The Fourth World
The economic explosion of the 1990s has exposed a huge and disturbing income gap between the industrialized and developing worlds. The divide was wide before, but technology and globalization have expanded it to nearly incomprehensible breadth. Technology drives economic performance today, and poorer nations just don’t have it. Yes, the gulf between the haves and have-nots in America is wide, but it is nothing compared with this global crisis.
Sadly, few are paying any attention. During the recent trade summit in Seattle, involving the world’s leading nations, the widening gap never came up. With the laissez-faire brand of capitalism so celebrated now, it is apparently an unpopular subject. Yet, half the world’s population is increasingly threatened with economic oblivion. That is dangerous for world stability, and we should not resign ourselves to it.
If this planet truly splits in two--the rich and the very poor, with an ever-widening gulf between them--it will be an unstable place. The Fourth World, the least-developed parts of Africa and Asia, will become even more fertile territory for brutality, state-sponsored terrorism and mass tragedy. There will be more spots crying out for intervention, like North Korea, Iraq and Rwanda, and some will be more dangerously armed.
The solutions, if there are any, don’t involve Western governments writing big checks. Washington may be the capital of the richest nation, but it shows pitifully little interest in its own poor, let alone those in Africa and India. No, hope centers on ever-cheaper technology that enlightened businesses and certain philanthropic foundations will bring to the Fourth World. The basic premise is that supply can induce demand: the availability of extremely low-priced cellular phones, Internet access or medicines, for example, can create consumers of them, even in distressed markets. Yes, there are also a few changes in Western policies, other than money, that can help.
The size of the income gap is breathtaking. In the United States, inequality has widened sharply. Four of every five households now takes home a smaller percentage of the national wealth than 20 years ago. But it is the global gap that truly shocks. The income disparity between the richest and poorest fifths of the world’s population was 30 to 1 in 1960; today, it is 75 to 1. A hundred years ago, America’s per-capita income was nine times larger than Chad’s and Ethiopia’s. Now, it is 45 times larger. Especially poignant, 98% of children who die before age 5 lived in the developing world.
More than any other single factor, it is technology that separates the fortunate from the less-fortunate. In this age, technology drives productivity, which, in turn, determines standards of living. But the gap in technological capability between wealthier and poorer nations is huge and growing.
Look at communications. Virtually all U.S. and Western European homes have phone service; half of all Americans have a computer at home. But there are only 14 million phone lines in all Africa, fewer than in the L.A. metropolitan area, and almost no computer homes. One of every three Americans now uses the Internet, but only one in 10,000 residents of India uses it. Incredibly, there are more Internet users in the United States than in the other nine most-populous nations combined.
Do we want the two planets that such an ever-widening gap will create? Should we just concentrate on ourselves and wait to see what happens? Or is there a responsibility to try harder to lift these places up?
At bottom, it is a moral issue. Over the foreseeable future, these poorest regions do not pose a strategic threat to the U.S. and to countries north of the equator. Nor will our own economic fortunes be much affected by their poverty. But it is unconscionable to do nothing while 3 billion people living on less than $2 a day recede further into oblivion. And with all the new and fantastic tools of technology we possess, there is a greater opportunity to improve their fate.
But how? One key is the same technology that is widening income inequalities. It may ultimately be the economic salvation of the developing world. That’s because the accelerating speed of technical advancement is relentlessly lowering the price of all technology. From laptops to Internet service, prices are plummeting.
We can see this in Moore’s Law, named for one of the founders of Intel. It has accurately predicted that the price of computing power would fall 50% every 18 months. We also see it in satellite television. Many in the developing world who don’t have access to broadcast or cable networks now have access to satellite systems.
Then there is the unique historical phenomenon of the Internet. Soon, any laptop user in Africa or China will be able to download all information from the greatest libraries in the world. Any remote medical unit will have instant access to case histories from the greatest teaching hospitals.
Hopefully, the corporate sector and world-capital markets will help to establish these technologies in poorer regions. The example of wireless communications is encouraging. It is spreading everywhere as operators and investors recognize the potential. It turns out that consumers are prepared to spend high proportions of their income on it. Consumers consider it a necessity, like food and shelter, and it lets them bypass the five-year wait for inept telephone monopolies to install land-line phones. And cellular telephones are available because many wireless companies are practically giving them away in order to sign up customers. Everybody wins.
The same phenomenon may occur with Internet access. There are new companies that provide cheap leases on personal computers in exchange for consumers selecting their Internet service. These packages are still far too expensive for the developing world, but the price is coming down, fast. Progressive companies like America Online are already putting down roots in some of these markets.
The leading international financial institutions, like the World Bank, could play a more constructive role. But these organizations are greatly undercapitalized. Their major shareholders--the rich nations--should at least triple their financial resources. They can do so through more creative use of loan guarantees, thus avoiding major new cash commitments. Such new resources should be concentrated on teaching, technical assistance and related, on-the-ground help. Such aid can also be funneled through local, nongovernmental organizations, circumventing corrupt or inept national governments.
Third, industrialized countries should lower their tariffs on goods imported from the truly poorest countries. Such duties, including America’s, remain high. With so many global trade agreements completed during the 1990s, we are overdue in lowering these. African-made goods, for example, pose little risk to U.S. and European trade balances and to their organized labor movements.
Finally, there is a role for private philanthropy. The enormous amounts of private wealth created during this decade have birthed some powerful new foundations and enlarged many others. The recent gift from the Gates Foundation--to finance purchases of vaccines in the poorest African countries--powerfully demonstrates this potential. Its goal is to create a market for vaccines in such regions and induce pharmaceutical companies to supply them. This gift also recognizes that sick populations are unproductive ones.
In the end, we can all agree that the Fourth World is getting relatively poorer and the outlook seems bleak. Yet, is it beyond economic redemption? Maybe, but it’s not foreordained, particularly since the price of technology is falling so fast. Is it our fate to watch from the sidelines? There’s a one word answer: No. *
