Why we must reject the dangerous delusions of Davos

Skiing in Davos, where the World Economic Forum meets this week
Skiing in Davos, where the World Economic Forum meets this week

By Alex Scrivener

It's a wonderful time to be alive.

Global poverty is plummeting thanks to the kind contributions of philanthropists and big aid donors. We've beaten the financial crisis and the world is on the way to economic recovery. Free trade is ensuring that there are fewer poor countries in the world than ever. And the boundless innovation of our entrepreneurial financiers has led us closer to solving the challenges of climate change and environmental degradation through markets in carbon and biodiversity.

This is the reality presented to us by many of the participants in the World Economic Forum currently underway in Davos. It's tempting to believe this triumphalist narrative in which our economic and political elites are busy 'sorting out' the problems of the world. It's a narrative that appears at first sight to come with a lot of evidence: international poverty statistics, GDP growth figures, development indices and reports.


Unfortunately, as a new report from Global Justice Now has shown, when you scratch the surface of this story, and look closely at the figures we are being fed, things begin to fall apart.

Now let's cast those (Davos standard issue) rose-tinted glasses aside and take a look at reality.

First, there's the myth that poverty is falling because of the efforts and policy prescriptions of western governments and aid agencies.

World leaders at Davos, alongside many in the international development sector itself, are currently busy patting themselves on the back for successfully achieving the goal of halving global poverty. It's a promise they made back in 2000 as part of the millennium development goals.

The problem is most of this supposed fall in poverty comes from China, which has had almost no help from the aid agencies and philanthropists who are trying to take credit for it. Once you take China out of the equation, there has been very little improvement, at least in terms of raw numbers of people living in poverty. In fact, the number of people in poverty in sub-Saharan Africa (perhaps the continent where the aid industry has been most active) has almost doubled since 1981.

And that's using the completely arbitrary poverty line of $1.25 a day. A recent study showed that if you increased that boundary by just two cents, much of the statistical reduction in poverty would be wiped away at the stroke of a pen.

But falling poverty is not the only myth being peddled in the gilded chalets and conference halls of Davos.

There's also the widespread dogma that completely free trade is always the right policy for every country. This is just not true historically. For example, Ghana's adoption in the 1980s of ultra-free market policies promoted by the World Bank led it to have a lower GDP per capita in 1994 than it did in 1983. Conversely, Malaysia's fast recovery from the 1990s Asian Financial Crisis has been credited to its willingness to set aside open markets, introduce capital controls and protect its currency in the aftermath of the crisis.

It's this ideological attachment to free trade at all costs that has led to the crazy situation whereby aid agencies appeal for £3 a month to help feed people in countries which export large amounts of food.

Perhaps the most pernicious myth peddled by right-wing politicians and big business is that the private sector provides the one-size-fits-all solution to pretty much all of the world's problems. We're encouraged to think of businesspeople as entrepreneurs, wealth creators and innovators while disparaging those who depend on the state for support.

So, rich countries spend millions to spread the dogma of 'private good, public bad' across the world. When it comes to big problems like climate change, instead of putting serious money towards curbing emissions, governments see 'mobilising' (ie using lots of taxpayers' money to subsidise) big corporations as the priority. In countries where people don't have a decent water or electricity supply, the prescription has often been privatisation.

But the evidence suggests that the privatisation of the world's problems just doesn't work. For example, in Tanzania, where aid money paid for a pro-privatisation pop song, the British company involved in the privatisation of the country's water system was expelled from the country after just two years for sheer incompetence.

And all the talk of big business being creators of wealth belies the fact that subsidies for big business in rich countries can dwarf state benefits paid to ordinary citizens. In the UK, we spend just under £5 billion a year on Jobseekers' Allowance but give out an estimated £85 billion every year in corporate subsidies. And that's not even including one-off acts of largesse such as the £850 billion bailout of the banks.

So if there's so much wrong with the mainstream model of economic development, why will we hear so much about the great 'progress' being made in fighting poverty or the 'leading role' big business is supposed to play in combating the world's problems?

Alas, the myths of the Davos elite are very convenient. They cast the super-rich as heroes of charity, rather than as the unjust beneficiaries of a system that has brought us a world in which just 80 billionaires own as much wealth as the poorest 3.5 billion people.

And, as the poor as more or less excluded from the discussion there, these are myths that will go more or less unchallenged.

Alex Scrivener is the policy officer at Global Justice Now and the author of The Poor Are Getting Richer And Other Dangerous Delusions. A series of 7 interactive infographics dealing with the ‘dangeous delusions' of Davos can be found at www.globaljustice.org.uk/delusions

The opinions in Politics.co.uk's Comment and Analysis section are those of the author and are no reflection of the views of the website or its owners.

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