Category Archives: Economics

For ye have the poor always with you

But, according to Mike Davis, we need not have had them in the numbers and living in the unimaginable conditions of squalor and degredation that we have today.

Mike Davis is an American left-wing academic, Planet of Slums is his 2006 study of the immiseration of roughly a fifth of humanity (immiseration, a word I hadn’t encountered before this book and which I rather wish I hadn’t). Davis studies the growth of slums globally, the conditions within them, the dismal prospects for improvement and the sources of the consequential vast explosion in poverty and misery that has taken place over the past 30 years or so. He does so in a work that is packed with figures and footnotes, every charge and comment backed by reference to external sources (of which, more later), his overall thesis being both readable and persuasive, if utterly dispiriting.

There is a tendency, in discussing books of this sort, to simply summarise the argument and state whether or not one agrees with it, but not to address the book’s qualities as a literary effort. That’s a shame, because readability matters for non-fiction too, if we can’t get through the text, the argument (however persuasive) is lost. Fortunately, although Planet of Slums was for me an extremely difficult and slow read, that difficulty arose due to the density of information within it and the grinding misery it depicts, page after page. Davis’s style however is clear, his lapses into sociology-speak rare and his passion evident on the page. With a work which contains more statistics on the average page than most economics texts, that prose clarity and that sense of anger are vital, without those elements it would be wholly unreadable. Too dry and too dark.

Davis opens with an explanation of the staggering growth in slums over the past three decades or so, the increasing pace of urbanisation and how the rate of slum expansion is so rapid and so extensive that “in many cases rural people no longer have to migrate to the city: it migrates to them.” Vast conurbations connecting city to city in long strips of semi-urbanised countryside form megacities, but megacities characterised by marginalisation and poverty for the vast majority of their inhabitants.

Davis spends time explaining the sheer scale of the problem, backing his analysis with a series of statistics which are so terrible they are I think genuinely hard to grasp, not due to complexity but due to their implications. The sheer volume of humanity living today in horrific conditions without access to basic sanitation or any form of formal job market becomes incomprehensible from scale alone.

Davis moves on to explore the historic causes, particularly colonialism and its legacy, describing the practice in the developing world of maintaining colonial systems of segregation so as to ensure the national elite was kept physically isolated from the rural and urban poor. He cites deliberate examples of French and British colonial policy in which rights of sanitation and desirable habitation were restricted to certain power groups, restrictions which were then continued post independence.

More recently, government after government he shows as having taken a deliberately punitive approach to their own poor. He is particularly scathing on South Korea and China’s treatment of slum-dwellers in preparation for the Olympics. He speaks of urban beautification programs which largely consist of shuttling people out of sight, often forcibly relocating the poor to overcrowded settlements where they are out of the immediate gaze of the more prosperous world. For him, the ultimate effect is as something from the writings of Philip K. Dick, a world consisting of fortified enclaves and edge cities of poverty (distopian versions of the edge cities celebrated in Joel Garreau’s groundbreaking book on the topic).

Davis also explores how governments across the world demonise the poor, identifying slums as crime epicentres and carrying out brutal raids and clearances, the land frequently being sold to property developers thereafter. Indeed, he shows clear links between slum clearances and property development, often with government officials personally profiting from the crackdowns they announce in the name of public safety. It is as I said a passionate book, one that it is difficult to read at times without feeling tremendous anger, though my more common emotion was one of simple despair.

Davis addresses too how the poor frequently pay more for those few services they actually receive than we in the wealthier parts of the world do, slum rents for example are typically far higher per square foot than rents in the most desirable parts of the same country, often by significant multiples. Equally: “Water sales is a lucrative industry in poor cities, Nairobi, as usual, is an egregious example, where politically connected entrepeneurs resell municipal water (which costs very little to families wealthy enough to afford a tap) to the slums at exorbitant prices.”

Davis keeps his real fury however for the IMF and World Bank. His thesis, again painstakingly supported by references and statistics, is that IMF structural adjustment programs have wreaked extraordinary havoc on the developing world, leading to an explosion of poverty in the past 30 years almost without precedent in human history. He cites requirements for public sector layoffs and salary cuts which in many cases lead to whole segments of society being suddenly cast into abject poverty, while the social services the poor depend on are eliminated. He notes too the effect of requiring free markets for the poor, but not for ourselves, explaining “SAPs devastated rural smallholders by eliminating subsidies and pushing them sink or swim into global commodity markets dominated by heavily subsidised First World Agribusiness.” Here he speaks to matters I have some knowledge of, and I am persuaded by his argument that essentially it is unjust to expose the developing world to free market pressures which in the developed world almost every government protects its own public from. The fall in public sector and agricultural sector incomes that results is staggering, for without subsidies and without the ability to sell to the West in the face of import controls and our own agricultural subsidies the farmers of the developing world simply cannot make enough to survive. To make matters worse, SAPs often require a retooling of the economy to be export rather than subsistence driven, exports which are made into a global market which is far from free.

