The current cost of living crisis lays bare the faults of our economy – vast inequalities, irreversible environmental damage, and an economic policy unable to achieve prosperity for all.
It may then seem surprising that given these challenges, the top economic priority of recent administrations has been public finances, that is, maintaining public sector spending roughly equal to its revenues and ensuring that government debt does not exceed a certain proportion relative to the size of the UK economy.
<a href="https://www.bbc.co.uk/news/uk-politics-63335671">Liz Truss’ failed economic agenda</a> brought a major shake-up precisely because it departed from this commitment. By not outlining how the revenues lost in the proposed tax cuts would be compensated for to prevent government spending and debt from ballooning relative to government finances, Truss broke one of the key principles of modern economics adopted by the Conservative governments since 2010 – that of a balanced budget.
As the decades of austerity implemented in the UK and around the world have shown, prioritising balanced budget has not improved wellbeing; instead, it has raised poverty and inequality and constrained economic growth by limiting resources people have to spend. Why do politicians still cling to the idea of balanced public finances and what else is needed to achieve a more inclusive and sustainable economy?
<h5>Economic policy is shaped by politics and ideology </h5>
The economic model at the heart of today’s policies dates to the Reagan-Thatcher era in the 1980s – prioritising economic growth above other aspects of societal wellbeing and boosting economic resources of the rich and deregulating with a belief that income and wealth would then eventually “trickle down” to the rest of society. This has been justified by economic theories based on simplistic assumptions. But our understanding of the economy is not subject to universal laws predicted by such abstract mathematical models. Economics is inherently political and ideological, because it examines human behaviours and power structures that relate to how money and goods are created and distributed in society. Economic research that underpins policy is inseparable from economists’ own biases and convictions.

<h5>The fantasy of growth under economic neoliberalism</h5>
The obsession with balanced public finances is grounded in ideas of economic neoliberalism. For over four decades, it has defined national economic policy under both right and centre-left governments, and internationally, by organisations such as the World Bank and the International Monetary Fund (IMF). It argues for the withdrawal of the public sector from the production and distribution of goods and services, in favour of private markets in which people are free to pursue their own interest and try to out-compete others to capture as much economic resources as possible.
Economic policy range has therefore become narrow. Its objectives have been limited to promoting economic growth, neglecting broader goals such as nurturing an equitable and sustainable economic life. The actions of central banks have been restricted to changing interest rates and trading financial assets, while the government machinery has been focused on regulation intending to help markets work better, using taxes and social transfers to redistribute unequal economic resources. Public spending exceeding government revenues has been labelled as “irresponsible” towards future generations, who would need to contribute to the repayment of government debt, and a hindrance to economic growth. Many public services have become privatised in the name of improving performance and relieving the pressure on public budgets.
<h5>When economics misses the bigger picture</h5>
The above has been fuelled by the dominant practice of economics that glorifies quantitative data and methods as “rigorous” and objective. Overarching issues that shape the production and exchange of economic resources such as colonialism and post-colonial relations, racism, patriarchy, class-based inequalities and planetary boundaries have been largely excluded from economic modelling and thus from the design and evaluation of economic policy. So it is not surprising that economic neoliberalism has been linked to numerous local and global crises since the 1980s. It has increased inequalities in income, wealth, health and housing across social classes, gender, race/ethnicity, and generations, as well as irreversible degree of environmental degradation that will erode the quality of life in the foreseeable future.

Since the 2008 global financial crisis, public attitudes towards the economy and economic policy has shifted to challenge growing inequality and climate change. But a corresponding shift in the theory and practice of economics has been much more gradual. Economic theory and policy have retained many of the fundamental principles of economic neoliberalism, and alternative ideas are not being valued quickly enough. Meanwhile, economic growth has been slow, while cuts to public spending have been unsuccessful in improving production, and they have also increased poverty, as many essential public services such as healthcare and education have been more expensive and chronically underfunded.
<h5>Who wins and who loses in the ever-freer market? </h5>
Sunak believes in making markets as free as possible by reducing government regulation. But this often limits how much can be produced and at what cost, and for how much firms can sell their product, preventing them from earning excessively high profits. What he grossly misses out on is that in the current cost of living crisis more people struggle to afford basic necessities, and are less likely to spend on other, non-essential goods and services. If people don’t spend – on going to restaurants or to the gym, on new gadgets, clothes or vacations – eventually businesses won’t think it’s worth investing and expanding, and economic activity can collapse.
Without support to a typical household, growth is unlikely to take off. Instead, it is by strengthening the demand side, and supporting people’s incomes through public spending aimed at improving universal services, and prioritising the wellbeing of those on middle and low incomes that policy could create space for firms to innovate and produce more.

<h5>The rich won’t save us </h5>
The “trickle down” argument suffers from a similar shortcoming. It assumes that the rich are inherently smarter, more hardworking, and better at making money, and that their resources are used to invest in innovative ventures that create jobs and promote growth, which benefits the rest of the economy. But this view ignores the unearned privilege of wealth coming from one’s class background, race, gender and age. It also neglects the fact that much of the wealth of the rich is invested in personal luxury consumption or financial assets that further enrich the wealthy and have little impact on job creation and innovation.
<h5>We need a radical change in economic thinking</h5>
As the new government’s decisions regarding its finances will come under scrutiny in the coming months, we should be asking the question of how taxation and public spending work. Cutting taxes is not necessarily bad if it targets financially vulnerable individuals. Similarly, abandoning the balanced budget won’t be beneficial if it is used to enrich the wealthy at the expense of further cuts to public services. We need more detailed design and evaluation of economic policy that look at who benefits from the proposed changes in public spending and taxation (as well as interest rates).

The decision to retain Jeremy Hunt as Chancellor signals that, as a prime minister, Sunak is likely to continue with the commitment to balanced public finances that he showed as Chancellor under Boris Johnson. Hunt has declared that he was ready to do “whatever is necessary” to reduce government debt in the name of maintaining strong public finances, which, in his view, are “the foundation of a strong economy”. And it is no longer just a Conservative ideal – Keir Starmer has vowed to turn Labour into the party of “sound finances”.
Yet what the experiences of economic neoliberalism show is that prioritising balanced public finances over equality and sustainability will make the ongoing crisis even worse. The obsession with rolling back the state to “liberate” markets will be a death sentence to some, who won’t be able to feed or heat themselves this winter while large energy companies enjoy record high profits. Economics can no longer be used to disguise those policy choices as inevitable laws of nature. The widespread criticism of <a href="https://www.theguardian.com/uk-news/2022/sep/30/how-kwasi-kwarteng-mini-budget-hit-uk-economy-in-numbers">Kwasi Kwarteng’s mini-budget</a> sparks hope for a shift in the public’s expectations of economic policy. Such transformation requires a broader change in economics that accepts its ideological and political roots – and there are plenty of alternative theories and experts that Number 10 should learn from.
<pre>Photo Credit: Number 10 via <a href="https://flic.kr/p/2jKRhgk">Flickr</a></pre>

Rishi Sunak

UK economics desperately needs to move on from flawed prescriptions into a fresher more agile model that responds to today’s crises.

A new UK prime minister is not enough – the current economic model needs a radical overhaul

