What do you think – Is it right to make money from the poor and starving?
Perfect
Making money from the poor and starving
There are things that one reads about in Newspapers and is left wondering whether what they have read is true or even plausible. We all know that some Newspaper Editors will do whatever they can to sell their papers and normally that involves outrageous headlines.
For my blog here I thought I would pick out a couple of headlines that left me speechless and indeed wondering if they were true at all.
HEADLINE 1
Third world debt is rich pickings for Vultures
This heading is fairly old but is core to what is wrong with AID to Africa today and as such a year on I still can’t get it out of my mind! It dealt with VULTURE FUNDS
These funds work on the basis on buying up developing world debt, knowing very well that the developing world country is so poor and is unlikely to pay and when this become evident the “vultures” pounce.
What is shocking about this is that these vultures are not breaking the law well not here in the UK anyway. There is however an irony in this because the developing world country is unlikely to pay and the only way that country can pay is by dipping into the AID that is allocated to it for health, education, or food. Furthermore, AID is made available through our tax system here in UK and as such we the tax payers are putting money into these vultures pockets.
HEADLINE 2
How Goldman gambled on starvation
This headline was in the Independent on Friday 2nd July 2010 and deals with how the likes of Goldman Sachs speculated on food prices leading to massive starvation in places such as Ethiopia. You can read the rest of the article here http://www.independent.co.uk/opinion/commentators/johann-hari/johann-hari-how-goldman-gambled-on-starvation-2016088.html
The one thing that these headlines have in common is the fact that rich/fat cats make financial gains from the poor and surprisingly it is not only the poor of Africa but those in Europe too be it through the tax system. If we all had a choice we would probably opt out of paying taxes, especially if we knew that our hard earned cash was going to bail out the Vultures!
The question is there is all manner of regulation in the West, so why are the scenarios described in above allowed to happen? Are the regulators part of the game or they just to slow to catch on or worse still simply don’t care?
Last year’s Reith Lectures dealt with the issue of ethics precisely that although some things can be sold it doesn’t mean that they should. Professor Sandel cited a case of selling refugees, if Japan and Australia didn’t want to take in refugees an obligation placed upon them by international rules and regulations they could pay Uganda to take them on, that way they meet their obligation, Uganda gets an income but is it the best outcome for the refugees? Is it ethical or moral to trade in people this way?
So although the Vulture funds and derivatives based on food are legal it doesn’t mean that the regulators should allow the financial systems to trade in them. These practices hurt those at the bottom of the period be they in the developed or developing economies.
Do the finance houses that deal in such funds care? What do you think?
About IdaHornerFounder of Ethnic Supplies a social enterprise working to alleviate poverty amongst East African women involved in textile and handicraft production. Managing Editor of Africa on the blog
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22 Responses to What do you think – Is it right to make money from the poor and starving?
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Hmmm, not sure that the bonuses are actually lower – the rich seem to be continuing to get richer
I watched this youtube video the other day – a Marxist analysis
http://www.youtube.com/watch?v=qOP2V_np2c0
Quite fascinating for those of who remember the problems being blamed on labour being too strong back in the 70s and 80s, and now the problem is defined as finance being too strong…
The analysis is helpful – but of course there has never been a convincing solution. It’s the same with the cuts now – if you take money out of the economy, where does growth come from? How can people buy if they don’t have any money? The same problem between countries as within them…
In the past growth has always depended on opening up new markets. Now we’ve discovered that credit doesn’t work too well, what next?
It’s not something that can be solved by tinkering with the rules of the game any more, we need to change the game.
With an increasing population, and increasing disaprity between rich and poor, between countries and within them – and not enough wealth to go around (at least not while so much of it is creamed off at the top) – there’s going to be increasing unrest. Even in China there are more and more strikes…
Profit at any cost isn’t going to help any of us – we need to do something about our addiction to consumption if we are to do anything about the dangers of climate change.
So I agree with you Ida. Some of these prctices are not only legal, they are encouraged by our culture. We need to make some very fundamental changes.
Hmmm, not sure that the bonuses are actually lower – the rich seem to be continuing to get richer
I watched this youtube video the other day – a Marxist analysis
http://www.youtube.com/watch?v=qOP2V_np2c0
Quite fascinating for those of who remember the problems being blamed on labour being too strong back in the 70s and 80s, and now the problem is defined as finance being too strong…
The analysis is helpful – but of course there has never been a convincing solution. It’s the same with the cuts now – if you take money out of the economy, where does growth come from? How can people buy if they don’t have any money? The same problem between countries as within them…
In the past growth has always depended on opening up new markets. Now we’ve discovered that credit doesn’t work too well, what next?
It’s not something that can be solved by tinkering with the rules of the game any more, we need to change the game.
