Economics

Subterms

    More stories

    • 138 Shares119 Views

      in World Politics

      In China, Cuba and Ohio, Reform and Inertia Go to Battle

      by

      In August, the Daily Devil’s Dictionary appears in a single weekly edition containing multiple items taken from a variety of contexts.

      This week, before glancing at political division in the US, we look at what is shaping up to be a game-changing development in China. Bloomberg’s reporters refer to it as a “policy bombshell,” but mainstream media in the West have largely ignored it. This neglect may have something to do with the conviction in the West that, though there are monumentally important problems to deal with, the inertia of the political and economic system we have today is such that no one believes that anything we decide to do will ever change anything. Could China be on course to become the century’s new “exceptional nation”?

      Xi’s Promise of a New Great Leap Forward

      In his successful 2008 campaign, Barack Obama railed against George W. Bush’s tax cuts and wars, only to maintain both during his two terms in office. In his campaign last year, Joe Biden lamented Donald Trump’s provocative policies regarding Cuba and Iran as well as Trump’s tax cuts. But after six months at the helm, he has shown no serious intent to reverse those policies. 

      Both Democratic presidents claimed they would effect change (Obama) and be transformative (Biden), hiding they would be acting to reduce the inequality between makers and takers that Republicans promoted as an illustration of capitalist virtue. Both Democrats have shown themselves ready to accommodate and defend the interests of the 1% who supported their campaigns while expressing a sentimental commitment to improving everyone’s lives. The structure of US democracy seems to make challenging the status quo an impossible task. Sentiments consistently fail to influence reality.

      Thought Suppression Flourishes in France and Washington

      READ MORE

      China is governed by an exclusive elite, the Communist Party. Its monopoly on power spares its leaders the trouble of having to invent campaign promises to seduce ignorant voters. Many have noticed the comfortable complicity of China’s communist leaders with an economy that has become a decidedly capitalist power structure. If the US has cultivated an efficient, legally validated system of structured private capitalist corruption that offers the wealthy class the privilege of controlling politics, the Chinese have perfected a system of state corruption that offers the politically powerful direct control of wealth itself.

      All recent US regimes have had no choice but to capitulate to the private interests that literally own the economy. The Democratic Party’s public war against the progressive reformers within its midst provides a good demonstration of the phenomenon. The democratic processes laid out in the US Constitution have been successfully manipulated over time to comfort oligarchy. This makes it particularly remarkable today that China’s authoritarian regime under President Xi Jinping, a true and largely unassailable oligarchy, appears to be providing the rare example of a government intent on taking action against the powerful interests that control the global economy. Xi appears to be taking steps to move China’s political economy in a more egalitarian direction. It may not be Karl Marx, but it clearly isn’t Milton Friedman.

      According to Bloomberg journalists, Tom Hancock and Tom Orlick, “Xi is engaging in a “capitalist smackdown” that will change the way the Chinese economy works in the coming years. Xi’s new agenda “puts three priorities ahead of unfettered growth.” The first, which should surprise no one, is national security. It “includes control of data and greater self-reliance in technology. All nations in our dangerous world are enamored of security. The second is far more radical: “Common prosperity, which aims to curb inequalities that have soared in recent decades.” The third is consistent with traditional Chinese culture: “Stability, which means tamping down discontent among China’s middle class.” In Chinese culture, this is the effect of the virtue of harmony.

      In other words, Xi is attempting to do what Joe Biden has ominously warned he might do: use his authoritarian power to achieve pragmatic goals in the name of the people that are difficult to achieve in the kind of democracy practiced in the US.

      Common prosperity:

      The opposite of the now current regime of private prosperity that works by undermining what was once idealized in the notion of the commonwealth, implying a fraternal sharing of national wealth

      The Context

      Xi appears to be announcing a quiet but stern revolution that has already provoked panic among many of the vested interests in the world of finance, both foreign and Chinese. Forty years ago, Deng Xiaoping’s departure from Mao Zedong’s radical communist egalitarianism and his encouragement of Western-style economic freedom led to China becoming a fixture of the global capitalist system. It achieved this goal by exciting the appetites of both Western and Chinese economic opportunists, leading to a record-breaking expansion of the Chinese economy.

      Unique Insights from 2,500+ Contributors in 90+ Countries

      The new policy aims at relieving the suffering of “stretched workers, stressed parents, and squeezed start-ups.” The article’s authors designate the losers: “tech billionaires and their backers in the stock market, highly leveraged property companies including China Evergrande Group, and foreign venture capital firms that had hoped to take Chinese companies public in the U.S.” The Economist describes the intended outcome in these terms: “Alibaba in e-commerce or Tencent in payments and entertainment will be around but less overweening — and less lucrative. Policies to curb their market power will redistribute some of their profits to smaller merchants and app developers, and to their workers.”

      Xi’s gambit doesn’t appear to be merely rhetorical. Whether he can accomplish his goals remains an open question. He has undoubtedly set the scene for a major drama that, as it plays out, will most likely dominate the decade to come. Both the world of global capital and the declining US empire will react. It could lead to war. It could also lead to radical restructuring of the current geopolitical order in what may become a more multipolar world. For the moment, we the spectators are simply discovering the dialogue of Act I, Scene 1.

      Can Xi Really Corral Such Ferocious Animals?

      The same Bloomberg article explains Xi’s political motivation for his “capitalist smackdown.”  To ensure the population’s acceptance of his hold on the reins of power, Xi wants to reassure the middle class that he is defending their interests. There may be more complex geopolitical causes, but that motivation clearly explains the urgency of the shift. The authors go on to evoke the possible downside of Xi’s new agenda: “The bigger risk for Beijing: Heavy state intervention might dampen the animal spirits that drive private investment and reverse an integration with the global economy that has helped drive growth in the last four decades.”

      Animal spirits:

      The spontaneous exuberance attributed to unthinking creatures with energy to expend, an unbridled appetite and scorn for anything that stands in their way

      The Context

      Xi is undoubtedly a clever geopolitical strategist. He can see clearly the issues Western empires have struggled with in past centuries. China had a privileged vantage point for observing the British Empire’s strengths and weaknesses after experiencing a pair of Opium Wars in the 19th century. The incoherence of nationalistic rivalries in Europe ultimately undermined the British Empire that had reduced much of Asia, and particularly India and China, to a state of economic submission, if not slavery. 

      Two world wars that included an emerging Japanese Empire eventually cleared the space for the USA’s consumer society-led neo-colonial, officially apolitical but heavily militaristic empire that eventually crafted a productive role for China’s post-Marxist economy. The Chinese “workshop of the world” became a vital feature of a system focused on permanent growth and obsessively stoked consumerism. Following World War II, American consumers became literally addicted to falling prices on consumer goods. China, with help from US capitalists, could step in to provide an ever-expanding cornucopia of goods at lower prices.

      Xi is aware that the entire Western world, struggling with various imperfect models of democracy, has reached a tipping point regarding two existential problems: health and wealth. Both are clearly out of control. Governments in the West have demonstrably failed to address both the health of the planet, increasingly subjected to climate chaos, and the health of their people. None more so than the US, a nation that continues to resist even the idea of universal health care and persists in spectacularly bungling most of its initiatives with regard to the COVID-19 drama. 

