NGO
Another Way (Stichting Bakens Verzet), 1018 AM
Edition
05: 24 February, 2011.
Edition
06 : 01 May, 2011.
Edition
07 : 20 September, 2011.
01. E-course : Diploma in
Integrated Development (Dip. Int. Dev)
SECTION A : DEVELOPMENT
PROBLEMS.
Study value :
04 points out of 18.
Indicative
study time: 112 hours out of 504.
Study points
are awarded only after the consolidated exam for Section A : Development
Problems has been passed.
First block : Poverty and quality of life.
Study value :
02 points out of 18.
Indicative
study time: 57 hours out of 504.
Study points
are awarded only after the consolidated exam for Section A : Development
Problems has been passed.
First block : Poverty and quality of life.
First Block : Section 1.
Analysis of the causes of poverty. [26.50 hours]
First Block : Section 2. Services needed for a good quality of
life.
First Block : Exam. [ 4 hours each attempt]
Block 1 of Section
1. Analysis of the causes of poverty. [26.50 hours]
Part 1 : Introduction
to the causes of poverty.[06.50 hours]
02. Some factors linked with
poverty.
04. Financial leakage : food
and water industries.
05. Financial leakage :
energy.
06. Financial leakage : means
of communication.
07. Financial leakage : health
and education.
08. Financial leakage : theft
of resources.
09. Financial leakage :
corruption.
Part 1 :
Introduction to the causes of poverty.[06.50
hours]
03. Debts and subsidies. (At least 30 minutes)
Look at slide 3 :
03.
Financial leakage : interest and subsidies.
The slide covers a vast area. At this stage, the basic concepts in
question should be understood.
Think about the following points.
1. THE DEBT SYSTEM
Debt.
In industrialised countries, 99% of new money is created by private
banks against payment of interest. Our financial system is exponential.. The
higher the amount of the collective debt, the more profit the private banks
make.
For more information consult:
Powerpoint presentation of the monetary system.
«The ripple effect » : Financial system
mechanics explained for the first time.
Summary of «The ripple effect ».
Suppose you have no money. Your bank lends you € 100 for one year at 10% interest, or €10 interest per year.
To carry out this operation, your bank creates a
capital sum of € 100 “from nothing” in its books. On one side it creates
a credit to itself of € 100 . On the other side it creates a deposit in your favour of € 100. That deposit is a debt for the bank. As you pay
your debt back, the deposit in your favour is reduced. The bank’s capital
account credit is reduced by the same amount.
Once you have paid your debt of € 100 back, you have no debt with the bank, the bank’s
capital account credit has also been reduced to zero.
At that point you have repaid your capital debt of € 100. However, you still have to settle the agreed
interest payment of €10, which
was never a part of the formal book debt.
How are you going to do that ? Often you will have to make another
loan, this time for € 110 to be
able to renew your debt and to pay the interest on the previous loan. At the end
of the second year, you will have repaid
€ 110, but
you will still have interest to repay. This time the interest will be € 11. The system works exponentially. The amount of the interest ( the
first year € 10, the
second year € 11,
together € 21) is never
cancelled from the system. It continues to increase
«indefinitely »......
2. ONE FACE OF THE COIN
Accumulated interest.
In industrialised countries today practically all new
finances are issued by private banks against interest. Each link in the
industrial production chain is subject to finance against interest. That means
that at each step along the chain, the price demanded by the seller must
include a margin to cover the interest he has to pay on his loans. The margins
covering interest payments increase exponentially along the production chain.
At each step interest is paid on capital plus interest already accumulated.
The final touch.
As just stated, an important part of the price of
“modern” industrial products covers interest accumulated during their
production. All that interest is paid by the final buyer (consumer). To pay
that price, the buyer often has to borrow
money against interest from a bank. In case of medium- and long-term loans,
the interest paid by the end user over time may equal an important part of the
original purchase price, much of which already comprised accumulative interest
margins.
What happens to the interest?
Interest accumulated by creditors (bankers and,
especially, wealthy people with interest-bearing bank deposits) in the absence
of negative rates of interest on loans, that is, where interest is lower than
0%, is by definition never cancelled. Interest is not “earned” through
productive work. It is profit on money deposits. Over time, especially during
the past 20 years, an enormous mass of
this “unearned income” has formed.. This money mass is called «the speculative
economy » or «the paper
economy ». It is «invested » mostly in speculation on variable
currency exchange rates, on land and buildings, and on shares and financial
instruments, most of which have nothing to do with the productive
economy.
Migration of control over the
real value added.
In paragraph 02.Some factors linked with poverty of Part 2 : In depth
analysis of the causes of poverty the adventures of a can of peas
are analysed.. Originally, commercial control over the peas was local. It
usually lay by the farmer himself. When peas are canned, where does the control
at the end of the productive chain lie? Which levels of control have the peas
passed through ?
Lack of means of transfer at local level.
Consider your replies to the questions above. How much
money is left at local level to conduct transactions for the sale and purchase
of goods and services?
Suppose you are a commercial operator in one of the
least industrialised countries. You produce something and create value added.
This value added forms a part of the real (bona fide) productive economy. You put the money you have earned into a bank
account. You bank uses this money, your money, for commercial activities.
