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      The COVID-19 Crisis Has Catalyzed Vision 2030

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      A look back at history shows that desperate times do indeed call for desperate measures. After all, it was not until Saudi officials watched in horror as oil prices plummeted by 70% that, in 2016, Vision 2030 was born. While other Gulf Cooperation Council (GCC) members presented their own initiatives, true to form, Saudi Arabia’s economic reform agenda is the most ambitious yet. 2020 was set to mark the agenda’s first benchmark achievement. Instead, an oil price war, a disastrous bombing campaign against Yemen and a 5.4% contraction in GDP set a different tone than the kingdom may have intended.

      The Line: Mohammed bin Salman’s Green Blockbuster

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      The disruption ensued by the COVID-19 pandemic wreaked havoc on economies and markets worldwide, but none saw the eye-watering lows experienced by the oil industry. This was exacerbated by Saudi Arabia and Russia going head-to-head in a price war that brought about further carnage. Despite production cuts being eventually agreed upon, the global downturn and persistent oversupply of oil reached its crescendo with US oil dropping spectacularly into negative for the first time in history.

      Progress Overview

      As the dust began to settle, a sense of urgency set in among leaders as they were faced with the aftermath of the crisis. Not only did COVID-19 highlight the risk of oil dependency, but it has further exposed oil-exporting economies to fiscal vulnerabilities. With growth contractions across the MENA region, the current price of oil is far below the break-even level required to balance the budgets. With the exception of the UAE, oil represents over 50% of GCC budgets, highlighting the urgency to diversify in order to pay off the fiscal bill. While the impact of COVID-19 on Vision 2030 is unclear, an analysis of existing achievements and overall aims can paint a clearer picture of how Saudi Arabia should reassess its grand plan in light of the pandemic.

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      Only a year after the announcement, it seemed that Vision 2030 was not enough to satiate the Saudi appetite for grandiose ideas. So, in 2017, Crown Prince Mohammed bin Salman announced the construction of a $500-billion smart city of NEOM. Aside from talk of a fake moon and flying cars, the Saudis managed to hit a more palpable note with investors with the city’s $5-billion green hydrogen plant. By 2025, the facility will supposedly produce 650 tons of hydrogen daily and 1.2 million tons of green ammonia for export.

      Despite the challenges hydrogen fuel presents, this project offers Saudi Arabia an unparalleled opportunity to pioneer a market gaining “unprecedented political and business momentum,” according to the International Energy Agency. Beyond this, while there is little publicly available information on the kingdom’s key performance indictor achievements, visible progress has been made in the one thing it does best — state-managed tasks. Notable regulatory reforms in 2018-19 earned Saudi Arabia a spot in the World Bank’s top 10 global business-climate improvers.

      Strong development has also been observed in capital markets and the banking system, whereby the growth of Tadawul, the Saudi stock exchange, has been the standout achievement. Such praiseworthy steps have also been accompanied by progress in the realm of digitization and social reforms. Yet this is not enough.

      While the kingdom is certainly achieving its goal of being an ambitious nation, less can be said for its key pillar — a thriving economy. Job creation, foreign direct investment (FDI), entrepreneurship and private sector growth are all core areas where Saudi Arabia has fallen short. A recent string of PR disasters, like the murder of Washington Post journalist Jamal Khashoggi in 2018 and the 2017 high-profile purge that included the arrest of 11 senior princes, have further tainted the kingdom’s image, harming investor confidence. At mere 0.57% of GDP, current FDI levels are simply not enough to fund the diversification plan.

      Needless to say, the economic challenges spurred by the pandemic will require a tightening of the Saudi purse strings to rein in the growing budget deficit. Such fiscal prudence will inevitably impact the ever-more necessary reform agenda, indicating that a stringent revaluation of the Vision 2030 objectives will be needed to deliver on its promises.

      The To-Do List

      To lay the foundations of their revised plan, the kingdom must first reprioritize spending and maximize income from existing revenue streams while attracting and retaining investor funding. This will require boosting FDI through greater transparency, accountability and generally better self-conduct on the international stage. In the longer term, focusing on strategically sound, high-impact projects while delaying those with little real-time value will be an integral step in the agenda’s revaluation.

      Much to Saudi Arabia’s dismay, this will mean moving away from the likes of NEOM to the less glamourous task of actual economic reform. Yet if NEOM were not enough, within it there is now The Line — a linear, AI-run city free of carbon, cars and any sense of realism. Regardless of its supposed economic benefits, the fact of the matter remains that problems are not solved through procrastination, even if it costs billions.

      Arguably the hardest yet most important step for Saudi Arabia will be to cede state control to make room for a diverse, competitive and independent private sector. The kingdom’s strategy of spreading itself thin across all sectors is not only inefficient, but unattractive. A more market-based approach will stimulate entrepreneurship, competition and, most importantly, draw in foreign investment.