      Embed from Getty Images

      With its retrograde approach to the distribution of vaccines, the intellectual ownership-obsessed West, guided by the wisdom of Bill Gates, has failed to live up to its image as the putative provider of global solutions. As it focuses on protecting and exploiting its supposed intellectual property in competition with the rest of the world, the West has, embarrassingly for itself, allowed spectacular chaos to continue and amplify. As for wealth, the effects of the pandemic have aggravated the growing and insurmountable gap between the hyper-rich and the rest of humanity. The idea that everyone can someday become a millionaire has been replaced by the clear perception that the super-wealthy will do everything in their power to ensure that only a select few will ever be admitted into their club.

      China’s authoritarian system has made it easier to enact and implement policy. Powerless to solve problems, Western governments, captured by binary logic, prefer to explore hypothetical consequences and debate what emerge as two contradictory positions. With his Belt and Road Initiative, Xi has already expertly used the contrast between the image of constructive cooperation and the American addiction to war, military operations and sanctions as the solution to all problems. Xi’s gambit may translate more as image-building than economic realism, and it may rely as much on corruption as the will to collaborate, but it stands as an effective example of soft power.

      Now Xi can remake his image as a populist hero at home. His announced policies even correspond to the fantasies of populists on the right and left who would love to see the financial operators ushered out the door, replaced by laws and practices that at least appear to be transferring power to the people under the protection of the government. Xi promises to put a leash on the over-exuberant animals who alone make the law in the capitalist West.

      Antony Blinken Worries About China’s Ambitions

      The Biden administration has apparently decided that the key to consolidating its image with voters lies in a foreign policy that consists of getting tough on the nations that refuse to get in line behind US leadership. The first among them and the one most likely to inspire the kind of fear that galvanizes American voters is, of course, China. With nearly four times the population of the United States, the quantity of fear it can generate will be spectacular. And in politics, it’s the spectacle that counts.

      Bloomberg has published an article by Peter Martin with the headline, “Blinken Warns Asian Nations of China’s Growing Nuclear Ambitions,” in which he cites the US secretary of state’s “‘deep concern’ over China’s growing nuclear arsenal.” 

      Deep concern

      The emotion politicians claim to have, thanks to their privileged knowledge of geopolitical realities, which, when communicated to the people, generates the degree of fear that justifies risky and aggressive policies, including war

      The Context

      Reuters reports Secretary Blinken’s complaint that “Beijing has sharply deviated from its decades-old nuclear strategy based on minimum deterrence.” China is expected to understand that only the US is authorized to practice maximum deterrence. The following two paragraphs in the Reuters article give an idea of why Blinken’s concern is so “deep”:

      “A 2020 Pentagon report estimated China’s nuclear warhead stockpile in ‘the low 200s’ and said it was projected to at least double in size as Beijing expands and modernizes its forces.

      Analysts say the United States has around 3,800 warheads, and according to a State Department factsheet, 1,357 of those were deployed as of March 1.”

      Who wouldn’t be concerned with only 3,800 warheads to ensure peace in the world? Bloomberg quotes Chinese Foreign Minister Wang Yi, who disapproves of “countries interfering in each other’s internal affairs.” Wang added a casual historical observation “that Asian nations had been bullied by others in the past and didn’t require ‘teachers’ or ‘saviors.’” The Opium Wars apparently left an indelible smoky taste in the Chinese collective unconscious.

      The Latest Skirmish Inside the Increasingly Divided US Democratic Party

      As the Republican Party continues its existential anguish surrounding the role of Donald Trump, the Democratic Party struggles to define whether its loyalty is to the people or the lobbies that fund its campaigns. The drama played out this past week in a special election pitting two African American women against each other.

      The Los Angeles Times provides its explanation of the come-from-behind victory of mainstream Shontel Brown over progressive Nina Turner in a high profile Democratic primary election for a congressional seat in Ohio: “Brown’s primary win is a boost for moderate Democrats who have been in increasingly testy tussles with progressive activists and gives a new voice in Congress for voters who are more hungry for calm pragmatism than for the passionate populism that animates Sanders’ followers.”

      Calm pragmatism:

      The fear of calling into question the visible cause of one’s suffering because the status quo has proved so destructive that people think any change will make things even worse

      The Context

      One Democratic political consultant in Cleveland explained what he thought “calm pragmatism” amounts to: “People are tired and worn out after the last four or five years.” They have stopped thinking about the implications of political choices and simply hope there will be a new status quo. The loser, Nina Turner, claimed that her campaign “didn’t lose this race. Evil money manipulated and maligned this election.” She has a point, since the effect on politics of money — once deemed in the Christian West to be “the root of all evil” — now dominates the rhetoric deployed in campaigns to the point of definitively crippling and even excluding serious political debate. Populist passion is real, but so is the passion of fear-mongering that incites voters to retreat into the illusion of calm pragmatism.

      On an unrelated topic, Al Jazeera’s senior political analyst, Marwan Bishara, has expressed his surprise at the African Union’s acceptance of Israel as an observer despite its consistent criticism of what it qualifies as Tel Aviv’s apartheid policies. Bishara explains that African nations may “reckon that Israel has major sway in Washington and may be of help to influence the decisions of the world’s superpower in their favour.” He then adds, “Indeed, such pragmatism — read opportunism — may have worked for the likes of Sudan in getting US sanctions lifted after it began normalising relations with Israel.”

      Embed from Getty Images

      Bishara thus equates “calm pragmatism” with “cynical opportunism.” Can the Ohio voters who chose Brown over Turner be accused of opportunism? Undoubtedly no, if only because they have nothing specific to gain from Brown’s election. The true explanation is the “evil money” Turner complains about paid for yet another media campaign based on stoking voters’ fear of the unknown. Democratic Party stalwarts — which included Hillary Clinton, Jim Clyburn and their sources of corporate money — effectively countered the successful grassroots funding of Turner’s campaign and turned the tide in Brown’s favor. Those stalwarts and their backers are the opportunists. The voters persuaded by their fear of the unknown were their dupes.

      What links these two stories together is what a significant factor in Brown’s primary victory. As the Times of Israel explains, a lobbying group, “Democratic Majority for Israel (DMFI) threw its support behind Brown.” The DMFI reportedly contributed nearly $2 million to Brown’s campaign. Why? Because they know that Turner is one of the rare American politicians who has the independence of thought to criticize Israel, something no US politician is permitted to do on pain of being branded anti-Semitic. The idea that Turner might challenge the unconditional commitment of the US to supporting Israel galvanized the white suburban voters who ended up giving Brown the majority.

      The lockstep alignment of the US with Israel has been as important a factor as access to oil in determining US Middle East policy in recent decades. That policy has been disastrous for the region, the US and the world in a variety of ways. Is that the result people still expect from following a policy of calm pragmatism?

      A Washington Post Columnist’s Shameful Feinting With Damned Praise

      Conservative Washington Post columnist Marc A. Thiessen quite logically makes it clear that he is ready to come to the defense of black Cubans as the most effective way of undermining pretentions of the most vocal black US Americans: “As the Cuban people — up to 75 percent of whom have Afro-Cuban ancestry — rose up to demand their freedom, the Black Lives Matter Global Network Foundation issued a statement praising the brutal regime that oppresses them and calling on the Biden administration to lift the U.S. embargo on Cuba.”

      Praise:

      Make an objectively true statement describing a complex situation that includes a reference to a regime that has been labeled for ideological reasons as a diabolical enemy of every moral (i.e., economic) principle the United States is believed to stand for

      The Context

      In July, protests spread in Cuba provoked by a variety of ills for which many Cubans, succumbing to conditions of severe deprivation, wish to hold their government to account. US media predictably seized upon the occasion to nourish the dream of various interested parties in the US — mostly located in the quintessential swing state, Florida — to restore the situation of effective neo-colonial rule that the US enjoyed over the island from 1915 to 1959.