According to present banking rules, the bank can officially lend up to 12,5
times the value of your deposit. In practice, many banking operations are
off-record, and the bank’s leverage, as it is called, may not exceed 1%. In
that case it can create loans for up to 100 times the amount of your deposit.
Where will that money be invested? What
will it be invested in?
Necessary imported goods and services.
You may agree that the importation of certain goods
and services into your chosen project area in a developing country may be
justifiable to increase local productivity there. Which goods and
services ? Do you agree that that importation should be kept to minimum
indispensable levels? Why?
Monopolistic control – monocultures.
Control over the value added of the can of peas at the
end of its “productive” cycle is a long way away from the farmer who grew the
peas. Unearned accumulative interest finds its way into the pockets of an elite
of “investors”. Local money deposited in bank accounts in developing countries
is rarely invested at local level. That money, including the savings of the
poor, is used elsewhere, maybe to re-build the twin towers in
Contributions paid by emigrant workers to their
families in their country of origin form an important part of the commercial
budgets of poor countries. How do you think these payments are spent? Which
part of the contributions is spent to finance local productive activities? For
how long?
1. Opinion.
Who have
financial capacity to purchase lands, structures, infrastructures in poor countries?
Why would they want to purchase the lands? [ Refer to Cotula L. et al, Land grab or development opportunity? - Agricultural
investment and agricultural land deals in Africa, FAO, IIED and
IFAD, London/Rome, 2009].See also Vidal
J. How food and
water are driving a 21st century African land grab (The Observer, London, Sunday 7 March, 2010).
On the human rights aspects of monocultures,
see Suárez
S., Emanueli M, Monocultures and
human rights, Food First Information and Action Network (FIAN),
3. THE OTHER FACE OF THE COIN.
Subsidies.
Subsidies are an «indispensable » part of most modern
industrial economies.
They are defined for the purposes of the World Trade Association
(WTO) in the Agreement on Subsidies and
Countervailing Measures which
is annexed to the Marrakech Agreement
instituting the World Trade Organisation signed
involving : direct or indirect
transfer of funds or liabilities, revenues that are foregone or not collected,
provision of goods or services below market value, and provision of income or price support.
On pages 13 and 14 of the report Fossil Fuels – At What Price ?
by Sawyer D et Stiebert S, for the International
Institute for Sustainable Development (IISD), Global Subsidies Initiative,
Geneva, November 2010, 29
subsidy groups for just the Canadian Oil Industry (excluding the coal and gas
sectors !) are listed showing benefits amounting to $Can 2.800.000.000 in 2008, without taking any of the
consequential social costs linked to sector activities into account. By way of comparison, the entire Canadian
contribution to international development aid in 2008 was US$ 4.725.000.000
(Source OECD Statistics, 2009).
It has proved difficult to get accurate information, often to get any
useful information at all, on government subsidies to the fossil fuel (gas,
coal, oil) industries. (Ask Your Government Survey, Global Subsidies Initiative,
“Global
fossil-fuel consumption subsidies amounted to US$ 312 billion in 2009 and US$
558 billion in 2008…. Global producer subsidies are estimated by GSI to be US$
100 billion annually.”
The figure of
US$ 312 billion for fuel consumption
subsidies (excluding producer subsidies promoting domestic exploration,
extraction or refining) is taken from the International Energy Agency (IEA) ,
For
a detailed item by item analysis of subsidies applied to the nuclear power
industry see Appendix A to the report by
Koplow D., Nuclear Power : Still not
Viable without Subsidies, Union of Concerned Scientists,
Slide 03 Financial leakage : interest and
subsidies mentions the unimaginable subsidies paid to farmers in the
rich OECD countries.
2. Opinion.
What do you think about subsidies paid
for industrial activities?
3. Opinion.
What is the price of 280 gr. of peas bought directly from the farmer?
What is the price of a 400 gr. can of peas (280 gr net weight of peas) at the end of its
industrial voyage ? Try to explain how the price of the can of peas can
often be lower than the price asked by the original grower for the fresh
product. Who pays the subsidies?
4. Opinion.
Farmers and industrialists in rich
countries receive many subsidies. Which formal authorities given them these
subsidies? How are these authorities
financed? The beneficiaries of the
subsidies are private individuals or companies. Subsidy funds are collective
and derive from tax payments. Why does this transfer of public funds to
private interests take place ?
4. .MULTINATIONALS.
Following the State
of New York legislation “An Act Relative to Incorporations for Manufacturing
Purposes”, 22 March 1811, the first national law on the limitation of
investors’ liability was The Limited Liability Act 1855 (18&19 Vict. C.133)
in England.
We have gradually passed
from a system where, in principle, before
Financial
deregulation began in 1971 when President Nixon of the United States abolished
the coupling of the $US to gold (known as the Gold Standard) and was perfected
during the 1980s with the neo-liberal policies of Mrs Thatcher in England and
President Reagan in the United States. It has led us to the situation where
large trans-national corporations acting in the private interests of a small
elite have a budget which is larger than that of most of the world’s nations.
5.Research.
Make a list of the multinationals which
are most active in your country.
◄ First block : Poverty and quality of life.
◄ Index : Diploma in Integrated
Development (Dip.Int.Dev)