Davis has been criticised for failing to offer solutions. For me, that is shallow thinking, the existence of a problem does not mean there exists also a neat solution to it. Davis describes the world as it is for much of its population, a world of Hobbesian squalor and horror in which the burden falls increasingly on women who work ever harder to help undemployed families living in unimaginable conditions keep going another day. Davis writes from a clearly left wing perspective, helpfully a consistent one (I don’t really care about a writer’s politics, as long as they’re clear enough to be recognisable and taken into account). My impression was that he would regard violent resistance as probably the poor’s best option, and that he probably thinks we largely deserve it.

Not everything is flawless, in a couple of places I noticed citations went to newspaper articles and in one case an extraordinary claim was supported only by an interview in a regional newspaper, but in fairness the strength of his approach of providing citations for his arguments is that it allowed me to look at his source and decide that it didn’t persuade me in that instance. In a curious way, I found the book as a whole more persuasive because he gave me the tools to reject parts of it (small parts).

Still, the statistics are the meat of the book, the simple mathematics of the volume of human faeces generated in many cities each day cross-referenced to the vastly smaller disposal capacities of those cities, such that over time the poor come to literally live in shit that is being produced faster than it can be taken away. The lack of water, the unsafe housing, the settling of fringe regions which are innately prone to earthquakes, mudslides, natural disasters, the litany of human misery. The statistics bludgeon the reader, reminding me that the human condition of which so many authors write is essentially a luxury of that part of the planet which knows where its next meal is coming from.

Davis ends with a vision of the security implications, bleakly assessed by US military planners who have no requirement to pretend the optimism of their political masters. Their analysis is of a future in which wars are increasingly waged in feral urban environments where “Night after night, hornet-like helicopter gunships stalk enigmatic enemies in the narrow streets of the slum districts, pouring hellfire into shanties or fleeing cars. Every morning the slums reply with suicide bombers and eloquent explosions.”

For the interested, there is a much more detailed writeup of Planet of Slums available at the LRB website here. It’s an excellent piece which delves into Davis’s analysis with more space than I have chosen to take here and which is extremely well written. I recommend it, and indeed anything else written by Jeremy Harding, unreservedly.

Planet of Slums


Filed under Davis, Mike, Economics, Reportage

He’s not the messiah, he’s just a very naughty boy

Confessions of an Economic Hit Man, by John Perkin

Originally posted 7 July 2008.

I rarely fail to finish a book, even works I don’t enjoy I generally persevere with as sometimes a novel or other work can be redeemed in whole by a single sentence near the end. Aldous Huxley’s novel Antic Hay is in many senses a repugnant work, filled with terrible people who are astonishingly self absorbed and difficult to spend time with. The novel is so unremittingly bleak for most of its length that it becomes genuinely challenging to care enough to turn the next page, but near the end it contains a sequence which redeems the entire novel, which casts into sharp relief the miserable solipcism of the bulk of its cast and which takes it from empty caricature to what is ultimately a powerful and affecting work.

Usually if a book seems terrible there is no such late payoff, but with most books I will persevere and try to give the work a fair chance.

Confessions of an Economic Hit Man I abandoned on page 50, when the author has a vision of Jesus. A vision incidentally which changes his worldview, but which he fails to act on for around another 20 years or so. The book is ostensibly non-fiction, nothing in it though persuades me the author genuinely believed himself to have seen Jesus (I’m not personally religious, but I have no issue with the idea someone might believe themselves to have encountered Jesus in a personal sense) and indeed nothing persuades me that the book is anything more than a purely cynical attempt to make money by peddling conspiracy theories to the American left.

I did skim the remainder of the book, I read some sections after page 50, mostly to check that my view wasn’t dramatically changed. It wasn’t.

Confessions of an Economic Hit Man is billed as an expose of the way in which the US government uses private corporations to lead third world countries into taking unwise development loans for US imperial benefit. John Perkins, the author, was one of these economic hit men (the term is he claims a term used in the real world by those who practice this profession), and in the foreword to the book he treats us to a conversation he has with his daughter where he worries that the “corporatocracy” to use his phrase will have him assassinated rather than let the book be published, but she persuades him to risk his life for our benefit. John Perkins, as of the time of this blog, is alive and well and selling alternative therapies and shamanic spirit-journey techniques in the US.