      The first thing to notice in Thiessen’s piece, as in most of the media treatment in the US, is the facile use of the term “the Cuban people.” When a crowd of protesters appears, they become “the Cuban people.” Many of the same pundits in 2003 claimed that an overwhelming majority of Iraqis were ready to toss flowers at US soldiers invading their country. Honest reporters might write “a significant number of discontented Cubans” or some variation on that idea, but the dishonest ones simply declare that the protesters, some waving US flags, are synonymous with “the Cuban people.”

      Thiessen reveals his utter dishonesty when he complains that Black Lives Matters was “praising the brutal regime” in its statement. Thiessen links to a BLM statement on Instagram that begins by condemning “the U.S. government’s inhumane treatment of Cubans.” At no point does it praise the Cuban government other than citing an objective fact of “the country’s strong medical care and history of lending doctors and nurses to disasters around the world.” The BLM statement notes one other objective fact concerning a government’s policies, that “the United States has forced pain and suffering on the people of Cuba” through its embargo.

      Unique Insights from 2,500+ Contributors in 90+ Countries

      Anyone inclined to doubt that fact need simply refer to the State Department memorandum of April 6, 1960, that describes a policy that has been in place for the last 60 years: “The only foreseeable means of alienating internal support is through disenchantment and disaffection based on economic dissatisfaction and hardship.” It recommends “every possible means should be undertaken promptly to weaken the economic life of Cuba … to decrease monetary and real wages, to bring about hunger, desperation and overthrow of government.”

      Although the sanctions regime was loosened in 2015 by Barack Obama, Donald Trump scaled back and imposed new crippling measures. During his campaign last year, candidate Joe Biden proclaimed: “I’d try to reverse the failed Trump policies that inflicted harm on Cubans and their families.” Instead, he has maintained Trump’s sanctions and last week added new ones, while promising even “more to come.”

       *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

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

    • 188 Shares179 Views

      in US Politics

      The Guardian view on post-Covid recovery: powered by the state not the market | Editorial

      by

      OpinionCoronavirusThe Guardian view on post-Covid recovery: powered by the state not the marketEditorialThe Thatcherite wing of the Conservative party desires a restoration of ideas whose time has come and gone Mon 9 Aug 2021 14.02 EDTLast modified on Mon 9 Aug 2021 15.35 EDTThe Conservative party hooked British capitalism to the state’s life support system for the past 18 months. So it takes chutzpah to think, as business secretary Kwasi Kwarteng does, of putting the free market at the heart of a post-Covid recovery. Yet lengthening NHS waiting lists, hiking consumer energy bills and welfare cuts when poverty is rising all betray a mindset that regards the re-legitimation of state intervention as threatening a way of life rather than securing it.What the Thatcherite wing of the Conservative party desires is a restoration. For them this is an opportunity to go back to 1979 and use tried-and-tested ways to stabilise prices, crush labour and discipline poorer nations. These rightwingers yearn for higher interest rates, to prioritise financial returns on assets and the use of creditor power to squeeze the global south.Such ideologues are likely, in part, to be disappointed. The US president, Joe Biden, does not see the world their way, saying this April that “trickle-down economics”, associated with Ronald Reagan, didn’t work. The president aims to show that the state can do good, and the early results are promising. His Covid-related aid boost will push the share of Americans in poverty to the lowest level on record. Mr Biden’s treasury secretary, Janet Yellen, professes a “free market” scepticism. She has promoted the social benefits of running the economy “hot” by maximising the use of all available resources. Her inspiration is the economist Arthur Okun, who in 1973 argued that governments increasing employment would foster “a process of ladder climbing” in the job market that would reduce inequality and stimulate productivity growth. Ms Yellen has stuck to this playbook in office.Perhaps the greatest pushback against the return of laissez-faire dominance in economics comes from China. Beijing has surpassed the US in some key technologies. Mr Biden’s economic team is blunt about needing to use the state for more “targeted efforts to try to build domestic industrial strength … when we’re dealing with competitors like China that are not operating on market-based terms”.The state is, clearly, not powerless against global capital. During Covid it paid for millions of workers without breaking a sweat. Contrary to conventional thinking there was no threat from rising deficits to interest rates. Thatcherism was defined by Nigel Lawson as “increasing freedom for markets to work within a framework of firm monetary and fiscal discipline”. This saw the state put in service of business interests rather than mediating between labour and capital. It also left Britain woefully unprepared, and ill-equipped, for the pandemic. A Thatcherite approach will not produce a fairer distribution of growth. It will militate against support during downturns and plans to “level up” the regions. Ministers ought to outline a new role for the state rather than relying on failed ideas about what the market can do.TopicsCoronavirusOpinionConservativesMargaret ThatcherEconomicsJoe BidenUS politicsRonald ReaganeditorialsReuse this content More

    • 100 Shares129 Views

      in World Politics

      Can Saudi Arabia Balance Social and Economic Change?

      by

      The World Bank issued a stark warning in its 2018 outlook for the Saudi economy: “The Kingdom likely faces a looming poverty problem.” The bank has since noted in its 2019 and 2020 outlooks that “while no official information is available on poverty, identifying and supporting low-income households is challenging.” Dependent on world oil prices, the curve of gross domestic product (GPD) per capita in Saudi Arabia was never a straight line upward. Instead, it ebbed and flowed.

      Austerity for the Poor and Prosperity for the Rich

      READ MORE

      In one example, Saudi GDP per capita dropped by almost half from a peak of $17,872 in 1981 to $8,685 in 2001, the year in which 15 Saudi middle-class nationals constituted the majority of jihadists who flew airplanes into New York’s World Trade Center towers and the Pentagon in Washington. It was also the year in which many Saudis struggled to make ends meet amid depressed oil prices and then-King Abdullah’s efforts to introduce a measure of Saudi fiscal restraint. Many people held two to three jobs.

      “Prior to the Gulf War, we didn’t pay rent in student dormitories — now we do,” a Saudi student enrolled in Saudi Arabia’s prestigious King Fahd Petroleum and Minerals University told this writer at the time. “In the past, it didn’t matter if you didn’t complete your studies in five years. Now you lose your scholarship if you don’t. Soon we’ll be asked to pay for tuition. Before the Gulf War, you had 10 job offers when you graduated. Now you’re lucky if you get one,” the student said referring to the US-led reversal of the Iraqi invasion of Kuwait in 1990.

      Unique Insights from 2,500+ Contributors in 90+ Countries

      “There’s nothing to do here but sit around, watch television and smoke shisha,” added Abdulaziz, one of the student’s friends. “There’s nothing we can do to change things. That’s why we get married early, only to discover that it was a mistake.”

      Saudi GDP per capita has dropped again, although less dramatically, from $23,337 in the year that the World Bank warned about looming poverty to $20,110 in 2020. On a positive note, the bank reports that while “poverty information and access to survey data to measure welfare conditions have been limited,” Saudi Arabia has seen “gains in administrative capacity to identify and support low-income households.” It warned, however, that the middle class could be most exposed to the pains of austerity and fiscal restraint.

