Chapter 10: Conclusion
10.3 The case study: global poverty, under-development and the role of certain
I investigated at length certain social issues from the egalitarian perspective. I looked at the rules of international trade, the institutions of sovereign debt and the global reserve system insofar as they impinge on global poverty and on the
development prospects of poor countries. Egalitarian intuitions and social movements have noted the relevance of these institutions to global poverty and development for decades. At the same time, the problems of global poverty and of under-development of the poor countries are among the more pressing problems that confront egalitarians. The choice of this case study thus functioned to present an issue that can properly be said to be of concern to egalitarians, and an issue that is representative of the central concerns of egalitarianism (as opposed to an issue which might be a ‘hard case’ for egalitarian principles but which may not illuminate its core).
Let me summarise some mechanisms that affect global poverty and that can be reformed for progressive ends. The rules governing international trade affect how effectively developing countries can increase their export revenues and domestic employment, expand their industries, diversify their economies, and how easily various infrastructures and institutions are created in their economies. The institutions surrounding sovereign debt affect the level of difficulty a debtor has in paying the debt, the occurrence of over-lending, the opportunity cost to the residents of debtor countries as their governments service debt, and whether residents are held
responsible for debt repayments if the debt was not acquired by legitimate rulers. The global reserve system contributes to economic instability, which necessitates the accumulation of larger reserves, or of debt, both as a matter of prudence, and in cases where instability erupts as crisis. Economic crisis itself imposes costs on the poor through greater unemployment, rises in prices of essentials, and lower income.
The egalitarian values relevant to the discussion of these mechanisms include at least the following: fairness; rectifying objectionable international relations
imposed by the powerful countries; changing institutions that (whether directly or indirectly) unnecessarily allow external agents to influence a sovereign country’s
policy; better prioritising of the interests of the worst off; reducing inequalities due to brute luck and improving the lives of the very poor.
With respect to the rules governing international trade, existing WTO regulations make diversification, development and expansion of exports harder than they need to be for developing countries. I argued that a more progressive system of market access (the MAP) would make these easier. Whilst the MAP would entail some costs for the developed countries, their governments are in a much better position to compensate these costs through productive investment, job creation and safety nets than are the governments of developing countries to take care of their poor in the absence of such a progressive policy.
With respect to the institutions of sovereign debt, the actions of creditor governments and multilateral lenders have contributed to over lending. The absence of sovereign bankruptcy mechanisms has encouraged even greater debt accumulation, and imposed great opportunity costs for the residents of many debtor countries as money spent on debt service could instead have been spent on poverty alleviation programs. Many lenders have lent to despotic rulers, expecting later democratic regimes to continue debt service, and have been aware (or should reasonably be expected to be aware) that the funds would not be spent in the interests of the population. I presented proposals for a sovereign bankruptcy mechanism, and for a mechanism to reduce availability of loans to undemocratic and despotic leaders. Under the sovereign bankruptcy scheme, judgment of a country’s ability to service a given level of debt should be sensitive to the social opportunity costs of debt service imposed on poorer residents of the debtor country, and should not be calculated merely in financial terms. I also advocated immediate debt reduction for many countries.
Turning to the global reserve system, I presented arguments that it contributes to global economic instability, and makes it more difficult for chronic trade deficit countries to achieve trade surpluses and thereby earn sufficient export revenue to service debts. I considered a reform proposal that seems promising as a way to reduce the global economic instability associated with the current arrangement, and that would make it easier for chronic deficit countries to achieve surpluses. It would allocate the specially created Global Greenbacks progressively, making it easier for poor countries to accumulate reserves. The progressive allocation, together with the penalty on surplus countries, would be a systematic and unconditional flow of wealth to the global poor, either through their governments or through international and domestic NGOs and multilateral agencies.
The institutions and mechanisms I described are useful markers for any investigation of global poverty. The proposals I considered in my case study require further analysis, especially in terms of their practicability and political feasibility. They must also be compared to other proposed solutions to the same problems. It is only in a reflective equilibrium with social science, current affairs, and real world concerns about practicability, that egalitarian intuitions achieve definition. And it is only in responding to such urgent problems, that egalitarian intuitions find a purpose.
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