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Globalization, Debt, and Transnational Corporations: the Unfinished Health and Human Rights Agenda

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Title: Globalization, Debt, and Transnational Corporations: the Unfinished Health and Human Rights Agenda


1
Globalization, Debt, and Transnational
Corporations the Unfinished Health and Human
Rights Agenda
  • Timothy H. Holtz, MD, MPH
  • Montefiore Medical Center
  • July 14, 2005

2
Outline
  • Economic, social, and cultural rights
  • Globalization and its discontents
  • Overview of myths of growth
  • Background on debt, structural adjustment, trade,
    and aid
  • Impact of transnational corporations (non-state
    actors) on health

3
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4
What are economic rights?
  • Right to a standard of living
  • Right to work, just and favorable conditions of
    work, protection against unemployment, fair wages
  • Right to social security
  • Right to own property
  • Freedom of peaceful assembly

5
What are social rights?
  • Right to marry and form a family
  • Freedom of religion/expression
  • Right to rest and leisure
  • Right to education

6
What are cultural rights?
  • Everyone has the right to freely participate in
    the cultural life of the community, to enjoy the
    arts, and to share in scientific advancement and
    its benefits. (Article 27, UDHR)
  • Everyone is entitled to a social and
    international order in which the rights and
    freedoms set forth in the Declaration can be
    fully realized. (Article 28, UDHR)

7
Do we really live in a global village? Marshal
l McLuhan
8
  • How does one define the concept of
    globalization that we hear about every day?
  • What does it mean that we live in a global
    economy.
  • Does anyone know what this really means?

9
Free markets make free men.
  • Milton Friedman
  • University of Chicago
  • Nobel Laureate, Neoliberal Economics

10
Globalization
  • Globalization is the growing interdependence of
    the worlds people through shrinking space,
    shrinking time, and disappearing borders.
  • Markets, the HDR states, have been allowed to
    dominate the process, and the benefits and
    opportunities have not been shared equally.
  • The result is that global inequalities in income
    and living standards have reached grotesque
    proportions.

1999 Human Development Report, UN Development
Program
11
Rats and roaches live by competition under the
laws of supply and demand it is the privilege of
human beings to live under the laws of justice
and mercy.
  • Wendell Berry

12
Development
  • Is growth necessary for a just and fair
    globalization?
  • Is economic growth necessary for social
    development?
  • Is growth in GDP our only measure of success in
    reducing poverty?

13
GNP and life expectancy
1979 Data
14
GNP and life expectancy
GNP per capita and Life Expectancy at Birth, 1994
74
52
From Development as Freedom, Amartya Sen 1999.
Figures from Country Data World Bank, World Bank
Development Report, 1996
15
Globalization is.
  • When the profit motives of market players get
    out of hand, they challenge peoples ethics and
    sacrifice respect for justice and human rights.
  • More progress has been made in norms, standards
    and policies for open global markets than for
    people and their rights.
  • Patent laws pay little attention to the
    knowledge of indigenous people. The result a
    silent theft of centuries of knowledge from
    developing to developed countries.

1999 Human Development Report, UN Development
Program
16
Globalization also is...
  • The collapse of space, time, and borders may be
    creating a global village, but not everyone can
    be a citizen. The global, professional elite now
    faces low borders, but billions of others find
    borders as high as ever.
  • The new rules of globalization and the players
    writing them focus on integrating global
    markets, neglecting the needs of people that
    markets cannot meet. The process is concentrating
    power and marginalizing the poor.

