme poverty by 2030.

 

*In fact, in a World Bank research paper, Shaohua Chen and Martin Ravallion (pdf), compared absolute and relative measures and found “a simultaneous rise in the numbers of relatively poor, alongside the fall in absolute poverty.”

 

266-global-wealth

There is a wealth of data in the 2015 Credit Suisse Global Wealth Report.

One series (which Credit Suisse began compiling last year) measures global wealth inequality. As the authors of the report observe,

The updated and extended series displayed in Figure 6 shows that the top 1% of global wealth holders started the millennium owning 48.9% of all household wealth. According to our estimates, the top percentile share fell every year until it reached 44.2% in 2009, a drop of 4.7 percentage points. The downward trend then reversed and the share rose each year, overtaking the 2000 level within the last twelve months. We estimate that the top percentile now own half of all household assets in the world.

The shares of the top 5% and top 10% of wealth holders follow a similar pattern. The share of the top 5% dropped by 3.8 percentage points between 2000 and 2007, then flattened out until 2010 when it began rising again. The share is now 76.6%, the same as in 2000. Meanwhile the share of the top decile declined from a peak of 88.3% in 2000 to a low of 85% in 2007, after which it has been climbing slowly upwards. We estimate the current share of the top wealth decile to be 87.7%, again close to the level at the start of the century.

Clearly, one of the drivers of this trend of increasing wealth inequality in recent years, especially for the top 1 percent, is the increase in the value of financial assets, especially corporate securities, since wealthier households hold a disproportionate share of their assets in financial form. That’s particularly true in the United States, where 68.8 percent of gross wealth is held in the form of financial assets—greater than in any other country except The Netherlands and South Africa.

So, an economic recovery program that has privileged the recovery of financial markets and corporate profits has fueled the increase in wealth inequality, in the United States and across the world.

mandela statue

I won’t attempt to add to the list of superlatives that have been attached to the life and work of Nelson Mandela, who is today being appropriately recognized and celebrated—except to note that many of those grand adjectives and phrases are being issued by representatives of countries that once branded him a terrorist and of universities, corporations, and other entities that for many years refused to support the anti-apartheid movement.

We also need to remember that South Africa was—and remains, 19 years after the end of apartheid—one of the world’s most unequal societies. According to a very careful study conducted by South African economist and former student Murray Leibbrandt (with Ingrid Woolard, Arden Finn, Jonathan Argent),

184. . . .the long-run development trajectory in South Africa has been one that has generated a very high-inequality society with a strong racial component to this inequality. The bottom half of the income distribution was reserved for black South Africans and, at any of a wide range of poverty lines, poverty was dominated by black South Africans. Historically this was the result of active racial privileging and discrimination in state policy. Even without the direct racial interventions in the labour market such as the reservation of jobs that took place under Apartheid, the racial biases in determining where people were allowed to live and in the education, health and social services policy matrix would have created a workforce with racially skewed human capital and spatial characteristics. Such spatial and human capital legacies leave a very long-run footprint and these processes are hard to reverse. They should not have been expected to disappear at the dawning of democratic government in South Africa. . .these factors have continued to exert an influence on South Africa’s development path. It is not just the case that the 15 years since the democratic transition is not enough time for these factors to work their ways out of South African society: it is a much more dynamic and daunting process than this.

185. While we observe a decline in the importance of between-race inequality, within-race inequality has risen sharply and this has been strong enough to stop South Africa’s aggregate inequality from falling. It should be noted that while the between-race component of inequality has fallen, it remains remarkably high by international norms and its decline has slowed since the mid 1990s. Moreover, the bottom deciles of the income distribution and the poverty profile are still dominated by Africans and racial income shares are far from proportionate with population shares. Nonetheless, South Africa’s changing population shares imply that a policy focus on race-based redistribution will become increasingly limited in the future as the foundation for further broad-based social development.

lonmingatheringjpg

Thousands of miners remained on strike at two shafts in South Africa’s Marikana platinum mine on Tuesday, operator Lonmin Plc said, revising an earlier statement that they had gone back to work.

Disruptions at Marikana are particularly closely watched as it was the site where 34 striking miners were shot dead by police last August in South Africa’s deadliest security incident since the end of apartheid in 1994.

Workers affiliated to the militant Association of Mineworkers and Construction Union (AMCU) refused to go underground on Tuesday, demanding the closure of the offices of a rival union, said the mining group. . .

Glaring income disparities and grinding poverty in the shantytowns around the platinum mines have also fueled the violence.

zapirofarms

According to Alex Duval Smith [ht: gh],

Unions and charities supporting the Western Cape’s 500,000 farm workers say pay and working conditions are so bad that South African wines, table grapes and granny smith apples should be as unacceptable to responsible British consumers as they were under apartheid. “The government should be forcing the farmers to the table but it is not,” said Nosey Pieterse, secretary general of the black agricultural sector union, Bawusa. “Our only weapon left is for the foreign buyers to pledge that unless the conditions are addressed, they will no longer import South African products.”. . .

Pieterse said the farm owners, not workers, had benefited from the ending of apartheid. “In the first 10 years of democracy, the wine industry grew tenfold, from 20m litres’ output before 1994 to 220m litres. The farm workers’ conditions went the other way. Tenure rights laws were not accepted by the farmers. More than 1 million farm workers were evicted. They remain slaves on the land of their birth.”

 

Longshoremen Contract pb-121114-south-africa-protest-nj-04-photoblog900

Actually, a follow-up to two different protests of the day. . .

Port operators along the East Coast have reached a tentative deal on a new contract with the union for longshoremen, averting a possible strike that would have crippled operations at 15 ports.

South Africa has increased the basic daily wage of farm workers by 52 percent following a strike in the wine-producing Western Cape region.

Farmworkers [ht: sn] in the Western Cape have been engaged in a week-long strike, demanding higher wages. The South African police have killed one of the striking workers and wounded at least five others.