On 13 June 2020, I stood with a few French friends on the corner of Boulevard de la Villette and Rue du Faubourg du Temple discussing the rise of socialism in the United States. We had forked off from the Vérité pour Adama manifestation (“Truth for Adama” protest) and, along with <a href="https://www.lameute.info/posts/la-generation-adama-met-la-france-face-ses-ideaux">a few thousand others</a>, had marched through traffic up the hill to the Belleville neighbourhood. In this quartier – populated largely by migrants from East Asia or North Africa, or their children and grandchildren – the stalled traffic responded with cheers, honking horns and raised fists, while the protesters clapped and cheered in accord. Chants and signs echoed those originating in the Anglo world, “Black Lives Matter”, in English, alongside the familiar <a href="https://en.wikipedia.org/wiki/No_justice,_no_peace">“Pas de Justice, Pas de Paix”</a> (“No Justice, No Peace”), as well as more local slogans such as “Vérité pour Adama” or the beloved and now time-tested “Macron, démission!” (“Macron, resignation!”). For me, the noise, discord and togetherness were a great relief after two months of one of the strictest quarantines in the world.
The Vérité pour Adama movement responds to racist policing in France and demands truth and justice after <a href="https://fr.wikipedia.org/wiki/Affaire_Adama_Traor%C3%A9">Adama Traoré</a>, a 24-year-old Black man from the Val-d&#8217;Oise department just outside of Paris, died in police custody. After four years of medical exams, the autopsies have been <a href="https://www.euronews.com/2020/06/04/france-what-happened-to-adama-traore">inconclusive</a>.
Here, I consider the similarities and differences between French and US movements around the issues of racial justice and police violence. Both movements have the same underlying demands for the respect and protection of Black lives, and these demands crystalize particularly in moments of austerity. In France, the movement addresses itself largely to the state, citing its alleged commitment to equality, welfare, justice and truth. In the US, the demands are similar but focus more on dismantling state structures that enforce racial and economic inequalities. At the same time, socialism is on the rise among younger generations in the US and the <a href="https://www.8toabolition.com/">#8toAbolition</a> platform calls for the reallocation of resources to sustaining communities as a crucial step to abolishing the police state.
As we stood at that intersection of the two main streets in Belleville, my French friends started talking about how they were interested in studying the growth of socialism in America. I was puzzled at first – it seemed strange to me, in a place where <a href="https://www.theguardian.com/commentisfree/2019/dec/04/french-workers-cherish-welfare-state-strike-reforms-macron">the welfare state still has some shaky legs to stand on</a>, to be looking to the US. But there are some things the French left admires about the US left. For one, the recognition of identity as a category of oppression is still something that is resisted by the centre-left in France, although contingents of the far left and younger generations acknowledge it more. The French left won its power through socio-economic struggles – and while the <a href="https://theconversation.com/revolutionary-ideals-of-the-paris-commune-live-on-in-black-lives-matter-autonomous-zone-in-seattle-140673">radical history of France</a> also fought against colonialism, for racial justice, and for sexual and gender liberation – the prevailing left in France hangs its hat mostly on fights over union power, labour law and taxation practices.
Redistributive justice is certainly the bottom line of any struggle for liberation, but in a country plagued by a history of racism, sexism and anti-immigrant structures, focusing purely on bread and butter issues like pensions, job security or family leave excludes many comrades and contingent workers whose work is not recognised by labour laws, who don’t have pensions, and whose gender or chosen family is not acknowledged as medically, legally or existentially valid. In France, by and large, the struggle has been for equity and inclusion in these existing structures. The US, on the other hand, while one of the most <a href="https://www.nytimes.com/interactive/2020/03/06/opinion/working-class-death-rate.html">economically punishing places in the world</a>, has also been home to some of the most beautiful and inspiring examples of mutual aid, protest culture and liberation movements, including the Black Panther Party, ACT UP, the Seattle Alterglobalization movement, Occupy Wall Street, #MeToo, and now multiple waves of Black Lives Matter protests. As one French colleague explained it to me, “it’s the only place in the world that can make these amazing movements out of total shit.”

In the working-class banlieues (“suburbs”) where the Vérité pour Adama movement began, police violence is nothing new and has been a long-running problem and trigger for unrest. In the autumn of 2005, <a href="https://www.nytimes.com/2005/11/07/world/europe/behind-the-furor-the-last-moments-of-two-youths.html">a series of protests and riots</a> broke out sparked by the death of two adolescent boys who were hiding from the police in an electrical switching station and were accidentally shocked to death. The fact that the boys instinctively ran from the police – to their death – rather than expecting protection or justice was seen as an articulation of how the state treats largely Black and brown, and largely immigrant or first-generation, poorer populations in the banlieues. The banlieues went up in flames in anger: 10,000 cars were burned, 3,000 people arrested, and <a href="https://www.telegraph.co.uk/news/worldnews/europe/france/11248098/The-heat-rises-in-Frances-banlieues.html">a state of emergency was declared</a>.
The lockdown has exposed further issues of inequality, including living conditions and police violence in the banlieues. French policing has drawn international criticism because of the disproportionately <a href="https://www.nytimes.com/2020/04/10/world/europe/coronavirus-paris-suburbs.html">harsh policing of the poorer banlieues</a> during confinement, where admittedly, larger families live in smaller quarters and were less successful at quarantining themselves. In the midst of this, the Vérité pour Adama movement has gained traction and has become France’s “Black Lives Matter” in many ways – taking the case of Traoré as an example of the overarching threat of the police and their lack of accountability vis-à-vis these populations.
The demands of the movement differ in some ways from the Black Lives Matter movement in the US. One main difference is that there is little discussion of <a href="https://www.essence.com/feature/breonna-taylor-justice-abolition/">police abolition</a>. In addition to an urgent emphasis on the recognition of the value of Black lives, the French movement focuses on more republican themes like <a href="https://www.newyorker.com/news/letter-from-europe/assa-traore-and-the-fight-for-black-lives-in-france">justice, truth and equality</a>, which are owed to the people by the state. French anarchist platforms have indeed published <a href="https://lundi.am/Manifeste-pour-la-suppression-generale">manifestos</a>, “triggered by the assassination of George Floyd in the United States”, calling for the abolition of the police, but the comité pour Adama has focused on justice for victims of police violence, rather than on defunding.
However, budgets are still an issue – pensions, health care, public transit and education are all being contested at the moment, and all have their own protests, strikes and social movements forming in their defence. While the US left has developed strong attention to mutual aid and identity politics, this might be in part because there is barely a welfare state to hold people together and of which to make demands. But, like the police, the assaults on the welfare state in France won’t attack everyone equally – the poorest and most vulnerable will suffer the most. Some of the key demands of the US abolitionist movement <a href="https://www.8toabolition.com/invest-in-care-not-cops">call for an investment</a> into something like a welfare state, which will <a href="https://lareviewofbooks.org/article/how-defunding-abusive-institutions-goes-wrong-and-how-we-can-do-it-right/">support communities</a> before they fall victim to the social ills that the police might be called to react against.
What remains to be seen, as with all other nations struggling against austerity in our current moment, is whether we can succeed in a true convergence des luttes – whether there will be a redefining of what is “essential” to human life and whether we will recognise and protect Black lives, not just within the nation but globally. If so, it will certainly require a conflict with, and overthrowing of, the forces that exist to enforce inequality and which harvest our resources and lives. In other words, this struggle requires not just an end to police violence but a reallocation of economic resources, from institutions that operate through violence to ones that support life, education, art, childcare and health. A clear distinction needs to be made between a welfare state and a police state, and we might find that the boundaries of the nation state may be insufficient to bring about the required economic reforms. The greatest struggle of these movements may be to bridge this gap from the local, municipal or national, to the global – which is, indeed, the geopolitical terrain from which oppressive power is exercising itself.
&nbsp;
<pre>Photo Credit: Twitter</pre>

Justice Pour Adama

Social movements in the name of Black lives are gaining visibility internationally, but as part of this, the reallocation of economic resources must be prioritised on a global scale.

France, USA, and the Fight for Black Lives

I wouldn’t have you back. 
With your nice houses and good schools 
on the better side of wherever. 
You installed (or tried to) in each of us 
the tendency to come out in a loud red rash 
on the days we could find no one to be better than. 
You were always issuing updates. 
We downloaded them in our sleep.
Normal, you’ve made the world 
a place nobody belongs.
Even our hugs and handshakes – 
now banned under plague-time legislation – 
became a thing transactable on Instagram.
For you are more savage by far 
than the guy who spends his evenings watching otters 
be decapitated on Youtube.
Even the woman across the road’s premature last breath 
is a stock you might invest in.
And though you’re not exactly dead – 
those whose only contribution 
would have been to steal earrings 
off children obliterated in the blitz 
before the bits had been tidied away 
are, as ever, on the lookout for something to nick – 
we see now your fabric unwinding until it’s 
string we can remake 
any shape we want.
Normal, you’re just a script 
given us by the Publicity Department 
which we acted out for so long 
we believed 
you were all there ever could be.
&nbsp;
<pre>Photo Credit: The National Guard via <a style="color: #808080;" href="https://flic.kr/p/2iH7eRL">Flickr</a></pre>

