My conflicting India

I have always thought that the only effective way to learn something is by doing it. This is the reason why in June I started an internship at Udayan Care, an Indian NGO that works with orphan children and disadvantaged women. This ten week-long work experience seemed to be the perfect opportunity to gain insight into the nonprofit world while discovering my dream country: India. This country is the world’s biggest democracy and fourth largest economy, with a booming, world-class information technology sector. However, it is also home to more desperately poor people than all the nations of Sub-Saharan Africa combined.

Inequality for All: how did it happened?

Haven’t you watched the documentary “Inequality for All” yet? So you can’t miss this article from the Guardian that goes deep into the movie and gives a first overview of what it is really about.

 

“In one sense, Inequality for All is absolutely the film of the moment. We are living through tumultuous times. The economy has tanked. Austerity has cut a swath through the country. We’re on the verge of a triple-dip recession. And, in another, parallel universe, a small cohort of alien beings – or as we know them, bankers – are currently engaged in trying to figure out what to spend their multimillion-pound bonuses on. Who wouldn’t want to know what’s going on? Or how it happened? Or why? Or if it is really true that the next generation down is well and truly shafted?

And yet… what sucker would try to make a film about it? It’s not exactly Skyfall. Where would you even start? Because there are some films that practically beg to be made. And then there’s Inequality for All; the kind of film that you can’t quite believe that anybody, ever, considered a good idea, let alone had the passion and commitment to give it two years of their life.

How did you even come up with the idea of making a film about economics? I ask the director Jacob Kornbluth. “I know! People would roll their eyes when I told them. They’d say it’s a terrible idea for a film.” On paper it is, indeed, a terrible idea. A 90-minute documentary on income inequality: or why the rich have got richer and the rest of us haven’t (I say “us” because although it’s focused on America, we’re snapping at their heels) and which traces a line back to the 1970s, when things stopped getting better for the vast majority of ordinary working people and started getting worse.[…]

In fact, Inequality for All, which premiered at the Sundance film festival a fortnight ago, is anything but dry. It won not just rave reviews but also the special jury prize and a major cinema distribution deal, and while it owes an obvious debt to Al Gore’s An Inconvenient Truth, it is, in many ways, a much better, more human and surprising film. Not least because, incredibly enough, it’s actually pretty funny. And, in large part, this is down to its star, Robert Reich.

Reich is not a star in any obvious sense of the word. He’s a 66-year-old academic. And he’s been banging on about inequality for more than three decades. […] These days he’s a professor of public policy at the University of California at Berkeley and while he’s not a figure we’re familiar with in the UK, he’s been part of American public life for years.

[…] Any synopsis of the film runs the risk of making it seem dry again, but essentially it describes how the middle classes have come to have a smaller and smaller portion of the economic pie. And how, since 70% of the economy is based on the middle classes buying stuff, if they don’t have any money to buy this stuff, it cannot grow. Meanwhile, the government has allowed the super-rich, the “one per cent”, to take more of the nation’s wealth. Half of the US’s total assets are now owned by just 400 people and, Reich contests that this is not just a threat to the economy, but also to democracy.

[…] the film is structured around a lecture, or rather series of lectures: Reich’s incredibly popular wealth and poverty class at Berkeley. But it is only loosely used as a vehicle. There are also news clips and interviews and stylised graphics and archive footage.

And what it tries to do is thread together evidence that many people know about – the increasing struggle of the middle classes to just get by, the way that the top 1% of society has unshackled itself from the rest of us and has seen its income increase exponentially, and the ever-increasing cost of the traditional avenues of improvement, such as higher education – and weave it into a cohesive and convincing narrative. It is, in some respects, a theory of everything.

Reich charts the three decades of increasing median income after the Second World War, a period he calls “the great prosperity” and then examines what happened in the late 1970s to put an end to it. The economy didn’t falter. It kept on growing. But wages didn’t.

The figures that Reich supplies are simply gobsmacking. In 1978, the typical male US worker was making $48,000 a year (adjusted for inflation). Meanwhile the average person in the top 1% was making $390,000. By 2010, the median wage had plummeted to $33,000, but at the top it had nearly trebled, to $1,100,000.

“Something happened in the late 1970s,” we hear him tell his Berkeley class. And much of the rest of the film is working out what happened. Some inequality is inevitable, he says. Even desirable. It’s what makes capitalism tick. But at what point does it become a problem? When the middle classes (in its American sense of the 25% above and below the median wage) have so little of the economic pie that it affects not just their lives but the economy as a whole.

