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close this bookOvercoming Global Hunger (WB)
close this folderSession two - macroeconomic reform: its impact on poverty and hunger.
View the documentMacroeconomic reform: its impact on poverty and hunger
View the documentDiscussant remarks
View the documentWorkshop spokesperson remarks
View the documentWorkshop spokesperson remarks
View the documentFloor discussion
View the documentSpecial address: the scope for public action to reduce chronic hunger

Discussant remarks

Carlos Heredia

As Dr. Birdsall has pointed out, high growth rates are not enough to tackle poverty and hunger In 1993 a greater percentage of the population of Latin America is struggling with hunger and misery than in 1980, despite the claims by the governments and by multilateral institutions that the right policies are in place We have countries like Venezuela, in which rates of annual growth of the gross domestic product of 9 percent do nothing to alleviate the poverty of the majority of the population.

We can no longer bear with this increase of misery and social degradation. This is why civil society is mobilizing, through its institutions and organizations, to take care of the problems that governments are unable or unwilling to tackle. The World Bank's poverty alleviation programs do not attack hunger at its roots. Rather, World Bank supported macroeconomic policies tend to polarize our societies by concentrating income and resources in the hands of the few, and narrowing economic and social opportunities for the poor.

Social development programs compensate for the damage done by structural adjustment only to a very limited extent. Civil society cannot and will not remain idle in the face of widespread hunger, and yet hunger is not the only challenge we face. We must also grapple with the monolithic nature of World Bank policies and operational procedures, which serve to shut down the voices of civil society.

A strategy by civil society to combat hunger is not merely an issue of economic policy It is above all a political issue NGOs and other organizations of civil society cannot afford to deal only with social policy, while the economic and political elites, the establishment, make all major decisions about macroeconomic policy. It has been said, and it cannot be repeated enough, that a good social policy starts with a sound economic policy, and our definition of the latter is one that benefits all groups of society, not only those that have political clout or economic might. In Latin America four out of every ten people are suffering hunger as we speak. Where are their voices in this debate? The World Bank, despite claims to the contrary, appears to have a laissez-faire attitude toward hunger in the same fashion that a military president of Brazil said in the 1970s, "Brazil is doing fine. It is the people who are doing poorly."

Let us listen to the people to find out what is really happening and what people really want. The people I work with in peasant communities in rural Mexico want credit, available in a timely manner and in sufficient amounts to enable them to finance their small-scale productive operations. They don't want charity, they don't want aid They want credit What they actually get is educed credit for the production of basic goods and basic grains and for regions considered to be less productive, and a preferential targeting of scarce credit funds to agribusiness.

What small farmers want is to stay and work on their land, but they are being forced to migrate to cities, or in the case of Mexico, to the United States, because agribusiness controls not only the land, but the resources needed to make it productive.

People want food security, by which they mean the ability to either purchase or produce the food they need. But under World Bank policies, more and more countries are pushed to increase their agricultural exports while increasing numbers of their people, including their farmers, go hungry.

People want long-term job creation programs and income-generating activities, and they want to earn a decent living from their work. But what they get is so-called poverty alleviation programs, which are often, as in the case of Mexico, controlled by political elites who choose the beneficiaries on partisan grounds and are immune from any democratic means of accountability. They also get wage suppression as a condition for foreign investment. For industrial workers in Latin America, this led to a 35 percent drop in wages between 1980 and 1991, according to the international Labour Organization.

People want to break out of the cycle of poverty. Instead, poverty is on the rise. In Brazil, the world's third largest food exporter, where per capita income is now US$3,000 per year, the United Nations says that the number of people living on less than US$1 per day increased by 40 percent during the 1980s. That is why the core of Brazil's hunger problem is not food supply, but purchasing power.

Let's go beyond the numbers and look at the human dimension of all this. And remember that these effects are not separate, not discrete They combine to overwhelm individuals and communities. Let's take the case of Maria Martinez, an Indian-Mexican woman in the state of Oaxaca in the south. Maria has to work sixteen hour days while the men of the household go to the United States as migrant laborers, because as small farmers they cannot compete with cheap food imports. She has no voice in local affairs because elections are stolen. She has had to pull her two older girls out of school to help her with her work on the farm. She has no access to credit, to health care, to education. The communal land she lives on and around which her cultural and religious life revolves is now for sale to the highest bidder, thanks to World Bank privatization schemes. Her family can barely survive, and she is one of the 17 million Mexicans that according to World Bank statistics earn less than US$350 per year.