      A Different Saudi Arabia

      To be sure, the Saudi Arabia at the turn of the century is not the same kingdom as today. Saudis made up one of the largest contingents of foreign fighters in the Islamic State group that seized territory in Syria and Iraq in 2014. Despite this, Saudi citizens are unlikely to respond to a unilateral rewriting of a social contract that promised cradle-to-grave-welfare and potential economic hardship by drifting toward militancy and extremism at a time that a young crown prince has promised massive change and delivered some.

      Crown Prince Mohammed bin Salman has liberalized social mores, rolled back the influence of ultra-conservative clerics, created greater leisure and entertainment offerings, and enhanced women’s rights and professional opportunities. This forms part of his plan to wean Saudi Arabia off its dependency on oil exports and diversify the economy. He has simultaneously tightened the political aspect of the kingdom’s social contract involving the public’s absolute surrender of all political rights, including freedom of expression, media and assembly.

      In exchange, Mohammed bin Salman’s Vision 2030 reform plan promises, according to the World Bank, to protect citizens from the pain of economic change by “modernizing the social welfare system, redirecting price subsidies toward those in need, preparing and training those unable to find employment, and providing tailored care and support to the most vulnerable citizen.” In doing so, the government has sought to soften the impact of higher energy prices and the tripling of value-added tax and expatriate levy.

      Embed from Getty Images

      More than social protections, Vision 2030 is about creating jobs for Saudis in a country where unemployment was 11.7% in the first quarter of this year. In the last three years, the Saudi private sector reportedly created a third of the 1.2 million jobs the kingdom needs to generate by 2022 to meet its unemployment target. The country’s statistics agency said the first-quarter unemployment was Saudi Arabia’s lowest in nearly five years. But the decline was partly driven by people dropping out of the labor force rather than new job creation.

      Jobs for Saudis

      In May, Mohammed bin Salman asserted in a wide-ranging interview that “we have 200,000 to 250,000 people getting into the job market each year and public sector jobs are limited.” Taking tourism as an example, he said the development of the industry would create 3 million jobs, 1 million of which would be for Saudis who, over time, could replace expats who would initially fill two-thirds of the openings.

      “Once we create three million jobs, we can Saudize them in the future. There are also jobs in the industrial sector and so on,” Prince Mohammed said. He predicted at the same time that the percentage of foreigners in the kingdom could increase from a third of the population today to half in the next decade or two.

      Writing about the changing social contract in Saudi Arabia, Mira al-Hussein and Eman Alhussein cautioned that the government needs to manage rapid economic and social change, in part by providing clearer information to the public. The scholars identified issues involving rights of foreigners versus rights accorded children of mixed Saudi and non-Saudi marriages, the rollback of religion in public life and austerity measures as potential points of friction in the kingdom. “The ramifications of existing grievances and the increasing polarization within Gulf societies … as well as the extensive social engineering programs have pitted conservatives against liberals. Arab Gulf States’ ability to redefine their social contracts without turbulence will depend on their tactful avoidance of creating new grievances and on solving existing ones,” the authors wrote.

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

    • 100 Shares129 Views

      in World Politics

      Is America Ready to Raise the Minimum Wage?

      by

      Since the federal minimum wage was introduced in the United States in 1938, it has provided a level of security for workers to be able to afford a minimal living standard. However, the minimum wage of $7.25 an hour has not changed since 2009, the longest timespan without an increase in its history. Critics argue that $7.25 is not a livable wage, which by 2018 was worth 14.8% less after adjusting for inflation. For nearly a decade, discussions about raising the wage have continued, with the minimum wage in 30 states now above the federal level.

      Do Americans Really Need a Roof Over Their Heads?

      READ MORE

      Yet according to the National Low Income Housing Coalition’s 2021 report, a full-time minimum wage worker, whether at the $7.25 federal wage or higher state minimum wages, could afford a one-bedroom rental at market rate in only 7% of US counties. The report estimates that workers will need to make $20 an hour to earn a one-bedroom housing wage.  

      With debates around the issue ongoing, how sensitive is the American public to a minimum wage increase? President Joe Biden and congressional Democrats’ proposal for a $15 minimum wage may be popular among workers, but fear of the consequences complicate its passage.

      To Raise or Not to Raise?

      Businesses with razor-thin margins face a threat of closure if wages increase. The Congressional Budget Office (CBO) estimates that a $15 minimum wage would result in a likely loss of 1.4 million jobs. Likewise, the national deficit was also predicted to increase by $54 billion over the next decade if the wage were raised. Opponents argue that a new minimum wage will create more problems than it solves, fail to alleviate poverty and transfer the extra $333-billion cost to firms on to consumers in the form of higher prices. In contrast, Republican senators have floated increasing the minimum wage to $10 an hour in exchange for policy concessions on immigration.

      Proponents of the $15 minimum wage assert that it will bring earnings closer to the rising cost of living expenses. A report by the Economic Policy Institute states that essential and frontline workers constitute 60% of those who would benefit from the higher wage. A National Low Income Housing Coalition report states that with a $15 minimum wage, some inland states would approach full-time wages that support modest rent at 30% of one’s income. The CBO report estimates that 900,000 Americans would be brought out of poverty with a $15 minimum wage. The raise would also decrease racial income inequality.

      A recent survey by the Pew Research Center showed that 62% of Americans supported an increase of the federal minimum wage to $15, with only 10% opposed to any level of increase, with clear partisan differences: 72% of Republicans expressed opposition to a $15 minimum wage while 87% of Democrats were in favor.

      Embed from Getty Images

      In 2013, a Gallup poll showed that small business owners were divided on increasing the minimum wage to $9.50, juxtaposed to 76% of the public supporting an increase to $9. In 2014, analysis by CBS News found that people were less supportive of raising the minimum wage if they thought it would lead to job losses. The issue of how raising the minimum wage will affect small businesses is a crucial component of how willing people are to support an increase.

      We conducted a national web survey using quota sampling and recruited 625 American respondents via Qualtrics on June 22-24. Rather than just ask about support for the minimum wage in the abstract, we randomly assigned respondents to one of four questions to evaluate on a five-point Likert scale (strongly disagree to strongly agree). Targeted formulation of the statements allowed us to directly test whether support differs between $15 as the Democrats have proposed versus the $10 endorsed by some Republican senators. The methodology would also show whether support declines if primed to think about the potential negative impacts to small businesses.

      With no mention of businesses closing, increasing the minimum wage to $10 was more popular than the $15 option (64.31% vs. 57.21%), reflecting that opponents of a $15 minimum wage favor a more modest increase as found by previous survey work. When primed to consider that some small businesses may close due to increased employment costs, support for both a $10 and $15 wage declined (53.13% vs. 55.77%). Regression analysis finds statistically significant drops in support for increasing the minimum wage when the increase was listed as $15 instead of $10 and when businesses closing was mentioned. The pattern endures when controlling for demographic factors.

      Political Divide

      Surprisingly, a majority of Republicans agreed with raising the minimum wage to either $10 or $15 when we did not reference small businesses. This deviates from past survey work showing strong Republican opposition to increases in the minimum wage, signaling that conservatives may be more open to increasing the minimum wage than they have been in recent years. Additionally, non-white Republicans were more willing to support an increase than white Republicans, consistent with trends among racial minorities being more willing to support an increase than white Americans.

      Unsurprisingly, a majority of Democrats supported raising the minimum wage to $15 both when businesses closing was mentioned or not. However, the inclusion of small businesses closing had a larger effect on declining support than specifying a $15 wage versus a $10 wage. This indicates that Democrats are not immune to concerns about small businesses failing from an increased minimum wage but have largely accepted a $15 over a $10 minimum wage as the path forward. Providing protections for small businesses such as a gradual increase of the minimum wage or government financial support for businesses could garner more support for the wage hike among Democrats, making the proposed increase more feasible. 