Reich’s thesis is that since the 1970s a combination of anti-union legislation and deregulation of the markets contrived to create a situation in which the economy boomed but less of the wealth trickled down. Though for a while, nobody noticed. There were “coping mechanisms”. More women entered the workforce, creating dual-income families. Working hours rose. And increasing house prices enabled people to borrow. And then, in 2007, this all came crashing to a halt. “We have exhausted all the options,” he says. There’s nowhere else left to go. It’s crunch time.

It’s crunch time that so many working families understand too well. They may not be familiar with the theory of income inequality but they haven’t been able to avoid noticing that they’ve got less money in their pockets. “I’ve always thought that kitchen-table economics is the most important topic to most people,” says Reich. “Their wages, their jobs, getting by. I’ve always tried to relate economics to where people live. That’s why I was so excited about the film.”

[…] There’s Erika and Robert Vaclav, for example, who pay $400 a week to keep their daughter in after-school care so that Erika can work on the checkout at Costco. “And I’m trying to work out if I should get her a phone so that she can walk home from school alone, and I know she’s OK, or if I should continue paying the money.” They lost their house when Robert was made redundant from his job as a manager at the now defunct electrical retailer Circuit City. And, it gradually transpires, that he’s a student in Reich’s wealth and poverty class at Berkeley. “How much money do you have in your checking account?” Kornbluth asks Erika from off camera as she drives her daughter to school. “$25” she says and her voice starts to crack and waver. […]

The world has changed. Just not in the way many thought it would. We fell victim to what Reich calls “the huge lie“. That the free market is good. And government is bad. Government makes the rules, Reich keeps on reminding us, over and over. And it decides who benefits from those rules, and who is harmed. And increasingly, that boils down to the rich and the poor.

Perhaps the most surprising voice in the film is Nick Hanauer‘s. He’s just your ordinary, everyday billionaire. One of the 1%. Except that he believes that he doesn’t pay enough tax. And that hammering the middle class, the ones who buy actual stuff, who create demand, which in turn creates jobs and more taxes, is simply bad for the economy. “I mean, I drive the fanciest Audi around, but it’s still only one of them… Three pairs of jeans a year, that will just about do me.”

The system simply isn’t working, he says. It’s put the millionaires and the billionaires, the Nick Hanauers and the Mitt Romneys – the people that Republican rhetoric describes as job creators – at the centre of the economic universe, rather than what Hanauer calls the true job creators – the middle classes.

The problem is, he says, that they’ve been attacked from every side. He was one of the initial investors in Amazon, a business of which he’s “incredibly proud”, but he points out that on revenues in the last three months of 2012 of $21bn (£13bn), Amazon employs just 65,600 people. “If it was a mom and pop retailer, it would be 600,000 people, or 800,000 or a million.”

Globalisation and technology have played their role. But so has the government. For decades, under both Republicans and Democrats the highest rate of tax didn’t dip below 70%. Now, Hanauer says he pays 11% on a six-figure income. Hanauer believes that if he was taxed more, he would be better off, because his company – he’s a venture capitalist and his family own a pillow factory – would sell more products, and he would, therefore, make more money. […]

One of the key moments for Reich was the underinvestment in education, particularly higher education in the 70s. This was when America introduced tuition fees and its workforce started to fall behind the rest of the world’s. […]

We have more people living in poverty who have jobs than those who don’t, according to Oxfam.

[…] One of the key pieces of research that Reich cites is a study of tax data by Emmanuel Saez and Thomas Piketty which shows that the years of peak income inequality in America were in 1928 and 2007. Right before both crashes. “The parallels are striking,” he says. It’s also striking what happened in the years after 1928. How in Germany, to take a random example, worldwide depression also led to a vicious polarisation of right and left. And certain other outcomes.

Could that happen in America? “Oh good heavens, I hope not!” he says. “Though when you go into periods of economic insecurity with widening inequality which puts the middle class under stress, you create fertile ground for demagogues from left or right. The politics of hate. The politics of fear. We’re already seeing that.”

And yet, despite, it all, he remains hopeful. “Change has always been difficult,” he says. It’s why he teaches. If he can’t change the world, maybe his students will.

http://www.theguardian.com/film/2013/feb/02/inequality-for-all-us-economy-robert-reich

A unique approach to poverty

Harry O’Sullivan is a student at The University of Melbourne and has been a micro-credit volunteer at IIMC, Institute for Mother and Child, Kolkata.