Contrast this with the fortunes of Carlos Slim, whose assets grew by US$1.5 billion thanks to his purchase of Mexico's state-owned telephone company, which was recently privatized. This amount is roughly equivalent to the 1992 budget for the social investment fund to address the needs of 17 million Mexicans living in misery.

It is because of women like Maria Martinez and men like Carlos Slim that we must not only address the immediate consequences of hunger, but also the urgent need to come up with new development alternatives that, unlike structural adjustment, put up front the needs of millions of unemployed, underemployed, hungry, and landless people in our countries. We are not only talking about the countries of the South. Millions of people are also hungry in Europe and in North America, which also struggle with the enormous contradictions in these societies.

The best development strategy for a given society will be the one that, first and foremost, derives from the population's expressed needs and priorities. The basic criteria for assessing the soundness of any strategy should be the following. What is its contribution to ending misery and decentralizing power? What is its environmental sustainability? To what extent are governments and multilateral agencies held accountable under this strategy, especially to the poor, who are supposedly the beneficiaries of these policies? This approach implies a direct involvement of small producers, in agriculture, industry, and services, that allows for economies of scale and technological advances to work, while being flexible enough to permit the creativity of each producer to flourish. Strengthening small and medium size business at the regional level is extremely important, because that is the basis for economic and political decentralization.

Unfortunately, what Josue Castro said about Brazil fifty years ago-and fifty years is the lifetime of the Bank—not only remains true today, but applies to an increasing percentage of the population in countries of both the North and the South He said, "Brazil has a population of insomniacs those who cannot sleep because they are hungry, and those who stay awake out of fear of those who don't have anything to eat."

Hunger is a human, not a technical, drama. It affects us all one way or another. The Bank has to look beyond the statistical characterizations of poverty and wake up to the call of the poor. There is no reason, no argument, no theory that can justify the persistence of hunger. We are out of time, and we will accept no more excuses. The Bank has to change.

I will now briefly address some of the points Nancy Birdsall raised. I found her approach of shared growth interesting, although it is unfortunate that in my home country we have not been able to witness that. I am being educated about economics in Southeast Asia by friends in the Bank and by friends in the NGO community in that part of the world, but in Mexico, we have not had that kind of growth. In fact, we are having very low growth now, despite pledges and promises that with structural adjustment, which has been ongoing for more than ten years now, we would have higher growth. The rate of growth in Mexico for 1993 is projected at 1.3 percent, and it was supposed to be 6.0 percent to cope with an increasing work force going into the labor market.

We have not had that kind of growth because of three main factors. The first factor is because we have had a deliberate strategy to suppress wages, a deliberate strategy to suppress labor rights—and this came up during the North American Free Trade Agreement (NAFTA) debate—precisely because the Mexican government refused to include labor rights, industrial organization, collective bargaining, and the right to strike in the NAFTA side agreements to lock in the high productivity/low wage model.

The second factor is that we do not have a democratic system in place. We do not have a checks and balances system; we do not have an independent judiciary; we do not have clean, fair elections. So when people are not free to express their will to change the government, little can be done to attain shared growth.

And the third reason is that economic policies have been designed largely, supposedly, to address the issue of poverty and poverty alleviation, but they have fallen far short of most people's needs. We are told that they will mature over time, and that the benefits of adjustment will be found at the end of the road.

When one of the top Mexican bankers was asked, "When do you think the benefits of adjustment from 1982 to 1992 will materialize for the poor?"—we had asked the Bank the same question and Bank staff said maybe five years—this banker said, "´Nell, maybe twenty-five years."

We have asked the Bank to work with us on this. We wrote a paper, a research report, on structural adjustment in Mexico, and we are discussing it with the Bank. We invited the Bank to go and visit the communities with whom we work in Mexico, and they said, "Fine, we'll go, we'll visit the communities." That was in October. Today, what do I find on my desk? 1 find a fax from the Bank telling me that well, the Bank missions will visit more communities, but only after close consultation with the Mexican government, and not necessarily through our NGO.

So I put forward the challenge again to the Bank. Are you afraid of facing the poor, face-to-face, in a setting in which you can exchange views about your programs? What is wrong with doing that? What is wrong with talking to the very beneficiaries of your policies?