      This ties into the second key step: optimizing the business environment. This means pushing for greater access to capital, greater ease of doing business and greater stringency and transparency in the legal system, encouraging entrepreneurship both at home and from abroad. The third and most important step is human capital development. In a country where 67% of the population is below the age of 34, disregarding the youth would mean neglecting Saudi’s greatest asset.

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      Quality of education and upskilling the youth must be prioritized alongside creating jobs suited to the existing workforce. The importance of human capital cannot be overstated: In order to create a successful economy that best serves the people, investing in its citizens must be the crux of Vision 2030.

      Finally, to reinvent itself as the business hub of the Middle East, the kingdom must rein in its regional military interventions, a massive burden on both its budget and international image. In order to truly convince investors, Saudi must actively channel its efforts away from conflict and toward long-term economic reform.

      On the whole, despite some notable achievements, progress is slow, and the Kingdom of Saudi Arabia has a long journey ahead. However, COVID-19 has prompted a much-needed agenda revaluation, revealing some shortcuts and pushing Saudi leaders to move with a greater sense of urgency. The Word Bank itself warns that “higher than expected oil and gas revenues could reduce the pressure for [GCC] governments to reform,” exemplified in Vision 2030 itself being the result of such a price shock. However, with the eye-watering oil price drops of 2020, COVID-19 may have been the rude awakening Saudi leaders needed.

      The challenge now lies in both pioneering change while stimulating an economy in a world experiencing the greatest recession since the Second World War. This, of course, is no easy feat, but the key to success will lie in focusing on projects that truly add value. This will mean ceding control to facilitate private sector growth, optimizing the business environment and committing to its citizens by investing in the youth. Only then can Saudi Arabia unlock its potential and become, as it envisions, the “epicenter of trade and the gateway to the world.”

      *[Fair Observer is a media partner of Gulf State Analytics.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in US Politics

      House set to approve $1.9tn Covid aid bill despite minimum wage setback

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      The US House of Representatives is aiming to pass Joe Biden’s $1.9tn coronavirus aid bill on Friday in what would be his first big legislative win, although marred by the news that a favored minimum wage hike would have to be tossed out.A spirited and potentially long debate was expected, as most Republicans oppose the cost of the bill that would pay for vaccines and other medical supplies to battle a Covid-19 pandemic that has killed more than 500,000 Americans and thrown millions out of work.The measure would also send a new round of emergency financial aid to households, small businesses and state and local governments.A group of Senate Republicans had offered Biden a slimmed-down alternative, but the White House and some economists insist a big package is needed.Biden has focused his first weeks in office on tackling the greatest public health crisis in a century, which has upended most aspects of American life.Democrats control the House by a 221-211 margin, and Speaker Nancy Pelosi is counting on nearly all of her rank and file to get the bill passed before sending it to a 50-50 Senate, where the Democratic vice-president, Kamala Harris, holds the tie-breaking vote.Embedded in the House bill is a federal minimum wage increase, which would be the first since 2009 and would gradually bump it up to $15 an hour in 2025 from the current $7.25 rate.But the future of the wage hike was dealt a serious blow on Thursday, when the Senate parliamentarian ruled that it could not be allowed in the Senate version of the coronavirus bill under that chamber’s “reconciliation” rules.The special rules allow the legislation to advance in the Senate with a simple majority of the 100 senators, instead of the 60 needed for most legislation.Biden has not given up on raising the minimum wage to $15, a top White House economic adviser said on Friday.A higher wage “is the right thing to do”, White House national economic council director, Brian Deese, said in an interview on MSNBC.“We’re going to consult with our congressional allies, congressional leaders today to talk about a path forward, about how we can make progress urgently on what is an urgent issue.”Meanwhile, lawmakers must also act on the coronavirus stimulus package, Deese said.The $15 minimum wage figure had already faced opposition in the Senate from most Republicans and at least two Democrats, which would have been enough to sink the plan. An array of senators are talking about a smaller increase, in the range of $10 to $12 an hour.In a statement after the Senate parliamentarian’s ruling, Pelosi said: “House Democrats believe that the minimum wage hike is necessary.”She said it would stay in the House version of the coronavirus bill.In arguing for passage of the relief bill, Pelosi cited opinion polls indicating the support of a significant majority of Americans who have been battered by the yearlong pandemic.“It’s about putting vaccinations in the arm, money in the pocket, children in the schools, workers in their jobs,” Pelosi told reporters on Thursday. “It’s what this country needs.“Among the big-ticket items in the bill are $1,400 direct payments to individuals, a $400-per-week federal unemployment benefit through 29 August and help for those having difficulties paying their rent and home mortgages during the pandemic.An array of business interests also have weighed in behind Biden’s America Rescue Plan Act, as the bill is called.Republicans have criticized the legislation as a “liberal wishlist giveaway” that fails to dedicate enough money to reopening schools that have been partially operating with “virtual” learning during the pandemic.The House minority leader, Kevin McCarthy, complained it was “too costly, too corrupt”. While Republicans for months have blocked a new round of aid to state and local governments, McCarthy said he was open to his home state of California getting some of the bill’s $350bn in funding, despite a one-time $15bn budget surplus.Efforts to craft a bipartisan coronavirus aid bill fizzled early on, shortly after Biden was sworn in as president on 20 January, following a series of bipartisan bills enacted in 2020 that totaled around $4tn. More

