THE STORY OF STUFF

by Annie Leonard

  And in a cruel turn of a self-perpetuating cycle, as ordinary people have less income, the bargains promised by big-box stores are even more inviting, and so consumers support the very entity that is sucking the life out of their local economy and communities.

  There’s some hope, though. Local communities have gotten hip to the deception and destruction of big-box development and have been organizing to fight new big-box stores in favor of local businesses, which provide more secure jobs and keep more of the money circulating in the local economy. The highly publicized case of Inglewood, California, going up against Wal-Mart itself was one such victory. In 2003, Wal-Mart planned to build a superstore covering an area the size of seventeen football fields in the town of Inglewood in Los Angeles County. After the city council effectively blocked Wal-Mart’s proposal, the company decided to bypass them and take the issue directly to the voters. To win folks over, Wal-Mart spent $1 million—a huge amount for a city with a population just over 110,000—and even went as far as handing out free meals to city residents. Yet to Wal-Mart’s surprise, in April 2004 Inglewood voters overwhelmingly rejected Wal-Mart’s plan, preventing the store from being built.101 While there were those who had looked forward to better access to bargain shopping, the community as a whole prioritized environmental, economic, and community well-being.

  The victories in Inglewood and other communities remind me of one of the seminal events in establishing our independence as a country—the Boston Tea Party. To support local enterprise in the colonies, our plucky foremothers and forefathers boycotted tea from the East India Company, possibly the world’s most powerful transnational corporation at the time. Then they boycotted all British goods (even though it meant a little bit of hardship and the loss of access to some Stuff they were used to) as a step toward independence.

  In fact, there are those who compare today’s huge multinational corporations to colonizers. Just like colonial powers, the corporation’s central aim is not to foster local economic development, happiness, and prosperity but to enrich itself. In Africa, for example, colonizers built the railroads not so they would connect local African towns with one another, but as tracks that ran in single lines from the interior to the ports on the coast, so that resources and slaves could be extracted as efficiently as possible. And that’s exactly what the major chains, with the help of international trade policies, have done: they’ve built tracks for the wealth of local communities (whether that wealth comes from natural resources in Africa, toxic goods produced by exploited workers in China, or the sweat of underpaid retail employees in America) to flow in one direction—into their pockets.

  The Rule Makers

  None of what I’ve described thus far happened in a vacuum. It has all been made possible by the massive development of information technology over the last twenty-five years: the evolution of computers, semiconductors, fiber optics, satellites, etc., which have laid the foundation for the elaborate management systems that have enabled companies to find the cheapest, fastest path to making and distributing products. Then there’s the physical infrastructure of power plants, factories, ports, and roads—especially in rapidly developing countries like China and India.

  A final huge piece of this puzzle involves the structure of the global economy, a group of global regulatory institutions, and a set of agreements that have been worked out between countries to promote trade and “growth.” Uncovering the pervasive role of trade agreements and international financial institutions, or IFIs, is crucial. There is no way to comprehend the Story of Stuff without them, because they establish the rules by which not only the global distribution system but the whole of the take-make-waste economic model operates.

  To understand how these IFIs came to be, we have to delve briefly into history, especially the financial crash of 1929 and the resulting Great Depression that lasted through the 1930s and led up to World War II. For decades up to that point, governments had relied on the supposedly free market to take care of business with minimal government involvement. Even during our so-called Progressive Era between the 1890s and 1920s, when early protections like antitrust legislation and food-safety regulations were adopted, big corporate interests, not government, were dominant.102

  Then, in response to the Great Depression, national governments worldwide scrambled to protect their own workers and businesses by imposing tariffs on foreign Stuff, which led to a collapse in international trade and worsened unemployment and poverty for people across the globe. Even large increases in government spending for public works didn’t solve the problem. In this international atmosphere of extreme political and economic stress, Adolf Hitler launched World War II, which got the U.S. out of the Depression but trashed the industrial base of Europe and much of Asia. As the war drew to a close in 1944, the Allied powers, led by the United States, decided they needed a way to rearrange global economic relations around the new de facto world currency, the U.S. dollar, while also facilitating investment in the economies freshly destroyed by the war.103

  And so two superinfluential international agencies were born at a hotel in Bretton Woods, New Hampshire. The “Bretton Woods Institutions”—the International Monetary Fund (IMF) and World Bank (the nickname of the International Bank for Reconstruction and Development)—were later joined by the World Trade Organization, or WTO (which evolved from the 1948 General Agreement on Tariffs and Trade, or GATT). The IMF was created to deal with financial imbalances between countries: its primary role was to keep the world’s currencies stable and exchangeable in order to support international trade and to provide emergency loans to any country whose economy was in such bad shape that it couldn’t participate in global trade. The World Bank was created specifically to loan money to the governments of countries devastated by World War II so they could rebuild their economies and rejoin global trade. Soon, the World Bank shifted its focus to countries and European colonies in Latin America, Africa, and Asia. The GATT was a complicated treaty set up to reduce national barriers to trade; in 1995 it was replaced by the international organization known as the World Trade Organization (WTO), which has even broader-reaching powers. Note that these are only the three largest of these organizations; there are dozens of additional multilateral banks, government agencies, and trade agreements that replicate the IMF/World Bank/WTO model in regional or sector-specific forms.104

  Although some of the original intentions behind these institutions may have been good, their evolution over the past half century has had disastrous results for the great majority of people on the planet, and for the planet itself. Dominated by the biggest players (especially the United States), the IMF, World Bank, and WTO have created and perpetuated huge imbalances in global wealth while trashing the natural environment and destroying communities all the way from Argentina to Zimbabwe and everywhere in between.