With an increasing population, and increasing disaprity between rich and poor, between countries and within them – and not enough wealth to go around (at least not while so much of it is creamed off at the top) – there’s going to be increasing unrest. Even in China there are more and more strikes…
Profit at any cost isn’t going to help any of us – we need to do something about our addiction to consumption if we are to do anything about the dangers of climate change.
So I agree with you Ida. Some of these prctices are not only legal, they are encouraged by our culture. We need to make some very fundamental changes.
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My experience is that finance houses don't care AT ALL about what they're investing in, only about the profit. That's probably a bit unfair on the ethical funds, but they are few and far between.
I can't help but wonder if that accounts for the mess that we are in! Worrying still I hear that inside those institutions it is life as usual, whilst the rest of us struggle to make ends meet.
No, no you don't understand….life isn't carrying on as normal. Fund performance is down so the bonus payments have been reduced….
Reminds me of when I was getting some pension advice back in 2003. I asked to invest in green and ethical funds and they laughed at me and told me there wouldn't be enough to pay me a pension. That part is the only part of my pension that ever performed well, the 20% invested in commercial property has been going downhill since 2007…
I made a load of profit in the Jupiter Ecology fund. Enough to leave my first husband
Sarah, get your funds switched, sharpish!
We should all be very mindful of what we're investing in (hmmmm, that could lead to another blog….), and there's no excuse whatsoever these days to not be when there are fund factsheets readily available, or you can instruct your adviser to do the research for you.
Really Kate? So is this all wrong http://www.personneltoday.com/articles/2010/04/… ?
What Kate is saying, in the world of finance what is wrong, to them, is their bonuses are lower and that is their main concern, not that what you said was wrong, but their outlook. I am sure Kate will correct me if I have misinterpreted, but I have the foresight of her next blog….
Ah! OK I can see that now
As a customer of the Co-operative Bank, who although not perfect are certainly a lot more ethical than most High Street banks, we were sitting pretty and secure when the credit crunch first hit. It was one of the few banks not affected.
I know I can't do anything at the big multinational level, but if I buy fairtrade products and encourage others to do so, the demand for fair trade will hopefully grow, more fair trade collectives will be formed in Africa and other parts of the developing world and hopefully this will give more power and money to the people who need it most. And that is not the banking elite.
Ha yes, I was being sarky about the bonuses, not sympathetic! The entire system needs to change – just don't ask me how, I haven't got that far yet!
Ida – when they snidely, sneakily and quietly trash the expected performance of the funds they are selling, (I think they even bet against them, didn't they?) I don't think you can expect the word 'ethics' to be uttered with any conviction out of any of their mouths.
Twitter: Linda_Mattacks
That's interesting Maggie. I used the Co-op for years, precisely because of their ethical investment policy. They were also an excellent bank to work with. Good to know they kept out of the dodgy mortgage game and survived the downturn.
Strange world we live Ann,, but I do hope that we take away some good lessons from this bu the trouble is we have got very short memories as human beings..
Yes I heard the Co-op were a good Bank. Fairtrade has done a good job of high lighting the plight of farmers in developing economies, if only they could the extra mile- VALUE ADDITION AT SOURCE create more jobs, governments collecting more in tax etc, that is where the real value is as well the ending of poverty in sustainable terms
I suppose I can dream Linda- with emphasis on dreaming
The short answer is NO.
My OH worked in the city for a few years many moons ago, trading in something called Asset Swaps. I don't know how ethical, ethical is, but the vast majority of financial insitiutions are ONLY interested in profit and are constantly seeking 'new products' to bring to market to exploit evolving situations. These are now often very convoluted and based on a string of linked deals (hence the term 'swap'). If any link in the chain becomes weak, the whole chain falls. Hugely risky scenarios. Also, the whole bonus system was apparently geared around greed – the strongest sales people were the greediest and the system fed their desire for more.
Interesting points Ann – and a key question might be, why do we need growth? That might sound daft, but growth is often about relative power. i.e. the US economy must grow in relation to other economic powers in order to maintain its position as a leading economy, but is growth what's really needed to sustain itself, or is it more a case that redistribution of its own wealth is required to address the issues faced by the poor and the vulnerable? That's a bit simplistic, but Chomsky's books are a good read on these issues.
Surely progress has to be partly based around the (age old) requirement for better distribution of wealth – huge institutions whose obscene profits are shared between very few people are a major factor. We need more people sharing those profits.
Yes, investors are after the cash and the bottom line but I do wonder where the regulators! Defining Ethical, hmmm possibly means different things to different people. And I can imagine the vultures stretching that out..
Rasna Warah while writing in Kenya's Daily Nation had this article but hers focused on NGOs and such organisations http://ow.ly/28fx2