Answer: the already poor, and especially the recently upwardly mobile. Recession economics aren't fair: the brunt isn't borne by the already wealthy and industrialized. America, and middle power countries like Canada, will continue to attract foreign investment because they are safe havens in turbulent economic times. They have proven track records, educated work forces and retain far more confidence than developing economies. Ironically in recession markets more money and investment, not less flows into the US - and it's coming out of the developing world.
Joe Clark - a once (Conservative) Prime Minister of Canada - argues the poor will feel this recession the worst for four reasons:
- Private foreign investment plunges as investors look for "safe" markets.
- Rich countries can borrow and run big deficits. Poor countries can't.
- Aid budgets are the first to go, both in foreign policy and in NGO budgets. Sub-Saharan Africa can't unelect a a developed world government.
- Remittance - money sent home from individuals working in rich countries - plummet (Remittances account for an astonishing 20-30% of GDP in Haiti, Bosnia and Jordan).
2 comments:
Joe Clark misses out on another piece--private giving to aid agencies also takes a hit. We are working on our church budget right now and we typically give about 150,000 dollars to outside causes. We are cutting 250,000 dollars from our budget. It is a pretty sure thing that while those outside causes are not the first to go (indeed, they are one of the last things we try to cut), they will take a hit.
True enough. Interestingly, having spent the last month or so studying the stats on charitable giving rather closely, it is actually religious giving which is least effected by recessions. Such giving tends to match comparable losses in the overall economy - but it does not strikingly decline, relative to other sectors.
The policy lessons from this are less clear, but it is true that when governments get in trouble ODA (official development assistance) is one of the first to go - much less the case for religious institutions.
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