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Our spending slump is hitting the world’s poor

Returning from Australia late in January, we avoided the misery of travelling for 26 hours non-stop by taking a two-day stopover in Dubai. Having spent a miserable time being monsoon rained upon for days on end in the Whitsunday Islands (discovered by James Cook, British navigator on Whit Sunday in 1770 – us Brits are nothing if not logical, albeit somewhat unimaginative), we were determined to have some last-minute sun before returning to our cold and snowy shores.

At 5am, as we were approaching touchdown at Dubai’s new airport terminal, the pilot announced that for the first time in several months it appeared to be raining in Dubai. I was beginning to take things personally.

We had been in Dubai a year ago, once again to bridge the gap between holiday and the realities of home. We stayed at the Hilton Jumeirah Beach hotel just along from the sail of the famous Al Burj.

Ten years ago, the Hilton stood in splendid isolation on Jumeirah beach, with unspoilt views in every direction. Today, its 10 stories are completely dwarfed by the rows of 40-50-storey beachside apartments which line the new promenade directly across the road from the hotel. We have watched these apartments being built over recent years with some awareness of the effect that the Human Rights Watch has had on the working practices employed by the local building companies.

Allegedly because of the heat, the building sites are run 24/7, with contractors bussing in hundreds of workers three times a day for each eight-hour shift. There has been a great deal of controversy about the extremely tough conditions endured by building workers in Dubai, most of whom come from the Indian sub-continent – India, Bangladesh and Pakistan.

This year, we walked around some of the new developments and not surprisingly, building progress has slowed a great deal. There are still immigrant workers but their numbers are vastly reduced from previous years. The global credit famine is hitting Dubai hard.

With a tiny native population and a large but quickly shrinking expat community. one wonders who is going to buy the thousands of properties being built.

Most residents of Dubai (between 80 and 90 per cent are “visitors” working on short-term visas) are male and working to support families elsewhere. With the economy going through a tough time, many are losing their jobs and leaving the country.

At the same time, property investors around the world are pulling in their horns.

This leaves Dubai property companies selling off luxury villas and apartments at massive discounts. Maybe more important, however, is the fate of the erstwhile imported labour who, while earning a pittance by Western standards, relied on their sparse income to support their families in some of the poorest parts of the world.

This reminds me of some research trips I took several years ago which later led to many heated dinner table debates about capitalism and exploitation of labour. This has become a major social issue in the intervening years.

I visited a huge clothing factory in Bangkok in the 1990s which made women’s fashion clothes.

I remember visiting the quality control department run by expats. This factory employed young teenaged women who wore the global uniform of jeans and t-shirts with fashionable watches and jewellery. Bearing in mind the daily challenges of their lives, probably financially supporting their whole families, they were surprisingly cheerful.

There were no obvious abuses of workers in this particular workplace but the whole area of exploitation of poorly-paid workers in third-world countries has become an ongoing scandal in contemporary life.

Even in the buoyant economic times pre-2007, the moral tensions between possible abuses on the one hand and offering people a means of climbing out of destitution on the other were difficult to unravel. How much more difficult is it now?

The Financial Times reported in February that “more than 20 million rural migrant workers in China have lost their jobs and returned to their home villages or towns as a result of the global economic crisis”.

The job losses were due to the drop in foreign demand for Chinese manufactured goods and Chinese officials are concerned about the possibility of social unrest. It is a similar story across many of the poorer countries of the world. Most of these “redundant” workers have no state safety net, no social insurance, basically no hope.

This is the awful thing about the economic crisis. We in the West are suffering from fear and in some cases reduced incomes or redundancy but our very existence is not being threatened by this recession. Around the world, many thousands of people are facing starvation simply because Western consumers have put a brake on their consumption.

Remember that something like 70 per cent of world economic output relates to consumer spending. No wonder economies around the world are suddenly in a mess. We do not have to reduce our spending very much for the economy to come to a virtual halt and that is precisely what has happened.

As I wrote previously, the solution to this dilemma is in our hands. Strangely, there has still been no strong and charismatic leadership shown in this crisis.

I expected Barack Obama to galvanise the American people in his inauguration speech. I expected Gordon Brown to attempt to hint at it in his speech to Congress when he recently visited Washington. I have expected the right exhortations to come from the lips of some world leader somewhere in recent months, but no.

The public will respond to an appropriate impassioned plea to take action to stamp on this recession. It does not need VAT reductions. It does not need tax rebates. It does not need interest rate reductions (which takes spending power away from the grey economy where it is easiest spent). It does not need public spending. What it needs is a charismatic leader to explain to the public that they need to get back to leading normal fearless lives, where they resume their previous levels of sensible rational spending.

What the world needs now is a resumption of business as usual. Otherwise, the price to be paid by millions living in the world’s poorest nations does not bear thinking about. Maybe we, as influential people in our communities, should be spreading the word because it seems that no one else is going to.

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