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      in US Politics

      A $15 minimum wage isn't just about justice. It's good economics | Steven Greenhouse

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      There’s one important aspect of the fight for a $15 minimum wage that is little understood: the fight isn’t so much about raising pay for a few million workers. Rather it’s about the far more ambitious goal of putting the US economy on a higher road, on a different track from being a low-wage economy. In Europe, many people scoff at the US as a country of low-wage McJobs with paltry benefits – often no paid sick days, no paid vacation and no health insurance. In Denmark, a McDonald’s hamburger flipper averages $22 an hour (with six weeks’ paid vacation), while in the US, fast-food jobs pay half that on average.You might wonder: how can the United States, the world’s wealthiest nation, be a low-wage economy? Of the 37 nations in the Organization for Economic Cooperation and Development, the unofficial club of rich and near-rich nations, the US has the third-highest percentage of low-wage workers, with nearly one in four workers defined as low-wage. Only Latvia and Romania are worse. (That study defines low-wage as earning less than two-thirds of a nation’s median wage.) In another study, Brookings found that 53 million Americans hold low-wage jobs, with a median pay of $10.22 an hour and median annual earnings of $17,950.The US also has the lowest minimum wage among the G7 industrial nations in terms of purchasing power. America’s $7.25-an-hour federal minimum is 38% lower than Germany’s and 30% lower than Britain’s, Canada’s and France’s. This helps explain why the US has among the worst income inequality of the 37 OECD nations – only Mexico, Chile, Costa Rica and Bulgaria have greater inequality. And the US has the third highest poverty rate; only Hungary and Costa Rica are worse.The US didn’t always have a low-road economy. In the 1950s, 1960s and 1970s, it had a high-road economy: labor unions were at their strongest, American businesses were booming (for the most part), and corporations shared their profits and prosperity with their workers as never before, helping build the world’s largest and richest middle class. But beginning in the 1980s, many corporations pushed the US economy and American workers on to a lower road, as corporate America felt the sting of global competition, as Wall Street pushed companies ever harder to maximize profits, as labor unions grew weaker and as President Reagan and other Republicans weakened worker protections and did little to raise the minimum wage.The US also has the lowest minimum wage among the G7 industrial nations in terms of purchasing powerBecause of persistent Republican opposition, the federal minimum wage hasn’t increased since July 2009 – the longest stretch without an increase since Congress first enacted a minimum wage in 1938. Franklin Roosevelt signed the minimum wage into law during the Great Depression because he thought workers had far too little bargaining power and consumers far too little purchasing power. Roosevelt urged companies to pay fair wages, saying, “No business which depends for existence on paying less than living wages to its workers has any right to continue in this country.”Today’s federal minimum wage is just $7.25 an hour –  try maintaining a decent living at that pay level. The minimum wage is down 18% since it was last raised in 2009, after factoring in inflation, and down over 30%, after inflation, since 1968, during Lyndon Johnson’s Great Society years.America’s business community has staunchly opposed any minimum wage increases, warning that they would push up prices and force some companies out of business. Those leading the charge against a higher minimum – corporate executives and well-paid lobbyists and thinktank fellows – repeatedly say that raising the wage floor would be a job killer. They note that the Congressional Budget Office (CBO) recently estimated that increasing the minimum to $15 by 2025 would reduce employment by 1.4 million, although the treasury secretary, Janet Yellen, echoing many economic studies, said a $15 minimum’s effect on jobs would be “very minimal, if anything”. The CBO also predicted that increasing the minimum to $15 would raise the pay of 27 million workers nationwide and increase worker pay overall by $333bn – a step that would stimulate the struggling economy.Corporations, along with their Republican allies, overwhelmingly oppose a $15 minimum; in doing so, however, they ignore the will of the vast majority of Americans. According to a Pew poll, Americans favor a $15 minimum by 67% to 33%. While low-wage workers would be most vulnerable to any job losses caused by a higher minimum, lower-income Americans shows even greater support for a $15 minimum. Pew found that 74% of Americans making under $40,000 a year support a $15 minimum wage, as do 56% of Republicans making under $40,000. Last November, Floridians – even as their state went for Trump – voted 61% to 39% in favor of raising their state’s minimum to $15, joining eight other states that have approved a $15 minimum.Despite such strong public backing for a $15 minimum, it looks doubtful that even one Republican senator – even though the Republican party now describes itself as the party of workers – will vote for a $15 minimum. President Biden has championed a $15 minimum: “No matter where you work in America, if you work full time or 40 hours a week, you should not live in poverty,” he has said. “A $15 minimum wage accomplishes that.” A full-time worker making $7.25 an hour earns $15,080 a year; in contrast, a full-time worker earning $15 will make $31,200. In the face of opposition from Republicans and some congressional Democrats, however, Biden has hinted he might compromise on a lower number.The Economic Policy Institute, a progressive research group, predicts that if the minimum rises to $15, nearly one-third (31%) of African Americans and one-quarter (26%) of Latinos will receive a pay increase. Those pushing for a $15 minimum are carrying on a fight that Martin Luther King Jr, championed: the fight for decent pay and dignity at work. In 1967, the year before he died while fighting for higher wages for sanitation workers in Memphis, King wrote, “There is nothing but a lack of social vision to prevent us from paying an adequate wage to every American whether he [or she] is a hospital worker, laundry worker, maid or day laborer.”Millions of low-wage workers are still waiting for America to heed King’s social vision. More