Poem Normal &#8211; Coronavirus &#8211; New_Site

Poem: Normal

This election is about delivering a major policy overhaul, which will profoundly change the lives of millions of UK residents and citizens for years to come. No, I am not talking about Brexit, but about the rebuilding of social infrastructure through a boost in public spending. All major political parties have promised to raise government expenditure in some form, from targeted pledges for the NHS and social care promised by the <a href="https://www.bbc.com/news/election-2019-50524262" target="_blank" rel="noopener noreferrer">Conservative Party</a> and investment in teachers and free childcare proposed by the <a href="https://www.bbc.com/news/election-2019-50459123" target="_blank" rel="noopener noreferrer">Liberal Democrats</a>, to nationalising of entire industries put forward by <a href="https://www.bbc.co.uk/news/election-2019-50501411" target="_blank" rel="noopener noreferrer">Labour</a>.
<h5>Labour’s economic reform</h5>
Out of these political parties, Labour has promised some of the most far-reaching changes in economic policy. Think-tank <a href="https://www.resolutionfoundation.org/app/uploads/2019/11/Election-2019-what-the-manifestos-reveal.pdf" target="_blank" rel="noopener noreferrer">The Resolution Foundation</a> estimates that under Labour’s public spending plans, over 4% of output produced in the UK (measured by the Gross Domestic Product, or GDP) would be invested in the public sector. This is one percentage point more than the estimated levels of public investment under the Conservative proposals. While these projections are still below the highest observed levels of public investment in the mid-1960s, they are substantially larger than the trends recorded since the early-2010s.
Labour’s economic proposals would effectively double the levels of public spending observed today. Hence, it is not surprising that <a href="https://labour.org.uk/manifesto/">the party’s manifesto</a> has come under close scrutiny from experts and the media – and the verdict is mixed. Analysis of the think-tank <a href="https://www.ifs.org.uk/election/2019/manifestos">The Institute for Fiscal Studies</a> (IFS) states that “Labour would not be able to deliver investment spending increases on the scale they promise”. Many media and business pundits hail Labour’s spending plans as “<a href="https://www.dailymail.co.uk/news/article-7730683/Voters-blast-Labours-unaffordable-83billion-spending-splurge-FIFTH-backing-it.html" target="_blank" rel="noopener noreferrer">unaffordable</a>”, “<a href="https://www.thesun.co.uk/news/10313313/sajid-javid-john-mcdonnell-labour-spending/" target="_blank" rel="noopener noreferrer">reckless</a>” and “<a href="https://www.telegraph.co.uk/politics/2019/11/16/labours-four-day-week-plans-unaffordable-raise-important-point/" target="_blank" rel="noopener noreferrer">impossible</a>”.
Conversely, in a widely shared <a href="https://labour.org.uk/latest/163-economists-back-labour/" target="_blank" rel="noopener noreferrer">letter to the Financial Times</a>, 163 economists, including myself, expressed support for Labour’s manifesto. We argue that Labour’s policies mark a much-needed shift in the economic priorities of the country, tilting the balance of power towards workers and other members of society who have been at a disadvantage under the policies of the past few decades. As experts in this field, we see Labour’s spending plans as the most effective and sustainable way of reducing inequality and promoting economic and social prosperity. As one of the signatories, I believe that Labour’s proposals are the most economically sound towards such reform.
<h5>Towards a green new future</h5>
Given the conflicting outlook on the Labour Party’s manifesto, what exactly are Labour’s plans for the UK economy and how viable are they?
Labour’s economic plans echo the large-scale plan of government investment in public services and infrastructure which was implemented by the US president Franklin D Roosevelt to revive the economy after the Great Depression.
Labour’s Green New Deal would involve raising the minimum wage to £10 per hour and creating a million jobs across the UK in a way that does not exacerbate climate change. Labour also plans to deliver free broadband to all households and bring into public ownership several industries providing vital services to the society, including energy, water, rail and mail. In addition, Labour wants to develop a National Education Service to provide equal and free access to education – with a particular focus on a <a href="https://www.bbc.co.uk/news/election-2019-50551765" target="_blank" rel="noopener noreferrer">progressive curriculum</a> – and to expand funding for the <a href="https://www.bbc.co.uk/news/health-50397847" target="_blank" rel="noopener noreferrer">National Health Service</a>, as well as deliver free personal care for the elderly.
These plans are ambitious and go against the economic policy trends of the past four decades. Since the late-1970s, the government has actively reduced its role in the economy, believing that competition among private, profit-oriented firms leads to a better and more cost-effective production and allocation of economic resources. It implemented market-oriented policies according to which many areas of economic activity have been deregulated, while policies supporting wages (such as trade unions laws) have been restricted. After the Great Recession in 2007, the government has also pursued a budget surplus through reducing public spending in hope that such austerity policies would keep public finances in check and help restore economic growth.
Evidence suggests that the deregulation and privatisation policies have been <a href="https://eurodad.org/fiscal-cost-PPPs" target="_blank" rel="noopener noreferrer">costlier than government provision</a>, and made the economy more unstable, <a href="https://www.opendemocracy.net/en/oureconomy/fight-against-climate-change-fight-against-capitalism/" target="_blank" rel="noopener noreferrer">contributing to climate change</a>. Austerity has not boosted the economy as GDP growth has been slow, and the policy has <a href="https://unctad.org/en/PublicationsLibrary/tdr2017_en.pdf" target="_blank" rel="noopener noreferrer">made inequality worse</a>. The broken social infrastructure is a result of ideologically – rather than evidence-driven – economic policies, which were initiated by the Thatcher government and have continued under subsequent governments, both New Labour and the Conservatives. Mainstream economics is also responsible, presenting misleading research as “objective” evidence for what are deeply ideological policy decisions. For instance, reductions in public spending that underpin austerity have been partly motivated by the infamous paper by two Harvard economists, <a href="https://theconversation.com/the-reinhart-rogoff-error-or-how-not-to-excel-at-economics-13646" target="_blank" rel="noopener noreferrer">Carmen Reinhart and Kenneth Rogoff</a>, who manipulated data to argue for a maximum permissible threshold for government debt.
The policies of the status quo have proven to be ineffective in delivering economic prosperity and detrimental to social justice and the natural environment. Hence, both populist politicians, promising a return to the “good old days”, and centrists, who claim that free market solutions are the panacea for the current social and economic ills, are adding insult to injury. Social tensions, so evident in the Brexit debate, highlight the need for a true reform of the UK’s policy priorities.
<h5>Public spending plans </h5>
The large-scale investment in public services proposed by Labour is radical enough to break away from the ineffective market-oriented policies of the past four decades, re-thinking the way in which economic resources are produced and allocated among people. It is backed by a long standing body of evidence produced by economists outside of the profession’s mainstream, which shows that higher government spending <a href="https://www.ituc-csi.org/IMG/pdf/modeling.pdf" target="_blank" rel="noopener noreferrer">raises economic output</a> by more than the amount of the initial investment and <a href="https://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf" target="_blank" rel="noopener noreferrer">reduces income and wealth disparities</a> in society across space and over time, <a href="https://wbg.org.uk/analysis/intersecting-inequalities/" target="_blank" rel="noopener noreferrer">improving the material situation</a> of women and people of colour. Government regulation is also indispensable in <a href="https://islandpress.org/books/ecological-economics-second-edition" target="_blank" rel="noopener noreferrer">reigning in the negative effects of climate change</a>. According to this evidence, Labour’s spending plans are by no means “impossible”.
Neither are Labour’s proposals “unaffordable” or “reckless”. Economist Laurie Macfarlane gives <a href="https://www.opendemocracy.net/en/oureconomy/how-misleading-economic-analysis-corrupting-our-democracy/" target="_blank" rel="noopener noreferrer">an insightful analysis</a> of the misleading nature of cost estimates which headline critical evaluations of Labour’s policy proposals. Economic evidence is never objective because economics is a social, rather than natural, science. The decision on what to analyse, how, and based on what data, is a subjective choice on the part of the given economist. This is crucial because analyses by experts are often presented as objective and unbiased in the media. But in fact, all estimates have a substantial margin of error embedded in them because they cannot measure directly all potential benefits that a progressive policy, such as a public spending increase, may have in the long term. For instance, MacFarlane notes that the existing estimates of the costs of implementing a four-day working week in the UK ignore the potential benefits to the quality of work which may arise if fewer working hours improve employees’ physical and mental health.
<h5>Progressive tax reforms </h5>
Labour’s radical public spending plans are backed by equally radical proposals for a progressive tax reform. Current tax structure in the UK is <a href="https://www.theguardian.com/money/2017/may/27/tax-britons-pay-europe-australia-us" target="_blank" rel="noopener noreferrer">one of the most generous</a> in the world when it comes to high earners. A marginal tax rate on personal income means that tax is only paid on income <a href="https://www.instagram.com/p/B5NzyjfFGNY/" target="_blank" rel="noopener noreferrer">above a certain threshold</a> – those earning more pay a higher amount in taxes on incomes above the tax-free personal allowance. However, other forms of taxes do not take into account the taxpayer’s income level. For example, the size of the national insurance contributions (NI) and the value-added tax (VAT) are the same for all employees and consumers respectively. These types of taxes have been increasing systematically, which, together with rising costs of living and sluggish income growth for the majority of the population, has put a great burden on finances of low- and middle-income people.
A progressive tax structure like the one proposed by Labour could reverse this trend. In addition to higher taxes on corporate profits, Labour proposes to increase marginal tax rates on the richest earners while freezing NI contributions and tax rates on lower incomes. This means that those earning up to £80,000 a year would not pay any more in taxes than they do now, and could even see their tax burden reduce if public services become more affordable and wages increase. At the same time, someone earning £100,000 a year would pay just <a href="https://action.labour.org.uk/page/content/fair-tax-calculator?gclid=Cj0KCQiA_rfvBRCPARIsANlV66PETAh0VA8dZ5M5K6IDxCMhk90fTF4rKytercsnkLhKPwf19hbRpacaAvntEALw_wcB" target="_blank" rel="noopener noreferrer">£19 more a week (or £83 a month)</a> in personal taxes.
It’s no secret that raising taxes on corporations and the highest earners is not easy, because their profits and savings can easily be moved to lower-tax jurisdictions elsewhere in the world. There is a limit on how much individual countries can mitigate tax avoidance, but <a href="https://www.aspen.review/article/2019/hood-recovery-rethinking-state-contemporary-capitalism/" target="_blank" rel="noopener noreferrer">several ideas have been put forward</a> by economists on how to effectively design taxes at the national level. Arguments against raising taxes come from the same ideological conviction as arguments against increasing public spending, namely, that the government’s involvement is bound to “distort” the “efficient” free market outcomes. But there is no clear-cut evidence that higher taxes reduce economic growth, and it has been shown that raising taxes may actually <a href="https://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf" target="_blank" rel="noopener noreferrer">boost economic performance</a>.
<h5>A transformative government </h5>
In sum, Labour’s economic proposals are viable and necessary to reduce some of the social and economic tensions experienced in the UK. The proposals are backed by ample economic evidence and represent a true step towards a fairer and more sustainable economy. In fact, many of Labour’s proposals have already been <a href="https://www.theguardian.com/commentisfree/2019/nov/19/labour-programme-utilities-rail-full-fibre-capitalism" target="_blank" rel="noopener noreferrer">successfully implemented in other countries</a>. For example, free broadband is provided to almost all households in South Korea, while the marginal tax rate on highest earners is nearly 60% in Sweden. Together with its plans for a taxation reform, Labour’s economic policies are a change that the UK society can afford – and deserves.
<pre>Photo Credit: Jeremy Corbyn via <a href="https://flic.kr/p/2hUVhax" target="_blank" rel="noopener noreferrer">Flickr</a></pre>

