Erkin Ünlü

Software Engineer

The Divide: A Brief Guide to Global Inequality and its Solutions

Date read December 12, 2021

How much I recommend: 10/10, Go to Amazon or Goodreads for other reviews

This book is an amazing eye opener. So the book talks about why global south (it means actually most of the world except for Europe and some other English speaking countries including USA etc) is so far behind the Western countries in terms of economic success. It starts with presenting the general premise that even though the Western countries are paying huge amounts of aid money to global south, they always lag behind, they have poverty that they can not eradicate and so on.

People find themselves surrounded by hideous poverty, by hideous ugliness, by hideous starvation.1 It is inevitable that they should be strongly moved by all this. Accordingly, with admirable intentions, they very seriously and very sentimentally set themselves to the task of remedying the evils that they see. But their remedies do not cure the disease: they merely prolong it. Indeed, their remedies are part of the disease. They try to solve the problem of poverty, for instance, by keeping the poor alive. But this is not a solution: it is an aggravation of the difficulty. The proper aim is to try and reconstruct society on such a basis that poverty will be impossible. And the altruistic virtues have really prevented the carrying out of this aim. Just as the worst slave-owners were those who were kind to their slaves, and so prevented the horror of the system being realised by those who suffered from it, and understood by those who contemplated it, so the people who do most harm are the people who try to do most good. Charity degrades and demoralises. Oscar Wilde

Fake news

Of course there are reasons for this situation and author starts digging into the false but widely circulated reasons cited in mainstream media. Taken generally from the likes of Why Nations Fail , people suggest that:

  • Global South is basically corrupt and lazy
  • Global South doesn't have capital, therefore they should focus on cheaper labour (as if we didn't hear about Marx)
  • Global South should implement more structural adjustments , as if they haven't implemented them enough already.

Hard news

But then, there are some real reasons as to why this Divide between the West and the Global South is there and it's getting bigger, and some of them are:

  • Colonialism: European nations plundered most of the Global South for hundreds of years! They stole the raw materials, they stole human beings, they stole labour, they stole nearly everything they could get their hands on. The beauty of the western capitals like London and Paris mostly comes from the money which is earned from the exploitation of the whole world.
  • After WW2, colonialism reached its end of life. Countries like India, Ghana began to gain their independence and rest of the Global South followed suit. Coinciding with the New Deal and Bretton Woods, whole world turned to developmentalism which basically meant that countries should invest in public goods and its public basically (mostly with strong tariffs). This created a huge increase in productivity and economic gains for the Global South and the Western world didn't like it. So, whenever they can:

    • They started to try invading countries again, like Cuba, Egypt, Vietnam and so on. This was a very expensive strategy both in terms of finance and politics back at home.
    • West then started to use coups and spy actions against the progressive countries. This strategy worked really well for a while but after some years, public also learned about these activities and these interventions became a bit last resort mainly.
  • And then we hit the seventies. Productivity gains from WW2 levelled off, OPEC oil crisis hit the world, creating a serious inflation. 70's already saw an increased amount of debt circulating the globe, much thanks to all the money invested (most probably forced by the US) in the Wall Street by Saudis which was made from the oil crisis. So what happened next? US increased its interest rates to record levels and this put into motion a serial bankruptcy in the Global South. What happened afterwards? All these poor counties were taken over by the rich countries' finance systems. So, global south had to open their markets to world, reduced all the tariffs, privatised the national assets and changed their capital and labour laws (all these are called structural adjustments which sounds really nice if you don't know the bitter recipe it entails). Result is the perpetual serfdom to western financial centers.
  • To add insult to the injury, global organisations like United Nations, IMF, World Bank and so on all changed nature to accommodate this neoliberal finance ruled free market ideology. These institutions used to help the poor countries to develop themselves. But after the 80s, they all became structural adjustment enforcers. Furthermore, with new institutions like WTO, and patent systems that are in favour of rich countries, the level playing field became a serious myth.

As you'd guess by now, global south is unfortunately chained to global finance, and there's no end in sight to this torture. Because, as we outlined above, the game is rigged.

Solutions

As is the tradition with these kinds of books, the author presents some solutions to this problem. Some of them are:

  • Deleting debt: Although this sounds crazy because debt and promise are some of our main shared cultural values through out the whole world, this actually makes sense. As the author writes, rich world is going to hurt if poor don't pay, but if the poor pay their debts, they will die. With the interest rates they are given, compound interest is breaking the backs of these poor countries. We should really delete some of the debts.
  • Chasing and shutting down the tax havens: These places are one of the most prominent ways that poor countries are getting ripped off, forever. If we really want to help the poor, we should stop people using these places to siphon money out of poor countries. Similar can be said about inter company mis-invoicing (also called Transfer Mispricing) to evade tax in the host countries where the tax rates are higher.
  • Most radical solution (I like radical ideas) is degrowth (author has actually wrote a book on degrowth later on). With the advent of climate emergency, (as the UK's prime minister calls it aptly, a minute to midnight), we need to descale our economies in a healthy way. The obsession with debt based growth has already hit the limits of our natural world. We should hit the brakes and let the poor countries grow a bit more (they need to plunge out of poverty) and then the whole world needs to slow down, together.
  • We should also stop subsidising the fossil fuel industry and froze their not yet extracted assets. As Naomi Klein tells us, capitalism is at war with the natural world. And we know that we can't win against the world in such short time. We should get rid of the artificial notion that is maximising the shareholder value. This is childish and greedy and puts all of us at risk. (I am shocked to learn that it's actually illegal in the US to act against shareholder value with the precedent set in Dodge vs Ford Motor Company court case.)

Verdict

This is a really valuable book and it tells us to solve the root problem of the disease rather than trying to treat the symptoms. Aid is good and gives you the moral high, but it actually solves nothing. If the West is sincere about its desire to eradicate poverty, it should stop exploiting the Global South and let it grow out of poverty itself.