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      US minimum wage activists face their toughest foe: Democrat Joe Manchin

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      Hopes that the US will finally increase the federal minimum wage for the first time in nearly 12 years face a seemingly unlikely opponent: a Democrat senator from one of the poorest states in the union.Joe Manchin of West Virginia, the state’s former governor and the Democrats’ most conservative senator, has long opposed his party’s progressive wing and is on record saying he does not support increasing the minimum wage from $7.25 to $15 an hour, the first increase since 2009. “I’m supportive of basically having something that’s responsible and reasonable,” he told the Hill. He has advocated for a rise to $11.None of this has found favor with some low-wage workers in a state where an estimated 278,734 West Virginians lived in poverty in 2019, 16% of the population and the sixth highest poverty rate in the US.Last Thursday Manchin reaffirmed his stance during a virtual meeting with members of the West Virginia Poor People’s Campaign (WVPPC), a group pushing for an increased minimum wage and other policy changes that would benefit the working class.That meeting was closed to the media but at an online press conference immediately afterward, participants said Manchin refused to budge. “He was kind of copping out,” said WVPPC member Brianna Griffith, a restaurant worker and whitewater rafting guide who, due to exemptions for tipped workers, only makes $2.62 an hour.As a result of her sub-minimum wage job, Griffith received only $67 a week in unemployment benefits until that ran out in August. She lost her house and was forced to move in with her grandmother. Although she has now returned to work, business is slow and she estimates tips have fallen by 75%.When Griffith told Manchin about her plight on Thursday, she said he asked about the $600 stimulus check approved by Congress in December. “He seemed to think that $600 … was enough to get me by,” she said. “I feel like he’s got his head in the clouds and he doesn’t understand what’s happening to poor people in West Virginia.”Despite Manchin’s insistence on an $11 minimum wage, according to MIT’s living wage calculator, even a $15 minimum wage would only provide a living wage for single West Virginians without children. For a West Virginia family with two working parents and two children, both parents would need to be making at least $20.14 an hour to make ends meet.Griffith said if the minimum wage was increased to $15 an hour, “I could afford to live on my own. I could afford a car that’s not 25 years old.”The Rev Dr William Barber, co-chair of the national Poor People’s Campaign, was in last week’s meeting and said Manchin agreed the current $7.25 minimum wage was “not enough”.But Barber said he was “amazed” Manchin could hear from people like Griffith and still oppose increasing the minimum wage to $15.“What he is suggesting would just further keep people in poverty and hurting,” he said.Raising the minimum wage was a key part of Democrats’ 2020 platform. The former presidential candidate and now Senate budget committee chairman, Bernie Sanders, has referred to the current $7.25 rate as “a starvation wage”.The wage hike, formally known as the Raise the Wage Act of 2021, is now part of a proposed $1.9tn Covid-19 relief bill. The measure would incrementally raise the minimum wage from $7.25 to $15 over the next four years.With only a razor-thin majority in the Senate, all 50 Democrat senators need to be onboard for the bill to pass. But in addition to Manchin, Kyrsten Sinema of Arizona has told Politico she does not want the minimum wage increase to be part of the Covid relief package.There are some reasons to be hesitant about increasing the minimum wage. A Congressional Budget Office (CBO) report detailing the economic impact of the Raise the Wage Act has estimated the legislation would eliminate an estimated 1.4m jobs and would swell the national debt by $54bn over the next decade.But the report also estimates a $15 minimum wage would lift 900,000 people out of poverty nationwide and inject $333m into the US economy.Other economists have disputed the CBO report. Estimates by the left-leaning Economic Policy Institute predict 32 million US workers would benefit from the minimum wage increase, which includes a quarter-million workers in Manchin’s home state of West Virginia.WVPPC member Pam Garrison was also on Thursday’s call with Manchin. Garrison is 55 years old and says she has earned minimum wage her entire working life and makes ends meet by taking side jobs cleaning houses. She spoke of the mental, physical and emotional toll that living in poverty has on people like her.“You’re just frazzled,” she said. “If you’ve never lived in poverty, you have no idea what it does to you.”If you’ve never lived in poverty, you have no idea what it does to youGarrison said Manchin ‘heard our side” but is reluctant to embrace a $15 minimum wage because he is worried small businesses could not absorb the increased labor costs. But she said giving low-wage workers more money would also benefit small businesses.“If you give us a decent pay, we’re going to put the money back into the economy [and] we’re going to be able to feed our families,” she said.Members of the WVPPC plan to continue lobbying Manchin on the Raise the Wage Act despite his seeming unwillingness to change his stance on the legislation.The group will hold a masked, socially distanced rally outside his office in Charleston, West Virginia, on Monday. A similar rally will be held at . Sinema’s office in Pheonix, Arizona.Manchin’s office denied multiple requests for comment.Zack Harold is a freelance writer and radio producer in Charleston, West Virginia. He is a regular contributor for West Virginia Public Broadcasting’s Inside Appalachia and formerly served as the Charleston Daily Mail’s entertainment editor and managing editor for WV Living, Wonderful West Virginia and WV Focus magazines More

