- World leaders from rich countries
really want to solve global inequality, right?
Wrong!
If you listen to them, you'd think they do.
- Inequality is exploding!
- United States is the world's largest giver,
in the world, by far, of foreign aid.
- Rich governments do give more than $130 billion
in aid, each year, to poor countries.
But the truth is, the aid narrative is a lie.
It hides the brutal reality of how the global economy
actually works.
I was born in Eswatini, a small country
in southern Africa, and I studied in the U.S.
I've spent much of my life analyzing global inequality.
"Global inequality" describes the income gap between rich
countries - sometimes referred to as the global north -
and the poorer regions of Africa, Asia and Latin America,
often referred to as the global south.
It's a huge gap.
Now we all know that during the colonial period
the global north plundered the south
for its own enrichments.
Gold, silver, land, slaves and labor,
generating a huge income gap between north and south.
Now that the colonial era is over
you'd think the gap was closing, but guess what?
It's not. In fact, today it's four times bigger
than it was in the 1950s.
So why is inequality increasing if so-called
generous rich countries give so much aid?
It's because they give aid with hand,
taking much more with the other.
Let's break it down.
Each year about $2 trillion
flows from the global north to the global south.
That's aid, loans, foreign investments, everything.
But you know what?
$5 trillion actually flows back
in the opposite direction, from the global south
to the global north.
That means that the north takes a net total
of $3 trillion U.S. dollars from the south every year.
That's 24 times the aid budget that the south receives.
It's a huge transfer of wealth from poor countries
to rich countries.
How is this happening?
First, through often-shady financial activities,
from tax evasion and illicit money transfers
involving big multinational companies to interest payments
on debts that have already been paid off many times over.
Second, through international trade rules
designed to benefit rich countries,
allowing them to extract labor and resources
from poor countries at artificially low prices.
The consequences are mind-blowing.
Get this:
The people of the global south contribute most of the labor
and the resources that go into the world economy
but the poorest 60% of humanity receives only 5%
of all of the new income that's generated
by global economic growth each year.
The rest goes straight to the already-rich.
Sounds complex and totally unfair, right?
The point is, rich nations grow rich
at the expense of the rest of the world.
So what makes this possible in the first place?
Power imbalances.
Basically, richer nations of the global north -
I'm talking the U.S., U.K., Germany and France,
but also Canada, Australia, Japan and others -
get to control international trade in their own interests.
Take the World Trade Organization, for example,
which sets the rules of international trade.
Technically, it's one nation, one vote.
But in reality, rich nations have all the bargaining power.
It's like a monopoly.
The same rich countries also have almost all of the voting
power at the International Monetary Funds
and the World Bank.
At the IMF, the U.S. alone has 16% of the votes
and veto power over all major decisions.
But all of the countries of the global south
combined - home to about 85% of the world's population -
have less than 50% of of the votes.
In other words, people in developing countries
have only about one-tenth of the votes
that people in rich countries have on a per capita basis.
It's a huge and even racist imbalance,
kind of like a global apartheid right at the heart
of our international institutions.
Rich nations have leveraged this power to prevent poor
nations from using progressive policies, like tariffs
and subsidies, to develop their own industries.
And the irony is, those are the very same policies
that rich nations themselves
once used for their own growth.
Historically, it hasn't always been this way.
During the colonial period, the global south
was forced to serve as a source of raw materials,
slaves and cheap labor for the north.
But by the 1950s, poor countries had freed themselves
from colonialism. They were electing their own leaders,
introducing land reforms, social spending and subsidies
for their domestic industries. And it worked -
it was a development miracle for the south.
- This decade is the decade of African independence!
Now, you might think that major powers
would be happy about this.
After all, they claimed to be all for developments.
Wrong again!
They were not happy.
The rich north was losing access to the cheap labor
and precious resources they'd enjoyed under colonialism.
So they intervened, and by the 1980s
they had re-imposed the old colonial logic
on the global south.
So, how did they do it?
First of all, with coups in Iran, Guatemala,
the Congo and so on.
They toppled democratic leaders and replaced them
with dictators that would serve their economic interests.
Then by leveraging their power as creditors
to force global south countries to reverse their progressive
reforms, basically kicking away the ladder to developments.
The aid narrative obscures the truth.
Aid is actually flowing in reverse.
Rich countries aren't developing poor countries.
It's poor countries that are developing rich ones.
Colonialism never ended, it just changed form.
But it doesn't have to be this way.
Inequality is not a natural fact, it's an artifact,
a consequence of power.
We need to reverse the assumption that aid is the solution
and change the rules of the game to make the global economy
fairer for the world's majority,
so they have a real say in the decisions that affect them.
Want real solutions?
Democratize global governance to give the south
a fair share of voting power.
Cancel old debts.
End illicit financial flows and resource theft.
Allow poor countries to use subsidies
and tariffs to develop their own economies.
And set a global minimum wage so that workers
in the south receive a fair share of the value they produce.
Poor countries don't need charity, they need justice.