Globalization & the Poor

The urbanization of poverty is being propelled by a tremendous increase in the transnational movement of people and capital. The rapid transfer of money and jobs to cities and countries where cheap labor can be found has fueled by a race to the bottom. For the urban poor who are impacted by this race, there are no winners, and the losers will most likely find themselves among the projected two billion people who will be living in slums by 2030.

Hardest hit by globalization are women and children - the most vulnerable of urban dwellers. Poor women are becoming increasingly marginalized as the feminization of poverty manifests itself in many parts of the world.

The positive aspects of globalization, including greater longevity, increased literacy, lower infant mortality and wider access to infrastructure and social services, mask the unfortunate truth that these benefits are not being shared equally. The effects of globalization on cities – both positive and negative – need to be better understood if public policy is to be effective in bettering the lives of those who live in them.

Under globalization, manufacturing activities in cities have been relocated offshore to the developing economies whose lower labor costs, lower taxes and less rigorous environmental protection enable higher profits. The socio-economic consequences of globalization weaken access to basic infrastructure and housing, fuel the creation and expansion of slums, and reinforce the negative environmental and health impacts affecting the urban poor in many cities.

Demographic shifts, including transnational migration and poor integration of ethnic and racial groups, add impetus to these changes. So, too, does the ability (or not) of households and individual people to cope with rapid economic change. Those on the losing end of these changes can easily find themselves confronted with the loss of jobs, and the consequent sale of assets in order to survive, converting them into the new poor, leaving them even more insecure and vulnerable in the face of economic change.

The last two decades have witnessed a transformation of the global economy, which has led to vast economic, social and political realignments in many countries and cities. The trend towards open markets has enriched some countries and cities tremendously, while others have suffered greatly. World trade in this period has grown from about US$580 billion in 1980 to US$6.3 trillion in 2004—11-fold increase. Flows of capital, labor, technology and information have also increased tremendously.

Among the losers in this race are female workers, whose wage levels and working conditions have declined as a result of the dropping of barriers to footloose industries. This same dynamic is evident inside individual cities as well, leaving many people unable to obtain stable jobs and incomes. This leads to changes in patterns of social inclusion and exclusion across cities, often along racial and ethnic lines.

The distribution of the fruits of globalization reflects private-sector judgments about the expected financial returns to these investments, their security, and the economic and political environments in which they occur. Corporations have tended to concentrate direct investment in ten countries, including China, Brazil, Mexico, Indonesia and Thailand. In stark comparison, the poorest countries have seen no such investment.

The vacuum created by footloose industries is rarely filled by job opportunities for the poor. Rather, any new jobs tend to be in knowledge-intensive industries, many requiring university-level education.

The race also occurs within individual cities, resulting in job losses where large segments of the labor force have to shift from one sector to another. The urban poor are losing jobs and benefits and must now find other income-generating opportunities in the informal sector, which offer no security or benefits.

The loss of secure jobs with secure community roots fosters an informalization of the urban economy, with more people eking out a living in unregulated sectors. Several economic processes converge to informalize employment and other aspects of urban life. The closing of formal-sector enterprises often coincides with the downsizing of ancillary industries and services. As one industry declines – as with light engineering in Karachi - incomes in the city as a whole reduce. Former employees are no longer able to purchase services on the street; hence, street vendors also suffer. Simultaneously, if utility tariffs increase, other enterprises suffer and are forced to reduce their operations or close altogether.

Globalization has set cities against each other in a desperate competition for a share of highly mobile capital and trade. The needs and desires of global capital must be balanced with policies based on the needs of the region’s own inhabitants. Otherwise, any effort to alleviate urban poverty will expire, as meaningless gestures that provide little more than temporary relief – and the gap between rich and poor will continue to grow larger.

Jobs, consumption patterns and opportunities for social mobility are all easily influenced by external factors. This instability can be manifested in both national and local contexts through at least four important channels: patterns of investment, labor markets, prices and public expenditures. Moreover, they occur in different locations within the city, creating patchworks of decay, renewal, and economic revitalization. The challenge for national and local authorities is to identify which kinds of changes are occurring, or better still, which types of changes can be anticipated, in order to consider whether there are measures that can cushion or mitigate these impacts. To do that, changes must be anticipated and capital set aside to deal with them.

While government may feel its budget is severely constrained, it needs to apply discipline to save some of their resources for these future needs. This does not mean borrowing and thereby passing on debts to future generations. It means saving for the future. In reality, this saving is an insurance policy against future unknowns. Having such resources at hand allows decision-makers to face the future more confidently and to smooth out the impacts of volatile changes in the global economy at large. (www.asifjmir.com)

Emphasizing Well-being

In recent years, psychologists studying measures of life satisfaction have largely confirmed the old adage that money can’t buy happiness—at least not for people who are already affluent.