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      The Italian Job: Can Mario Draghi Master It?

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      A political crisis was the last thing Italy needed during the COVID-19 pandemic. Yet a personal conflict between the leader of Italia Viva, Matteo Renzi, and the previous prime minister, Giuseppe Conte, led to the collapse of the coalition in mid-January. President Sergio Mattarella then commissioned 73-year-old Mario Draghi, the former head of the European Central Bank (ECB), to form a technocratic government, which he will preside over as prime minister.

      According to Mattarella, it would have been risky to organize early elections during the pandemic. Indeed, new elections would have delayed the fight against the pandemic. In addition, the prospect of a right-wing populist government would also probably have had a negative impact on the financial markets — a risk that had to be avoided in an already challenging situation.

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      Draghi is inheriting a difficult situation. In Italy, the health, economic and social crises triggered by the pandemic have exacerbated the country’s enormous structural problems. Italy’s “seven deadly sins” — as Italian economist Carlo Cottarelli called them — are tax evasion, corruption, excessive bureaucracy, an inefficient judicial system, demographic problems, the north-south divide and difficulty in functioning within the eurozone. As a result of the pandemic, gross domestic product (GDP) fell by almost 9% in 2020, public debt rose to around 160% of GDP and more than 400,000 jobs were lost. The inability of the traditional parties to find solutions for the economic problems keeps support for the right-wing populist coalition (Lega, Fratelli d’Italia, Forza Italia) at almost 50%.

      Even though almost all major political forces have declared their intent to cooperate with the Draghi government, the framework of a technocratic government offers the right-wing populists a target. It is quite conceivable that they will accuse Draghi of lacking democratic legitimacy. It will also be a challenge for the new head of government to govern without his own parliamentary majority.

      Managing the Health Crisis Without Austerity

      The top priority of the new leadership will be to manage the health crisis. This includes speeding up vaccinations and supporting schools and the labor market. This means applying for — and successfully using — funds from the financial assistance plan of the European Union to mitigate the economic and social consequences of the COVID-19 pandemic. The expected €200 billion ($243 billion) or so from this fund could benefit the economic recovery as well as the planned structural reforms in public administration, taxation and the judiciary, which will give the new government more room for maneuver in economic policy.

      Unlike the last technocratic government under Mario Monti between 2011 and 2013, the fact that Draghi will not have to enact politically-costly fiscal consolidation with possible negative effects on GDP growth can also be seen as an opportunity. This is mainly due to broad market confidence in Draghi and the fact that his government is operating from the outset under the protective umbrella of the ECB, which will not allow the cost for servicing public debt to rise excessively. The eurozone’s fiscal rules have also been temporarily suspended; this makes it possible to support the economy through fiscal policy measures.

      Finally, it should not be forgotten that, despite the structural problems, the Italian economy has many strengths: Italy is one of the most industrialized countries in Europe and the second-largest exporter after Germany. If some obstacles to growth are removed and, for example, credit is released by the Italian banking sector, the pace of recovery could pick up significantly. Draghi’s experience from the finance ministry and in central banking could help him set a decisive course.

      Who Will Succeed Mario Draghi?

      Nevertheless, given the major challenges facing Draghi’s technocratic government, one should be cautious about expectations. The next general election is less than two and a half years away, and it cannot be ruled out that it will be brought forward. That is very little time to address structural problems that have existed for decades.

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      To avert a victory for the right-wing populists, the new head of government will do everything he can to prevent early parliamentary elections until the current moderate majority in parliament has elected President Mattarella’s successor. The latter’s term ends in February 2022, and it cannot be ruled out that Draghi himself will succeed Mattarella. He could use his authority and power as president to stabilize politics, as is the traditional role of the Italian president.

      In 2012, Draghi saved the eurozone as head of Europe’s most important financial institution. In the current crisis, even if supported by figures from across a broad political spectrum, he will act as head of one of Europe’s most politically-fragile governments — an incomparably less favorable starting position.

      Draghi will make the best possible use of his time as head of government. That much is certain. However, given the massive level of support for the populists, the most important question is: After Draghi, will someone take the helm who will continue his reforms or reverse them? Not only Italy’s future but also that of the entire eurozone depends on it.

