Ethics of the Rich and Poor Nations That Has to Rule the Market Place - Essay Example

WHAT WOULD HELP THE CITIZENS OF THE POOREST NATIONS MORE, INCREASING FOREIGN AID OR REMOVING ALL AGRICULTURAL TARIFFS AND SUBSIDIES? Introduction Thedifference between the poor and the rich nation has continued to grow with time. The poor nations continue to be poor while the rich nation continues to be rich. In rich and poor nations, the difference between the rich and the poor is still widening despite various efforts aimed at reducing the gap. This has been brought by the inequitable distribution of resources in the world and lack of world policies that would lead to equitable distribution. The poor nations have not been an equal chance to access world markets and the rich nations continue to put impediments which marginalize the poor nations in world trade. In this is the rule of justice that is likely to determine how we achieve equity in distribution of resources which further accounts for the richness and poverty. (Steve, 2002) World distribution system According to Peter Singer, the rich and the poor nations are treated as equal in the world. There are many instances in which the poor nations have not been given the same voice in the world as regards the matter of trade and other development issues. While the rich nations continue to explore all the available opportunities in order to be rich, the poor nations have remained segregated to the extreme poverty. The global distribution chain has not helped the poor nations to be given an equal access to resources. Singer showed the there are exploitation factors that have been used by the rich nations in order to control all the levels of world resources. The injustice system has worked against the poor nations which have been pushed to poverty condition by the world trade and social distribution systems. The rich nations have taken it as their right to be rich and the have ignored the poor nations in a way that justify their right to poverty. Although this is not expressed directly, there are several social justice systems that are used that portray such a notion. The poor nations cannot access the world markets and where they are given a chance to participate in the market, they are faced with many challenges including the subsidies on agriculture. There are many hidden oppressive factors behinds the free trade concept initiated by the rich nations have in order mask the exploitation of the poor nations. The poor nations are denied free entry to the world market. Trade is one of the systems that are used to achieve equal distribution of resources in the world. While the volume of trade has continued to grow in the world, the number of poor nations benefiting from this trade is relatively low compared to the rich nations. According to peter Singer, the social justice system such as world trade can be one of the best systems to achieve equitable distribution system, but it has failed due to unfair world trade policies. The rich nations continue to have an upper hand in distribution of resources while the poor nations are left to scramble for few resources that re left. This is portrayed in various dimensions in the world including equal participation in trade. World trade as a social distribution system should be a platform in which the poor and the rich nations participate based on their level of competencies and ruled by economic principles to demand and supply. Important world organizations like WTO which helps in regulation of trade have failed to come up with a fair distribution system has failed to live to its mandate of acting as a fair judge in world trade. While the debate has remained on the viability of creation of working system that can help to redistribute world wealth, a number of methods have been crafted by technocrats in coming up with such a system. For example Breton wood institutions were crafted in order to give loans to the developing nations to help them in development. But Breton Wood institutes have continued to burden the developing nations with loans. Most of these loans given in the form of aids and grants have turned to be odious loans given to corrupt regimes and generations have been repaying them. Then there was a system of giving the developing nations loans direct not from the Breton Wood institutions. This proved to be a more corrupt system than the earlier one and it did not meet the expectations of the people. The burden of loans continued to become heavier on the developing nations. In order to ensure transparency in the management of the loans the NGO chipped in to give aid direct to the deserving poor. But this did not work either. They turned out to be corrupt and most of them did not address the grass root cause of the problem that these people were facing. Giving aids is not a development strategy Since the concept to collective responsibility took root in the world, a lot of money has been channeled in helping the poor nations to develop. In this case the rich nation grants aids to the developing nation through funding of different projects. While billions of money has been channeled to the development of the poor nations, there is little that has been achieved through such initiatives which tells us that the system is not working. There are more and more people who are living below the poverty line in these countries (Douglass, 2006). As we have seen in the above discussion, the system of giving donations, loans, aids and grants has not helped to solve the problem of poverty in the developing nations. The level of poverty has continued to bite despite having millions of money in aids and