Free Market Rules
Under this new economic regime, governments
privatised state enterprises such that industries, banks, hospitals,
utilities like water, sewage and sanitation, railways, and toll highways
were sold off to the private sector in the name of efficiency. Public
expenditure for social services was cut. Government control and
regulation was reduced, hence laws on food, food subsidies, taxes,
workers’ safety and welfare, environmental protection, and job
security were lifted or whittled away to facilitate business (read
profits). The role of government was to ease conditions for companies to
invest and increase their profits. The free market was allowed to rule,
meaning there should be no impediments to the free flow of money, goods,
investments and services. Free enterprise also meant individual freedom
and responsibility in place of the public good. People and individuals
were responsible for their welfare, health and social security and well
being.
The dismantling of the State began and the need to
mask the benign face of the free market (as embodied in social democracy
and the welfare state) was soon removed. In Europe (especially France,
Germany and the UK) workers lost their jobs, poverty increased and
income inequality especially in Sweden, the US and the UK rose. In the
UK, the number of families below the poverty line rose by 60 per cent in
the 1980s, and in the Netherlands by some 40 percent. In Canada, US, UK
and Australia, at least half the single parent households with children
have incomes below the poverty line. By the end of the 90s, economic and
corporate restructuring, and dismantled social protection have made jobs
and incomes more precarious. Flexible labour policies, work arrangements
with no long-term commitment between employer and employee are the norm.
Belgium, France, Germany and the UK watered down their worker dismissal
laws and Holland, Spain and UK have emasculated wage bargaining (UNDP
1999).
In the transition economies of Eastern Europe and the
former Soviet Union, the effects of market reform were devastating. The
dismantling and weakening of the welfare state have meant cuts and
deterioration in health services and education leading to deteriorating
human outcomes. Life expectancy was lower in 1995 than in 1989 in seven
of 18 countries - falling as much as five years since 1987.
Responsibility for pre-primary education was transferred from the state
to parents with drastic consequences for mothers of children.
Kindergarten enrollment between 1989 and 1995 plunged from 64 percent to
36 percent in Lithuania and from 69 percent to 54 percent in Russia (Ibid).
This shift in the political and economic climate in
the North also led to the decline of aid budgets in the Third World, as
the rich industrialised countries cut back on overseas aid. This
development aggravated the already shrinking social budgets of Third
World countries. Official development assistance (ODA) from the OECD’s
Development Assistance Committee (DAC) decreased by 17 percent between
1992 and 1997 (OECD 1997). In the 1980s, the percentage of (ODA)
disbursed to countries available for the health sector stagnated in
absolute terms and declined as a share of total aid. By the end of the
decade barely six percent of total aid went to health (UNDP
1992). In 1986 the North spent over 20 times as much on the military as
on development assistance (UNICEF 1986:72): the US spent over
$250 billion annually on arms (Forsberg) while arms spending worldwide
is $750 billion each year (Renner 1994). Although bilateral aid was more
significant for individual countries, only 25 percent of ODA go to the
ten poorest countries, which represent three quarters of the world’s
poorest people (UNDP 1992). In 1998, DAC nations’ commitment to
health spending was $1.5 billion, the lowest since 1991. Within this
total US$578 million was for basic health funding which accounted for
1.3 percent of all DAC nations’ commitment to bilateral ODA (International
Federation of Red Cross and Red Crescent Societies 2000:130). In
terms of education, DAC funding totaled $4.4 billion in 1998, the lowest
in the decade of which only $434 million was for basic education. These
figures are mere commitments, actual disbursements would be less still (Ibid:
131). The amount of bilateral ODA disbursed in 1998 was $8.5 billion
less than what DAC nations committed.
Since 1994, ODA has fallen from US$60 billion to $50
billion in 1997 (UNDP 1999). And whatever aid that is given goes
to debt relief or rescheduling not development. Third World countries
have a slim chance of receiving substantial foreign direct investment (FDI)
so they have to depend entirely on aid for development. Although private
foreign investment is increasing, a disproportionate share goes to a few
countries like Southeast Asia which despite rapid growth in the last two
decades or so, have been overtaken by a severe financial crisis since
1997. Whilst Africa, (where two thirds of the countries are defined by
the UN as least developed, received less than five percent of the direct
foreign investment in Third World countries in 1994 (Ross 1998:203).
Thus, the new wave of economic and political reform in the North, has
led to a drastic decrease in overall aid to the South, a downward trend
which is set to continue. More important, this economic reform model was
transplanted on the Third World with adverse results on the population.
This model of economic reform and restructuring was
carried out at the global level by the International Financial
Institutions (IFIs), namely the WB-IMF and the WTO (World Trade
Organisation). The economic reform policies are increasing the health
crises in the Third World through instruments namely the WB-IMF imposed
structural adjustment policies (SAPs); trade agreements in the WTO; and
social and health policies implemented by the international institutions
like the WB, WHO and UNICEF.
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