Ladies and gentlemen, there’s a war out there. It’s the longest running war humanity has ever known and its more prominent now more than ever, yet now more than ever we have more of an opportunity to defeat the enemy and do something about it. Forget terrorism, this scourge, this disaster is real and it kills more people than any battle ever has, and inflicts more human misery and suffering than weapons may inflict. It exists in every country and nobody is completely immune from it. Once it gets you, it doesn’t let go.
Never has inequality been so prevalent and so noticeable as it is today. How is it fair that few people have so much, and so many have so little? How can we waste so much of what we don’t want, when others want so much what we waste? Sometimes our biggest decision for the day is what e-mail to respond to first, when so many do not even have access to the most basic of luxuries that we take for granted – to think that household electricity and clean water are luxuries, and to us the word would imply a new plasma television or flash car.
Now let us not get carried away. To make someone wealthier, you don’t steal from those who have. Zambia learned this back in the 80s when they nationalised their mines that were producing 700,000 tonnes of gold a year, which quickly reduced to 300,000. Zimbabwe learned this by forcibly removing farmers from their farms to give to veterans, only to turn one of Africa’s richest countries into its poorest recording 100,000% food price inflation (World Bank 2008). The answer is incentives and incentives come with trade. China and India, once poor nations, have delivered over the last decade GDP growth rates almost treble the global average removing millions from poverty into full time jobs and driving motor vehicles. I overheard at a seminar recently that China is now outsourcing manufacturing to Bangladesh to take advantage of cheap labour and has shut down 1,000 factories. Global trade is spreading bringing new jobs and technology to those who previously did not have it.
“Lowering the costs of trade can speed up the rate at which proven medical technologies can be adopted by other countries” (International Policy Network). Attracting foreign investment is a good thing. Third world countries must abolish their tariffs to benefit their own people in cheaper prices and increasing efficiency for domestic producers. Fighting corruption and developing a sound legal framework to protect property rights attract global enterprise to set up shop, bringing with them know-how, employment, and more efficient methods of production. This basic premise sets a chain reaction, whereby people who now are able to earn income are able to pay taxes to be invested in roads, health and education, and purchase products and services requiring financial institutions to perform the function of transacting money, and lending to finance the expansion of credit worthy entrepreneurs. As people become more educated and the workforce becomes more productive, this has an exponential expansionary affect on growth. Note that if the developing world’s growth rate had been 1.5% higher in the 1980s, half a million infant deaths would have been averted (Pritchett and Lawrence 1996).
Around the world, average life expectancy increased from 46.6yrs in 1950-55 to 66.8years between 1955 to 2003, as technology and knowledge was diffused around the world (World Bank 2005). With an open economy free of barriers, knowledge is shared. Successful businesses know they need local knowledge, international experience, and a healthy productive workforce. But like any system, you need to have confidence that it will work. If people did not feel their money was safe in bank deposits, they would at once withdraw and the system would collapse. And no amount of money will fix corruption. Imagine investing millions into Enron, when you know the management team is unreliable and incompetent. Countries must act like businesses and attract investment in what they do best, doing so with incentives and the best incentive is openness and transparency. If you want to invest in an unknown, unproven product, you want to know how it works, how reliable it is and that you will get value for money. While I am not suggesting this can only occur in democracies, I am stating that this can only occur where investors have faith that their capital won’t be squandered.
We expect and demand this of listed companies, why not sovereign States? I argue that sending money without any expectation of return, creates a disincentive for the recipient to modify their behaviour or aim to meet any level of benchmark. I argue that aid to rogue nations is used to buy weapons and feed a hungry militia than help those most in need. A donation is an investment. I will give to the poor in hope that my money will help a child in need or a family be fed for the night. I am investing in “humanity” and if everyone did it the world would be a safer, happier place. But no one should feel obligated to give money if they can’t be sure it will help anybody in need. And we should expect that our leaders will act on our behalf to pressure rogue nations to cease genocide, build infrastructure, allow money to be invested in schools and hospitals, and open their borders to the extended arms of the world. Help them during times of famine and devastation. Because how can we continue to sleep easy without stopping to help those in need. Fighting poverty starts at home, by ensuring our indigenous people and homeless are afforded the same opportunities and care taken for granted by most Australians. That we help and support our fair share of genuine refugees. That we help our less fortunate neighbours by sending teachers, engineers and medical practitioners. This war won’t be won by guns and bombs. But it can be won with a little bit of love and understanding, and some compassion. The tools are there to achieve anything, and this war is a long way from over.