grants channelled towards alleviating the situation in the developing nation. While the level of poverty has continued to increase, the developed nation are expanding their industries and production power and controlling the trading system in the world. The proceeds from the trade are used to give loans to the developing nations. The moral issue has been the way the developed nations deny the developing nations a chance to participate in the trading system in order rot reap the same amount of profit and build their economies. There are several multifaceted arguments that used in light of the arguments on the state of being poor or rich. According to the utilitarian theory the price of justice constitute of rules that works for the common good of all people. Based on the principles of utility, it postulate for the need to have a distribution system that will meet the need of all people in the society. For example, if we take from the rich and give to the poor, we will be doing so not because the poor are entitled to some of what has been acquired by the rich, but because the rich will benefit more from the redistribution than the rich will suffer if is taken from them. But this would create social anarchy and lack of rule of law. Therefore giving the rich and the poor a chance to participate in the source of resource would be more beneficial as it would help to bring social equality. Against the Rawls principle of maximum, utilitarianism requires us to improve the living conditions of those who are poor in the society since poverty is not their own fault. If we are all given the choice of being poor or rich, all of us would choose to be rich. No one would opt to be poor. Poverty is therefore caused by faulty resource redistribution system. The faulty world trade system has been held responsible for increasing gap between the rich and poor nations in the world. While the rich nations strive to remain rich, the poor nations are doing their best to move out of poverty. (Graham, 2004) Therefore the world should come up with a framework that will ensure that the poor nations will also access the same resource that they are having. We all live in the same boat and the problem that is affecting the poor nation will also catch up with us in the future. Creation of a fair distribution system will help the developing nations more than giving them aids. Equal access to trade opportunities is the key to development The debate on free trade may have taken root in the recent past but it is as old as human evolution. The concept of free has crated a revolution in the way we live more so due to the way it has affected the trading systems in the world. Fair trade is a type of system that is based on inclusion of environmental and social factors affecting commodity farmers or producers. Fair trade usually focuses on products coming from third world countries especially those ones that are sold in first world countries. The movement was started with the aim of empowering farmers who had been sidelined in the global market. Most of these producers had no price security and their economies were also quite unstable. Some of the issues brought forward by the movement include lack of producer participation within their organisations and low levels of contribution within the global market. There are a number of groups and associations that have expressed the above sentiments and other problems facing the world commodity producers. Such advocates include; Caritas International, Amnesty International and Oxfam. Most fair trade proponents like Oxfam believe that fair trade is the ultimate solution to prevailing market inefficiencies. The rules of trade in theory may not necessarily apply in the real world especially in poor countries. (UNCTAD, 1998) The concept of fair trade has been calling for the developed nations to give a chance to the developing nations in order to benefit from trade. It calls for the developing nations to be given a fair share of participation in the world market in order to help them to stimulate their growth of their economy. However there are a number of hindrances factors in the implementation of free trade in the world. One of such has been the issue of subsides and other market tariffs that has been reducing the ability of the developed nations to fully participate in the mainstream of world economic development. What have been the effect of tariffs and subside? While the western world pressed on the developing nation to open their market as a model of capitalist economy. The developing nations followed suite and opened their markets only to realize that they had been cheated out as the market became more competitive to outdo the capacity of production of their home industries. Most of the developing countries have an agrarian economy which has been greatly disadvantaged by the new market models. With the growing of trade blocs like the EU and NAFTA, there were several restrictive conditions that were put against the entry of products from the developing nations. (Nicholls and Opal, 2002) The developed world has been using unfair means of production and marketing models that have continued to hamper the fully competitive participation of their producers and producers from developing nations. While they have been putting trade tariffs and agriculture subsidies to protect their farmers and their agriculture sector, farmer in the developing nation have been left more helpless as they don’t have ways in which they can actually substitute the subsides that is given to farmer from the developing world. (Antony, 2002) Subsidies have an effect of undermining the spirit of free trade