Lester R. Brown

Chapter 7. Eradicating Poverty and Stabilizing Population: A Poverty Eradication Agenda and Budget

As indicated earlier, eradicating poverty involves much more than international aid programs. It also includes the debt relief that the poorest countries need in order to escape from poverty. For many developing countries, the reform of farm subsidies in aid-giving industrial countries and debt relief may be equally important. A successful export-oriented farm sector often offers a path out of poverty for a poor country. Sadly, for many developing countries this path is blocked by the self-serving farm subsidies of affluent countries. Overall, industrial-country farm subsidies of $258 billion are roughly double the development assistance from these governments. 79

These subsidies encourage overproduction of some farm commodities, which then are sent abroad with another boost from export subsidies. The result is depressed world market prices, particularly for sugar and cotton, commodities where developing countries have the most to lose. 80

Although the European Union (EU) accounts for more than half of the $120 billion in development assistance from all countries, much of the economic gain from this assistance in the past was offset by the EU’s annual dumping of some 6 million tons of sugar on the world market. Fortunately, in 2005 the EU announced that it would reduce its sugar support price to farmers by 40 percent, thus reducing the amount of sugar exports to 1.3 million tons in 2008. 81

Similarly, subsidies to U.S. farmers have historically enabled them to export cotton at low prices. And since the United States is the world’s leading cotton exporter, its subsidies depress prices for all cotton exporters. As a result, U.S. cotton subsidies have faced a spirited challenge from four cotton-producing countries in Central Africa: Benin, Burkina Faso, Chad, and Mali. In addition, Brazil challenged U.S. cotton subsidies within the framework of the World Trade Organization (WTO), convincing a WTO panel that U.S. cotton subsidies were depressing world prices and harming their cotton producers. 82

After the WTO ruled in Brazil’s favor in 2004, the United States made some token efforts to comply, but the WTO again ruled in Brazil’s favor in December 2007, concluding that U.S. cotton subsidies were still depressing the world market price for cotton. The affluent world can no longer afford farm policies that permanently trap millions in poverty in aid-recipient countries by cutting off their main avenue of escape. 83

Whereas most U.S. farm subsidies depress prices of exports from developing countries, the subsidy for converting grain into ethanol raises the price of grain, which most low-income countries import. In effect, U.S. taxpayers are subsidizing an increase in world hunger. 84

Debt forgiveness is another essential component of the broader effort to eradicate poverty. A few years ago, for example, when sub-Saharan Africa was spending four times as much on debt servicing as it spent on health care, debt forgiveness was the key to boosting living standards in this last major bastion of poverty. 85

In July 2005, heads of the G-8 industrial countries, meeting in Gleneagles, Scotland, agreed to cancel the multilateral debt that a number of the poorest countries owed to the World Bank, the International Monetary Fund (IMF), and the African Development Bank. Among other things, this initiative was intended to help the poorest countries reach the Millennium Development Goals. It immediately affected 18 of the poorest debt-ridden countries (14 in Africa and 4 in Latin America), offering these countries a new lease on life. 86

The year after the Gleneagles meeting, Oxfam International reported that the IMF had eliminated the debts owed by 19 countries, the first major step toward the debt relief goal set at the G-8 meeting. For Zambia, the $6 billion of debt relief enabled President Levy Mwanawasa to announce that basic health care would be now free. In Oxfam’s words, “the privilege of the few became the right of all.” In East Africa, Burundi announced it would cancel school fees, permitting 300,000 children from poor families to enroll in school. In Nigeria, debt relief has been used to set up a poverty action fund, part of which will go to training thousands of new teachers. 87

Even as debt was being reduced, development aid as a percentage of gross national income from donor countries decreased in 2006 and 2007. Although it rose in 2008, aid is still $29 billion a year short of meeting the 2010 target of $130 billion that governments agreed on in 2005. The bad news is that many of these same countries burdened by foreign debt were being hit hard when the global economic crisis brought falling prices for their mineral exports, falling remittances from abroad, and rising prices for their grain imports. 88

As noted earlier, the Bank estimates that increases in fuel and food prices have pushed 130 million people below the poverty line. And the Bank projected that another 53 million would be pushed below the line in 2009. In referring to the difficulty many developing countries were already experiencing in trying to reach the MDGs, Bank president Robert Zoellick said in March 2009, “These targets now look even more distant.” 89

The steps needed to eradicate poverty and accelerate the shift to smaller families are clear. They include filling several funding gaps, including those needed to reach universal primary education, to fight childhood and other infectious diseases, to provide reproductive health care and family planning services, and to contain the HIV epidemic. Collectively, the initiatives discussed in this chapter are estimated to cost another $77 billion a year. (See Table 7–1.) 90

The heaviest investments in this effort center on education and health, which are the cornerstones of both human capital development and population stabilization. Education includes universal primary education and a global campaign to eradicate adult illiteracy. Health care includes the basic interventions to control infectious diseases, beginning with childhood vaccinations. 91

As Columbia University economist Jeffrey Sachs regularly reminds us, for the first time in history we have the technologies and financial resources to eradicate poverty. Industrial-country investments in education, health, and school lunches are in a sense a humanitarian response to the plight of the world’s poorest countries. But more fundamentally, they are investments that will help reverse the demographic and environmental trends that are undermining civilization. 92

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