The UK Labour Party’s large-scale investment in public services is the economically viable transformation we need.

The Economic Goals of Labour’s Manifesto Are Achievable – and Necessary

The 25th of July saw a new wave of hope in the 200 million strong population of Pakistan, as Imran Khan won the general election to become prime minister. How he will fare in a country where no prime minister has ever completed a full term will be monumental in the country’s history.
The in-tray is not short of challenges for the prime minister-elect; corruption laces through every vein of Pakistan from traffic patrols to the judiciary. It is globally regarded as a hot spot for sectarian conflict and for the “War on Terror”. Amid growing <a href="http://www.the-platform.org.uk/tag/islamophobia/">Islamophobia</a> globally and the constant political instability at home, whether a man given the moniker of “Taliban Khan” can deliver a tangible and positive change for the country will have huge implications.
As opposed to his counterparts, Imran Khan is not feudalistic and garners support not on the basis of caste and feudalism, but policy and change. This seems to bother western commentators whose eyes are fixed on a colonial narrative, whereby an independent-minded Muslim leader, outside of a western sphere of influence, prompts deep uncertainty and doubt.
These often grotesque displays of Islamophobia are evident in the coverage given to Imran Khan, and in particular of his advocacy to encourage peace talks between the Afghan Taliban and the TTP (Tehrik-i-Taliban Pakistan). 
In response to <a href="https://www.theguardian.com/us-news/2014/nov/24/-sp-us-drone-strikes-kill-1147">US drone strikes</a> which were allegedly aimed to specifically target 24 men, but have instead killed 847 innocent civilians including 142 children, Khan called for an <a href="https://www.youtube.com/watch?v=LaUPcd3d6Pk">end to drone strikes</a> and an end to a one-sided relationship with western powers, in which the “Pakistani government tolerates drone strikes in return for aid money”. Khan has argued that <a href="https://www.youtube.com/watch?v=krWbxWoMark">peace talks</a> are not a deplorable idea, and that “Pakistan, Afghanistan and America are in need of peace and a mutually beneficial, balanced relationship”. Many Pakistanis agree with him.
Years of brutal war have cost Pakistan countless innocent civilian lives, and the US and UK millions in taxpayers’ money. The country&#8217;s infrastructure, economy and tourist influx has taken a huge hit. Interference of both the American and Pakistani military in cases such as Operation Khyber and Black Thunderstorm have been futile in tackling the presence of Taliban fighters, or their ability to adapt and respond.
As the United States was the nation to instruct Qatar to host a Taliban office for peace talks, it is vital that at this juncture the United States supports Imran Khan’s decision to establish communication with the Taliban, rather than insisting on a violent approach. It is not Pakistan alone that needs peace to prosper; the international community does too. As <a href="https://www.youtube.com/watch?v=krWbxWoMark">Khan has said</a>, “We need to establish peace in Afghanistan to stabilise the entire region and improve relationships; we hope to mediate this.”
Every election Pakistan conducts is fuelled with debates of international influence, army interference and vote rigging. This time, many have claimed that Khan has been appointed as the ladla (favourite) of the army, rather than legitimately voted for, due to his soft corner and support for the military of Pakistan. Accusations such as these are thrown about daily and regularly in Pakistan.
In these elections, however, the election commission was appointed by the former prime minister, Nawaz Sharif, now imprisoned on corruption charges. Meanwhile, the army personnel to oversee fair and free elections were agreed upon by the oppositional Pakistan People’s Party (PPP) and the then governing party (Pakistan Muslim League N). Though the opposition parties have made claims of rigging, these have been minor compared to the <a href="https://www.theguardian.com/world/2013/may/13/pakistan-elections-nawaz-sharif-imran-khan">collective uproar in the 2013 elections</a>. If Imran Khan and the army are indeed complicit in rigging the elections, they have certainly not done a good job. The party of Khan, the Pakistan Tehreek-e-Insaaf (PTI), does not hold a majority in neither the national assembly nor the most populous state, the Punjab.
Imran Khan has already <a href="http://www.pndkp.gov.pk/wp-content/uploads/2017/07/DEVELOPMENT-STATISTICS-OF-KHYBER-PAKHTUNKHWA-2017.pdf">proven his mettle in the Khyber Pakhtunkhwa (KPK)</a> province by creating a social welfare state, depoliticising the local police and making education more accessible, thereby raising <a href="https://www.abacademies.org/articles/Urbanization-and-literacy-rate-in-khyber-pakhtunkhwa-relationship-and-projections-1528-2643-21-1-101.pdf">literacy rates to nearly 70%</a>. For many Pakistanis, these are noteworthy achievements that offer proof that Imran Khan can bring change to the rest of Pakistan.
Khan’s aims are to tackle corruption, raise the aspirations of the poor and labouring classes, make education an accessible right not a luxury, and to make peace with Pakistan’s neighbours. He is also the first South Asian leader to take an initiative on climate change by initiating the “<a href="https://www.weforum.org/agenda/2018/07/pakistan-s-billion-tree-tsunami-is-astonishing/">Billion Tree Tsunami</a>” project in an effort to restore the province’s depleted forests and fight the effects of climate change. This is a man that has fought the political elite all his career. And now he has been elected, Imran Khan wants to implement positive change and create a Naya Pakistan (New Pakistan).
I have spent time in Pakistan’s major cities over the last year, and it resonates within people’s conversations and hopes that they see a new, flourishing Pakistan under Imran Khan’s leadership. Economically, there have already been positive changes. The dollar has weakened against the Pakistani rupee, and there is a renewed confidence in the Pakistani economy and businesses over recent weeks.
On the 71st birthday of the birth of this nation, Imran Khan is taking his oath as PM. As Pakistan steps into a light, the world can support it or watch as Pakistan renews itself.
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<pre><a style="color: #808080;" href="https://en.wikipedia.org/wiki/Imran_Khan#/media/File:Imran_Khan_(4276439704).jpg">Photo Credit: Wikimedia Commons</a></pre>

Many Pakistanis harbour hope for a new dawn on the nation as Imran Khan is sworn in as prime minister

Pakistan&#8217;s ReinKhanation: Do Election Results Signal a New Dawn for the Country?