1999 Human Development Report, UN Development
Program
17
Growth
  • Myth neoliberal capitalism is the only way to
    achieve economic growth (Does everyone know this
    to be true?)
  • Myth Growth will automatically translate into
    greater prosperity for all
  • Myth Growth is an sufficient objective
  • Myth Economic laws and markets function
    independently of politics

18
Golden Age of Growth
  • 1945-1970 was golden age of capitalism,
    industrialized countries grew at 5 annually
  • Managed growth by governments (Keynes)
  • High trade flows, low currency flows (restrict
    mobility of capital)
  • Oil crisis of 1973 heralded end of age
  • Stagflation (high rates of inflation and
    unemployment)
  • Election of anti-state governments in UK and US

19
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20
Globalization neoliberal capitalism
  • High debt burden
  • Promotion of free markets
  • Relaxation of trade barriers
  • Reduction of subsidies for the poor
  • Privatization of public assets
  • Weakened role of government
  • Growing dominance of western-based transnational
    capital
  • Continued high military expenditures

21
The global economy
  • Crushing debt burdens on poor countries
  • Free trade theory elevated to dogma
  • Diminished aid from rich countries to poor
    countries
  • Accelerated capital flows and increased influence
    of privatization of public assets
  • Increasingly important role of transnational
    corporations

22
I. Debt crisis (1982 to present)
  • Commercial banks loaned vast amounts of capital
    to developing nations at high interested rates,
    not predicting.
  • Changes in international economy
  • Expanded bank lending, fueled by oil prices
  • Increased government borrowing
  • many countries stretched to thin - July 1982
    Mexico defaults, heralding beginning of crisis

23
The crippling burden of debt
  • Countries of Sub-Saharan Africa spent an average
    of 12 billion annually on debt repayments from
    1990-1995, while their total debt increased by
    33 billion.
  • For 27 highly- indebted nations, debt is greater
    than their GNP.
  • Tanzanias debt service payments are nine times
    what it spends on primary health care and four
    times what it spends on primary education.
  • Mozambique has a debt burden nine times the value
    of its exports.

1998/9 Human Development Report, UN Development
Program
24
Neoliberal diagnosis
  • State playing too large a role
  • Markets are being inhibited, state intervention
    is preventing markets from being efficient
  • Government should stick only to property rights
    and enforcing contracts

25
Neoliberal prescription
  • Reduce role of state relative to the market
  • Allow floating currency rates, and wages to be
    determined by market forces and interest rates
  • Lift all barriers to trade and investment
    (opposite of Adam Smiths invisible hand free
    movement of labor but not capital)

26
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27
International Financial Institutions
  • Bretton Woods Institutions, NH, July 1944
  • World Bank (WB)
  • Support embedded liberalism
  • Free trade, restrictions on capital mobility,
    and domestic social contract
  • Provided loans to countries for development
    projects
  • International Monetary Fund (IMF)
  • Prevent currency fluctuations/devaluations
  • Contain 1930-style economic crisis
  • GATT General Agreement on Tariffs and Trade

28
World Bank program of Structural Adjustment of
the worlds poorest countries
  • Re-orienting economies toward export production,
    away from self sufficiency
  • Removing restrictions on foreign investment
  • Reduction of wages
  • Cutting tariffs
  • Imposing consumption taxes (value added tax/VAT)
  • Eliminating price subsidies on essentials like
    food and housing
  • Devaluing local currency
  • Privatizing state enterprises
  • Deregulating govt oversight of economic activity

29
Structural adjustment report card
  • 75 countries had received loans by 1991
  • 30 in SSA, 18 in Latin America
  • Overal debt increased, both official debt and
    commercial debt
  • Did not reduce debt, reduce poverty, or increase
    growth
  • New category HIPC Bolivia, Burkina, Ivory
    Coast, Guyana, Moz, Uganda

30
Growth for whom?
  • Only 33 countries achieved sustained three
    percent annual growth in gross national product
    (GNP) per capita during 1980-1996.
  • For 59 countries, mainly in sub-Saharan Africa
    and the countries of the former Eastern Bloc, GNP
    per capita declined from 1980 to 1996.

