Save the billionaires first!

Roberto Bissio

Dear friends of Social Watch,

A South American radio personality was commenting on the impact of the crisis on the world´s billionaires. The number of individuals with personal wealth of over one billion dollars has dropped to 793 from 1,125 a year earlier. Mr. Bill Gates lost 18 billion dollars, but still tops the Forbes list because Mr. Warren Buffet and Mr. Carlos Slim lost 25 billion each. A listener calls the radio and with a mix of Schadenfreude and sarcasm comments how happy he is that, not having money in the bank nor properties, he has not lost anything.He was wrong.

According to the Basel-based Bank of International Settlements, an institution known as “the central bank of central bankers”, “although emerging markets generally had little direct exposure to the distressed asset problem plaguing major industrial economies and managed to weather the most acute phase of the financial crisis in late 2008 relatively well, they were much less immune to the deepening recession in the advanced industrial world. Plunging exports and GDP growth bore clear evidence of the severity and synchronicity of the global economic downturn, which was reflected in declining asset prices, particularly in emerging Europe”. Dominique Strauss-Kahn, managing director of the International Monetary Fund adds an even gloomier view: “After hitting first the industrial countries and then emerging markets, a third wave of the global financial crisis is now hitting the world's poorest and most vulnerable countries, and hitting them hard.”

The non-billionaire in the Third World might not have suffered from the wealth destruction wave that wiped the financial markets, but he might lose his job if he works for an export industry, might lose his income if it relies on remittances from family-members abroad, or might lose the possibility of enrolling his children in school or getting adequate health care, because his government is cutting back on social expenditures. The crisis is coming fast to middle and lower income countries and its impact is bound to be much more severe on people, particularly the most vulnerable.

As the leaders prepare for the April 2 meeting of the London Summit of the G-20 (the group of the 22 countries considered “systemically important because of the sizes of their economies or population”), two different views of the crisis are emerging. The United States wants to stimulate the economy by throwing more money into it. The European Union prefers financial regulation and a strengthening of welfare programs, which in turn might be just another way to stimulate the economy.

But middle and low income countries do not have the deep pockets required to feed the economy when the markets contract, nor the social security mechanisms to assist the victims of the crisis. And that translates into human suffering. Every new prediction pushes farther into the future the forecast of when the crisis will end and pushes even farther down the economic growth indicators, which will translate into increased poverty, more infant mortality, increased cases of domestic violence. We have already seen that picture play out over the last decade during the financial crises in South East Asia, Russia and Argentina.

To add insult to injury, Mr. Strauss-Kahn acknowledges that “we cannot act as if this is a crisis of advanced economies with some impact on emerging markets: it is now a global crisis”. But 171 countries are excluded from the exclusive club where the decisions will be taken on how to deal with the global crisis. No matter how rich or how big, a handful of countries can not decide the fate of all of humanity.

In times of economic growth, not long ago, we were told not to worry about fairness because “the tide will lift all boats, big and small”. Now that the big boats are sinking, Social Watch has a duty to remind policy makers of the fate of the Titanic passengers: six out of ten traveling first class survived, but only one out of four with a third class ticket did so.

Best regards,

Roberto BissioCoordinatorSocial Watch International Secretariat