  While most of us in the United States have few occasions to confirm this harsh truth regarding the negative impacts of IFIs, ordinary folks all over the developing world have extensive hands-on knowledge: these institutions influence their ability to do everything from make a living as farmers, get much-needed medicine, send their kids to school, or escape the grips of poverty.

  In Singrauli, India, I met villagers who had been kicked off their land (“involuntary resettlement,” in World Bank speak) in order to make room for a World Bank–funded coal-fired power plant complex. I was struck by the constant background shade of grey caused by the coal ash from the facility. A generation ago, Singrauli was richly forested, with wildlife and clean water and small subsistence farming; today, the coal mining and burning and ash has devastated the air, water, and landscape so intensely that some Indian journalists have dubbed it “the lower circles of Dante’s Inferno.”105 The compensation given to the displaced families was nowhere near enough to make up for their increased distance to fresh water, the loss of farmland, and the destruction of the social fabric due to the relocation.

  The problem is not just the actual projects, like hig
hways to nowhere, greenhouse-gas-spewing coal plants, or dioxin-emitting incinerators, but the broader development model that is forced on borrowing countries as well. While the IMF, for example, does loan money to countries in need, these loans too often come with ruthless strings attached, requiring borrowing countries to further deplete their natural resources in order to ramp up exports and to divert funds from public health, education, and other social needs to ensure loan repayment. In other words, they have to lower their already low standard of living in order to meet international debt payments. And if a country refuses these conditions, it finds itself blacklisted from other international lenders, unable to access desperately needed funds.

  The World Bank and IMF work hand in hand. Once the IMF requires borrowing countries to export more natural resources, the World Bank is happy to provide the technical expertise and loans needed to extract those resources, using technologies like those described in chapter 1 on extraction. Generally charging interest rates higher than those of local lenders, the World Bank finances roads, ports, power plants, factories, megadumps, incinerators, and dams all over the world. Its projects have been plagued with controversy, from the forced—sometimes violent—displacement of local residents to large-scale destruction of forests, aquifers, and entire ecosystems, as well as systemic corruption. The World Bank’s stated mission is to “to help developing countries and their people... alleviate poverty.”106 A noble goal, sure enough, but the real issue is how the World Bank goes about achieving it. What values and beliefs guide the strategy to meet these goals? For the World Bank, it is pretty clear. The World Bank—like the other IFIs—believes that more economic growth, more globalization, more unhindered capital flow, and more natural resource exploitation will reduce poverty.

  In fact, there’s a ton of empirical evidence that proves otherwise. In spite of (actually, partly because of) all these required economic “reforms,” loans, and “development” projects targeting developing countries, there’s still a massive net flow of wealth out of them into the richest countries. This is partly because each time the World Bank or IMF loans a developing country money, some of that money goes right back to the lender countries via the purchase of technologies or international consultants from the lending countries. Then there are interest payments, often at crippling rates, and the payment of the loan principal, which becomes more onerous when developing countries’ currencies decline in value (which happens most of the time). Zambia’s 2004 loan repayments to the IMF alone, for example, amounted to $25 million, more than the education budget for the entire country.107 In 2005–06, Kenya’s budget for debt payments was as much as for water, health, agriculture, roads, transport, and finance combined.108 Overall in 2006, the world’s poorest countries (with annual average incomes of less than $935 per person) paid more than $34 billion in debt service (payments of interest and principal), which works out to $93 million a day. If you include all developing countries, the amount was $573 billion.109 According to the Jubilee Debt campaign, which provides those numbers, although there was some debt cancellation in 2007 and 2008, today’s figures are likely similar; there were also plenty of new loans.110

  Finally, there’s the transfer of wealth from the export of valuable natural resources—remember the resource curse I mentioned in the extraction chapter? So the World Bank and IMF have contributed to a situation where most borrowing countries pay way more than they ever receive in international aid.

  But why is this our concern? These are international institutions, right? Actually, the United States provides 18 percent of the World Bank’s funding. And the United States controls 18 percent of the voting power at the IMF—in effect a veto power, since an 85 percent majority is required for a decision.111 This means the United States has a disproportionate share of influence over both the IMF and World Bank. And it means we U.S. citizens are involved by providing our tax dollars, as well as by benefiting from interest repayments the World Bank makes on its bonds that are bought by our pension funds, municipalities, and church or university endowments. We’re paying for all these environmentally destructive projects, ruthless economic reforms, and bad loans that are suffocating many developing countries’ economies. So we have both the responsibility and the right to check out what the IMF and World Bank are doing, and to rein them in.

