Global Overcapacity: A Major Cause

Global Overcapacity: A Major Cause of Poverty In researching global poverty one can come across startling statistics, i.e. almost half the people in the world live on less than $2.50 a day (Shah, 2011), 1 out of every 2 children live in poverty (Shah, 2010); speaking of children, 1 child will die every 4 seconds due to poverty, easily preventable diseases and illnesses, and other related causes (Shah, 2010), the GDP of the 41 Heavily Indebted Poor Countries is less than the wealth of the world's 7 richest combined (Shah, 2011). These facts are dumbfounding.

And they might cause one to reason that global poverty is an issue of insufficient supply. That if there were more food and resources available and disseminated around the world, these impoverished people would (1) stand a better chance at surviving the hardships of poverty, and (2) have an increased opportunity to make a better life for themselves.

While this is not an illogical way of reasoning, as there is an occasional shortage of food and resources (particularly medicines), one of the main causes of global poverty is an oversupply of goods, resources, and services. And this may seem counter-intuitive given the aforementioned facts (how can people remain poor when there's plenty to go around?). Nevertheless, this oversupply phenomenon is known as global overcapacity.

To clarify a bit more, it's the notion that due to technological advances in industry and in science, goods and services are cheaper and easier to produce resulting in an abundance that exceeds demand (Judis, 2010). It is the purpose of this essay to examine global overcapacity as a main cause for world poverty. There's an old Chinese proverb that states, "Give a man a fish and you feed him for a day.

Teach a man to fish and you feed him for a lifetime." This is a maxim that rings true for all fledgling countries wracked by poverty. It's only through education and the adoption of new technology that a country can become self-sufficient and independent. Well, the definition of self-sufficiency has changed in the global context, as no country is truly self-sufficient with regards to goods (particularly food) and services.

Due to globalization and industrialization sovereign countries are now, more than every, forced to rely on neighbors in the international community to provide goods, services, and resources not produced and/or endemic to their own land. So in a sense, as a result of this interconnectedness, the paradigm has shifted from the goal of "self-sufficiency" to a more leverage-based position within the international community (Freidman, 2005). This means that fledgling countries wracked by poverty are not seeking "self-sufficiency" so much as they are seeking leverage at/in the international marketplace.

This is an important point to make because in many cases in precludes the poorer countries from becoming financial stable. It's one thing if a country has the resources and the wherewithal to pioneer a path to socio-economic independence and fails to do so (for reasons such as war, oligarchy, despotism), it's quite another if a country has the passion and the desire to do so, but lacks the international support and the subsequent leverage needed to become a player at the negotiating table.

While many countries experience both scenarios to varying extents (they're not mutually exclusive), it is the case that many countries have the passion and desire to change, but lack the true, string-free support, needed to propel them into the modern era. Why are their efforts to change, to learn, rebuffed by the countries in power? Especially countries like the U.S., who is duly aware of their hardships and struggles.

Again, there are many reasons why they are not given what they need to succeed (covert imperialism, ideological differences, etc.) but one of the main reasons is global overcapacity. If there are more countries producing goods and services the supply of those goods and services continue to increase. When supply goes up, and demand remains relatively unchanged (or static) one of the only ways to earn a profit is to lower costs (Judis, 2010). Lowering costs means a smaller profit margin.

A smaller profit margin means, well, less money for the CEOs and shareholders. One may think that this theory is a bit of a reach, that there is no conspiracy to retard the efforts of fledgling countries to take a power position in this new "flat" world (Friedman, 2005). And maybe they're right, there is no coordinated effort to do such a thing, it's just the way the system is set up. Either way, whether it's consciously done or unconsciously done, it's the way it is. The facts bear this out.

For starters, and to circle back to that Chinese proverb, why do countries in power continue to delivery fish, instead of curriculum on fishing techniques? Here is an excerpt, from an article regarding the ill effects of food dumping, that underscores this issue, "Food aid (when not for emergency relief) can actually be very destructive on the economy of the recipient nation and contribute to more hunger and poverty in the long-term.

Free, subsidized, or cheap food, below market prices undercuts local farmers, who cannot compete and are driven out of jobs and into poverty, further slanting the market share of the larger producers such as those from the U.S. And Europe" (Shah, 2010). There's two additional points to make regarding this scenario. The first is obvious and an iteration of what's just been said, the reason countries in power give away food,.