He is recruited in what even he refers to as a James Bond style interview, where a beautiful woman (actually, every woman in the book is beautiful, I don’t recall any other kind) recruits him to be an economic hit man explaining to him in clear detail that his job will be to produce intentionally misleading economic forecasts for developing nations, which forecasts will be used to mislead them into taking disadvantageous development loans. This is explained as being an intentionally cynical ploy designed to rob these countries of their wealth and as a deliberate act of American empire building – the US on his account having taken at government level (Republican, though since presumably Democrat administrations would be aware of this it seems odd none of them changed the policy in the last 50 years) a deliberate decision to create a global empire but deciding to do so through development loans rather than armies due to fears of the Soviet missile arsenal.

At this point my suspension of disbelief was already struggling. Not with the notion that development loans might be tied to preferential treatment of lender country corporations, they often are, not with the idea that development loans might often be made inappropriately and with disastrous consequences, certainly not with the idea that the growth forecasts driving them might be massively misleading.

What I struggled with was the James Bond villain-esque way in which all this is done. John Perkins as a young graduate is explicitly told he is being hired to be a bad guy, he is being hired to defraud nations. To put it simply, that’s just not very likely. Nor is it borne up by the book, where he describes his colleagues (and this bit I do believe) as fundamentally naive with a belief that they are helping debtor nations while showing no real understanding of those nations or the effects massive debt may have on them.

John Perkins has already told us in the foreword that he is risking his life for us, within a few pages he is (and I am not exaggerating) giving alms to lepers and showing his bravery by attending anti-US puppet shows. He is full of misgivings (unsurprisingly given on his account he was expressly told that he was joining the bad guys) though in practice he seems to reconcile them enough to continue in this industry for many years.

My objection to the book is not the subject matter, I think John Perkins has very cleverly taken a lot of truth and mixed it into the book, much of it taken I suspect from direct observation. Aid and development capital is routinely tied to economic benefits for the provider nation, projects are often encouraged which do not meet the real needs of the debtor nation, for example high quality train networks are built which only a handful of locals can afford to use while a far more useful local minivan bus service is left unfunded so leaving the majority of people without adequate transport (lowtech projects like minivan bus services really struggle to get international development money), motorways are constructed where there is no traffic to make use of them, massive container ports built where any impartial traffic forecast would show no meaningful prospect of their being meaningfully utilised. In these deals provider nation construction companies do make huge profits on occasion, while the host country reaps little real benefit. All this is sometimes true, and deserves much closer scrutiny than it sometimes receives.

But, it’s not all part of some dread secret conspiracy, revealed only to entry level economists. That’s a comforting myth, because if it were we could arrest those responsible and the world would be made right. Those who tie loans and aid to contracts for provider nation countries are typically quite open about it as they believe that’s an appropriate and right thing to do – it’s not a secret policy anywhere. Where it happens it is typically open government policy with those supporting it openly arguing for why they think those are appropriate conditions to aid and loans.

Equally, there is much to be said about developing world debt, how it is incurred, how the developed world may profit from it, about the ethics of that and the way the rich world profits from the poor. There’s much to be said about how trade barriers are used to protect developed world producers and prevent developing world producers from having fair access to free trade (trade barriers typically erected by developed world free trade advocates at that), there’s a lot to be said about how the developing world is denied access to healthcare, clean water and capital for appropriate development projects.

This book though does not really make those arguments, instead it posits a neat and convenient conspiracy of evil men (and their beautiful female agents) who conspire to deliberately defraud the developing world, the author is a messianic individual who when not providing alms to lepers claims he helped in this process by intentionally producing misleading economic forecasts (though on his own account his peers simply don’t think through their forecasts and simply produced what they thought their employers expected, a far more likely scenario in my view – Perkins appears to be the only person the conspiracy informed of its intentions, while he was a new intake economist), the author doesn’t persuade.

In my view this book is a calculated deception aimed at the American left, designed to appeal to the fears and concerns of that target demographic. It takes a number of very real issues, wraps them in an easily digested conspiracy framework which avoids the need to examine how developed world corporations and governments actually exploit the developing world and sells outrage and easy solutions to those who are not actually activists but who like to think of themselves as such. It’s no coincidence in my view that the author now sells spiritual transformations and spirit journeying techniques (quite how he reconciles that with his visions of Jesus I have no idea, he seems a man much prone to visions), I think he has identified groups that he thinks will swallow myths for cash, has taken his own real life experience working with developing nations and his own understanding of the issues surrounding the same, and has come up with a book which is essentially fiction but which is close enough to reality as to do little other than to obscure the very real ways in which the developed world takes advantage of the developing world.

It’s not a book I recommend.


Filed under Economics, Politics