      Unique Insights from 2,500+ Contributors in 90+ Countries

      To help move the issue forward, reporting on how raising the minimum wage could help small businesses would be a meaningful way to combat concerns. The Center for American Progress argues that higher wages will increase demand for goods, increase worker productivity and ultimately benefit small businesses in the long run with the correct support from the government. Politicians and media outlets supportive of increases could use this framing to solidify support for Democrats and perhaps strengthen support from Republicans as well.

      Proponents argue that increases are necessary to make the federal minimum wage a livable one, as the inflation-adjusted value of the minimum wage peaked in 1968. An increase to $15 would only partially address the impact of inflation and the rise in housing costs, the latter that has increased by nearly 30% since the last minimum wage hike. However, if small businesses close due to higher payouts, workers may not be any better off. Our survey findings suggest public sensitivity to broader impacts of a minimum wage increase, suggesting that gradual policies of raising the minimum wage or policies that can minimize the burden on small businesses could expand bipartisan support.

      *[Funding for this survey work was provided by the Mahurin Honors College at Western Kentucky University.]

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

    • 113 Shares129 Views

      in World Politics

      Austerity for the Poor and Prosperity for the Rich

      by

      There has been a growing interest in social protection policies in the Arab region dating back to the 1990s. Yet the impact of such measures has not been empirically and independently assessed. Evidence shows that, even before the COVID-19 pandemic, the poor have been getting poorer and the number of vulnerable groups and people living below the poverty line is increasing.

      Poverty rates have risen throughout a decade of turmoil. This started with the Arab Spring in 2010-11 and intensified when the pandemic began in 2020. The situation is worse in Arab countries where there is ongoing conflict, economic hardship or political crises. These indicators of rising poverty mean the effectiveness of the social protection policies in the region must be placed under critical examination.

      How China’s Growing Dominance Will Impact Sino-Gulf Relations

      READ MORE

      The Arab Mashreq is a case in point. This region, which consists of Jordan, Iraq, Syria, Lebanon, Palestine and, in some definitions, Egypt, has been marred by prolonged conflict, economic turmoil and political upheaval. In response to the crises, there has been an added focus on people’s resilience mechanisms to cope with the socioeconomic uncertainty.

      From Economic Reforms to the COVID Crisis

      Since 2015, many Arab governments have introduced financial and economic reform policies, supported by the International Monetary Fund. However, in the absence of effective social protection policies, these changes led to a sharp increase in inflation. This exacerbated the hardship of the poor, caused negative repercussions for people’s living conditions and led to further structural social stratification. The negative impact on the poor was accompanied by a political narrative of austerity for a better future. Simultaneously, generous policies were introduced for the upper class.

      Embed from Getty Images

      The policy response in Mashreq countries to the pandemic was not an exception from this inequality paradigm. The poor have been excluded in the design of policy responses. The fragile health sectors and the coverage gap of medical insurance generated an association between appropriate recovery and the upper class. Accordingly, access to quality care was exclusively for the rich. On the other hand, the poor had to rely on public health, which is often underfunded, understaffed and lacks sufficient resources.

      In addition, government support in the form of loans and financial subsidies to recover from the economic fallout of the pandemic was directed exclusively at big businesses. This led to the shutdown of many small and medium-sized enterprises (SMEs) and caused unemployment to rise in all Mashreq countries.

      Moreover, refugees and internally displaced people were left behind in the policy response. Instead of prioritizing their needs as vulnerable people, they faced restrictions on moving out from overcrowded camps due to the lockdown measures, which exacerbated their plight. In particular, they suffered from a lack of access to health services and malnutrition.

      Resilience Mechanisms

      In the Mashreq, people have used different coping and resilience mechanisms throughout the pandemic. Yet defining what appears to be the relatively simple concept of resilience is complex. Resilience is a term that has been applied to research and practice in nearly every possible area of life and academia — from science to sociology, psychology, nursing and medicine to business and ecology. The theoretical definition of resilience is “one’s ability to bounce back or recover from adversity.” Research on coping with poverty emphasizes the importance of resilience mechanisms to be considered in the design, development and implementation of social protection policies for the prevention of risks associated with irrational resilience mechanisms.

      Unique Insights from 2,500+ Contributors in 90+ Countries

      Some resilience mechanisms in Arab Mashreq countries are constructive. For instance, there has been a rise in transnational family support, including remittances, and a revival in the agricultural sector due to food shortages. Dual-earner households have also increased as more women are joining the labor force. Yet the majority of reported resilience mechanisms are destructive. Seven areas are particularly important.

      First, reports show increasing numbers of children who have ab­stained from going to school or dropped out altogether, often due to rampant poverty. In recent years, economic reform policies have included a sharp reduction of fuel, electricity and water subsidies. This has led to higher living costs. In response, children have been forced to work to earn money and contribute to the family income. The pandemic has made the situation even bleaker with the new educational setup, as not everyone has access to computers or the internet. The lack of technological infrastructure has meant the poor are excluded from the online classes introduced by lockdowns.  

      Second, even before the pandemic, leftover or used food markets emerged in countries such as Jordan and Egypt. At these places, the poor can buy food at reduced prices. These markets, which sell scraps of food, have become increasingly common in areas with people on low incomes. Often, the remains of meals from restaurants and hotels are offered to families at a discounted rate, with many food items unpackaged and no information as to where or when they were made. Some customers have said that no matter the quality, they are in need of the low prices as they cannot afford to buy other food products.

      Third, the cut in subsidies and rising food prices have not only affected the poor. Many middle-class people cannot afford quality food due to the increase in prices and their depleted family savings. This has been exacerbated by economic hardship and the pandemic. This is particularly the case in Lebanon, where the lira (or pound) has lost most of its value, leading to higher costs of living. Lebanese people are reportedly cutting out meat from their diets or skipping meals. In Iraq, throughout the COVID-19 crisis, people have been forced to sell their furniture and personal items, just for the sake of buying food. Many Iraqis have lost jobs and the country lacks social protection measures.  

      Embed from Getty Images

      Fourth, in response to the rising prices of medicine in the region, people have turned to traditional medicine and herbal remedies instead. For instance, due to the loss of more than 90% of the Lebanese pound’s value, there has been a shortage of essential medicines. The catalyst behind this was the ongoing national economic crisis in Lebanon and the state measures on lifting subsidies on medicine. Pharmacies often lack basic medications for blood pressure and even painkillers and antibiotics.

      Fifth, to cope with poverty, mothers are joining the informal sector in order to have dual-earner families. Daughters have also joined the workforce. But the problem is that this sector is not covered by any social protection schemes, which means that families struggled during the height of lockdowns to curb the spread of COVID-19.

      Sixth, the unprecedented rise in food prices has led some of the poor to buy their daily needs of food products via the postpaid system, or the so-called popular “note.” This system, known as shokok, is based on mutual trust between grocery store owners and residents in poor areas. As part of shokok, a shop owner archives either daily or weekly the merchant records of customer withdrawals on a note before collecting the cash at the end of each month.

      Seventh, the United Nations and several media outlets have reported increased rates of crimes, drug abuse, robberies and rising cases of suicide as some people struggle to cope with poverty and hardship.

