A new report by the Institute for Policy Studies (IPS) has found that the United States and Europe have committed $4.1 trillion to rescuing financial firms. This amount is forty times more than they have spent combating climate change and poverty in the developing world.
The report, titled “Skewed Priorities: How the Bailouts Dwarf Other Global Crisis Spending,” opens with the following graph:
The graph makes it abundantly clear where the US and Europe are focusing their money.
However, the report argues that by not addressing other crises, the US and Europe will face problems in the future:
“The world is facing multiple crises. In the United States and Europe, the financial crisis has now spread to the “real economy,” causing mass layoffs and dire predictions of more to come. In the developing world, many countries were already reeling from a food crisis — even before the financial crisis went global. Increased grain prices cost poorer economies $324 billion last year. And this food crisis is not yet over. While world prices for some products have declined in recent months, declines in the values of most developing world currencies have kept the cost of food in the stratosphere for the world’s poorest. And on top of the financial and food crises, the world faces a climate crisis that threatens the very future of the planet.
All three crises underscore the interconnectedness of every nation on the globe. The forecasts for skyrocketing poverty and joblessness in the developing world are bad news for workers in the richer nations who will likely face even more brutal competition for jobs in a globalized labor pool. The lack of sufficient resources for developing countries to address global warming will contribute to a climate catastrophe with devastating impacts for all countries.”
Despite this, the US and Europe have shown little interest in addressing these problems. They have spent 45 times more on the financial crisis than on developmental aid and 313 times more than they have spent on climate change.
In many cases, the US and Europe have spent more to rescue individual companies than they have in addressing developmental and climate crises. For example:
* The U.S. government spent $23.2 billion in aid to all developing countries in 2007. That’s less than the $29 billion to bail out investment bank Bear Stearns.
* The U.S. Congress has not approved any contributions to the developing world’s climate change efforts. Meanwhile, the U.S. Federal Deposit Insurance Corporation (FDIC) has spent more money — $13.2 billion — to cover deposits at 19 failed banks than Western European governments have committed in climate finance.
The report argues that by ignoring other global crises, the US and Europe will not be able to escape them, rather, they are just delaying action on issues that will become critically important overtime as they continue to threaten global stability.