and forces of demand and supply in the market. In light of the increased subsidies, farmers are encouraged to produce more. The excess supply creates an oversupply in the world market which leads to lowering of prices. When the prices it the world market falls, famers from the developed nations are cushioned on the loss they would have made and therefore they cover their production cost and a marginal profit. This however does not happen to the farmers in the developing nations. (Bernard, 2000) If we take a financial analysis of the effect of the subsidies we will find the developed world has been using more money on subsidies than they have been giving to develop farmers. The developed nations have been using more than $300 billions every year in order to support the farmers. For example the EU has been advising a minimum of 3,282 euros to dairy farmers in the region. In case the world price of butter falls below the expected market price, the EU government compensates the farmers and pays them the minimum amount of the world price. EU dairy farmers receives around $15 billions every year which is more than the daily income of half of the world population (European Commission, 2004) The United States which has been another crusader of the free trade issue has also been giving subsidies to its farmers for a wider rage of crops. It has been shown that the US cotton farmers receives about $0.70 for every pound of cotton that the farmer produces. In case the cotton price falls below the market price, the governments will compensation for the loss that the farmers makes. If you analyze this in light of the AGOA agreement that the US has put in place the farmers from the developing world, it ends up as a loss to the farmers in the developing world since the cost of production in their countries is high and they are not subsidized. You will find that even with the removal of tariffs on the export of cotton to the US the cotton that is produced in the US will be more cheap than the cotton that has been imported tax free. (Brunner, 2003) Brazil officials have shown that the US subsides in cotton have led to fall in the world market price of the product. When farmers are given subsides they are encouraged to produce more than the market can absorb. The rest is dumped in the world market leading to lowered market price of the commodity. Brazil reported that since 1990, cotton subsidies by the US has depressed the world price of cotton by more that 50%. From 2001-2002, Brazil is reported to have lost more that $600 million due to the depreciation of the world cotton price arising from the subsidies. Oxfam which has become one of the major campaigners of the free trade has shown that the US spend three time more on subsidies than it gives aid to the developing nation. In 2001, Mali is reported to have lost more than $43 million due to fluctuation in cotton price compared to the $37 million that it received as aids from the US. However the developing nations have been suffering in silence since the subsidies have been arranged in the sprit for World Trade Organization. Under the 1995, peace agreements, the WTO member have agreed not to take each to court over the issue. (Arvind, 2006) If the developing nations are given a chance to participate in the world market, they will have a chance to improve their production. They will be able to increase the level of production that can compete competitively in the world market. Under the spirit of free trade, the force of demand and supply should be allowed to rule the market. Subsidies will continue to undermine the concept of free trade since it is the farmers from the developing world who continue to suffer. Conclusion There are ethics in the world that has to rule the market place. However it looks like the rich nations have seen themselves with more right to be rich while the poor nations still continue to be poor. It has been the case of a sinking boat and admission of the drowning poor nations in the boat. While the developed nations have been calling for the spirit of free trade in the world, they have also been crating unfair condition by advancing subsidies for their farmers. The developed have therefore found it difficult to benefit from the free trade. Therefore what the developing nations need is a fair chance to participate in the market rather than getting a lot of aids which ends up being consumed in the development of the production system that don’t benefit them due to the state of the world market. References Antony, E. (2002). Rich Nation is criticized for enforcing trade barriers. Oxford University Douglass, I. (2006). Historical Aspect of US trade policy. NBER Report, June 2006 Arvind, P. (2006). Free Trade Sceptics: Wrong Again: Economic Timers Review, Vol. 23 Brunner, A. (2003). The cost of market integration in the free trade world. Washington: International Monetary Fund, 2003 Steve, C. (2002). Trade laws and global governance. Londing: Cameron Bernard, C. (2000). Globalization and trade discontents. London: Catalyst Publishers Graham, D. (2004). Free Trade: myth, reality and alternatives. London: Zed Books Hardin, G. (1974). Against helping the poor. Psychology Today, September 1974. Singer, P. (1975). Who chose to be rich or poor? New York : Willey Nicholls, A. & Opal, C. (2002): Fair Trade: Market-Driven Ethical Consumption: London: Sage Publications, p17-19 UNCTAD (1998): UNCTAD Calls for Policy Changes to Avoid Throwing World Economy into Recession; press release 25 August 1998 European Commission (2004): Agricultural Commodity Chains, Dependence and Poverty; A proposal for an EU Action Plan, 3, 42, 7-9 Read More