A nation is successful not when it’s rich but when its people are happy. If you are very poor, there is no doubt that greater income can improve your life. But once the basic needs are secured, well-being does not necessarily correlate with wealth. The social and psychological needs of human beings also shape our cultures, and help to determine whether our civilization is sustainable or not. Good life is redefining prosperity to emphasize a higher quality of life, rather than the mere accumulation of goods.

The Prime Minister is busy sketching up plans for making continuing increases in gross domestic product (GDP) as a chief priority of domestic policy, under the assumption that wealth secured is well-being delivered.

Whether due to curbs on hundi business as a post-9/11 scenario or owing to connoisseur planning, foreign exchange reserves (FER) of Pakistan touched highest levels ever in the previous government. With increased GDP and FERs the number of suicidal deaths also grew larger when poverty ridden people take their lives. This situation demonstrates that some link was broken somewhere. And that’s about social moorings and calls for a shift in paradigm.

The government must focus on delivering what people most desire. Indeed, a new understanding of good life can be built not around wealth but around well-being: having basic survival needs met, along with freedom, health, security, and satisfying social relations. Consumption would still be important, to be sure, but only to the extent that it boosts quality of life.

Pakistani society if focuses on well-being will involve more interaction with family, friends, and neighbors, a more direct experience of nature, and more attention to finding fulfillment and creative expression than in accumulating goods. It should emphasize lifestyles that avoid abusing our own health, other people, or the natural world. In short, it will yield a deeper sense of satisfaction with life than many people report experiencing today.

What provides for a satisfying life? The disconnection between money and happiness in wealthy countries is perhaps most clearly illustrated when growth in income is plotted against levels of happiness. In the United States, for example, the average person’s income more than doubled between 1957 and 2002, yet the share of people reporting themselves to be very happy over that period remained static.

Happiness is best predicted by the breadth and depth of one’s social connections. People who are socially connected tend to be healthier—often significantly so. More than a dozen long-term studies in Japan, Scandinavia, and the United States show that the chances of dying in a given year, no matter the cause, is two to five times greater for people who are isolated than for socially connected people.

International development professionals also now acknowledge that strong social ties are a major contributor to a country’s development. The World Bank, for instance, sees social connectedness as a form of capital—an asset that yields a stream of benefits useful for development.

Creating a higher quality of life requires us to help create new political, physical, and cultural infrastructures of well-being. Pakistan has no such infrastructure and is thus ranked 167 out of 180 countries in Well-being Index. Sri Lanka ranks 49 and Bangladesh 131. Interestingly, Nigeria ranks 133, a position better than Pakistan.

Year after year, the Human Development Index report shows Pakistan lagging behind the rest of the regional countries. Our investment in realizing the human potential remains the lowest in South Asia. The HDI report lists a shocking situation of the poor quality of life in Pakistan.

The standard tool used to measure societal health, GDP, is much too narrow to serve as a yardstick of well-being because it sums all economic transactions, regardless of their contribution to quality of life. It also ignores entire swaths of non-market activity that contribute to individual and society well-being.

A well-being society would offer consumers a sufficient range of genuine choices rather than a large array of virtually identical products. Businesses would be encouraged through economic incentives to deliver what consumers really seek—reliable transportation, not necessarily a car; or strong neighborhood relationships in lieu of a large house with a big yard. Choice would be redefined to mean options for increasing quality of life rather than selections among individual products or services.

If focused on well-being Pakistani society would ensure that everyone in it has access to healthy food, clean water and sanitation, education, health care, and physical security. It is virtually impossible to imagine a society of well-being that does not provide for people’s basic needs.

Making the transition to a society of well-being is a challenge to the new premier given people’s habit of placing consumption at the apex of societal values. All the same, any move in this direction starts out with two strong advantages. First, the human family today has a base of knowledge, technology that can be invested in well-being rather than in continued material accumulation for its own sake. A second advantage is simple but powerful: for many people, a life of well-being is preferred to a life of high consumption.

By nurturing relationships, facilitating healthy choices, learning to live in harmony with nature, and tending to the basic needs of all, the PPP Government will leave its indelible footprints in history if it shifts from an emphasis on consumption to an emphasis on well-being. This could be an apposite response to the growing number of suicidal deaths due to poverty, and to be his great achievement in the twenty-first century.