      *[This article was originally published by the German Institute for International and Security Affairs (SWP), which advises the German government and Bundestag on all questions relating to foreign and security policy.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in US Politics

      'Hopefully it makes history': Fight for $15 closes in on mighty win for US workers

      by

      Fear was the overwhelming emotion Alvin Major felt when, on a chilly November morning in 2012, he went on strike at the Brooklyn KFC where he worked.
      “Everybody was scared,” said Major. He may have been fearful, but what Major didn’t know was that he was about to make American history – an early leader in a labor movement that some historians now see as the most successful in the US in 50 years.
      Major was paid just $7.25 an hour as a cook at KFC, but the consequences of losing his job were dire, as his family was already struggling to make the next month’s rent. “Everybody was scared about going back to work,” he said. “Nobody visualized what this movement would come to.”
      The New York strike by hundreds of majority Black and brown New York fast-food workers was, at the time, the largest in US history – but it would be dwarfed by what was to come. Two years later, strikes had spread across America, and fast-food workers in 33 countries across six continents had joined a growing global movement for better pay and stronger rights on the job.
      In eight years, what became the Fight for $15 movement has grown into an international organization that has successfully fought for a rise in minimum wage in states across the US, redefined the political agenda in the US, and acted as a springboard for other movements, including Black Lives Matter. It now stands perilously close to winning one of the biggest worker-led rights victories in decades.
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      This Tuesday, fast-food workers will walk out again, hoping to push through a change that will affect tens of millions of American workers.
      For Major, now 55, it all began in a hall in Brooklyn, where union and community activists had convened a meeting of fast-food workers to see what pressure they could bring on an industry notorious for its low wages and poor conditions, and a state that had shown those workers little interest.
      With a platform to speak, the workers talked about “how you had to be on food stamps, get rent assistance, all these kinds of things, and we’re working for these companies that are making billions”, said Major.
      At one point, a worker showed the burns on his arm he had suffered at work. In a show of solidarity, workers across the room others rolled up their sleeves to show their scars too. Even when injured on the job, workers said, they were too scared to take time off.
      This was not how Major imagined America to be when he moved to the US from Guyana in 2000. “In our family, with 14 kids, my dad’s wife never worked a day. My dad used to work, he took care of us, we had a roof over our head, we went to school, we had meals every day, he had his own transportation.”
      In America, “the greatest, most powerful and richest country in the history of the world”, he found “[that] you have to work, your wife has to work, when your kids reach an age they have to work – and still you could barely make it”.
      Industry lobbying allied to Republican and – until relatively recently – Democratic opposition has locked the US’s minimum wage at $7.25 since the last raise in 2009. Now a raise to $15 looks set to be included in Joe Biden’s $1.9tn Covid relief package – although it will still face fierce opposition.
      Even Biden, who campaigned on the raise, has expressed doubt about whether it can pass. But more progressive Democrats including longtime champion Senator Bernie Sanders are determined to push it through, and it remains in the House Covid relief bill.

      Rep. Pramila Jayapal
      (@RepJayapal)
      I’m thrilled to announce that after working with leadership, we’ve secured a $15 minimum wage in the House’s COVID relief bill!This provision would lift nearly 1 million people out of poverty. It’s long overdue that Congress enacts a minimum wage that is a living wage.

      February 8, 2021

      The stakes are huge. The Congressional Budget Office said this week that 27 million Americans would be affected by the increase, and that 900,000 would be lifted out of poverty at a time when low-wage workers – and especially people of color – have suffered most during the pandemic. The CBO also said the increase would lead to 1.4m job losses and increase the federal budget deficit by $54bn over the next 10 years.
      Other economists have disputed the CBO’s job-loss predictions – the Economic Policy Institute called them “wrong, and inappropriately inflated”. The long-running debate about the real cost of raising the minimum age will no doubt continue. What is certain is that Biden will face enormous political blowback if his campaign promise to raise the minimum wage falls so early in his presidency – a promise that during his campaign he argued was central to his plans to address racial inequality.
      That backlash will also cross party lines – at least outside Washington. The US may be as politically divided as it has been since the civil war, but polling shows the majority of Americans support increasing the minimum wage no matter their chosen party. In November 60% of voters approved a ballot initiative to increase the minimum wage to $15 by 2026 even as they voted to re-elect Donald Trump.
      More people voted for that ballot initiative than voted for either presidential candidate in the state. With Florida, seven states plus the District of Columbia have now pledged to increase their minimum wage to $15 or higher, according to the National Employment Law Project (Nelp) and a record 74, cities, counties and states will raise their minimum wages in 2021.
      The movement, and this widespread support, has changed the political landscape, pushing Democratic politicians, including Biden, Hillary Clinton and the New York governor, Andrew Cuomo, to back a $15 minimum wage, against their earlier qualms.
      Cuomo called a $13 minimum wage a “non-starter” in February 2015. By July, he was racing California to get it into law.
      In the 2016 Democratic presidential primaries, Clinton went from supporting a raise to $12 an hour to $15 as Sanders made ground on the issue. Even Saturday Night Live parodied the pair arguing about who was most for a $15 higher wage.