      In light of these resilience mechanisms, social protection systems have to be rethought in Arab Mashreq countries. When left behind, most vulnerable people generate their own forms of resilience, which might be destructive. To a major extent, the policy response is designed for the poor to fund the rich. However, the unmet needs of the poor are not only affecting their wellbeing negatively, but it will also impact the state in the long term.

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

    • 63 Shares149 Views

      in World Politics

      Can an Inflatable Economy Survive?

      by

      US President Joe Biden’s approval ratings have remained consistently positive since his inauguration in January, inspiring hope among his supporters and the liberal media that he can fulfill at least some of his campaign promises. With extremely thin majorities in both houses of Congress, Biden has to be sure that the “moderates” in his party follow his lead. The term “moderate Democrat” designates the type of elected official who wins office in a Democratic district but possesses a mindset in line with conservative Republican ideology. In particular, such people tend to reject anything that reeks of excessive spending or may create pressure to increase taxes.

      But that is not all. One of Biden’s most intimate advisers during last year’s election campaign, economist and former director of the National Economic Council under President Barack Obama, Larry Summers, has been leading a vociferous campaign opposing Biden’s policies on the grounds of a lurking danger of inflation. He fears that the combined effect of COVID-19 relief and an ambitious infrastructure project accompanied by diverse social reforms will stretch the economy to the point of triggering uncontrollable inflation, the bugbear of traditional politicians. Biden may want to be remembered as the new Franklin Delano Roosevelt. Summers appears to be inspired by the thinking of FDR’s predecessor, Herbert Hoover.

      Hoover was the president on whose watch the 1929 stock market crash occurred. Historians have identified excessive leveraging and the inflation of asset prices as the main contributing factor to the 1929 crash that marked the end of the Roaring ‘20s. That sobriquet for a decade that followed World War I and left in its wake the Great Depression reflects the wild optimism that reigned at the time. The US had survived a “war to end all wars” and now embraced what President Warren G. Harding called “the return to normalcy.”

      Embed from Getty Images

      Proud of their role in ending Europe’s war, Americans — though deprived of alcohol that had been banned in 1919 by a constitutional amendment — interpreted normalcy as an open invitation to self-indulgence. Throughout that roaring decade, the stock market reached for the ceiling before crumbling to the floor in 1929.

      To avoid the mistakes that led to depression, politicians have since crafted their preferred ways of fending off imminent disaster. They called the latest trick, perfected after 2008, quantitative easing (QE), a fancy name for the printing of money gifted to banks and corporations skilled at keeping it out of the reach of ordinary people. Quantitative easing magically inflated asset prices with little effect on the consumer index, a phenomenon all politicians gloried in for two reasons. First, it avoided consumer blowback against price-tag inflation. That always puts voters in a bad mood, threatening prospects of reelection. Second, QE meant that there would be unlimited cash available to corporate donors to finance their political campaigns.

      The COVID-19 crisis arrived at a point where interest rates had fallen to close to 0% and in some cases had gone negative. The encouraging news concerning effective vaccines at the end of 2020 gave hope of a rapid return to Hardingesque normalcy. But today, things have become more complicated. The new Delta variant of the coronavirus threatens the optimists’ vision of a prosperous post-pandemic world. Add to that the raging debate about spending trillions to implement the long-delayed response to a crumbling infrastructure in the US and it becomes clear that many now doubt the likelihood of a smooth transition to a new normalcy, in which the market’s productive forces, guided by an invisible hand, will solve problems on their own while government spending is reined in.

      The question arises: Is it reasonable to print money to solve otherwise unsolvable problems? Larry Summers says it will provoke inflation. Janet Yellen, Biden’s treasury secretary, disagrees: “Is there a risk of inflation? I think there’s a small risk. And I think it’s manageable.”

      Today’s Daily Devil’s Dictionary definition:

      Inflation:

      1. The characteristic expansion of all types of bubbles during their formation and preceding the moment at which they burst
      2. A general characteristic of any system that seeks to build an elaborate superstructure of hyperreality to replace traditional human activities, institutions, economic relations and social behavior, whose elements range from methods of governing and ideological frameworks to acceptable forms of public rhetoric

      Contextual Note

      Nobel Prize-winning economist, New York Times columnist and loyal Democrat Paul Krugman confessed this week that “while I’m in the camp that sees the current inflation as a transitory problem, we could be wrong.” He thus acknowledges that the threat of inflation is real while reiterating an optimism similar to Yellen’s. Consistent with The Times’ editorial line, he aligns with the president’s political agenda of Biden in his quest to be remembered as a second FDR.

      Some have asserted that Summers’ bitterness about not having been handed the job of treasury secretary explains his loud complaining about the danger of inflation. But Summers may have missed the real threat facing the economy, just as he misjudged not only the situation in 2007 but even the Asian crisis in the 1990s. “In terms of judgment, in forecasting his record has been atrocious,” according to Joseph Stiglitz. But does that mean Yellen and Krugman are correct?

      Who’s to Blame for a Tanking Economy?

      READ MORE

      Theron Mohamed, writing for Business Insider, cites a number of experts who beg to differ, including Michael Burry, who famously predicted the 2008 crash and became the hero of the book and film, “The Big Short.” These market analysts see something far worse than inflation in the offing. According to Mohamed, “Michael Burry and Jeremy Grantham are bracing for a devastating crash across financial markets. They’re far from the only experts to warn that rampant speculation fueled by government stimulus programs can’t shore up asset prices forever.”

      Whereas Summers and Krugman are debating possible effects on the consumer index, Burry and Grantham are talking about a market meltdown, possibly a new depression. And they dare to designate the true villain: the obsession with shoring up asset prices.

      Historical Note

      A recent study documented by Yale Insights points to a historical constant that exists despite radically changing market and regulatory conditions. “Downward leverage spirals are believed to be one of the main triggers of the 1929 U.S. stock market crash,” professor Kelly Shue points out. “Leverage-induced fire sales were also a contributing factor to the 2007-2008 financial crisis in the U.S.” She adds that the same phenomenon underlay the Chinese stock market crash in 2015.

      Measures taken with the intent of avoiding a depression have paradoxically aggravated the conditions that may result in a monumentally devastating depression. The intention of the Treasury and the Fed to employ quantitative easing to “shore up asset prices forever” contains one significant error: the belief in “forever.” It parallels the belief of every administration since George W. Bush — now for the first time called into question by Biden — that American wars can also be carried on forever.

      The link between the two may be more direct than most people recognize. Military investment and activity have become the core of the US economy. Bloated defense budgets are today’s “pump priming.” Wars keep a cycle of investment alive that nourishes not only industries that directly benefit from defense procurement but more broadly the entire technology sector, which has become the locomotive of the civil economy.

      The problem may even sink deeper into the structure of the US economy. Robert Kuttner recently unveiled a “dirty little secret of the recent era of very low inflation.” He believes that “the prime source of well-behaved prices has been shabby wages.” Citing “outsourced manufacturing, gig work, weakened unions, and a low-wage service sector,” he notes that the economy’s very real gains from productivity growth have all “gone to the top.”

      When nearly all incremental wealth is tied up in assets that may come tumbling down at any moment, nobody is secure. After the crash, the rich will lament their losses and their inability to rebuild. Millions will lose their gig work and below-survival wages in real jobs with no hope for a rebound. And with COVID-19 still creating havoc and climate change more and more visibly aggravating its effects, the problem of inflation we should be most worried about is the verbal inflation of experts who believe their discourse is capable of shoring up a failing system.