Despite President Trump scoring his administration’s response a <a href="https://www.msn.com/en-us/news/politics/trump-gives-himself-a-10-out-of-10-on-puerto-rico-storm-recovery/ar-AAtJfX4">perfect “10”</a>, the conditions on the ground in Puerto Rico could not be starker more than one month after Hurricane Maria. About one-fifth of Puerto Rican households <a href="http://time.com/4988841/puerto-rico-hurricane-maria-numbers-recovery/">lack drinking water</a> and only about 40% of the power grid has been restored, while communications remain dismal. Due to the inadequate response on the part of both the federal and territorial governments, Puerto Ricans have been <a href="https://indypendent.org/2017/10/a-peoples-recovery-radical-organizing-in-post-maria-puerto-rico/">self-organising</a> community recovery efforts.
In the context of this post-disaster humanitarian crisis, exacerbated by the pre-existing debt and economic crises and years of austerity and colonial neglect, Puerto Rico’s looming $74 billion public debt has received renewed media attention. However, media accounts often overlook the established struggle for a public debt audit that preceded the hurricanes and demanded a similar scrutiny that would conceivably lead to some debt relief. An integral public debt audit would untangle a complicated web of debt relations and determine who owns what, the kinds of mechanisms used to contract public debt, and what the funds were used for. In the wake of Hurricane Maria, politicians and creditors unleashed a slew of ambiguous claims, ranging from a <a href="https://theintercept.com/2017/10/04/puerto-rico-debt-forgiveness-hurricane-maria/">total debt wipeout</a> and new <a href="https://theintercept.com/2017/09/27/puerto-rican-debt-holders-respond-to-catastrophic-hurricane-by-offering-puerto-rico-more-debt/">debt swap</a> schemes for the electric utility, to a congressional “<a href="https://www.nytimes.com/2017/10/12/us/politics/house-congress-disaster-relief-hurricanes-wildfires.html?_r=0">aid package</a>” via new debt with supposed <a href="https://www.msn.com/en-us/news/politics/trump-gives-himself-a-10-out-of-10-on-puerto-rico-storm-recovery/ar-AAtJfX4">priority for repayment</a> over all existing obligations.
Law 97 of 2015 established the official ‘Commission for the Integral Audit of Public Credit’. Comprised of 17 people from the public and private sectors, labour, and academia, the objective was to audit the public debt and ensure that Puerto Ricans were not paying back debt that could instead be nulled. On the surface, an audit may seem like an ordinary and bureaucratic measure but, in Puerto Rico’s case, it is highly politicised. The multi-sectoral Commission would have evaluated how Puerto Rico’s 18 public entities contracted debt over 40 years of emissions, the role of financial institutions, and how public entities executed debt-financed projects. This would determine any illegal, unconstitutional or illegitimate debt relations before voluntary creditor renegotiations or legal debt restructuring took place. The audit process would, further, defend access to public information, transparency and accountability on the part of public officials and bankers who may be implicated in questionable debt emissions.
The Commission found multiple irregularities in two <a href="http://big.assets.huffingtonpost.com/Puerto_Rico_Commission_Interim_Report.pdf">preliminary</a> <a href="http://sptpr.net/wp-content/uploads/2016/10/Second-Interim-Pre-Audit-Report-on-2013-PREPA-debt-emission-con-anejos.pdf">reports</a> published in 2016. Independent organisations also found reason to audit the debt and cancel a good part of it. Researchers for the <a href="http://www.refundproject.org/">ReFund America Project</a>, under the Action Centre on Race and the Economy (ACRE), for example, concluded that nearly half of the public debt is not debt at all, but rather future interest on predatory loans called <a href="https://justiceleaguetaskforce.wordpress.com/2016/07/16/refund-america-project-report-nearly-half-of-the-debt-owed-by-puerto-rico-is-not-actually-money-that-the-island-borrowed-but-instead-interest-owed-on-bonds-underwritten-by-wall-street-firms/">capital appreciation bonds</a> (CABs). Another report argues that about $3 billion of the public debt is illegitimate issuance fees and capitalised interest on “<a href="https://www.scribd.com/document/322588236/Scooping-and-Tossing-Puerto-Rico-s-Future">scoop and toss</a>” deals.
The unelected fiscal control board overseeing Puerto Rico’s finances and fiscal policy has repeatedly claimed that an audit is a waste of time and money. This opposition comes as no surprise, as the audit would investigate bond emission and underwriting practices that some members oversaw and profited from. The <a href="http://hedgeclippers.org/">Hedge Clippers</a>, a coalition campaign to expose the mechanisms of hedge-fund profiting and “billionaire-driven politics”, revealed that two control board members in fact have <a href="http://hedgeclippers.org/pirates-of-the-caribbean-how-santanders-revolving-door-with-puerto-ricos-development-bank-exacerbated-a-fiscal-catastrophe-for-the-puerto-rican-people/">conflicts of interest</a> stemming from the “revolving door” between Santander Bank and Puerto Rico’s Development Bank. Despite mounting debt incredulity and conflicts of interest, the government <a href="http://caribbeanbusiness.com/new-debt-audit-commissions-report-raises-serious-questions/">held back</a> designated audit funding and in April 2017, Governor Ricardo Rosselló <a href="https://www.wipr.pr/gobernador-firmo-ley-que-deroga-comision-para-auditoria-de-la-deuda/">eliminated the official audit Commission</a>, effectively squashing a state-legitimated audit process. At the expense of Puerto Rican taxpayers, the control board recently contracted a legal firm to “<a href="http://caribbeanbusiness.com/puerto-rico-fiscal-board-picks-public-debt-investigator/">review</a>” part of the debt after pressure from multiple creditor groups in bankruptcy court, but credibility concerns invalidate this costly effort.
The grassroots support for the audit, however, was only strengthened by the legislative dismantling of the audit Commission. This struggle to defend access to public information and government accountability seems all the more relevant under conditions of tenuous democratic rights and economic uncertainty exacerbated by the hurricanes. The <a href="https://www.facebook.com/FrenteCiudadanoAuditoriaDeLaDeuda/">Citizens’ Front for the Debt Audit</a>, a group that formed in support of the official audit Commission, amplified its efforts and is undertaking a <a href="http://www.80grados.net/la-auditoria-va-pero-ciudadana/">citizens’ public audit</a>, for which it is has been raising funds and soliciting participants. The group sponsored a petition calling for the debt audit that reached 140,000 signatures, demonstrating this claim’s broad appeal. Even the University of Puerto Rico’s student movement, which led a cross-campus 10-week strike during the spring 2017 semester, <a href="https://www.huffingtonpost.com/entry/students-of-puerto-rico-lead-resistance-against-promesa_us_58e851c1e4b00dd8e016ec0e">endorsed a debt moratorium and integral public audit</a> as one of its major demands.
Creditors that invested in Puerto Rico’s municipal bonds comprise a diverse group. While all bondholders may not have engaged in unscrupulous practices, the creditors most apt to take a “haircut”, or reduced value, for serious debt relief should be those that accumulated unfettered and speculative profits from suffering in Puerto Rico and beyond. In the wake of hurricanes Irma and Maria, reports have revealed new details of mysterious bondholders with tremendous political clout and troubling track records. For example, a class of bonds called COFINA was purchased under Shell company subsidiaries to shield hedge funds like <a href="https://theintercept.com/2017/10/03/we-can-finally-identify-one-of-the-largest-holders-of-puerto-rican-debt/">The Baupost Group</a> from public scrutiny – until now. Out of the 30 known firms vying for debt repayment in bankruptcy court, 24 have been <a href="http://inthesetimes.com/features/puerto_rico_debt_bond_holders_vulture_funds_named.html">identified as “vulture funds”</a> that specialise in risky distressed debt. A number of these vulture firms also profited from the Argentinian and Greek financial crises and the U.S. sub-prime mortgage crisis.
Puerto Rico faces a massive recovery that magnifies the importance of a full and transparent debt audit. The audit and post-disaster debt relief are part of the broader struggle of Puerto Ricans, both at home and in the diaspora, to organise a just and <a href="http://www.truth-out.org/opinion/item/42152-it-is-time-to-transform-not-just-rebuild-in-puerto-rico">transformative</a> recovery that puts “the people before the debt”, as many activist groups demand. Rather than normalise the public debt in post-hurricane relief discussions, the established debt incredulity should be front and centre.
<pre>Photo Credit: US Department of Agriculture via Flickr</pre>

