Why are these various peoples and “failed nations” still so poor today and becoming ever poorer? What is wrong with them? Over the past half century or more, western transnational corporations and banks have invested heavily in the Third World. The transnationals are attracted by the rich natural resources, the high return that comes from low-paid labor, and the nearly complete absence of anything that cuts into profits, such as taxes, environmental regulations, worker benefits, and occupational safety codes. The US government has subsidized this flight of capital by granting tax concessions to corporations for their overseas investments, and even paying some of their relocation expenses—much to the outrage of workers here at home who see their jobs being exported.
American agribusiness cartels, heavily subsidized by US taxpayers, dump surplus products in other countries at below cost to undersell local producers. As Christopher Cook describes it, they expropriate the best land in these countries for cash-crop exports, usually monoculture crops requiring large amounts of pesticides, leaving less and less acreage for the hundreds of varieties of organically grown foods that feed local populations and sustain the local economy.3
Haiti is a prime example of this displacement of productive local populations. Decades of US farm imports pouring into Haiti—heavily subsidized by the US government and therefore easily sold at lower prices than local agrarian commodities—wiped out about three million small farmers, created more debt and hunger, and seriously damaged Haiti’s ability to be self-sufficient.
In 2010 Bill Clinton publicly apologized for championing policies that totally destroyed Haiti’s rice production. In the mid-1990s then-president Clinton encouraged Haiti to drastically cut tariffs on imported US rice. US rice growers received a federal refund of 72 cents on every dollar they expended to produce rice. Without tariff protections, the Haitian rice farmer was easily underpriced and put out of business by the heavily subsidized agribusiness growers in America. Haiti was not the only victim of this arrangement. In one year, US corporate rice production was subsidized by US taxpayers almost $1.3 billion. The rice shipped from the United States for sale in Honduras and several African countries was sold at 40 percent below production costs, causing 92 percent of Honduran rice farmers to lose their livelihoods.4
It was presumed, Clinton explained, that the displaced Haitian farmers would find new livelihoods by turning their efforts toward industrial development, though no specific full-scale program of industrialization was forthcoming. “It has not worked. It was a mistake,” he concluded.5
It actually was less a “mistake” and more a policy of opportunistic design, fitting nicely with the export interests of US corporate agribusiness. Clinton’s free trade policies toward Haiti, writes Kevin Edmunds, “deliberately reconfigured the country to fit into the new global division of labor, turning relatively self-sufficient farmers into low-wage workers in assembly plants.” Despite his belated mea culpa, ex-president Clinton and his big investor friends ignored the practical ideas to restore self-sufficiency put forward by Haitian popular organizations. Instead they continued to bolster export-oriented agribusiness cash-crops like coffee, mangos, and avocados.6
Instances of local industries and farming being wiped out by highly subsidized US products can be found across the globe from the Philippines to Honduras, from Mexico to Africa. In 2002 alone the US government allotted $3.7 billion in subsidies to its cotton agribusiness, which was then able to undersell African cotton producers. Countries like Benin, Burkina Faso, Chad, Togo, Kenya, and Mali lost up to $400 million in potential export revenue as a result.7
By displacing people from their lands and robbing them of their self-sufficiency, corporations create labor markets overcrowded with desperate populations forced into shanty towns to toil for poverty wages (when they can get work), often in violation of the country’s own minimum wage laws. In various Third World countries, workers are paid pennies per hour by corporate giants such as Nike, Disney, Walmart, and J.C. Penney.8
The United States was one of the few nations that refused to sign an international convention for the abolition of child labor and forced labor. The convention protested the child labor practices of US corporations throughout the Third World and within the United States itself, where child workers suffer high rates of injuries and fatalities and are often paid well below the minimum wage. Across the entire planet an estimated 158 million children aged five to fourteen are engaged in child labor.9
Shoes made by Indonesian children working twelve-hour days for 13 cents an hour cost less than $5 to be made but still sell for $150 or more in the United States. The savings that big business reaps from cheap labor abroad are not passed on in lower prices to their customers at home. Corporations do not outsource to far-off regions so that US consumers can save money. They outsource in order to increase their margin of profit.