      *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

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

    • 125 Shares179 Views

      in World Politics

      Has the Pandemic Boosted the Idea of Universal Basic Income?

      by

      The COVID-19 pandemic and the ensuing lockdowns have brought economic activity to a standstill. As a result, the livelihoods of people around the world have been threatened. To respond to the crisis, some governments have considered how to expand their social safety net. This is particularly because many people who work in the informal economy or those without jobs have been left with no financial support. In this context, the idea of a universal basic income (UBI) has resurfaced.

      Until recently, UBI was a utopian proposal relegated to academic discussions. But the pandemic has led to a debate about UBI as a potential tool of public policy. Now, several basic income programs are running around the world. Advocates see in UBI an instrument to build more resilient societies in the face of economic crises, income inequality and automation. Critics argue that governments should strengthen existing social programs instead.

      Can a Presidential Candidate Convince America on Universal Basic Income?

      READ MORE

      In June 2020, Spain offered monthly payments of up to €1,015 ($1,200) to the poorest families. Germany has implemented a small-scale pilot study to take place over three years. As part of the program, 120 Germans will receive monthly payments of €1,200. In the United Kingdom, a motion to introduce UBI was signed last year by more than 100 parliamentarians from across the political spectrum. At the start of the pandemic, the US government paid up to $1,200 to adults earning below $99,000 a year; a second stimulus package meant Americans received even more money. Thus, it seems that the crisis has shifted the UBI debate, at least in some European countries and in the US.

      However, in South and Central America, the debate on the desirability of UBI could “not take off, given the very severe fiscal constraints in most countries,” says Oscar Ugarteche, a Peruvian professor of economics. This is despite the Bolsa Familia (Family Allowance) experiment of Luiz Inacio Lula da Silva, the former Brazilian president. This indicates that the debate is partly country-specific and that the implementation of UBI may require “several national experiments, which are likely to influence corresponding variations in policy design,” according to counselor Andrew Cornford.

      Embed from Getty Images

      Indeed, UBI is not a one-size-fits-all program. Many questions need to be considered. For example, should payments be issued per household or adult? Should everyone be eligible for UBI or only those receiving low salaries? Should a universal basic income be temporary or permanent? How will it affect the willingness of people to find a job or to continue working? How would UBI be financed?

      The first step is to assess the feasibility and implications of UBI. To do so will require building on the experiences of small-scale studies, comparing their results and collecting further evidence. Thus, it could be a long time before governments and the wider population see such a program. That is unless the current health crisis can serve as a catalyst for socioeconomic change, contributing to make UBI part of the legacy of the pandemic. 

      By Virgile Perret and Paul Dembinski

      Author’s note: From Virus to Vitamin invites experts to comment on issues relevant to finance and the economy in relation to society, ethics and the environment. Below, you will find views from a variety of perspectives, practical experiences and academic disciplines. The topic of this discussion is: Where does the debate over a universal basic income stand in your region? Has the pandemic had an impact on discussions about UBI?

      “…ensure that everyone has a floor on which to build [their] life…”

      “World GDP in 2020 reached $90 trillion. To bring this number down to earth, it means that what we presently produce is equivalent to $3,800 a month per four-member family, amply sufficient for everyone on earth to live a dignified and comfortable life. A modest reduction in inequality and a flat redistribution to adults is sufficient to ensure that everyone has a floor on which to build [their] life. Huge financial resources lay idle in the world, growing not through productive investment, but financial rent. Taxing them might make these resources useful, stimulating demand and production at the bottom while drastically reducing poverty. Those who do not need the support might just be taxed back for the amount.”

      Ladislau Dowbor — economist, professor at the Catholic University of Sao Paulo, consultant many international agencies

      “…a certain confusion reigns here around the notion…”

      “In France, the debate concerning a universal basic income remains confined to academic spheres and to a few militant groups. The issue was, however, put in the political agenda by the socialist candidate in the last presidential elections (spring 2017), that is to say before the outbreak of COVID-19. This candidate achieved a very poor score. The crisis itself does not seem to have brought the problem to the fore. It is true that a certain confusion reigns here around the notion: Is it a real universal basic income, a negative tax, aid to citizens without resources or a subsidy to all residents? The imagination is lost, which does not help the political inscription of this notion, nor the serene economic discussion.”

      Etienne Perrot — Jesuit, economist and editorial board member of the Choisir magazine (Geneva) and adviser to the journal Etudes (Paris)

      “…with the COVID crisis, the idea is resurfacing…”

      “In June 2016, a proposal to introduce a universal basic income was rejected by three-quarters of Swiss voters and all Cantons. With the COVID crisis, the idea is resurfacing, but to gain traction, it will need to address two issues. The first is how to finance it, especially if UBI should be enough to live on, without having adverse incentives for work and the tax base. The second is why provide support to everyone instead of those in need? Even with the pandemic, the vast majority of the population have kept their income and thus do not need support.”

      Cedric Tille — professor of macroeconomics at the Graduate Institute of International and Development Studies in Geneva

      “…dissatisfaction with existing social-security systems…”

      “Dissatisfaction with existing social-security systems has recently led to greater attention to the universal basic income. Perhaps the best-known experiment is that carried out on a limited sample of recipients in Finland. In the recent municipal elections in the UK, almost 300 candidates of the Green Party were declared supporters of the UBI. Supporters stress the automaticity and universality of the UBI, which are believed to contribute to wellbeing and the ease with which beneficiaries are able to handle other problems of their lives. Critics stress the undesirability of the delinking of financial benefits from particular welfare services owing to its likely impact on popular support for these services. This is a debate that requires several national experiments, which are likely to influence corresponding variations in policy design, including other solutions such as negative income taxes or simply strengthened social security.”

      Andrew Cornford — counselor at Observatoire de la Finance, former staff member of the United Nations Conference on Trade and Development (UNCTAD), with special responsibility for financial regulation and international trade in financial services

      “…the proposal could draw away people from the labor force…”

      “During the pandemic, the Spanish left coalition government accelerated a plan called Ingreso Minimo Vital, expected to hand out between €462 and €1,015 per month according to the conditions of each household unit. This in part replaces or adds up to existing regional schemes. Until March 2021, 210,000 beneficiaries had their submission approved, of a total of 1.3 million requests. The unions and a few NGOs — some of them very efficient in relieving newly emergent poverty — denounced the slowness and administrative maze in the process. The Spanish unemployed still number 3.6 million (15.99%), plus about 750,000 in furlough schemes. The proposal, if successful, could draw away people from the labor force, whereas we need public-private policies aiming to the contrary.”

      Domingo Sugranyes — director of a seminar on ethics and technology at Pablo VI Foundation, former executive vice-chairman of MAPFRE international insurance group

      “…these measures would provide tangible help that women need right now…”

      “For myriad women in economies of every size, along with trailing income, unpaid care and internal work burden have exploded. While all are facing unprecedented challenges, women continue bearing the brunt of the economic and social fallout of COVID-19. Pandemic-induced poverty flow will also widen the gender poverty gap, which means more women will be pushed into extreme poverty than men, thereby revealing women’s precarious economic security. Introducing direct income support to women would mean giving cash directly to women who are poor or lack income that can be a lifeline for those struggling to afford day-to-day necessities during the pandemic. Further, these measures would provide tangible help that women need right now.”

