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COVID-19 | Radio silence during the crisis: how our imperial gaze threatens to sharpen global divides by Lize Swartz and Josephine Valeske

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The spread of coronavirus COVID-19 across the world has been accompanied by an explosion of activity on social media as people have tried to make sense of the implications of the virus and the speed of change. But the story that is emerging amid the chaos has failed to draw attention to the effect of the virus on low-income groups, making visible a radio silence on the plight of those in the Global South in particular. We need to break the silence to ensure the implementation of inclusive responses and a widening of the narrative beyond that of the privileged, write Lize Swartz and Josephine Valeske.

Following the progression of the coronavirus on news and social media from within the Netherlands, we have witnessed a worrying parallel development: a focus on the immediate economic effects of the crisis, including financial losses; reports of panic buying that have fueled further panic and anxiety; and the effects of quarantining on personal life. In the higher income households of Europe, social distancing and isolation are no more than an inconvenience for many, and one of the biggest concerns among young adults seems to be the boredom that will hit when being forced to stay at home for two weeks. For others it will be the lack of freedom of movement, the inability to travel for leisure and business or do things for pleasure.

Thus, two sides of the virus have become highlighted: either inconvenience through social distancing leading to eventual recovery, or death of the vulnerable as an impact of the virus itself. The ‘middle’—the physical suffering the virus will bring, rooted in pervasive structural socio-economic inequalities, has not sufficiently been discussed. The pandemic uncovers the effects of decades of neoliberalism undermining the welfare and healthcare systems all across the world. But in the Global South as well as in intentionally forgotten places in the Global North like the refugee camp Moria on Lesbos, the suffering will assume another dimension altogether.

There is still hope that low-income countries can avoid the pandemic, with Africa having put travel bans on Europe, China, and the US in a powerful twist of the discriminatory global visa regime. But if the coronavirus hits impoverished countries with high levels of social inequality and inadequate public health systems that still suffer the effects of (neo-)colonialism, that inequality will increase. For the vulnerable, the coronavirus will not be just an inconvenience, leading to loneliness or a temporary loss of income—it will likely cause untold suffering. The virus may result in the death of the physically vulnerable, including undernourished children and adults, or those with tuberculosis or Aids.

While it is true that the elderly across all income groups are experiencing the highest mortality rates, it is likely that young people in low-income groups will experience higher mortality than those that are wealthy, as is the case with influenza. A study by the University of Edinburgh found that the level of access to healthcare is associated with <65 year-olds’ influenza mortality rates. Deaths are not just numbers, but real experiences resulting in trauma and emotional distress.

Furthermore, often it is the suffering before possible death that strikes us hardest. Wealthier residents in the Global South, as many people in the Global North, will be able to self-isolate by withdrawing into their own lives, surrounded by high walls—properties where they can live in relative comfort for a few weeks, waiting for the storm to pass. Their place of safety is others’ place of danger. In informal settlements, isolation is not possible, where toilets and taps, where and if they are available, are shared. It is here where several people are crowded into a single room, sharing beds, utensils, space. It is here where diseases including tuberculosis spread more quickly. The suffering of those who cannot distance themselves socially, whose houses are not necessarily homes, or who do not have a house with a door and four walls, needs to be emphasized. The suffering of those who usually wander the streets during the day and now have to be confined into what might become a death trap.

When the time for isolation comes, not only will it be impossible in densely populated areas, it will become devastating. Many workers survive from their daily wage, living hand to mouth. Those without a choice will have to go to work, and the virus will spread. The dependence on public transport, particularly buses and trains, in developing countries should not be negated. Wearing a mask won’t help if you’re crowded into a small space. And as horrible as working with a fever and breathing troubles sounds, it might still be better than what will happen if the governments declare shutdown and sentence the extremely poor to go hungry for days or even weeks.

In addition, school feeding programmes for many children provide the only nutritious meal that they get each day—or the only meal they may get. Staying away from school can be devastating for families who cannot afford to feed their children, both in the Global South as also in places like New York City, which hosts 114,000 homeless children. And impoverished people who cannot afford private healthcare will have to wait in queues in clinics and at hospitals for free medicine—to the extent that they are accessible or proximate—increasing their risk of exposure to sickness.

