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| MORE ABOUT HUNGER NOTES |
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Obtaining Income
The basic idea and activity in productive societies is helping to produce goods— things that are useful to someone— food, light bulbs, cars— and then exchanging the income received for goods that are desirable to you. This fundamental economic mechanism exists in “harmful” economic societies as well. Unfortunately, also existing, and why we describe these societies as harmful, a certain strata— usually the top— also exists to obtain goods through means which may be described as unproductive or extractive.
The principal ways in which income is obtained in a harmful economic system are twofold: 1) obtain it through the government, or, 2) use the government to maintain, consolidate and increase sources of income that are (apparently) obtained in other ways. The first is most typical or at least most evident in developing countries. Armed conflict--typically the fight for control of the government or territory, frequently with natural resources, by groups deserves a separate discussion, because it has been throughout history the principal way in which harmful economic societies have been established and because of its continued importance in the world today.
There are a wide variety of means in which government officials and others obtain revenue from the government. The first thing to recognize is that people at the top of government, or those who have significant control over the government but who are not government officials--often entrepreneurs or corporations) can and do plunder resources coming into the government. Government revenue is often not devoted to productive services but siphoned off by those in control of the government. A nation expects that its national resources will be used for the benefit of the nation. However very large amounts of such revenue are often used to enrich those in charge of the government. People at lower levels of government can plunder resources too, by not providing services which they are paid to provide, by charging for services which they should provide, or by taking goods, such as medical supplies or automobiles/trucks, which should be used for government service.
Race Is On to Locate Hussein's Billions Henri E. Cauvin (New York Times, November 30, 2002) This article describes the search for Saddam Hussein's billions of assets. How did he get them? From oil revenues? By taxing the Iraqi people? Without knowing the details, we do know that he basically used his control of the government to divert large government revenues to himself, his family and other political allies.
Pool Photo: Terry Richards
Saddam Hussein's luxury yacht, al Mansur, was bombed while it was moored in the southern Iraq city of Basra. The vessel is part of a family fortune estimated to be worth between $2 billion and $10 billion. Investigators are in a race to track down and freeze that wealth.
Corruption. One name for the unproductive allocation of resources is corruption. Corruption basically means that government officials get extra-official payments (frequently very large but also often very small) for duties that they are paid for and obliged to perform as their duties as government officials. See the most recent Transparency International annual report on corruption worldwide. Reprinted here are the Corruption rankings of the countries of the world (PDF file).
Oil Field Suppliers Gave Hussein Kickbacks Peter S. Goodman (Washington Post, May 7, 2003. You will leave this site and be required to register [once] with the Post.)
IMF: Angolan Government Corruption Causes $1 Billion Disappearance of Government Funds Henry E. Cauvin. (New York Times, November 30, 2002.) This article, the first part of which is reprinted below, describes incredible events. First, that $1 billion was stolen. Secondly, that the only action of the International Monetary Fund was to issue an "unusually blunt"-- but confidential! report about this. [HELLO IMF! THIS IS UNACCEPTABLE MANAGEMENT OF THE INTERNATIONAL FINANCIAL SYSTEM!] And finally, that the Angolan officials are furious. [Unfortunately, this article is now available only by paying.]
The International Monetary Fund, in an unusually blunt confidential report, documents disappearance of almost $1 billion from Angola's treasury in 2001; cites widespread corruption; Angolan officials reportedly are furious about report, which was completed in March and widely circulated among donor nations and multilateral organizations.
Criminal Networks Linked to Occupying Nations Such As Uganda Exploiting Wealth in Democratic Republic of the Congo, U.N. Security Council Told United Nations (October 24, 2002)
Former President's 'Hidden Treasure' Appalls Nicaragua, Successor Pursues Corruption Charges Kevin Sullivan (Washington Post, Sept. 12, 2002. You will leave this site.)
Pay for little or no work. Another concern is that government officials receive pay without delivering (often anything near) an adequate level of services. What they have done is support the current political system, for which they are rewarded, not deliver government services to people.
Allocation of resources. The government frequently allocates resources, such as land and business opportunities, directly to itself and its supporters.
Zimbabwean Land Reform Benefits the Powerful and Well Connected John Jeter (Washington Post, November 9, 2002. You will leave this site.)
A very large part of this allocation/corruption is diversion of revenues from goods exported from or imported to the country.
The big ticket item is natural resource exports, including oil.
One would think that discovering oil and being able to export it would enable governments in developing countries to provide sufficient resources for assisting poor people in that country to have education and health services and to provide productive employment. NOT! In fact what HN has described as harmful economic systems mean that very little---a token amount-- gets to poor people. The following brief article and link to the full report describe the (mis)use of oil revenues in developing countries.
The African Oil Boom: Peril or Opportunity for Africa's Poor People? Catholic Relief Services (November 8, 2003)
Taking over resources of others.
For example, Zimbabwean Land Reform Benefits the Powerful and Well Connected John Jeter (Washington Post, November 9, 2002. You will leave this site.
An unusual way to obtain income is described in this article: capture and enslave people, and then let Western groups purchase their freedom! Rebels Exploit Westerners' Efforts to Buy Freedom for Sudanese Slaves Karl Vick (The Washington Post, Feb. 26, 2002. You will leave this site and be required to register [one time only] with the Post.)
Crime and looting. Crime and looting are examples of harmful economic activity in which poor people can participate. Crime, frequently a terrorist activity-- using terror to obtain income "your money or your life"-- happens everywhere. Even legitimate governments such as in the United States typically deal only partially with crime. Many neighborhoods in the United States are subjugated to gangs that sell drugs, kill people, and maintain control of their activities through intimidation and murder.
Looting and the absence of government has been in the news.
With No Authority to Stop Them, Looters Plunder Baghdad
Armed Conflict. Unfortunately there are many examples of armed conflict in the world today. Examined more closely this conflict is typically over control of the government or territory--often territory with natural resources. Thus this conflict is over who will establish a harmful economic system and subsequently over control over resources, including the power to tax, arrange oil leases, and so on. In conflict, in addition to the struggle for control over resources, there is typically great harm done to ordinary people, such as murder, amputation of limbs, rape, taking of family food and other resources. (This can be so bad that an end to conflict, even if it then means establishment of an organized system of oppression, is preferable to people.) Countries affected include the Democratic Republic of the Congo, Liberia, (northern) Uganda and Colombia. Other countries where this has been important in the recent past include Mozambique, Sri Lanka, Angola and Peru.
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Photo: Emily Wax/Washington Post
Fadia Wakengela lost two children to starvation. The Mai-Mai rebel group, fighting for control of eastern Congo, has cut off villagers from food. Villagers had already lost their farming know-how after going to work in mines.
Congo: Land of Plenty, Lives of Desperation, Starvation, Due to War and Colonial Legacy Emily Wax (Washington Post, November 2, 2003. You will leave this site and be required to register [once] with the Post.)
Northern Uganda's Brutal War: Murder, Rape, Abductions and Mutilations in the Name of the Ten Commandments Denise Lifton (November 1, 2003)
For an overview of the former Iraqi regime of Saddam Hussein, certainly a prime example of a harmful economic system, see Iraqi Backgrounder: What Lies Beneath? by the International Crisis Group (2002).
An example of what can happen during conflict. Violence against women is a frequent result. A Brutal Legacy of Congo War: Violence Against Women Emily Wax (Washington Post, October 25, 2003. You will leave this site and be required to register [once] with the Post.)