Hurricane Maria

The mission to audit Puerto Rico’s public debt comes with its own political challenges

Unfinished Business in Puerto Rico: The Case for Debt Audit and Relief after the Hurricanes

India’s recent cash crisis was the result of a good decision implemented poorly and has cost the country financially and politically 
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The decision by Indian prime minister Narendra Modi to <a href="http://www.bbc.co.uk/news/business-37906742">withdraw 500 and 1000 rupee notes</a> from circulation overnight, a move called demonetisation, was a measure designed to cut down on corruption and ‘black money&#8217;. In theory, it was a drastic but necessary measure to tackle an age-old problem in India and is technically still the right decision. But the rapid implementation of the decision in a largely cash-based economy has led to disastrous consequences for the country as a whole and placed Modi’s premiership under self-inflicted pressure. The lack of an appropriate modern financial infrastructure, such as bank accounts, use of credit and debit cards, and contactless payments like Apple Pay, has further exacerbated the negative effects of demonetisation. 
‘Black money’ 
The term ‘black money’ applies to funds which are <a href="http://www.bbc.co.uk/news/world-asia-india-35610332">hidden from tax authorities</a> and are, therefore, illegal. For instance, when someone is attempting to buy a house in India, the seller may offer the property for 120,000 rupees, but when the property is sold he records the sale down officially as 100,000 rupees – pocketing 20,000 rupees for himself. He will only be taxed on the first 100,000. As the transaction is conducted purely in cash, the money is hard to track, and once the cash is circulated back into the system through everyday spending, the illegal activity is virtually untraceable. This sort of illicit transaction happens on different scales all over the country and is a known, and essentially accepted, part of the Indian economy. The percentage of those who pay income tax differs depending on which source you refer to, but it is usually less than 5 per cent of the population, and in 2013 it was only 1 per cent according to <a href="http://www.bbc.co.uk/news/world-asia-india-36186116">official government figures</a>. This is frighteningly low in a country with a population of around <a href="https://www.google.co.uk/webhp?sourceid=chrome-instant&amp;ion=1&amp;espv=2&amp;ie=UTF-8#q=indian%20population">1.2 billion people</a>. 
Given that the black economy accounts for up to 20 per cent of India’s GDP, it is not surprising that this problem has been tackled through similar demonetisations in the past. <a href="https://www.thequint.com/india/2016/11/09/rs-500-1000-notes-scrapped-narendra-modi-a-look-back-at-1977-when-notes-were-scrapped-demonetization-black-money-rbi">In 1978, under then Prime Minister Morarji Desai</a>, the government decided to remove 1,000, 5,000 and 10,000 rupee notes. Prior still, <a href="http://www.livemint.com/Politics/uzZItqeHdMPHHgFJaq2BnM/A-history-of-demonetization-in-India.html">in 1946 the 1,000 and 10,000 notes</a> were withdrawn. Modi’s decision is therefore not without precedent. Negative consequences were also seen back then as a result of the removal of the notes. In 1978, the Times of India reported the <a href="http://blogs.timesofindia.indiatimes.com/cash-flow/demonetization-in-1946-and-1978-stories-from-the-past/">rising prices of agricultural products</a> such as edible oils, while India Today reported a 5-10 per cent drop in prices of gold and diamonds. 
Prime Minister Modi’s decision 
On the evening of 8th November, 2016, Modi announced the surprise decision to demonetise the 500 and 1,000 rupee notes and render them illegal to use as cash. They were replaced with new 500 and 2,000 rupee notes. Overnight, people found their money was worthless. 
The high value 500 and 1,000 notes were chosen for withdrawal because they were the notes most frequently used as black money, but also because together they made up <a href="http://www.bbc.co.uk/news/business-37919292">85 per cent of the cash</a> in circulation. This meant that everyone from the humble tea seller to the high-ranking business executive was left less able, and in some cases completely unable, to pay for anything. 
What’s more, as people attempted to exchange the withdrawn currency for the new tender, many banks struggled to cope with the increased demand and ATM machines ran dry of money. Huge queues and crowds ensued, as well as some <a href="http://news.sky.com/story/stampedes-and-scuffles-in-indian-as-rupee-banknotes-withdrawn-10654282">stampedes and scuffles</a>, as people scrambled to exchange their cash. 
The lack of a modern banking and financial infrastructure in India is likely to pose longer-term struggles and consequences as this decision trickles down. For example, <a href="http://www.bbc.co.uk/news/world-asia-india-37933231">only 27 per cent of villages reside within 5km of a bank</a> and nearly <a href="http://www.bbc.co.uk/news/world-asia-india-29074310">40 per cent of Indians have no access</a> to any financial services at all. As a result, the country needs to spend time, money and effort to actually be in the correct state for the demonetisation policy to have its desired effect. Ultimately, the few that do pay tax already have bank accounts and avoid black money benefit. The majority of the population, especially the poor who rely on cash to survive, look to be facing a period of financial hardship. Whether the measure will actually reduce corruption is also far from guaranteed. 
The future for Modi and the BJP-led government 
Prime Minister Modi and his party now face a lot more scrutiny and pressure. For a country which <a href="http://www.thehindu.com/news/international/India-ranks-76-in-Corruption-Perception-Index/article14022729.ece">ranked 76 out of 168</a> in Transparency International’s Corruption Perception Index, the reasoning behind his decision is logical. On the other hand, the speed and extreme nature of its implementation calls into question whether the appropriate research was conducted and the measure wholly thought through. It is unclear why the government did not stagger the withdrawal of the notes with, for instance, the 500 notes first and the 1,000 later. 
Modi has since defended <a href="http://www.bbc.co.uk/news/world-asia-india-37961975">keeping the decision secret</a>, which is understandable, given that an announcement would have allowed some to skirt around the change. Yet there is no reason the necessary element of surprise could not have been maintained with a staggered approach. Other measures could have been used to implement demonetisation more smoothly, such as introducing the new 2,000 rupee note first, circulating it into the system, and then declaring the 500 and 1,000 notes withdrawn. A further measure could have involved utilising and expanding <a href="http://www.bbc.co.uk/news/world-asia-india-37961975">new technologies, such as Payse and others</a>, prior to getting rid of the notes. This would have also benefited India in the long term by accelerating the country to a better financial infrastructure. This can and is being performed now, but much of the damage has already been done. The prime minister then put himself in a fragile position by <a href="http://www.hindustantimes.com/india-news/modi-turns-emotional-as-he-speaks-on-demonetisation-says-has-more-such-steps-in-mind/story-naFFmlHrFbhqbdUrj6ALBK.html">calling for 50 days</a> to allow the government to sort things out, but if he doesn’t his opposition will be ready to pounce and it is possible that his time in office could come to an end. 
It is clear that India is currently undergoing a period of massive instability and change as the decades’ long fight against corruption and black money reach a significant milestone. Modi took a huge gamble in his effort to try and reduce this problem, but there was a clear lack of critical thinking in the process. Of course, India is not the only country to struggle with corruption, but it is the way that corruption has seeped down to every section of the populace which makes it such a big problem. From paying off a policeman to avoid a traffic punishment to Bollywood stars using their fame and fortune to escape serious crimes, corruption is visible and widespread. The demonetisation strategy may be drastic, but it is extreme measures like this that may be necessary to vanquish corruption once and for all.
<pre>Image from: http://on.wsj.com/2fwFer9</pre>

India’s Cash Crisis: Who Will Lose Out in the Battle Against Corruption?

