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Salient: Victoria University Students' Paper. Vol. 25. No. 11. 1962

Rich and Poor: The Widening Gap

page 6

Rich and Poor: The Widening Gap

Independence is not the end of tutelage; it merely holds it up to auction, Hence economic aid.

This is not to decry all the motives which move wealth from the richer countries to the poorer. The desire to relieve misery is always very strong; perhaps predominant in countries like New Zealand which stand to gain very little in the way of political influence.

Nor is it to attach any stigma to the receipt of economic assistance by the poorer countries. Whatever the motives of the givers, the recipients are that much better off. After all, it is the free worker who is bid for.

Nevertheless, the flow of international economic assistance would not be of its present size (which is not great) if the donor countries did not hope to exert influence, or to neutralise that of others.

The evidence of this motive is not lacking. The rich countries of the world have all resisted the channelling of their aid through the United Nations (which at least has the virtue of including the recipients) but have insisted on bilateral schemes (this includes the Colombo Plan). Consequently, to avoid the political interference which attends economic aid the poor countries have turned increasingly to ask for loans instead: though redeeming them is likely to be a crippling burden for years to come.

Aid from Wealthy

It is not as if the amount of aid being given is enough to raise the poor countries from their level of indigence. It would require the transfer of some 10 per cent of the annual national income of the rich countries of the world to enable the poor countries to develop autonomously. Realistic economists, more modest, have asked that a vigorous effort be made to transfer some one per cent of national income, which would hardly break the rich countries. But even the most generous donor, the United States, gives only just over half of one per cent of her national income. (New Zealand, with a standard of living not far behind the American, gives only about one-sixth of one per cent, or 2½d in the £. This is, of course, no small sum, but nearly two million; almost as much as the two million; the country spends on ice-cream.)

To make matters worse, this inadequate amount is spread so thin that no independent body has been able to credit it with any improvement in the situation. Economic aid has made no difference to the fact that Pakistan's economy stagnates, India's moves forward. Indonesia's declines, Malay's develops steadily.

Things might have been otherwise had the donor countries concentrated their efforts on a promising candidate, such as India or Malaya, which in turn could have helped other countries. But the desire to curry favour (often called "political considerations") dictated otherwise. Consequently, what is given can no longer honestly be called economic aid; it is charity. The beggars may eat better from time to time, but they will remain beggars. The epitaph on the "economic aiders" might well be: "They could have created oases; they sprinkled the desert instead"

Foreign Exchange?

With or without concentration of effort, more must be given by rich countries, such as New Zealand. In this country it is burbled in answer that this involves questions of foreign exchange (apparently one should use foreign exchange only to enrich oneself, not to help others). Why foreign exchange? To buy machinery for the poor countries, it is said, because this is all they need for their development,

This idea is so far from the truth that its adoption as a firm article of faith can only be due to that pervasive xenophilia which constantly expels originality to make room for remedies tried and inappropriate. Economic aid schemes are fathered by industrial nations; manufacturing is naturally emphasised. But it does not follow that New Zealand's most effective contribution is in doing likewise.

As an indication of the contrary one would point to the feet that probably the single most important factor in making for success in India's current phase of development is a gift of American food. In addition, the underdeveloped countries of most interest, lying in the tropics, can produce meat and dairy products only with difficulty. These consequently use up foreign exchange; were they provided free, the money now spent on them could be used directly for development. But here, of course, the objection is made that if one feeds the hungry, this lowers the price of food and the incomes' of farmers in rich countries. One's heart bleeds for them.

But even a large increase of economic aid will probably not be enough. For the pattern of trade between rich countries and poor shows the prices of industrial products following a rising trend, while those of primary produce trace out a long-term decline, with frequent sharp falls, and the losses of income so incurred far exceed all the economic aid provided.

The gap in living standards between rich and poor is therefore widening, and in the international field the Marxian vision of the rich getting richer, and the poor falling ever Further behind, is being fulfilled more than it ever was in the rich countries.

What poor countries need is both Long-term stability and higher prices for the tropical producers. It is doubtful if they will get these as a result of economic aid, except insofar as their industrialisation improves their bargaining power. The working classes in rich countries gained their present affluence not through education and training, but in consequence of organisation. So also the terms of trade will only cease moving against the poor countries when they evolve organisations able to stand up to the world-wide virtual monopolies which industry seems naturally to breed.

Not surprisingly, however, all attempts by the poor countries to set up such associations, whether through the United Nations or otherwise, have been frustrated by the rich countries. The fact remains that the bargaining position of the poorer nations must be improved if we are to avoid conflict between rich and poor. There is no more urgent task in the world today.