Perhaps the worst of it all, however, is that for many low-income groups in the Global South, the physical effects of the pandemic and the sudden confrontation with death by illness are not at all as novel as they are for us in the rich countries. Death and suffering from communicable diseases is much more common in the Global South than in the North (see figure below). The daily death count of “poor people’s diseases” such as tuberculosis and malaria are at present much higher than those of the coronavirus, but these illnesses, often easier to fight than the novel virus, are usually forgotten―as are their victims.

corona graph

Source: https://informationisbeautiful.net/visualizations/covid-19-coronavirus-infographic-datapack/

The coronavirus is threatening to sharpen divides both intra- and internationally, not only revealing differences in adaptive capacity based primarily on socio-economic circumstances that affect individual responses to the virus, but also highlighting ignorance regarding the constant high level of exposure of vulnerable groups to communicable diseases. The very silence about these inequalities perpetuates them. Strong responses are sorely needed, including ongoing pressure to ensure that interventions are inclusive and target vulnerable groups first instead of focusing on the business sector.

Moreover, individuals need to break the silence by directing their gaze outward, away from their own societies, to reshape the narrative of the crisis by driving the focus away from the privileged who continue to dominate sense-making processes and who are dampening or silencing the voices of others in the process. And finally, it should not be forgotten that what wealthy societies are facing now has been the daily reality for many around the world, and that our imperial gaze often prevents us from recognizing this.

This article is part of a series about the coronavirus crisis. Find more articles of this series here.

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About the authors:

Lize Swartz is a PhD researcher at the ISS focusing on water user interactions with sustainability-climate crises in the water sector, in particular the role of water scarcity politics on crisis responses and adaptation processes. She is also the editor of the ISS Blog Bliss.

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Josephine Valeske holds a MA degree in development studies from the ISS. She is currently an intern at the Transnational Institute in Amsterdam and the blog manager of the ISS Blog Bliss. Her reseach interests lie in the areas of aid, corporate accountability, and social and economic justice.

The imperial intentions of Trump’s trade war babble by Andrew M. Fischer

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In defence of his trade war with China, Trump claims that ‘when you’re $500bn down you can’t lose.’ The problem with this stance is that persistent US trade deficits with China are arguably a sign of US strength or even imperial privilege, not weakness. However, on this issue, he has much of conventional economics wisdom supporting him in his delusions that the US is being treated unfairly or is ‘behind’ based on these deficits.

Trump’s trade tirades are being vigorously disputed by liberal economists the world over, although the riposte is usually in defence of free trade and existing trade deals. However, many of these same economists have promulgated the underlying idea that US trade deficits are the result of some sort of disadvantage or decline.

For instance, as I discussed in 2009, 2010, 2011 and 2012, many prominent economists such as Paul Krugman argued then (and many still do now) that China’s undervalued currency gave it an unfair advantage, causing deficits and even financial bubbles in the US. Many economists on the left have taken a similar line of argument. For instance, Yanis Varoufakis argues that US trade deficits have planted the seeds for the downfall of the US ‘Minotaur’ because it has made the country increasingly dependent on the willingness of other countries to finance these deficits.

Beyond methodological nationalism

The problem with this reasoning is that international trade, income and financial data mostly represent the trade, income and asset movements made by corporations. Conversely, our system of international accounts is severely out of date given that these data are still reported on the basis of country residence rather than ownership. It also treats these flows as if they were arm’s length trades in final goods, or so-called ‘autonomous’ flows of income or finance, rather than the internalised operations of lead firms and their networks of subsidiaries, affiliates, or subcontractors.

The country-based framing of the international accounts serves to obscure the very resilient and virulent foundations of US power, based in the private corporate sector. Corporate ownership and/or control of trade, income and financial flows have become increasingly internationalised, even while remaining predominantly centred in the North and with a strong allegiance to maintaining US dominance. International efforts to track and govern these aspects of ownership or control from the 1970s onwards have also been systematically undermined, especially by the US. As a result, the antiquated international accounting system is very unfit for the task of tracking these corporate activities. Most of the discussion on global imbalances avoids this reality.

In this sense, as argued by Jan Kregel already a decade ago, the US shift to systemic trade deficits from the late 1970s onwards is best understood as a reflection of this internationalisation of US-centred corporations as well as the increased profitability of these US corporations operating in the international economy.

A simple stylised example is the iPhone. When Apple sends a production order to a subcontractor, this is not recorded as a service export from the US. However, the return export of the iPhone is reported as a goods export from China, even though the export is contracted by Apple, a US company. The iPhone is then sold in the US at many times its exported value, and the vast majority of the value of the final sale is accrued in the US. The US has a merchandise trade deficit in this production and distribution network, even though this deficit is associated with the immense value-added accrued in the US and the profitability of Apple. The same applies when Walmart exports from itself in China to itself in the US.