  It is simply not possible for developing countries to pay back the crippling debt on these international loans, many of which were made under misleading or coercive terms for poorly planned projects. Or were made with undemocratic and corrupt leaders who diverted the funds for their personal use, or spent them on arms to secure their hold on power. And it is even more impossible to expect poor countries to be able to chart a path of sustainability, of just and healthy economic development, while being held hostage to decades-old debt. If the World Bank and IMF are even remotely interested in improving the life of the world’s poor, these debts need to be canceled. Instead, the Bank and IMF should offer ecological-debt repayments to communities worldwide to compensate for the social and environmental damages these institutions caused with their projects and policies over previous decades.

  The Jubilee movement—inspired by the biblical concept of a Jubilee year in which debts are forgiven and equity is restored—is active in many countries around the world, uniting faith-based communities with advocates for human rights, the environment, labor, and economic justice. It calls for a cancellation of international debts and the restoration of healthy relationships between nations. Some progress is being made. There is proposed legislation before the U.S. Congress called the Jubilee Act, which would cancel debt among the poorest countries in the world and promote more transparency and responsibility in future lending. In 2008, this act passed in the U.S. House of Representatives and the Senate Foreign Relations Committee but didn’t make it to the full Senate for a vote.112 Even while waiting for the Jubilee Act to move forward, there are other signs of hope, such as the April 2009 promise by the Obama administration to provide $20 million to cancel Haiti’s absolutely crippling debt payments to the World Bank and its regional ally, the Inter-American Development Bank.113

  The last of the big three is the World Trade Organization. The WTO was created in 1995 as the successor to the General Agreement on Tariffs and Trade (or GATT). First aimed at reducing trade tariffs, it later turned to “trade liberalization”—that is, removing obstacles to increased trade. Now, I am not against trade, which has been happening since the beginning of time and has brought many good things. But trade should take place when it supports a thriving environment, good jobs, healthy communities, and cultural diversity. Trade can support all those things when those things are the end, and trade is one (just one) means by which to achieve them. The fundamental problem with the WTO is that it acts as though trade itself is the goal and that therefore trade must be given preference over pesky little things like public health, worker rights, and strong and vibrant local economies.

  The trade-trumps-all approach of the WTO is demonstrated in its highly controversial provision which prevents nations from discriminating against any product based on how it was produced. It doesn’t matter if the technology involved in making the product is horribly polluting or unsafe to workers. Any country—driven by its corporate interests—can challenge a law in another country by claiming it’s a “trade barrier.” Such disputes are decided by three-person arbitration panels that meet in secret and are not screened for conflicts of interest.114

  In the late 1990s, I worked in Ralph Nader’s office in Washington, D.C. One of my colleagues there, Rob Weissman, a Harvard-trained lawyer and leading critic of the WTO, used to chide me for my obsession with factories and dumps, urging me to join those fighting the WTO instead of, or more accurately in addition to, working on garbage. He pointed out that every law that I worked tirelessly to strengthen, and every victory against a dirty production process could get wiped out, or rendered illegal, by the WTO.

  Weissman was right on: many of my local-level
campaigns, for example to prevent a certain incinerator or polluting factory, were won as battles but then lost in the overall war as macro-level policies determined a different longer term outcome. Under the WTO, environmental laws, labor standards, human rights legislation, public health policies, protection of native cultures, food self-reliance—all of these can and have been attacked and overturned as impediments to free trade. For example, the WTO overruled the European Union’s law banning beef raised with artificial growth hormones when beef producers outside Europe claimed the public health law constituted a trade barrier.115 Under the WTO, government laws made in the public interest can be overturned just like that. Obviously, many companies that extract resources and produce Stuff love this, since it means fewer obstacles to their business. For those of us who are working to promote higher standards and better practices for how resources are extracted, Stuff is produced, and workers and communities are treated, it’s a huge problem. All our goals become secondary (at best) to more, faster, cheaper trade.

  Despite its implicit threat to the well-being of people and the planet, the WTO (and international trade agreements leading to it) somehow managed to keep itself off the radar screen of the American public for half a century. And then 1999 happened. In 1999, some doofus at the WTO decided to hold the annual ministerial conference in Seattle, Washington. What were they thinking? Were they unaware of the city’s demographics and pro-environment politics? That meeting marked a major turning point in public awareness about the WTO. An estimated seventy thousand people from all over the world descended on Seattle116 to make their opposition to the WTO known, with nonviolence, teach-ins, strategy sessions, and marches. The protest was amazing in both its scale and its diversity. Alongside representatives from rich and poor countries alike, environmentalists and labor activists—two communities with a history of misunderstandings and tension between them—joined forces against an international regime that prioritizes trade over the planet, communities, and workers.