      Archana Sinha — head of the Department of Women’s Studies at the Indian Social Institute in New Delhi, India

      “In Central America, it has not even been considered…”

      “In Mexico, the discussion went to Congress as a proposal in June 2020 and is unapproved with a cost of 1% of GDP. In Central America, it has not even been considered as it is too onerous for the limited public finances of those countries. In Brazil, Chile, Colombia and Argentina, among other countries in the region, there is public discussion on the desirability of UBI promoted by ECLAC and UNDP and has not taken off, given the very severe fiscal constraints in most countries. UBI would not reduce inequalities as people who do not need it would get it and families with many adults in one household would get a bigger share than those with children.”

      Oscar Ugarteche — visiting professor of economics in various universities

      “…at the center of the most dynamic debates…”

      “The pandemic triggered a socioeconomic downturn — already sharpened by the 2008 debt crisis — that raised economic uncertainty and widened inequalities. Fundamental rights and basic life parameters are at risk, especially for the poorest of the poor. Scholars, experts and citizens feel that it’s surely the time to voice their support for a series of socioeconomic initiatives — the universal basic income being at the center of the most dynamic debates. The southern Mediterranean countries and Greece prioritized the pandemic effects and kept aside for a short period of time the austerity measures. However, Greece is expected to turn back to the economic stability narrative, as described during the debt crisis, a fact that disempowers a possible engagement to the UBI debate. If this becomes — as it should — an international matter, weaker economies will follow.”

      Christos Tsironis — associate professor of social theory at the Aristotle University of Thessaloniki in Greece

      “…popularizing the idea of universal basic income in the US…”

      “Thanks, Andrew Yang, for popularizing the idea of universal basic income in the US. Yang ran in the 2020 Democratic presidential primaries, offering the “Freedom Dividend,” a UBI of $1,000 a month to every American adult, as a solution to the eventual replacement of (nearly all) humans with automation. He scarcely answered how his UBI was to be funded, a significant, but not insurmountable, problem for UBI’s proponents. UBI skeptics were somewhat silenced when the former and current administrations sent out modest checks to those who lost jobs in the pandemic, in a series of massive economic rescue packages. Maybe the rescue plans are a nascent solution to UBI funding: higher taxes, deficit spending and pump priming.”

      Kara Tan Bhala — president and founder of the Seven Pillars Institute for Global Finance and Ethics

      “Italy introduced two years ago the Reddito di cittadinanza…”

      “Italy introduced two years ago the Reddito di cittadinanza, with 1.2 million Italians receiving this first attempt of universal basic income (€560 on average), at the condition of refusing no more than two job offers. In two years, only a small number of citizens actually signed a contract, as most offers were short-term. On the other hand, Italy just presented its Piano Nazionale di Ripresa e Resilienza )PNRR), consisting in €235.1 billion. Roughly 27% of the resources of the plan will be devoted to the digital agenda, 40% to investments to counteract climate change and 10% to social cohesion. Particular attention was paid to the historically disadvantaged Mezzogiorno of southern Italy (€82 billion, of which 36 in infrastructures), with projects involving young people and women, groups hit hard by the socioeconomic impact of the pandemic.

      Valerio Bruno — researcher in politics and senior research fellow at the Centre for Analysis of the Radical Right (CARR).

      *[A version of this article was originally published by From Virus to Vitamin and Agefi.]

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

    • 125 Shares119 Views

      in US Politics

      ‘The Great Resignation’: June’s US jobs report hides unusual trend

      by

      US unemployment and employment data‘The Great Resignation’: June’s US jobs report hides unusual trendJune’s numbers suggest economy is continuing to recover at steady pace – but another pattern shows people are quitting their jobs Rashida Kamal in New YorkSat 3 Jul 2021 06.00 EDTThe Bureau of Labor Statistics reported on Friday that the US economy added 850,000 jobs last month. Hidden by this encouraging figure is the hint of an unusual trend: people are beginning to quit their jobs in extraordinary numbers.June’s numbers, in combination with last month’s figures, suggest that the economy is continuing to recover at a steady pace. The rate of unemployment was 5.9% and 9.5 million people remain unemployed.This latest update, along with projections of positive economic growth, was met with notable optimism from the White House and record highs on Wall Street.Joe Biden, in response to the report, was eager to point out the changing power dynamic of the labor market.“The strength of our economy is helping us flip the script. Instead of workers competing with each other for jobs that are scarce, employers are competing with each other to attract workers,” he said.In midst of this uneven recovery, and perhaps somewhat counterintuitively, others have noticed another pattern that may further elevate unemployment rates in the months to come: people are leaving their jobs.In a move that organizational psychologist Dr Anthony Klotz calls “the Great Resignation”, workers are beginning to quit jobs in the highest rates seen since the Bureau of Labor Statistics (BLS) began to collect this data in 2000.Number of people quitting their jobsThis trend, according to Klotz, is not only due to pent-up “resignation demand” – fewer people quit their jobs during the early, uncertain months of the pandemic – but also because people are simply feeling burnt out.According to a recent report from Microsoft, 41% of the global workforce is considering leaving their jobs. Though the intention to quit is not quite the same as the act of quitting, the most recently available BLS data shows that while there were 9.3m job openings in April, almost 4 million people had also quit their jobs that month.“The economy is seemingly doing very well. There are lots of job openings out there. So, if you’re an employee, that’s empowering for you because you have options,” Klotz said.Like many other factors of American life, the Great Resignation will not be immune to the racial and economic disparities that exist elsewhere. Socioeconomic differences will shape who is quitting and why.Sandra Sucher, Harvard Business School professor and author of the forthcoming The Power of Trust, noted that low-wage workers will be particularly motivated to change jobs with even marginally better offers.“There’s definitely a sense of if I can make more money doing this job, I’ll go for it,” she said.While there are concrete factors such as better wage and improved savings rates driving these choices, experts like Sucher and Klotz also believe that the pandemic, by bringing us face-to-face with our own mortality, has prompted a reckoning with how we balance work and life.“There was overall sense of malaise that came from the experience of working, almost regardless of who you were working for during the pandemic,” Sucher said.“You want a place that takes care of you and recognizes you as a human being.”With labor market conditions seemingly turning in favor of workers, it is possible that there will better opportunities available, at least for some. Klotz has been careful to note that quitting a job is ultimately a deeply personal decision.“What I don’t want is for people to see all this coverage of the Great Resignation and think, oh, this is a good time to put my job.”Whether or not it is the right decision will still depend on a myriad of personal and particular considerations.Dr Valerie Wilson, the director of Economic Policy Institute’s Program on Race, Ethnicity and the Economy (Pree), warned against treating any one month’s report with too much importance, “The caveat is that subsequent revisions or updates to the numbers could always change what that story is. We always know more in retrospect than we do in any at any single point.”Despite the White House’s positivity, what has remained consistently evident is the disparate impact of the pandemic on different groups of people. There continues to be marked differences how long it is taking for everyone but white men to return to their pre-pandemic rates of unemployment.Race and gender groups that are recovering quicklyRace and gender groups that are recovering slowlyThese differences, of course, have been entrenched throughout US history. In particular, Wilson is concerned with “occupational segregation”, which has historically meant that Black and brown workers are disproportionately represented in some industries and not others.“For example, we know that women – women of color in particular – are more likely to be in low-wage service and those industries are hit extremely hard during a recession,” she said.Industries, such as leisure and hospitality, continue to falter in regaining their pre-pandemic rates of unemployment.Industries that are still recovering slowlyTopicsUS unemployment and employment dataEconomicsUS economyUS politicsJoe BidenfeaturesReuse this content More