Fifteen Rupees per month, this is how much it costs for a child to attend Dukherpul School, located in rural West Bengal, India. However, despite this minute cost, roughly 0,19€, many of the children that are not sponsored tend to drop out before secondary school because their family cannot afford the tuition. What makes this reality all the more heartbreaking is the obvious love the children have for school and the joy they receive from learning.

While on an overnight stay at Dukherpul School, I got to see firsthand how the school operates and what material they are taught. I was amazed when I sat in on a class of 5 and 6 year olds and the children were learning simple mathematics and spelling in Bengali, the language of the region, and English. When I asked the teacher, appropriately named Joy, if it is common for the class-work to be so advanced he replied, “The majority of children only have 5-6 years of schooling so it is important to teach them as much as possible”.

Although the importance of education is becoming more and more apparent to the people of West Bengal, the crippling poverty of the region deprives most of the basic right to education. This is where Dr. Sujit Kumar Brahmochary and his NGO, Institute for Indian Mother and Child (IIMC), has stepped in and tried to help.

Dukherpul School was built by IIMC, as well as 23 other schools, located in different parts of rural West Bengal. This education initiative is part of a four-dimensional plan that Dr. Brahmochary has devoted the last 24 years of his life to. The vision of IIMC is to alleviate poverty, empower women and implement basic healthcare into some of the poorest regions of India. In addition, Dr. Brahmochary insists on an all voluntary work force in order to keep costs low and charges patients a symbolic amount of money, as he strongly believes that ‘charity’ is not the answer. IIMC aims to achieve this by, firstly, offering basic medical treatment to over 120,000 patients every year while simultaneously running a micro-credit bank and a social development program. These projects, as well as the 24 schools, including pre-primary, primary and secondary, form the four-dimensional approach developed by Dr. Brahmochary.

This unique model was born out of an intuitive observation made by Dr. Brahmochary in the early inception of the organisation. IIMC initially offered only medical treatment from a small branch in Tegharia, Kolkata. After a number of years, he found a pattern, the same patients were returning with the same basic problems. His solution was education. In 1994, Dr. Brahmochary and his wife Barnali, a teacher, formed an education program for the children of this region. The program allows donors from all over the world to sponsor a child and allow them to attend school. At present, over 4,500 children attend IIMC schools, with over 2,500 children being sponsored. This additional program allowed children to be educated, among other things, about hygiene and sanitation and pass this information on to their community, thus creating a more permanent healthcare impact in the region.

Having observed the growth and success of these first two initiatives, IIMC decided to commence a micro-credit program. Micro-credit is the brainchild of Bangladeshi economist Dr. Muhammad Yunus. It connects the world’s poorest with the financial services we, in developed countries, take for granted. The concept encapsulates offering small loans to individuals (from 10€ to 100€), with no collateral. The only real requirement is that the loan should be for a “business purpose”.

This program, solely directed at women, was designed to have a multi-faceted impact on individual women and, more broadly, society as a whole. Firstly, it was and is IIMC’s believe that sexual discrimination is a core problem within many regions of India. In order to combat this deeply ingrained issue, IIMC consider the empowerment of women to be a central factor in removing this prejudice. By offering loans to women to start a business, and thus earn an income, IIMC felt that there family, and the community, would respect them more and value them as equals.

loans are extended only for women with business purpose

Although the IIMC micro-credit program is based on Dr. Yunus’ model, due to the low costs of running the organisation, IIMC have been able to make some quite amazing changes. Dr. Yunus recommends an interest rate on loans of between 12.5% and 20%, yet IIMC offer a flat 10% interest rate regardless of the amount or riskiness of the loan. The maximum loan is 15,000 Rupees (200€) but initially one can only borrow 1,000-3,000 Rupees (10€-40€), thus hedging the risk of large defaults.

While at first the standardised interest rate may seem commercially unviable, this observation drills to the core of Dr. Brahmochary vision: a socioeconomic solution. That is, working with their ‘clients’ in a social relationship. In many of the micro-credit branches, the branch manager also lives in the village and knows the women in a cordial manner. Furthermore, what one must understand is that micro-credit does not work like a normal bank. Women involved in the program have never had savings accounts or access to ‘borrowed money’. As part of the program, women open a savings account, which attracts 4% interest, higher than regular banks at around 3%. These generous rates are achievable because of the 700-odd volunteers that work full time for the organisation and receive only small honorarium pay for daily expenses.

As mentioned above, loans are given at 10% interest and repayments are made over the following year. This margin of 6%, between interest on loans and savings accounts, is used to pay for the overhead expenses of each micro-credit branch.

