[corp-focus] Global Poverty: More Big Business is Not the Solution

[robert weissman]

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Global Poverty: More Big Business is Not the Solution
By Robert Weissman
May 8, 2008

By most accounts, UK Prime Minister Gordon Brown is genuinely passionate 
about reducing global poverty.

But he is not willing to challenge the structures of the global economy 
that generate poverty, or the corporations that build, benefit from and 
maintain those structures.

Nor, apparently, is he immune to gimmicky notions of corporate 
leadership to support development, or the lure of high-profile summits 
to shed light on new plans to do -- very little.

Thus, earlier this week the UK was treated to the spectacle of the 
Business Call to Action summit, which Brown's office co-sponsored with 
the UN Development Program. More than 80 CEOs of large companies 
gathered with Brown and other luminaries to discuss how they could help 
meet the Millennium Development Goals, which aspire to reduce global 
poverty by half by 2015. Roughly two dozen of these CEOs -- from Anglo 
American, Bechtel, Citigroup, Coca-Cola, De Beers, Diageo, FedEx, 
Goldman Sachs, GE, Merck, Microsoft, SAB Miller, Wal-Mart and others -- 
have signed the Business Call to Action, which states, "as leaders from 
the private sector, we declare our commitment to meet this development 
emergency."

The premise of the event, as Gordon Brown said, was to advance "a new 
approach -- moving beyond minimum standards, beyond philanthropy and 
beyond traditional corporate social responsibility -- important though 
they are -- to develop long-term business initiatives that mobilize the 
resources and talents that are the central strengths of global business."

The mantra of the event was for corporations to "explore new business 
opportunities that use their core business expertise" and that also help 
spur development.

Taken at its face value, this was, um, not exactly inspiring. Says Peter 
Hardstaff of the UK-based World Development Movement, the CEOs "have all 
agreed -- to do more business."

But the problem goes way beyond the fact that business as usual -- or 
even a little bit of new business initiative with a 
development-conscious orientation -- is not going to do much to reduce 
global poverty. The real problem is that business as usual is a central 
part the problem.

"Instead of holding these companies to account for their actions," says 
John Hilary, executive director of War on Want, a UK-based anti-poverty 
group. "Gordon Brown has allowed them to portray themselves as allies in 
the fight against poverty. The prime minister should be working to 
address the poverty and human rights problems caused by business, not 
giving the companies a free ride.”

War on Want focused attention on the harmful development impacts of many 
of the corporations signing the Business Call to Action. The group has 
campaigned against mining giant Anglo American. It has documented how 
Anglo American has benefited from human rights abuses associated with 
civil wars in Colombia and the Democratic Republic of Congo (DRC). Local 
mining communities in Ghana and Mali have seen little economic benefit 
from Anglo American's operations (or the spike in the price of gold); 
instead, says War on Want, the company's mines harm their environment, 
health and livelihoods.

Other corporate signatories to the Business Call to Action have directly 
hurt poor people through their "core business" more than can be offset 
by development-tinged ventures (even assuming such ventures succeed). 
Wal-Mart contracts with sweatshops. Bechtel tried to price-gouge and 
rip-off Bolivian consumers and the Bolivian state through control of the 
country's privatized water system. Merck refuses to license life-saving 
medicines for cheap generic production.

Simultaneous with Brown's business summit, Action Aid UK pointed to a 
major systemic abuse by multinational corporations that undermines 
development: They don't pay their taxes. The group released a report 
looking at tax payments of 14 corporate signers of the Business Call to 
Action. It found that these companies combined are underpaying taxes by 
more than $6 billion a year, as compared to what they would pay if they 
paid at the statutory rate in the United States and UK. The group did 
not suggest any illegal activities by the companies -- there are plenty 
enough legal tax avoidance strategies.

Money lost to developing countries through capital flight and tax 
avoidance is many times greater than aid flows into poor countries, says 
Jesse Griffith, the lead author of the Action Aid UK report.

Tax avoidance is a key issue because it strips money from national 
treasuries that would otherwise be available for social investment, and 
because it reflects structural problems that could and should be cured 
without any need for global philanthropy or aid.

But tax avoidance is only one of many ways that corporations exploit and 
perpetuate economic policies and institutional arrangements that 
contribute to poverty or inhibit authentic development.

The World Development Movement issued a 10-point challenge to 
corporations that claim an interest in promoting global development. It 
called on companies to stop using their political influence to promote 
policies that undermine development. It urged companies to: stop 
lobbying to open up developing country markets, and let developing 
countries "use the same trade policy tools industrialized countries used 
to get rich;" stop demanding rich country-style patent rules for the 
poor; support radical government action, starting in rich countries, to 
address climate change; support binding codes of conduct for 
multinationals, including respect for labor rights; end support for 
privatization and deregulation, including particularly financial 
deregulation; stop lobbying for and exploiting tax loopholes; and other 
measures.

This is not exactly an agenda that global business leaders are likely to 
take up soon.

On the other hand, it's not exactly likely that global business leaders 
are going to lead the way to end global poverty.

Among other things, that's going to take a global movement, led from the 
Global South, to implement the policies implicit in the World 
Development Movement call.


Robert Weissman is editor of the Washington, D.C.-based Multinational 
Monitor, <http://www.multinationalmonitor.org> and director of Essential 
Action <http://www.essentialaction.org>.

(c) Robert Weissman

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