The Kingdom of Saudi Arabia seeks an alternative to its dependence on the petroleum sector and the House of Abdul Wahab 
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From the time of its establishment in 1932, the Kingdom of Saudi Arabia has always been recognised as one of the most powerful members of the Gulf states. With a rapidly growing economy on the international stage, success has been credited to the oil booms in the 1930s which led to Saudi Arabia becoming the largest exporter of oil in the world. That said, in recent developments, the Kingdom has come to the realisation that its once most valuable and profitable natural resource can no longer be its only source of income. 
A young prince with a vision 
Confronted with plummeting oil prices which has created a budget deficit spiralling to over 13 per cent of Saudi Arabia’s gross domestic product (GDP), the country was forced to mete out funds from its coffers, consuming roughly $116 billion of its foreign currency reserves in a matter of just one year. It appears that money has been leaking out of Saudi Arabia following the Arab Spring era, with the <a href="http://www.the-platform.org.uk/2016/01/22/britain-and-saudi-the-shame-of-2-8bn-of-arms-sales/">Saudi-led war in Yemen</a> diverting roughly 8 per cent of the annual GDP. Since the Yemen war, the country has been using up its foreign reserves at an alarmingly high rate. While it is no secret that Saudi Arabia has always relied copiously on the petroleum sector for a significant portion of its state budget, and nearly 100 per cent of its earnings come from exports, extreme circumstances like these beg the question of whether or not experts and the Saudi government itself ever predicted such a possible collapse to its economy. 
Taking heed to possible insolvency being only a few years away, 30-year-old Deputy Crown Prince Mohammed bin Salman recently decided to take matters into his own hands, announcing plans for a major restructuring of the Saudi government and its economic affairs. Having witnessed saturated oil markets with cheap prices, new reforms indicate plans involving a shift from unrefined petroleum to developing renewable energy. The deputy crown prince has reason to believe such transformations will help achieve what he refers to as his generation’s “different dreams” of a <a href="http://www.the-platform.org.uk/2016/01/14/the-climate-justice-movement-will-thrive-despite-the-failures-of-paris/">post-carbon future</a>. 
Last month, the Saudi government released the <a href="http://english.alarabiya.net/en/perspective/features/2016/04/26/Full-text-of-Saudi-Arabia-s-Vision-2030.html">Vision 2030</a> highlighting the afore-mentioned reforms and restructuring. The main aim of the vision is to generate a significant amount of revenue from means other than petroleum. A number of action plans have already been put into place by reducing considerable subsidies for commodities such as gasoline, electricity and water. In fact, the price of retail gas was raised by almost 50 per cent, translating into a spike from 60 cents a gallon to about 90 cents. Furthermore, there is speculation regarding the possible implementation of an income tax in addition to a VAT and further levies on items such as luxury goods and sugary drinks. However, according to a statement made by Finance Minister Ibrahim Al-Assaf, the Kingdom has <a href="http://www.arabnews.com/news/no-income-tax-vat-starts-2018">no plans to enforce income tax</a> on its people but has made the decision to introduce VAT by 2018 as agreed on at the 102nd meeting of the Gulf Cooperation Council (GCC) finance ministers which was held in Riyadh. 
Quick fix solution 
The current position of Saudi Arabia is a difficult one where the country’s only feasible export can no longer sufficiently pay the bills to sustain the nation. The deputy crown prince, however, aims to change such bleak perceptions of the Kingdom by raising funds at a time of low oil prices, announcing plans to make shares of Saudi ARAMCO – a state-owned oil company – open for public purchase. Sceptics are not too happy with the privatisation of the state’s largest asset even though the <a href="http://www.wsj.com/articles/saudi-aramco-ipo-could-be-5-of-value-1461256171">total shares of the IPO</a> amount to less than 5 per cent of the company potentially being valued at $2 trillion. 
Taking a look at the bigger picture has some people wondering what the rationale or end game is behind such an unprecedented move. Why is Saudi Arabia taking such actions now when they had 80 years to do so? Perhaps they see the IPO as a quick fix solution to the plummeting oil prices in the market. 
Wahhabism and social reforms 
Considered the power behind the throne, Deputy Crown Prince Mohammed bin Salman has a vision that not only focuses on economic reforms, but also on social restructuring, a plan which he claims will work towards promoting and reinvigorating social development in order to build a much stronger and more productive society. The new reforms programme intends to introduce a modern curriculum focused on rigorous standards in literacy, numeracy, skills and character development. What’s more is that the prince has spoken about providing more freedom and rights to women, proof of which can be seen in the <a href="http://www.aljazeera.com/news/2016/04/saudi-arabia-strips-religious-police-arresting-power-160413141418824.html">new ban issued to the Saudi religious police</a> stopping them from making any arrests without obtaining assistance from other authorities. 
These social transformations are potentially going in a positive direction, but the truth of the matter is that things are not always as simple as they may seem. All this would call for a massive breach of a historic pact the House of Al Saud made with the House of Abdul Wahab in which Al Saud agreed to protect and promote the doctrines of the Wahhabi movement, while Ibn Wahhab would support the ruler with power and monolithic control of the Kingdom in exchange for clerical power in matters such as education and the judiciary, in addition to segregation of women. As part of this status quo, for instance, the Minister of Religious Affairs has always been from the Al-Sheikh family, a descendant of the house of Ibn Wahhab. 
The extremely conservative religious movement known as Wahhabism has often been referred to as the predominant feature of Saudi culture. So much so, that one can argue that education has always been the vital binding element that connects the religious clergy with wider state bureaucracy. With education as a powerful agent of socialisation, the clergy are at the forefront of creating a national vision of the state’s values which are tailored to the official narrative of the state. They play a major role in writing school materials and preparing textbooks which are in accordance with the religio-political parameter of the Wahhabi-Saudi coalition. 
With that in mind, the government may be providing more social freedom and rights in the country, but educational and curriculum reforms will prove to be a much greater challenge. Clerical control over the curriculum at school and university results in generating Islamic extremists among Saudi youth, which may translate into domestic security issues. Such control is also producing graduates that have a weak understanding of numeracy, foreign language development and other skills that may be required to find employment. In other words, Wahhabi ideals are serving as barriers to economic reforms as they are hindering progress, as well as holding back women in the workforce. 
As such, the Saudi government is currently cornered; it must consider the consequences of upsetting the House of Abdul Wahab in order to sustain the economy. What the future holds for the Kingdom of Saudi Arabia and its plans for development is something only time will tell.
<pre>Image from: http://www.mintpressnews.com/wp-content/uploads/2016/01/oil_0205.jpg </pre>

