I. Government and poverty

The dollar in which the majority of Americans receive their wages or salary has no absolute, set value. We see this in the fact that the value of the dollar is constantly fluctuating when compared to gold, silver, or the currencies of other nations (which are all constantly fluctuating in value themselves). “Value” is determined by a wide range of factors, but is based in the fact that human beings are all rational maximizers who are all trying to get what they want while expending the least amount of resources possible to do so. The occurrence of this phenomenon in the mind of every single individual economic actor coordinates the price system in a free-market economy.

A given worker making $10.50/hour may see himself as bringing home a constant source of income. However, this is not the case at all due to the constantly shifting value of the dollar. Even in a free and unhindered market, the value of the dollars that this worker takes home each day would fluctuate based on factors like how much liquid currency was actually in existence in the market, how many resources had been invested in banks or stocks, and what amount of resources had been converted into physical capital or products. In the end, the dollar itself has all the value of a flimsy piece of cotton paper—it derives its true value from the productive activities of economic actors who use it as a medium of exchange. In other words, the dollar is a widely accepted “I.O.U.” This would be the case even in the freest of economies. Values of commodities and currencies are always changing based on the effectual demand and effectual supply of the moment.

But, as we all know, we live in anything but a free and unhindered economy. Our supposed “free market” is criss-crossed with a Federal Reserve System that manipulates the value of the dollar at will, a corporate welfare system that socializes the losses of corporations at the expense of the rest of society, and law enforcement policies that weigh the heaviest on those who do not have the time or resources to easily deal with court and lawyer fees, jury duty, and detainments prior to trial, not to mention the fact that the War on Drugs does substantially greater damage to the lower classes of American society than it does good, particularly when speaking of poor African-Americans.

II. Foreign policy and poverty


A. The War on Drugs


A great first point for libertarians to bring up in such discussion is the War on Drugs. Both the illegal nature of drug production and US cooperation with South American dictatorships have given "drug lords" in South and Central America a massive amount of market power. While I'm sure these drug lords would love to think that they are the source of their own wealth, the reality is that they have been handed this power -- gift wrapped with a bow -- by United States drug policy.

Taped up on the wall in my dorm room is an opinion piece from the Wall Street Journal co-authored by former presidents of Colombia, Brazil, and Mexico. While I'm not sure if these individuals are completely innocent in this situation, they make several great points about the link between the drug war and the state of this region of the world. They write:

  • "The revision of U.S.-inspired drug policies is urgent in light of the rising levels of violence and corruption associated with narcotics. The alarming power of the drug cartels is leading to a criminalization of politics and a politicization of crime. And the corruption of the judicial and political system is undermining the foundations of democracy in several Latin American countries. The first step in the search for alternative solutions is to acknowledge the disastrous consequences of current policies. Next, we must shatter the taboos that inhibit public debate about drugs in our societies. Antinarcotic policies are firmly rooted in prejudices and fears that sometimes bear little relation to reality. The association of drugs with crime segregates addicts in closed circles where they become even more exposed to organized crime."

More info on the War on Drugs can be found here.

B. Government-sponsored corporatism


While the War on Drugs is certainly one method by which US policy perpetuates Third World conditions around the world, another and arguably greater cause of this perpetuation is the symbiotic relationship between American multinational corporations and the American government. Remember, being "pro-market" does not necessarily mean that one must always be "pro-business." Corporations historically have attempted to harness government power to further their own aims (see the Federal Reserve System.) Ironically, we can trace this symbiotic relationship in many ways back to the "progressive" Woodrow Wilson, who said:
  • "Since trade ignores national boundries and the manufacturer insists on having the world as a market, the flag of his nation must follow him, and the doors of the nations which are closed against him must be battered down. Concessions obtained by financiers must be safeguarded by ministers of state, even if the sovereignty of unwilling nations be outraged in the process."

Edward Hermann sums up extremely well the effect that government corporatism has on the Third World:

  • "... the establishment can't admit [that] it is human rights violations that make ... countries attractive to business -- so history has to be fudged, including denial of our support of regimes of terror and the practices that provide favorable climates of investment, and our destabilization of democracies that [don't] meet [the] standard of service to the transnational corporation..."

...and...

  • " There is ...a huge tacit conspiracy between the U.S. government, its agencies and its multinational corporations, on the one hand, and local business and military cliques in the Third World, on the other, to assume complete control of these countries and "develop" them on a joint venture basis. The military leaders of the Third World were carefully nurtured by the U.S. security establishment to serve as the "enforcers" of this joint venture partnership, and they have been duly supplied with machine guns and the latest data on methods of interrogation of subversives."