1999 Human Development Report, UN Development
Program
31
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32
Revised poverty agenda - 1990
  • Labor intensive growth, invest in human capital,
    promote social safety nets
  • Enhanced Structural Adjustment Facility (ESAF)
  • Enhanced Heavily Indebted Poor Countries
    Initiative (HIPC) led by the G8
  • Reduction of tariffs, elimination of state
    support for industry, privatization of
    infrastructure to foreigners, removal of capital
    controls, opening up of service sector to foreign
    investors
  • Goal was to bring debt burden to sustainable
    level, although HIPC failed to achieve goals
  • Progress has still not been achieved, as many sub
    Saharan African countriess growth has been
    static for the past 15 years

33
Investing in Health, World Bank 1993
  • Promoted cost-efficiency approach to health care
    in developing countries in a world awash with
    capital.
  • Medical care defined as a commodity, and health
    defined as the absence of disease.
  • The concept of disability adjusted life years
    (DALYs) promoted.
  • Marked the entry of the World Bank in funding
    large health care projects in poor countries,
    such as vertical vaccine campaigns, TB control,
    etc.

34
What are the health effects of the IFIs?
  • ESAFs have failed to significantly raise GDP of
    participating countries
  • ESAFs have failed to reduce external debt burden
    of most highly indebted countries
  • Social safety nets are nonexistent for
    education, health, housing, social security
  • Cost-effectiveness calculus further hurts the
    most vulnerable populations, violates their
    social rights, and results in continued
    stagnating health outcomes

35
II. World Trade separate worlds
  • 48 poorest countries account for 0.4 of global
    exports
  • Share of worlds exports by least developed
    nations fell from 15 in 1968 to 13 in 1998
  • Transnational trade (globalized economy) reaches
    AT MOST only 1/3 of the worlds population

36
Free trade
  • More trade between nations in late 1800s than
    there is now
  • 46 of world trade is between EU, US, and Japan
    (OECD)
  • Actually 30-40 of trade consists of
    transactions within same TNC, trading with their
    own affiliates

37
More on trade
  • Most new manufacturing growth comes from NICs
    (SK, HK, RoC, Sing.)
  • Single commodity exports account for half of
    export earnings for many countries
  • The record shows, however, that the US, Rep of S
    Korea, Taiwan, Japan ALL developed under
    restricted and protective trade laws

38
World Trade Organization
  • WTO created in 1990 to supersede GATT
  • Set up to manage world trade system
  • Extensive set of regulations and rules are
    required (free is a misnomer)
  • Many argue these rules are set up to benefit the
    powerful, the TNCs, big finance capital from West
  • All meetings held closed door

39
III. Diminishing aid from the West
  • US is steadily decreasing its annual contribution
    in foreign development aid, which is now at 16
    cents for every 100
  • Many other countries, especially Scandinavia,
    devote over 80 cents/100 of their GNP for
    foreign aid
  • Blair proposal is to increase aid to 70 cents for
    every 100 by 2015
  • Given historical US rates, we will never achieve
    that level

40
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41
IV. Global finance capital
  • Dramatic increase in movement of capital
  • Principle of free trade to capital?
  • Daily trading in foreign exchange is over 2
    trillion per day
  • Control of capital is increasingly centralized

42
Transnational Capital Flows
  • Currency flows reach trillions of dollars every
    day, mainly between developed countries.
  • Foreign direct investment (FDI) reached XXX
    billion in XXXX
  • FDI is dominated by TNCs
  • 58 of it went to developed nations, and just 5
    to the transition economies of Central and
    Eastern Europe

43
Foreign Direct Investment (FDI)
  • FDI in developing countries increased from 18.3
    billion in 1983 to 149 billion in 1997
  • FDI to developing countries is highly
    concentrated 80 went to only 10 countries, with
    China as the largest recipient
  • The 100 smallest countries received less than 1
    of worldwide FDI
  • Only 5 of FDI to developing countries goes to
    Africa

44
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45
New poverty agenda 2000s
  • Caps on health and education expenditures, esp
    staffing
  • User fees
  • Liberalization of imports
  • Export driven growth
  • Structural adjustment in disguise?