Saudi Arabia: Saving the Economy from Collapse

The repression of the BDS movement is a double-edged sword which threatens liberty in the west and promotes violent resolutions to problems in the Middle East 
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BDS stands for “Boycott, Divestment, Sanctions”, and is a <a href="http://bdsmovement.net/">movement</a> which was launched in 2005 by Palestinian civil society organisations. It calls on people from around the world to express their solidarity with the Palestinian struggle for freedom and for justice by applying economic pressure on Israel. Inspired by the boycott movement against apartheid in South Africa, BDS is a rights-based movement, demanding that Israel implement international law. It calls for people to boycott Israeli products, cut ties with Israeli institutions involved with Israel’s violations of international law, and stop normal relations with Israel (including cultural and academic connections) until Israel withdraws from occupied Arab land, offers equal rights for all its citizens, and allows the Palestinian refugees the right of return. 
The movement, so far, has achieved a <a href="http://www.globalresearch.ca/the-impacts-of-the-bds-campaign-on-israels-economy/5458946">tremendous</a> impact on Israeli society. Israelis are becoming well aware that a growing number of people all over the world are refusing to buy Israeli products, while Israeli corporations are being taught that their international business suffers when they profit from the <a href="http://www.projectcensored.org/11-private-corporations-profit-from-the-occupation-of-palestine/">exploitation</a> of the Palestinian economy. Many Israelis feel that international pressure will escalate with every act of repression against Palestinian resistance, until the Israeli regime itself will collapse. 
The Israeli government is mindful of the growing BDS movement, but has no means to stop it except to respect the rights of Palestinians, which it refuses to do. The Israeli parliament <a href="http://www.haaretz.com/israel-news/israel-passes-law-banning-calls-for-boycott-1.372711">passed a law</a> against Israelis supporting BDS, and the government threatened to use Israel’s military intelligence and secret services to <a href="http://bigstory.ap.org/article/0601a79f13e041b9b5b312ec73063c98/covertly-israel-prepares-fight-boycott-activists-online">undermine</a> boycotters around the world. The Israeli government has become accustomed to using force to <a href="https://electronicintifada.net/content/israels-war-dissent/8217">repress</a> dissenting voices, to <a href="http://www.btselem.org/statistics/detainees_and_prisoners">throw in jail</a> Palestinian political activists and use violence to <a href="http://972mag.com/watch-violent-dispersal-of-a-demonstration-in-palestinian-village/16403/">disperse</a> Palestinian demonstrations, but such means are completely ineffective against an international grassroots movement, and the Israeli public is losing faith that its government can stop BDS. 
When international governments take steps against BDS, such as in the <a href="https://www.washingtonpost.com/news/volokh-conspiracy/wp/2015/05/18/illinois-passes-historic-anti-bds-bill-as-congress-mulls-similar-moves/">US</a>, in <a href="https://theintercept.com/2015/10/27/criminalization-of-anti-israel-activism-escalates-this-time-in-the-land-of-the-charlie-hebdo-free-speech-march/">France</a> and most recently in the <a href="http://uk.reuters.com/article/uk-britain-israel-boycott-idUKKCN0VQ16J">UK</a>, they simply cannot force their citizens to buy Israeli products, nor can they slow down BDS with repressive government action. By repressing freedom of speech of their own citizens, they aim to show support for the Israeli government; they do not protect the Israeli economy or society from BDS, but they protect the Israeli government from its own angry public, because such moves are only credited to the Israeli government’s diplomatic efforts and make it more likely that the current bunch of Israeli politicians will be re-elected. These Israeli politicians are then likely to be cooperative in international dealings with governments who repress BDS. 
Yet the reason for suppressing BDS in places like the UK is not just to win favour with the current Israeli government. It is also part of a larger policy of repressing liberties in the name of security. The countries which suppress BDS also happen to be countries that are <a href="http://www.telegraph.co.uk/news/worldnews/middleeast/iran/9031392/Britain-US-and-France-send-warships-through-Strait-of-Hormuz.html">militarily</a> involved in the <a href="https://en.wikipedia.org/wiki/List_of_countries_with_overseas_military_bases">Middle East</a>, and whose governments <a href="https://thesocietypages.org/ssn/2015/01/27/targeting-muslim-americans/">implement</a> policies of <a href="http://www.aljazeera.com/indepth/features/2015/01/france-attacks-uk-push-spying-powers-201511411111420135.html">surveillance</a>, restrictions and <a href="http://www.aljazeera.com/news/2016/02/france-state-emergency-extended-slim-evidence-160217174759408.html">control</a> on their own Muslim and Arab populations. Israel calls itself a democracy, but it serves as the <a href="http://www.haaretz.com/israel-news/1.686229">model</a> for replacing liberty with security, which right-wing governments and political parties around the world seek to imitate. <a href="https://theintercept.com/2016/02/16/greatest-threat-to-free-speech-in-the-west-criminalizing-activism-against-israeli-occupation/">Glenn Greenwald</a> recently wrote that the repression of political activism against Israel’s occupation is the greatest threat to free speech in the west. Israel / Palestine is a symbol for countless social and political movements around the word (from the left and from the right). The liberation of Palestine is in the interest of citizens of most countries in the world who are struggling for their own civil liberties and human rights. 
BDS is a movement which was initiated by Palestinian civil society organisations. They believed that international pressure could give them the power and the protection they need in order to demand their rights from Israeli authorities, and win them over by marching, protesting and resisting in non-violent ways. It is no surprise that there are also <a href="https://electronicintifada.net/tags/boycott-within">Israeli activists</a> who support BDS, because knowing the horrors of occupation and of apartheid up close, they understand that the alternative to peaceful protest is violent uprising. Indeed, there are Palestinian groups who dismiss BDS as ineffective, believing that only armed struggle can free Palestinians from Israeli domination. 
The attempt to repress BDS in the US, the UK and France is a boon to the Israeli government, but even more so to the Palestinian armed resistance groups, who cannot survive when a non-violent and effective alternative exists to their armed resistance. It is also a boon to anyone who prefers to see political problems in the Middle East resolved with violence, rather than with political means. Let us not forget that the US is the world’s largest <a href="http://www.cheatsheet.com/business/the-worlds-10-largest-arms-exporters.html/?a=viewall">arms exporter</a>, France is the fifth and the UK is the sixth. The weapon manufacturers in these three countries can thank their governments for fighting against BDS.
<pre>Image from: http://bdsmovement.net/files/2014/12/web-banner.jpg?1456161793582</pre>

From Inside Israel: The Dangers of Repressing the BDS Movement

The orange juice supply chain is an index of the development dilemma in Brazil 
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For many years now, giant <a href="http://think-global.org.uk/supply-chainge-press-release-orange-juice/">orange juice producers</a> Cutrale, Citrosuco and Louis Dreyfus have been engaged in heated, costly legal battles with Brazil’s Public Prosecutor’s Office. Their confrontation is a prime example of the dilemmas Brazilian society experiences today. It also serves as a memento of how thorny an equation emerging democratic countries have to face: they need to develop the country and protect social rights and the environment, while remaining highly competitive on a global scale. Finding the best way to solve this puzzle is one of the main challenges for Brazil. 
The first piece of the puzzle is the new socio-political climate of Brazil. Since the return to democratic rule in the country and the enactment of the new 1988 constitution, a much more politically conscious population has increased its demands for effective legal entitlement. In this context, human rights and the right to a healthy environment have become particularly prominent. In tandem with such demands, government institutions such as the Labour Public Prosecutor’s Office (MPT in Portuguese) have been given extensive powers of investigation to hold both public officials and private actors accountable for offences in these areas. 
The active role MPT has played in overseeing the labour conditions in three major orange juice companies is characteristic of this new mindset and the value Brazilians place in making rights count. Since 2000, MPT has started around 200 proceedings against Cutrale, 43 against Louis Dreyfus and 126 against Citrosuco. Together, these companies have recently been sentenced to a fine of R$ 455 million (around US$ 120 million) for violation of labour laws. More procedures are said to be forthcoming. MPT’s efforts have considerable popular support and signal a widespread desire to set clear rules for corporate activities, making sure that workers and the environment are protected. 
The second piece of the puzzle is economic. The task of combining macroeconomic stability with social-environmental fairness only grows more difficult when economic activity slows down. This is especially true if agribusiness is staple to the economy as a whole, and indeed is the case Brazil faces today. 
Agroindustry accounted for 23.3 per cent of Brazil’s GDP in 2014 and for 43 per cent of the country’s total exports. Orange juice is a key component in this sector. When MPT and producers come to the negotiation table, everybody is aware that the labour and ecological concerns of regulation have to find a way to co-exist with the economic rationale of business. Given the dire economic situation of the country, the Brazilian administration is wary of seriously antagonising some of its largest exporters. 
This is understandable. After a decade of impressive economic and social gains, which catapulted Brazil to the fore of world attention, the country is witnessing a fast-paced deterioration of its socio-economic forecast. GDP is expected to drop by 2.7 per cent in 2015 with an inflation of over 9 per cent. Unemployment has reached 8.3 per cent in the third quarter, the highest rate since 2012. 
To make things even more difficult, <a href="http://www.the-platform.org.uk/2014/11/13/brazils-re-elections-chicken-pastries-and-beagle-boys/">President Dilma Rousseff</a> has seen her popularity plummet. A recent poll has shown that only 10 per cent of Brazilians approve of <a href="http://www.the-platform.org.uk/2015/05/08/brazilian-teachers-enemies-of-the-state/">Dilma’s administration</a> while 69 per cent consider it to be “bad or very bad” for the country. This is the lowest approval rate ever recorded in Brazil and has considerably hindered her ability to implement policies and face opponents. 
It also makes the president more dependent on tax money for keeping inclusion programs afloat – a must if recent social gains are not to be corroded – and, thus, she is potentially more sensitive to the needs of those, such as the agroindustry, still capable of generating cash in a time of crisis. 
On the eve of the of the United Nations <a href="http://www.un.org/sustainabledevelopment/cop21/">conference on climate change</a> in Paris <a href="http://www.cop21.gouv.fr/en/">(COP21)</a>, Brazil is a much less optimistic country than it was in May 2012 when, at the end of the United Nations <a href="http://www.uncsd2012.org/about.html">conference on sustainable development</a> (Rio+20), the prospects of a bright, ecologically sustainable future seemed well within reach. 
However, there may be unseen benefits, and not negligible ones, in the present hardship. Too often the country has embarked in hyperbolic Manichean readings of its future, which was to be either of “absolute success” or “absolute failure” as dictated by the moment. Decades of democratic rule have contributed to the emergence of more nuanced approaches. 
More and more, it is recognised that Brazil is facing formidable problems including corruption and poverty, but also that it has the institutions and capacity to deal with them. Part of this is its independent judiciary, sentencing even high profile politicians to jail, demonstrating that popular commitment to greater social inclusion is still strong and freedom of speech is protected. 
A more mature approach to the country has also led to a rejection of a crude, shallow-minded opposition to both socio-ecological responsibility and economic growth. The firm response Brazilian institutions have been giving to accusations of foul play in the orange juice supply chain – as well as the political negotiations to end corruption, while respecting commercial concerns – bespeak this new understanding that the road to sustainable, inclusive development is long and bumpy. It also shows that Brazilians have made a commitment to follow it, even in hard times.
<pre>Image from: http://blogs.wsj.com/moneybeat/2014/03/05/orange-juice-wakes-up-to-brazils-drought/</pre>