Subject: Global Inequality: 'Grotesque gap' Date: Fri, 16 Jul 1999 23:33:51 -0500 A `GROTESQUE' GAP THE GLOBAL ECONOMY'S WINNERS AND LOSERS ARE SO FAR APART THAT BALANCING EFFORTS ARE NEEDED TO AVOID DISASTER, ACCORDING TO A NEW UN OVERVIEW. By R.C. Longworth Tribune Staff Writer July 12, 1999 As the global economy grows, rich nations are getting richer than ever, and poor ones are stuck in shantytowns on the outskirts of the global village. "Global inequalities in income and living standards have reached grotesque proportions," the UN Development Program said in its annual global overview, the Human Development Report. For instance: The richest countries, such as the United States, have 20 percent of the world's people but 86 percent of its income, 91 percent of its Internet users, 82 percent of its exports and 74 percent of its telephone lines. The 20 percent living in the poorest countries, such as Ethiopia and Laos, have about 1 percent of each. The three richest officers of Microsoft--Bill Gates, Paul Allen and Steve Ballmer--have more assets, nearly $140 billion, than the combined gross national product of the 43 least-developed countries and their 600 million people. The United States, meanwhile, has more computers than the rest of the world combined. Lesser-developed countries are not likely to catch up any time soon: the same computer that costs a month's wages for the average American takes eight years' income from the average resident of Bangladesh. The 200 richest people in the world more than doubled their net worth between 1994 and 1998. But in nearly half the world's countries, per capita incomes are lower than they were 10 or 20 years ago. Some of these are oil-producing nations hit by the long slump in oil prices, but many are in sub-Saharan Africa, where per capita income has fallen to $518 from $661 in 1980. In 1960, the richest fifth of the world's people had 30 times as much income as the poorest fifth. By 1997, that proportion had more than doubled, to 74-1. The key to a solution to these problems, the UNDP said, is not to stamp out the global economy but to embrace it with the rules and institutions that will ensure it serves people and communities, not just markets and their manipulators. "Competitive markets may be the best guarantee of efficiency but not necessarily of equity," it said. "Markets are neither the first nor the last word in human development. "Many activities and goods that are critical to human development are provided outside the market, but these are being squeezed by the pressures of global competition. "When the market goes too far in dominating social and political outcomes, the opportunities and rewards of globalization spread unequally and inequitably--concentrating power and wealth in a select group of people, nations and corporations, marginalizing the others. "The challenge," the report said, "is not to stop the expansion of global markets. The challenge is to find the rules and institutions for stronger governance . . . to preserve the advantage of global markets and competition but also to provide enough space for human, community and environmental resources to ensure that globalization works for people, not just for profits." The gap between people, like the one between nations, also is growing in the global economy, the UNDP report said. Inequality is growing both in industrialized nations--especially in the United States, Britain and Sweden, it said--and in newly industrializing countries, such as China and the formerly communist countries of Eastern Europe. One result of globalization, it said, is that the road to wealth-- the control of production, patents and technology--is increasingly dominated by a few countries and companies. Of all the countries in the world, only 10, including the United States, account for 84 percent of global research-and-development spending. Businesses and institutions in the same 10 control 95 percent of all patents issued by the U.S. government over the past 20 years, it said. Among corporations, the top 10 controlled 86 percent of the telecommunications market, 85 percent of pesticides, 70 percent of computers and 60 percent of veterinary medical products, it said. The major countries and the global corporations may have earned their dominance, but, the report said, this monopoly of power is cutting poorer nations off from a share of the economic pie and, often, from decent health care and education. "The privatization and concentration of technology are going too far," the report said. "Corporations define research agendas. . . . Money talks, not need. Cosmetic drugs and slow-ripening tomatoes come higher on the priority list than drought-resistant crops or a vaccine against malaria." Many new technologies, "from new drugs to better seeds," are priced too high for poor nations, it said. Global patent laws, intended to protect intellectual property, are blocking the ability of developing countries to develop their own products. Even within the Third World, inequality is sharp. Thailand has more cellular phones and Bulgaria more Internet users than all of Africa except South Africa, the report said. The report was not all gloom and doom. Even as gaps between nations grow and some countries slide backward, the quality of life for many of the world's poor is improving, it said. Between 1975 and 1997, life expectancy in Third World countries rose to 62 years from 53, adult literacy rates climbed to 76 percent from 48 percent, child mortality rates to 85 per 1,000 live births from 149, and some countries --Costa Rica, Fiji, Jordan, Uruguay and others--"have overcome severe levels of human poverty." The UNDP report said uneven and unequal development around the world is not sustainable and risks sinking the global economy in a backlash of public resentment. Without global governance that incorporates a "common core of values, standards and attitudes, a widely felt sense of responsibility and obligations," the major nations and corporations face trade wars and uncontrolled financial volatility, it said, with the Asian financial crisis of the past two years only the first of many upheavals. At the moment, new rules and regulations are being written in talks at the World Trade Organization, the International Monetary Fund and other powerful global bodies. But these talks are "too narrow," the report said, because they focus on financial stability while "neglecting broader human concerns such as persistent global poverty, growing inequality between and within countries, exclusion of poor people and countries, and persisting human-rights abuses." They also are "too geographically unbalanced," with an unhealthy domination by the U.S. and its allies." The UNDP report called instead for a "global architecture" that would include: - A global central bank to act as a lender of last resort to strapped countries and to help regulate finance markets. - A global investment trust to moderate flows of foreign capital in and out of Third World countries and to raise development funds by taxing global pollution or short-term investments. - New rules for the World Trade Organization, including anti-monopoly powers to enable it to keep global corporations from dominating industries. - New rules on global patents that would keep the patent system from blocking the access of Third World countries to development, knowledge or health care. - New talks on a global investment treaty that, unlike talks that failed last year, would include developing countries and respect local laws. - More flexible monetary rules that would enable developing countries to impose capital controls to protect their economies. - A global code of conduct for multinational corporations, to encourage them to follow the kind of labor and environmental laws that exist in their home countries. The report praised voluntary codes adopted in Asia by Disney World and Mattel, the toy company. The leading industrial nations already are considering new global rules on investment, banking and trade. The UNDP report, in effect, endorsed these efforts but urged that they be broadened to include the needs of poorer nations.