Rich-poor divide no longer a ‘gap’ now a yawning, unbridgeable chasm - International Social/Political

Rich-poor divide no longer a ‘gap’ now a yawning, unbridgeable chasm
by gan Sunday, May 4 2008, 7:52am
international / social/political / commentary

A new class of scurrilous thief has been spawned in the 21st century; a heartless breed that speculates on staple food commodities at the expense of human lives! These dastardly types influence futures markets with their huge buying power. What does it matter if people starve, there are billions to be made on rising and plummeting commodities prices and futures trading.

It is a sad fact that today’s futures markets are able to be manipulated as never before – obscene concentrations of wealth in fewer hands have made this possible – the globe has become the oyster of a new criminal elite, one that presents itself as respectable traders and business executives.

One does not need to be an economist to understand that those who earn hundreds of millions are not hundreds of millions of times more capable or intelligent than anyone else – they obtain their wealth not with immense skill or genius but with illegalities and privileged information. Grossly disproportionate incomes do not reflect talent they reflect criminal activity!

These 'geniuses' are undermining the stability of the world; populations in the poorer nations are in open revolt against trebling staple food prices. The traders, however, are not ruffled; their 'business activities' do not include moral considerations or human kindness.

The American president, George ‘Iraq holocaust’ Bush, praises this new heartless, mega-wealthy class as possessing all the qualities of the American business ethic – well, of course he would!

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Giant agribusinesses are enjoying soaring earnings and profits out of the world food crisis which is driving millions of people towards starvation, The Independent on Sunday can reveal. And speculation is helping to drive the prices of basic foodstuffs out of the reach of the hungry.

The prices of wheat, corn and rice have soared over the past year driving the world's poor -- who already spend about 80 per cent of their income on food -- into hunger and destitution.

The World Bank says that 100 million more people are facing severe hunger. Yet some of the world's richest food companies are making record profits. Monsanto last month reported that its net income for the three months up to the end of February this year had more than doubled over the same period in 2007, from $543m (£275m) to $1.12 billion. Its profits increased from $1.44 billion to $2.22 billion.

Cargill's net earnings soared by 86 per cent from $553m to $1.030 billion over the same three months. And Archer Daniels Midland, one of the world's largest agricultural processors of soy, corn and wheat, increased its net earnings by 42 per cent in the first three months of this year from $363m to $517m. The operating profit of its grains merchandising and handling operations jumped 16-fold from $21m to $341m.

Similarly, the Mosaic Company, one of the world's largest fertiliser companies, saw its income for the three months ending 29 February rise more than 12-fold, from $42.2m to $520.8m, on the back of a shortage of fertiliser. The prices of some kinds of fertiliser have more than tripled over the past year as demand has outstripped supply. As a result, plans to increase harvests in developing countries have been hit hard.

The Food and Agriculture Organisation reports that 37 developing countries are in urgent need of food. And food riots are breaking out across the globe from Bangladesh to Burkina Faso, from China to Cameroon, and from Uzbekistan to the United Arab Emirates.

Benedict Southworth, director of the World Development Movement, called the escalating earnings and profits "immoral" late last week. He said that the benefits of the food price increases were being kept by the big companies, and were not finding their way down to farmers in the developing world.

The soaring prices of food and fertilisers mainly come from increased demand. This has partly been caused by the boom in biofuels, which require vast amounts of grain, but even more by increasing appetites for meat, especially in India and China; producing 1 pound of beef in a feedlot, for example, takes 7 pounds of grain.

World food stocks at record lows, export bans and a drought in Australia have contributed to the crisis, but experts are also fingering food speculation. Professor Bob Watson -- chief scientist at the Department for Environment, Food and Rural Affairs, who led the giant International Assessment of Agricultural Science and Technology for Development -- last week identified it as a factor.

Index-fund investment in grain and meat has increased almost fivefold to over $47 billion in the past year, concludes AgResource Co, a Chicago-based research firm. And the official US Commodity Futures Trading Commission held special hearings in Washington two weeks ago to examine how much speculators were helping to push up food prices.

Cargill says that its results "reflect the cumulative effect of having invested more than $18 billion in fixed and working capital over the past seven years to expand our physical facilities, service capabilities, and knowledge around the world".

The revelations are bound to increase outrage over multinational companies following last week's disclosure that Shell and BP between them recorded profits of $28 billion in the first three months of the year -- or $6 million an hour -- on the back of rising oil prices. Shell promptly attracted even greater condemnation by announcing that it was pulling out of plans to build the world's biggest wind farm off the Kent coast.

World leaders are to meet next month at a special summit on the food crisis, and it will be high on the agenda of the G8 summit of the world's richest countries in Hokkaido, Japan, in July.

Additional research by Vandna Synghal.

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NEW YORK - Two recent pronouncements by US President George W Bush illustrate a new Western tendency to blame China and India for pressing global problems and divert attention from causes that originate in the West itself. On April 17, Bush denied special environmental exemptions for China and India since they "are emitting increasingly large quantities of greenhouse gases, which has consequences for the entire global climate".

On May 3, the American president argued that India's burgeoning middle class is "demanding better nutrition and better food ... and that causes the price [of food grains] to go up". US Secretary of State Condoleezza Rice had earlier elaborated on the quack doctrine that apparent improvement in the diets of people in India and China and consequent cereal export restraints are among the causes of the current global food crisis.

Bush's implication of China and India in global warming and food shortages has one common theme - that the rise of these two countries is problematic. In his April 17 comment, the US president said the economic growth of the two was "good for their people and good for the world", but suffixed it with the caveat that this is harming the environment. In his May 3 address, Bush said that "prosperity in the developing world is good", but quickly elaborated its supposed negative repercussions on food supplies.

