Structural Adjustment Is Hitting
the U.S. Too
by Anuradha Mittal
from the book
Democratizing the Global Economy
Kevin Danaher - editor
Common Courage Press, 2001
There is enough evidence on how policies of the World Bank,
International Monetary Fund (IMF) and the World Trade Organization
(WTO) have come to connote colonialism and a dominating world
capitalist system for the Third World. The unregulated flow of
global capital has placed the fate of developing economies at
the mercy of Wall Street traders. However, nations of the South
are not the only victims of this process. There is also a "South"
in the North-right here in the United States-that is being harmed
by domestic policies of the U.S. government, such as the "Contract
With America" and "welfare reform." This is the
same package of policies imposed by the World Bank and the IMF
on developing countries.
With the rise of neoliberalism on a worldwide scale, Third
World countries have faced rampant privatization and the removal
of barriers to trade via structural adjustment programs imposed
by the World Bank and the IMF. In the United States, supply-side
economics, or "Reaganomics," have continued uninterrupted
under the Bush and Clinton administrations. In England it was
called "Thatcherism" but has continued virtually uninterrupted
under the "New Labor" government. Regardless of where
it has taken place, the onslaught has been remarkably similar:
debts and government deficits accumulated through military overspending
and tax cuts for the rich are being repaid on the backs of the
poor, women, immigrants, people of color and workers.
In both rich and poor nations, dislocations from economic
and corporate restructuring, and from dismantling the institutions
of social protection, have resulted in greater insecurity in jobs
and incomes. Never before has there been such a stark contrast
between the mass of working families waging daily struggles for
survival and pervasive media chatter about unprecedented prosperity.
The 'Third Worldization' of America
The double squeeze by corporate America and a U.S. government
catering to corporate interest has forced Americans to give back
quite a bit. For example:
* Despite glowing media reports on the booming economy, as
estimated 46 million Americans, nearly 17 percent of the population,
live below the official poverty line.
* The top 2.7 million people have as much income as the bottom
100 million. The richest one percent of Americans are projected
to have as much income as the bottom 38 percent. Wealth is even
more concentrated, with the wealthiest one percent of households
owning nearly 40 percent of the nation's wealth. The bottom 80
percent own just 16 percent of the nation's wealth. Further widening
this inequality, CEOs of U.S. corporations pocketed 419 times
the average wage of a blue collar worker in 1998.
* According to the Report on Household Food Security put out
by the U.S. Department of Agriculture in 1999, an estimated 36
million Americans in 10.5 million households do not have access
to adequate food.
* Economic growth is not reducing hunger because, even though
more households are in the workforce, their take-home pay is not
enough to feed their families. A full-time worker at minimum wage
earns $9,512 a year. For a family of four, that puts the family
income well below the federal poverty line of $17,072.
* A survey of 26 cities released in December 1999 by the U.S.
Conference of Mayors shows that hunger and homelessness has grown
unabated, despite an expanding national economy. Among two key
findings of the 1999 Status Report on Hunger and Homelessness
in America's cities, demand for emergency food related assistance
during 1999 grew at the highest level since 1992 (18 percent over
the previous year), and demand for emergency housing related assistance
grew at the highest level since 1994. Twenty-one percent of requests
for emergency food assistance are estimated to have gone unmet.
* The government has responded to this crisis by passing legislation
such as welfare reform which has resulted in 11 million families,
including eight million with children, losing their income. This
happened despite the fact that total federal spending for food
programs before welfare reform was only 2.5 percent of the federal
budget. More than half of the $54 billion in welfare cuts are
coming from food stamps that 25 million poor Americans depended
upon. Over 80 percent of food stamps go to families with children.
These cuts have resulted in increased hunger.
* In 1997, Second Harvest, the country's largest chain of
food banks provided food for almost 26 million people, nearly
ten percent of America's population. Even then it had to turn
away 2.3 million people. To compensate fully for the government
cuts, each of the 350,000 churches in the United States would
have to contribute an additional $150,000 and many churches do
not have a budget this large. To make up for the shortfall, the
non-profit sector would have to distribute a total of 24.5 billion
pounds of food over the next six years, four times more then the
current distribution and enough to fill five million Army National
Guard Trucks.
* The number of Americans who lack health insurance continues
to rise, climbing to 44.3 million in spite of a prosperous economy.
* Some seven to eight million Americans are homeless.
* In the Unites States approximately 20.7 percent of the population
age 16 to 65 is functionally illiterate; the majority of them
are low-paid workers such as farm workers, domestic workers and
other who labor long hours in low-paying jobs.
Indeed, structural adjustment Washington-style is giving the
U.S. a Third World appearance: rising poverty, widespread homelessness,
greater inequality and social polarization. But perhaps it is
the state of children that most starkly captures the 'Third Worldization'
of America. Today, the United States has the highest rate of child
poverty among the industrialized countries, with one in every
five children growing up in poverty. The number of children living
at or below one-half of the poverty line increased by 426,000
between 1996 and 1997. About 20 percent of all children under
the age of 18, or 14 million, live in food insecure homes.
Impact of IMF/World Bank Policies on Americans
* The U.S. trade deficit has mushroomed from about $107 billion
in 1990 to more than $270 billion in 1999. A study by the Institute
for Policy Studies shows how World Bank/IMF policy lending has
contributed to the increase of the U.S. trade deficit by prescribing
currency devaluations in debtor countries, which make U.S. imports
more expensive, and by prescribing cuts in government spending,
which lead to job losses and reduced purchasing power of people
to buy U.S. goods.
* Although U.S. unemployment is at a record low, the fact
that U.S. imports are far outstripping exports has displaced U.S.
jobs, particularly in the manufacturing sector. More than 530,000
U.S. manufacturing jobs were lost between March 1998 and September
1999. This is significant because manufacturing jobs generally
pay better and more often offer fringe benefits such as health
insurance and pension coverage than other sectors that employ
non-college graduates.
* World Bank and IMF programs have also contributed to downward
pressure on U.S. wages by prescribing the lifting of controls
on investment and so-called "labor market flexibility"
measures that weaken unions. These policies have contributed to
the global mobility of corporations, increasing their power to
bargain down wages and working conditions here in the United States.
Although real wages in the United States rose slightly in 1998
and 1999, low-income workers, including large numbers of people
of color and women, saw their wages erode during the l990s. Even
some globalization proponents admit that 20-25 percent of the
increase in U.S. inequality may be due to import competition and
employers moving (or threatening to move) to developing countries
where they can take advantage of lax enforcement of worker rights.
Corporate-driven structural adjustment has triggered severe
social stress in both the North and the South. The United States,
after dismantling many of the social mechanisms of the New Deal,
has addressed the discontent through punitive measures. U.S. expenditures
on criminal justice have increased four times faster than the
budget for education, and twice as fast as outlays on hospitals
and health. Today the United States has achieved the dubious distinction
of imprisoning a larger share of its population than any other
nation.
To counter this wave of corporate driven structural adjustment,
it is essential that we promote the common interests of the peoples
of the South and the North. This entails forging, across borders,
an alternative economic vision, one that brings the economy back
under the control of the community, one that fosters solidarity
instead of polarization.
Democratizing
the Global Economy
Globalization
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"Third Worldization"
of America
Reforming the System
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