Plan B 4.0: Mobilizing to Save Civilization (Substantially Revised) by Brown Lester R

Plan B 4.0: Mobilizing to Save Civilization (Substantially Revised) by Brown Lester R

Author:Brown, Lester R. [Brown, Lester R.]
Language: eng
Format: epub
Publisher: W. W. Norton & Company
Published: 2009-09-24T21:00:00+00:00


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.



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