In plain language, the American president is reflecting a deep-seated belief that Asia's rising powers are irresponsible "free riders" as opposed to the more benevolent and magnanimous West. Bush's accusations mask deeper structural malaises in the global environment and economy that can be traced back to Western over-consumption and exploitation of resources.

The US and the EU repeatedly chant that China and India, as the second and fourth largest emitters of greenhouse gases, cannot wash their hands of responsibilities by claiming differential treatment. What they do not highlight is the difference between measuring pollutants on a national basis and on a per capita basis. By virtue of their huge populations accounting for more than 30% of the world's inhabitants, China and India, taken as aggregate units of analysis, do appear as major offenders spewing toxic gases. ( Late last year, data from the International Energy Agency and other research organizations revealed that China had overtaken the United States as the largest source of greenhouse gases,)

But if per capita emission is the unit of comparison, Canada, Russia, Germany, Britain, Japan and Italy, with much smaller populations, are far above China and India in pollutant rankings (see table below). The US is ahead of every other country both in absolute national-unit and per capita-unit pollution.

Top 10 emitters of greenhouse gases on a per capita basis (tons of carbon per person per annum)
1 United States (6.6)
2 Canada (6.3)
3 Russian Federation (3.6)
4 Germany (3.2)
5 United Kingdom (3.1)
6 Japan (2.9)
7 Italy (2.5
8 Brazil (1.3)
9 China (1.1)
10 India (0.5)
Source: US Congressional Research Service, 2005

One only has to look at disparities in standards of living among the top 10 per capita emitters for the complete picture. China and India, in comparison to the leading per capita polluters, are the poorest. There is an obvious link between past pollution ("stock" of emissions), present pollution ("flow" of emissions) and economic well being of people. In the absence of greener technologies and alternative development paradigms, the unfortunate implication of the per capita emissions column of the above table is that polluters grow economically and provide better for their populations in material terms. Western colonial empires and industrial advancement rest on the ugly reality of massive plunder not only of the inhabitants of the "Third World" but also of the planet Earth.

The essence of the Bush administration's repudiation of the present climate change regime is that it imperils US industry and jobs, which are facing tough competition from China and India. More broadly, Washington's fear is that the prosperity gap that exists in favor of the leading Western per capita emitters will be reduced if China and India are "let off the hook" on carbon emissions.

As long as attaining and maintaining "modernization" through industries is the main currency of so-called "progress", the US and European Union (EU)wish to retain their lead over the catch-up players, China and India. At the 2007 Bali conference on climate change, Washington threatened to unleash "green tariffs" or trade sanctions on developing countries for failing to meet designated carbon cuts. The very linkage between trade and environmental or labor standards reveals the politics behind scapegoating China and India, which are long-term challengers of American world supremacy.

The Bush administration's innuendos against China and India on the issues of food prices are also misleading. Indians and Chinese are not high per capita consumers of grains and cereals. Food consumption statistics clearly demonstrate that Western people account for the highest rates of nutrition and calorific intake in the world. Restrictions on food exports in India, Vietnam and Brazil are not meant to pacify the swelling middle-class bases of these emerging economies but to provide a safety net for the mass of the poor in these countries. Bush's contention that the protective measures are responses to growing middle-class demands for nutrition is completely misplaced.

Studies also show that wastage of food is most rampant in advanced industrial countries of the West. According to researchers at the University of Arizona, 40-50% of edible food in the US never gets eaten. Every year, US$43 billion worth of edible food is estimated to be thrown away in the country known better for its gas-guzzling habits. A complex phenomenon, wastage of food is not only a sore spot in a phase of escalating grain and pulse prices but also associated with greenhouse gas emissions.

In Britain, environmental activists are campaigning that reducing food wastage could curtail at least fifteen million tons of carbon dioxide-equivalent emissions per annum. Steeped in a consumerism described by economist J K Galbraith as a "culture of contentment", Western people and governments rarely self-introspect while pontificating on China and India as monstrous food and energy consumers.

It is now well-established that there is a relationship between fuel market inflation and food shortages. The per-unit production cost of food grains has risen globally because of the increased input costs of oil, petrol, diesel, kerosene and fertilizers. To what extent is American destabilization of the Middle East, especially the crippling war on Iraq, a contributor to the stratospheric levitation of oil prices? How much has US investment in bio-fuels like ethanol affected food supplies? These important questions are being swept under the carpet in Washington, which has found the alibi of ascribing every major global problem to the doorsteps of China and India.

When economic recession, soaring fuel costs, spiraling food prices, and deteriorating environmental indices occur together like a package of woes, one can expect a blame game in which every country will defend its own innocence vis-a-vis the alleged culpability of others. As shortages, conflicts and crises seem to congregate like a collective plague, there is a natural tendency to search for culprits.

This is especially true of the United States, which has a history of thriving on the construction of mean-spirited and selfish enemies against which American exceptionalism is contrasted. Psychologist Sam Keen observed famously about the end of the Cold War that "we [Americans] were getting desperate in our search for a new enemy".

The erosion of the Soviet challenge opened up a fascinating melange of new scapegoats in Washington, ranging from Japan, the "axis of evil" states, and "Islamofascism" to the crystallizing new consensus around China and India being the causes of plagues. The shift of emphasis to China and India as the new "hit me" toys in Washington is a surface-level manifestation of the realization in American strategic circles that the new competitors of the longue duree come from Asia.

Sadly for humanity, such politicization of survival needs like food, fuel and liveable temperatures continues to divert focus away from the real "inconvenient truths" that Al Gore had the courage to unmask as an American.

Sreeram Chaulia is a researcher on international affairs at the Maxwell School of Citizenship at Syracuse University in Syracuse, New York.

© 2008 Asia Times Online Ltd

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