The idea that China’s surpluses and foreign exchange reserves constitute increasing power is similarly based on this flawed understanding of international accounts. As I have argued in 2010 and 2015, a rarely acknowledged attribute of the explosion of China’s surpluses in the 2000s was their rapid denationalisation. Foreign funded enterprises (FFEs)—most fully foreign funded—quickly came to dominate the exports of China, and then the trade surpluses themselves, to the extent that by 2011, FFEs accounted for over 84% of the merchandise trade surplus.

This share subsequently fell sharply due to a surge in exports from non-FFEs, although this was also in a context of falling current account surpluses as a proportion of GDP. As shown in the figure below, this was due to increasing deficits on China’s services account, which reached 2% of China’s GDP in 2014-16, knocking out about half of its goods surplus in 2014 and 2016.

China also returned to running deficits on its income account from 2009 onwards (with the slight exception of 2014), despite being a major international creditor. As explained by Yu Yongding, this is because China’s foreign assets mostly earn very low returns, such as in US treasury bills, whereas foreign investment in China is very profitable, possibly in excess of 20-30% per year, thereby cancelling out any of the balance of payments benefits that would normally accrue to being a major international creditor.

Graph Andrew Fischer article
Source: Author’s calculations from IMF balance of payments and international finance statistics (last accessed 21 March 2018).

Notably, the US is the mirror image of China: it is a major international debtor and yet it earns a surplus on its income account. Both situations were due to profit remittances, e.g. profits leaving China and entering the US. Indeed, Yilmaz Akyüz estimates that the net current account position of FFEs in China has been in deficit in recent years, meaning that their profit remittances were cancelling out their merchandise trade surpluses.

In other words, after the exceptional but historically brief period of running very large ‘twin surpluses’ (on both the current and financial accounts), the current account structure of China has reverted to a pattern that, as I explain in a recent article, is common among peripheral developing countries. The pattern is characterised by goods trade surpluses that counterbalance service account deficits (dominated by payments to foreign corporations) as well as the profit remittances of foreign corporations (and of other foreign investments, whether licit or illicit).

These rapid transformations have been reflective of the increasingly deep integration of China’s foreign trade into international networks dominated by Northern-based transnational corporations. The model has resulted in exceptional export performance, although this has occurred through the injection of considerable but underappreciated sources of vulnerability.

Indeed, as noted by Yu Yongding, from 2015 to 2017 the People’s Bank of China undertook the largest intervention in foreign exchange markets that any central bank has ever taken in order to prevent a run on the renminbi. This depleted its foreign exchange reserves by over 1 trillion US dollars. In another recent article, Yu adds that from 2011 to 2017, around 1.3 trillion US dollars of China’s foreign assets had effectively disappeared, probably reflecting capital flight. Together with the run on the renminbi, these were the principal reasons that the Bank of China put a hold on capital account liberalisation and tightened capital controls to an extent not seen since the East Asian financial crisis of the late 1990s.

Considering that much of such capital flight is destined for the US, either directly or indirectly via multiple offshore financial centres, in addition to the profitability that US corporations derive from China’s trade with the US, it is clear that the US is in the more powerful position in this bilateral relationship.

The imperial utility of trade decline discourses

From this perspective, the deep US trade deficits that have persisted since the early 1980s arguably represent a new form of advanced capitalist imperialism, the emergence of a system of tributes whereby states around the world effectively subsidise the expansion of US-centred capitalism. At the very least, the deficits are signs of a structural shift underlying global power relations, based on an increasingly predatory form of financialised capitalism, with the US still at its helm.

Much like with discourses of Soviet rivalry in the 1960s and 1970s, the current babble of US decline and lagging serve an ideological purpose within these continuing transmutations of US-centered power. It is effectively aimed at subordinating other countries and shifting the burden of adjustment onto them, while distracting attention away from the US-centered, corporate-led restructurings of global production systems that underlie US deficits in the first place.

 

Main photo: https://pixabay.com/en/donald-trump-politician-america-1547274/

About the author:

Andrew mug shot.JPGAndrew M. Fischer is Associate Professor of Social Policy and Development Studies at the ISS, and laureate of the European Research Council Starting Grant, which he won in the 2014 round. He is also the founding editor of the book series of the UK and Ireland Development Studies Association, published by Oxford University Press, titled Critical Frontiers of International Development Studies. He is also editor of the journal Development and Change. His forthcoming book, Poverty as Ideology, won the 2015 International Studies in Poverty Prize, awarded by the Comparative Research Programme on Poverty (CROP).