46
G8 (G7?) Communique July 2005
  • Bilateral Debt cancellation
  • Limited number of countries (18)
  • Conditionalities
  • Strict surveillance and transparency requirements
  • Good governance (aka anti-corruption)
  • Free trade
  • Further liberalize economy
  • Lower trade barriers
  • Increasing development aid?
  • Bush left without any further commitment of funds

47
Alternative Global Equity Agenda - 2005
  • Complete multilateral debt cancellation
  • Unconditional cancellation of all sovereign
    developing country debt
  • Cap on debt servicing level
  • Fair trade justice
  • End of conditionalities on trade and tariffs
  • Ending of agricultural subsidies
  • Adequate aid (gt 0.7) to meet need

48
Source Adbusters
49
I see in the near future a crisis approaching
that unnerves me and causes me to tremble for the
safety of my country. Corporations have been
enthroned and an era of corruption in high places
will follow, and the money power of the country
will endeavor to prolong its reign by working
upon the prejudices of the people until all
wealth is aggregated in a few hands and the
Republic is destroyed.
  • President Abraham Lincoln, November 21, 1864,
    letter to Colonel William F. Elkins.

50
V. Transnational Corporations TNCs
  • Non-state actors
  • Characteristics
  • Economic power
  • International character
  • Impact of activities
  • Regulatory difficulty in LDCs

51
TNC Economic Power-1
  • Of the 100 largest economies in the world, 51 are
    corporations (sales versus gross domestic
    product/GDP)
  • The top 200 corporations sales are growing at a
    faster rate than global economic activity
  • The top 200s combined sales are 18 times the
    size of the combined annual income of 1.2 billion
    people living in severe poverty
  • US firms dominate the top 200 (82), while
    Japanese firms are second with 41

52
TNC Economic Power-2
  • The sales of the Top 200 are the equivalent of
    28 of world economic activity, they only employ
    0.8 of the worlds workforce
  • Between 1983 and 1999 Top 200 profits grew by
    362, but employment grew by only 14
  • 44 of 82 US Corporations in the Top 200 did not
    pay full taxes Seven actually paid lt0 - Texaco,
    Chevron, Pepsico, Enron, McKesson, Wal-Mart

53
TNC International Character
  • The top corporations earn 40-50 of their yearly
    profits from sales overseas
  • Assets of TNCs are also located overseas, 33 of
    pharmaceutical industry, and 75 of electrical
    industry
  • Many examples of individual factories and entire
    industries moving overseas to benefit from
    reduced wages, lower standards, higher profit
    margin

54
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55
Takeover in Nigeria
  • 150 Ugborodo and Arutan women successfully shut
    down a Chevron/Texaco oil plant in Escavros for
    several weeks in June/July 2002 by occupying an
    pipeline terminal, trapping 150 workers inside
  • Demands Jobs for locals and electricity for
    their villages
  • Damage to Nigerian environment and health of
    villagers throughout Niger River Delta from oil
    and gas drilling is extensive

New York Times, July 14, 2002, Foreign Desk
56
Gas flaring in Ogoniland, Niger River Delta,
December 2002 Credit Owens Wiwa
57
HR Impact of TNC Activities-1
  • Civil and political violations
  • Violate right to self-determination
  • Violate freedom of association
  • Perpetuate racial discrimination
  • Genocide against indigenous peoples
  • Violate right of people to dispose of the natural
    wealth
  • Bodily harm to people opposed to TNC by security
    forces

58
HR Impact of TNC Activities-2
  • Violations of ESC rights
  • Right to work freely chosen
  • Right to just and favorable working conditions,
    fair wages, equal pay for equal work, safe and
    health working conditions, reasonable limit on
    working hours
  • Right to education
  • Right of children to be protected from economic
    and social exploitation
  • Right to an adequate standard of living for
    individuals and their families