      [embedded content]

      Big companies including Amazon, Target and Disney have all moved to $15, or pledged to do so. One of Biden’s first executive orders called for federal contractors to pay employees a $15 minimum wage. The federal holdout would be the movement’s biggest win to date, but there is little arguing that they have made significant progress without it – not least for Alvin Major, who now has a union job earning over $17 an hour working at JFK airport and who says he is no longer worried about his bills.
      For Mary Kay Henry, president of the Service Employees International Union (SEIU), this is “the David and Goliath story of our time”. She puts the public support down to the “pervasiveness of underpaid, low-wage work”.
      “Every family in America knows somebody that’s trying to make ends meet through a minimum-wage job. And the pandemic has revealed that essential work in a way that many people hadn’t noticed before, and they now understand how grocery store clerks, nursing home workers, janitors, airport workers, security officers, delivery drivers [and] fast-food workers are all people trying to do the very best job they can, and provide for their families.”
      The SEIU has been a longtime funder and supporter of Fight For $15 and for Henry, the first woman to lead the SEIU, the fight for a higher minimum wage is just the beginning of a greater push for workers’ rights – not least the right to join unions, in a service sector where women and people of color make up a disproportionate number of workers.
      “Eighty per cent of our economy is driven by consumer spending. Service and care jobs are the dominant sectors in the US economy, and we have to create the ability of those workers to join together in unions in this century, just like auto, rubber and steel were the foundation in the last century,” she said.
      “If the US Congress can’t see what the American people are demanding, in terms of ‘Respect us, protect us, pay us’, then they’re going to have a political price to pay in 2022,” she added. “Our nation’s leaders need to get this done. Congress has used its rules to pass trillions of dollars in tax cuts for billionaires and massive corporations, so now it’s time for our nation’s leaders to give tens of millions of essential workers a raise.”
      Backing Henry will be a younger generation of activists who cut their teeth in the Fight for $15 movement and have used it as a springboard into a political debate that is now centered around racial and economic justice. One of those leaders is Rasheen Aldridge, one of the first to take action when the Fight for $15 spread to St Louis, who was elected to Missouri state assembly last November.
      Aldridge was working at a Jimmy John’s restaurant in 2013 when he was approached by a community organizer asking him about his pay and conditions. Aldridge had recently been humiliated by a manager who took pictures of him and a co-worker holding signs they were forced to make, saying they had made sandwiches incorrectly and had been 15 seconds late with a drive-through order. “It was so dehumanizing and just a complete embarrassment,” said Aldridge.
      The organizer talked about the strikes in New York, Chicago and elsewhere, and suggested the same could happen in conservative Missouri. More

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      in World Politics

      Is China the New Champion of Globalization?

      by

      On January 25, addressing a virtual World Economic Forum, China’s President Xi Jinping not only strongly advocated for a multilateral approach to the COVID-19 pandemic but insisted on the virtues and systemic benefits of free trade and globalization. Jeopardizing those elements may introduce conflict into the international system, Xi warned, clearly referring to, although not mentioning, the United States. This is not the first time Xi has credited himself as the “champion of globalization,” in particular when attending meetings in Davos. In 2017, in the early days of Donald Trump’s presidency, with the long shadow of barriers to trade and isolationist policies just starting to appear on the horizon, China’s president made important remarks encouraging free trade and opening up the markets.

      However, with Trump out and Joe Biden now in the Oval Office, there seems little to suggest any substantial change in US policy, at least in the foreseeable future. If the US isn’t particularly eager to work with China toward free trade and multilateral cooperation, the European Union, and Germany in particular, quickly opted for a completely different approach, signing a key investment deal with Beijing at the end of last year. The Comprehensive Agreement on Investment (CAI) will grant a greater level of market access for investors than ever before, including new important market openings.

      Forecasting the US-China Relationship

      READ MORE

      Washington did not miss the opportunity to express its concerns about a deal that suddenly and unexpectedly sidelined the United States at a moment when, after four years of relative anarchy and opportunism, restarting transatlantic relations should be a priority. Writing in the Financial Times, Gideon Rachman recently pointed out how little sense it makes to rely on a US security guarantee in Europe while undermining its security policy in the Pacific, considering how much Europe has benefitted from the fact that for the past 70 years, the world’s most powerful nation has been a liberal democracy. Germany, in fact, was able over the last decades to exercise a sui generis role of Zivilmacht (civilian power) by framing its national interest in geoeconomic terms, encouraging German exports worldwide while outsourcing its defense to the reassuring presence of US troops.

      To better understand Xi’s quasi-imperial stance at the World Economic Forum, it has to be placed not only against the backdrop of the recent investment deals with the European Union or with the 15 countries of the Asia-Pacific region, but on the big news that China is on course to overtake the US as the world’s biggest economy by 2028, five years ahead of earlier predictions, mainly due to the asymmetric impact of COVID-19. While it is clear that China has successfully contained the Sars-Cov-2 outbreak and the Chinese economy is now recovering at a higher speed than other countries, it is also true that a lack of transparency and delays in sharing information with the international community about the virus have contributed to an acceleration of the pandemic at a global level.