Another amazing feature of this micro-credit program is the default rate. It is virtually zero. As part of IIMC’s social approach to micro-credit, managers encourage women to discuss with them, or with their group committee, if they are having problems repaying their loan. Managers will never pressure women to repay and will work with them to solve their issues.

Take for example Lipika who came to IIMC to create a savings account. After many months she had saved around 300 rupees, after depositing 10 to 15 rupees per week. Suddenly her husband started to become physically violent with her and demand her to give him money for alcohol. Lipika came to IIMC crying and asking for help. Their solution was for Lipika to bring her husband to the weekly micro-credit meeting and then offer them money to start a business, after explaining to him the error of his ways. Now Lipika and her husband have a small shop and a cart that they sell groceries and have repaid their initial loan of 3,000 rupees and several more loans of up to 15,000 rupees. This is not an isolated case. I was taken to meet other successful cases including a paralyzed woman, Molina, who was given a loan and a wheelchair so that she was able to sell fish at the market. Molina has paid back more than 10 loans of up to 15,000 rupees. Of the 8,000 loans given in the past 12 months, only 2 women have been categorized as potential default risk and are receiving help from their branch manager.

IIMC microcredit program has a unique approach with groups of women

IIMC has grown from a simple medical clinic in Kolkata into an organisation that is supported by 15 countries worldwide and 700 local volunteers helping to achieve Dr. Brahmochary vision everyday. Their unique, four-dimensional approach to education and healthcare is having a lasting impact all over West Bengal.

As Mrs. Brahmochary says “India is 50 years behind western countries” but it is obvious from what I have experience that this program is a step in the right direction.

Still in chains

What does the word slavery remind you?

Probably you would think about the ancient slaves forced to build the Pyramids. Or maybe you would think about the Romans and those who they conquered and submitted.

In the Middle age there were thousands of serfs who entirely depended on the will of their lords.

If we think about a closer time, you surely would image an African kidnapped from its land and deported to one of the cotton plantations in the US.

In any case, when we think about slavery, our imagination brings us to the past times. Slavery is something that happened in the past, something that now does not exist anymore.

What if we are completely wrong about this issue? What if I can assure you that slavery exists and is only become modern?

In the modern world there are many ways to be a slave. Slavery is not anymore represented by chains and bonds; it is represented by forced marriages, debt bondage, commercial sexual exploitation, early and force marriage, and labors exploitation.

Modern slavery is not different from the previous one. It is always about the exploitation of one human being on another human being. Around the World more than 35 million are trapped in a modern form of slavery.

The Walk Free Foundation (WFF), an Australia-based NGO, through its global slavery index, clearly shows that from the previous year there is a 23% increase in slavery.

Although this phenomenon is present in all the countries, these five nations represent more than the 60% of the total value: India (14.29 million), China (3.24 million), Pakistan (2.06 million), Uzbekistan (1.2 million) and Russia (1.05 million).

However, if we take a look on the percentage of the population in chains, Mauritania leads the ranking with 4% of its own population in slavery. This nation is followed by Uzbekistan (3.97%), Haiti (2.3%), Qatar (1.36%) and India (1.14%).

Although it may be shocking, the data above can be more frightful if we see them in an economic point of view.

In the past an average slave in the US (1850 ca.) cost the equivalent of $40,000 in today’s money; Nowadays a slave costs an average of $90. $90 is enough to decide the life and wills of another person.

Before it was difficult to capture a slave. A war was necessary and the transportation from one part to another was difficult. Today, millions of economically and socially vulnerable people are potential slaves. These people can be forced to work, can be exploited and violated in their own land. They are part of what we call World Economy.

This consistent human supply of paupers makes slaves cheaper than they have ever been. As a slave is considered “cheap”, it is an investment easily to get rid of. If the slave becomes sick, old or he protest, he would be abandoned to himself or simply killed.

What can we do to tackle and eradicate slavery?

First of all, we need to support research to assess the scale of slavery in order to identify measures to end it. We need to know our enemy if we want to beat him.

Secondly, we have to educate the public about the realities of slavery and campaigning for its end. Before doing some researches about modern slavery, I did not know how widespread and brutal this phenomenon was.

Finally, we should lobby governments and intergovernmental agencies to make slavery a priority issue. Rules, laws and rights are the only things which can help a slave to be finally free.

Moreover, only governments can control and prevent the enterprises from exploiting slaves in the business.

The leaders in the fight against modern slavery are: Australia, Austria, Georgia, Ireland, the Netherlands, Norway, Sweden, Switzerland, the UK and the US. However, only Australia, Brazil and the US are making great efforts to address the issue in government debate and in the businesses.

Francesco Stefani