59
HR Impact of TNC Activities-3
  • Indirect impact
  • Pursuit of export oriented economic policies
  • Destruction of environment
  • Urbanization
  • Engaging in business with repressive regimes

60
TNCs and Repressive Regimes
  • Loans to repressive regimes
  • Breaking sanctions against repressive regimes
  • Buying from repressive regimes
  • Selling to repressive regimes
  • Lending credibility to repressive regimes

61
Health and Human Rights Impact of TNC Activities-1
  • Oil/power exploration
  • Texaco-Gulf in Ecuador environmental
    destruction
  • BP in Colombia private security abuses
  • Royal Dutch Shell in the Niger Delta murder and
    environmental destruction
  • Mining industry
  • Freeport-MacMoRan in PNG mine tailings
  • Chemical Industry
  • Union Carbide - Bhopal Disaster 1984
  • Manufacturing industry
  • Wal-Mart, Disney, K-Mart, Kathy Lee Gifford

62
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63
Health Impact of TNC Activities-2
  • Maquiladora sector on US-Mexican border has
    blossomed to over 2,500 factories
  • Assembly plants, part of export processing
    strategy to develop Mexico (though most people
    there live in squalor)
  • 90 are owned by US corporations, though often
    subcontracted work Korean corporations also
    common
  • Preferential tariffs, low taxation, lax
    environmental standards

64
Health Impact of TNC Activities-3
  • Maquiladora sector characterized by low wages,
    poor working conditions, environmental abuse,
    poor infrastructure
  • Human rights issues center around fair wages,
    right to organize, hazardous working conditions,
    disclosure of hazardous waste, safety training,
    infrequent occupational inspections, occupational
    compensation for injury, sexual harassment, child
    labor, housing conditions
  • Health issues center around repetitive strain,
    noise/solvent/toxic waste pollution,
    miscarriages, skin disorders, pulmonary
    disease/asthma, depression

65
Approaches to regulate TNC abuses
  • Social Responsibility approach
  • Promotional, use rational persuasion and moral
    argumentation
  • TNCs to sign corporate codes of conduct
  • Social Accountability approach
  • TNCs cant self-monitor, need independent
    accounting
  • Economic threat approach
  • TNCs only respond when profits threatened with
    boycotts, etc.
  • Punitive approach
  • Sanctions, selective purchasing laws, divestment
    campaigns

66
Regulating TNCs-1
  • Commission on Transnational Corporations in 1975
    formed draft code focused on bribery,
    disclosure of dangerous processes, and export of
    hazardous products and factories
  • Blocked by Reagan administration and died a
    sudden death
  • As Non-state actors they cannot be held
    accountable to same standards as states in UN
  • Voluntary codes exist, but no enforcement
  • Declaration and Guidelines on International
    Investments and Transnational Enterprises (OECD)
  • Tripartite Declaration on Principles of
    Transnational Enterprises and Social Policy (ILO)
  • WHO/UNICEF code on infant formula marketing

67
TNC Response to Criticism
  • Avoidance
  • Resistance
  • Acquiescence
  • Compromise

68
Corporate Codes of Conduct Bare essentials
  • Employment standards nondiscrimination, working
    hours, compulsory labor, fair wages, child labor,
    freedom of association, healthy workplace
    guidelines, excessive punishment guidelines
  • Environmental standards protection of
    biosphere, energy conservation, sustainable use
    of resources, risk reduction, disposal of waste
  • Internal compliance regulations personnel to
    monitor compliance, business partners to abide by
    standards (outsourcing), audit instruments to be
    used on site
  • Country assessment guidelines assessment of
    performance of all affiliates, gathering
    information from all sources
  • Independent monitoring

69
Amnesty International HR Principles for
TNCs/companies-1
  • Explicit company policy/UDHR
  • Security/law enforcement policy
  • Community engagement
  • Freedom from discrimination
  • Freedom from slavery