      Embed from Getty Images

      Nonetheless, in the current debate over shaping more efficient emergency policies, China is still emerging as the model to follow and imitate, despite being unpopular. There is little doubt that in the “social imaginary” of liberal societies, as reports from Europe and the US suggest, authoritarian regimes are seen by many as more efficient and better prepared to deal with crises than democracies. Yet we must not forget that this efficiency comes at the inevitable cost of political and civil rights.

      Xi Jinping is well aware that the Biden administration can finally change course for the US and its allies, forging a united and progressive front after years of populist, nativist and authoritarian politics. Perhaps this element can help understand Xi’s assertiveness at the World Economic Forum better than the recent economic successes. After all, political and civil rights are China’s Achilles’ heel. Criticism of the Communist Party, let alone advocating for basic human rights such as freedom of speech or the rule of law, inexorably leads to repression that falls with equal severity on the rich metropolis of Hong Kong and the poor areas of Xinjiang, sweeping up ordinary citizens and billionaires alike, from Joshua Wong to Jack Ma.

      Can China credibly profess the virtues of globalization to achieve harmony and balance in an international system if it doesn’t adhere to international law? Can Beijing speak of cooperation to solve global problems when it has withheld vital information about the threat of the COVID-19 pandemic? As Xi Jinping continues to steer the Middle Kingdom out of its historical isolation, avoiding challenging the United States for the position of world leader will be difficult, given China’s demographics and economic status. Will these two Weltanschauungen, two comprehensively different conceptions of the world, sooner or later present the international community with a choice?

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in US Politics

      The Guardian view on Covid relief: ideologies matter in democracies | Editorial

      by

      When Covid struck, it was governments that decided people could not go to work and governments that took people’s money away. It is now down to governments to decide whether or not to return that money and when to open up the economy. In the US, Democrats want to give generously. While $1.9tn dollars is a lot of money – about the size of Canada’s GDP – it probably is not enough.As Randall Wray of the Levy Institute has pointed out, the US government is engaged in relief, not stimulus, spending. It is offering much-needed assistance to the devastated balance sheets of households, school districts and local governments. Rescuing public services, making sure people don’t starve and building Covid-testing systems is not an economic stimulus but a necessary antidepressant. Reducing the size of the relief package would prolong the recession, which, given the virus’s capacity to surprise, may last longer than the experts predict. President Joe Biden was right to rebuff criticism that Democrats risked overheating the economy, saying the problem was spending too little, not too much. There is slack in the US economy: 400,000 Americans left the labour market in January.Mr Biden aims to control the virus and then create jobs with infrastructure investments to reinvent the post-crisis economy for a zero-carbon world. Call it a spend-then-tax policy. If he succeeds, Mr Biden will go some way to repudiate the conventional economic wisdom that argues that if governments keep borrowing too much, they risk defaulting, will end up printing money and be forced in a panic to put up interest rates. The pandemic revealed this to be bunk. Central banks can keep interest rates low by buying government bonds with money created from thin air. Last year, they bought 75% of all public debt.Within days of assuming power, Mr Biden had a plan, and new thinking, to rebuild a Covid-scarred country. Boris Johnson has little to show after months. His government intends to cut universal credit, raise council tax bills and freeze public-sector pay, weakening household finances. Given this mindset, which has dominated policy since 2010, it is hardly surprising that the £900bn of Bank of England “quantitative easing” money sitting with banks can’t find profits in the real economy. The Bank has “knowledge gaps” about QE. Yet there is truth in the quote attributed to Keynes that “you can’t push on a string” – when demand is weak, monetary policy can do little about it.With interest rates low, no recovery to invest in and no new regulations, UK banks will turn inwards, not outwards. Instead of the City contributing to the productive economy and a just green transition, expect speculation and Ponzi-like balance sheets. It is lobbying to expand lucrative but socially useless activities. In January, Tory peers with City interests argued for a new finance regulator with a “competitiveness” objective – a Trojan horse for deregulation.Central banks are creatures of their legislatures, but have been permitted, for ideological reasons, to work without a social contract. In her recent paper, Revolution Without Revolutionaries, the economist Daniela Gabor warned that unelected technocrats must not be allowed to hand politicians reasons to adopt external constraints that can be blamed for unpopular policies. It is timely advice. The UK will have record peacetime levels of debt. Rishi Sunak says such borrowing is “unsustainable”. Yet UK gilts are a risk-free financial asset, which is why banks crave them.The inequality, financial instability and ecological crises have multiple causes, but their existence is built on radical, free-market economics. It is not the case that the government’s ability to spend is temporary while interest rates remain low, as Mr Sunak claimed. Bond-purchasing programmes can control yields. A system that benefits private finance but subordinates the state and threatens to expose it, post-pandemic, to austerity and elevated levels of unemployment must be resisted. Only those unable or unwilling to believe the evidence of their own eyes would say otherwise. More