HR Principles for Companies, Amnesty International
70
HR Principles for TNCs/companies-2
  • Healthy and safe work environment
  • Freedom of association and right to collective
    bargaining
  • Just and favorable working conditions, including
    security and fair compensation/wages
  • Freedom from child labor
  • Monitoring human rights policy

HR Principles for Companies, Amnesty
International
71
Corporate Codes of Conduct Current problems
  • Lack of uniform language
  • Lack of compulsory enforcement mechanisms
  • Lack of language on sexual harassment
  • Fair wage/living wage clauses often inadequate
    and vague
  • Codes do not cover contractors and outsourcers
  • Lack of independent monitoring

72
Do we really live in a global village? Marshal
l McLuhan
73
  • People say, what is the sense of our small
    effort? They cannot see that we must lay one
    brick at a time, take one step at a time. A
    pebble cast into a pond causes ripples that
    spread in all directions. Each one of our
    thoughts, words, and deeds is like that. No one
    has the right to sit down and feel hopeless.
    There is so much work to do!

Dorothy Day
74
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75
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76
Summary
  • Civil-Political rights and Social-Economic-Cultura
    l rights are interdependent and indivisible,
    cannot have one without the other
  • Neoliberal capitalism and its aid system
    imposes many constraints on poor countries in
    promoting and protecting health rights
  • Globalization brings with it many human rights
    issues not generally discussed
  • Transnational corporations and other non-state
    actors have health and human rights impacts that
    should and can be monitored

77
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78
Militarism
  • 781 billion spent per year on military
    expenditures
  • 78 of expenditures done by developed countries
  • The US exports over 50 billion in arms every
    year, more than all other countries combined

1998 Human Development Report, UN Development
Program
79
Health costs of the weapons race
  • War is bad for public health
  • Majority of casualties since 1900 have been
    civilians, more so in the last 50 years
  • 75-90 of casualties since 1980 have been
    civilians
  • Health care facilities are targets in wars, ie El
    Salvador, Nicaragua, Mozambique, Philippines
  • Arms not only kill, but do chronic damage
  • Landmine injuries cripple victims for life
  • Arms fought with small arms have long lasting
    effects, ie Rwanda, Sierra Leone

80
Arms exports
  • The US exports over 50 billion in arms every
    year, more than all other countries combined
  • Many of these exports are to developing nations,
    especially those in conflict, human rights
    violations common
  • Of 24 countries which experienced at least one
    armed conflict in 1997, the US had sold arms to
    21 out of 24
  • US taxpayers spent 7.6 billion in 1995 to
    promote and finance weapons exports taxpayers
    underwrite the RD of weapons, subsidize the
    costs, privatize the profits, and employ
    thousands of government staff whose main jobs are
    to promote US arms sales

1998 Human Development Report, UN Development
Program
81
Share of world arms exports by US, 1984-1996
82
Indirect costs of weapons race
  • Diversion of resources from developing countries
    budgets into weapons, away from social needs
  • Some countries spend 5-10 of the GNP on military
    expenditures (Sivards Military and Social
    Expenditures yearly almanac)
  • Damage to the environment/hazardous waste, from
    weapons manufacturing as well as use (in US as
    well as abroad)
  • Create of climate of violence/crime, ie El
    Salvador

83
What can we do?
  • Document the effects of war on health and public
    health
  • Disseminate this information widely
  • Work for peace! Not militarism
  • SIGN THE LANDMINE TREATY!!

84
Code of Conduct in arms sales
  • Code of Conduct needed to ensure that arms do
    not fall into wrong hands
  • Code would prohibit arms exports to any
    government that does not meet criteria set out by
    law democratic government, respect for human
    rights of citizens, non-aggression, and
    participation in the UN Register of Conventional
    Arms.
  • Many supporters, Nobel Laureate Oscar Arias
    Sanchez, Rep Cynthia McKinney from Georgia, Rep.
    Rohrbacher from California
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