HONEY, I BLEW UP THE EUROPEAN ECONOMY

IMAGE CREDITS: Flickr/E. Topping

This is part 2 of my ‘Jesus Christ Italy, you ok hun?’ series. In part 1, Mama Mia, Here We Go Again, I talk about the current Italian political crisis and its recent history. Italy, you will be surprised to hear, is in a political crisis (I know, unprecedented). I say surprised because apparently no-one noticed that Italy has been in a crisis for the best part of 30 years.

Public debt in Italy is skyhigh and it’s a big problem. Why? Because the Italian economy is integrated with the economies of 18 other nations via the Eurozone and further still it is locked in common market with a whole host of other nations that make up the one of the largest economic blocs in the world, up there with the United States and the People’s Republic of China. The crisis today could therefore effectively bring down the European economy and by extension, potentially the global economy, and it is centred around the ‘monster’ as Italians like call it (Marro, 2018).

Or, is it?

The right-wing Neoliberal establishment haven’t exactly had a good track record of running the Western World in recent years, in the US, Europe, or anywhere else really and now we are supposed to believe them over this? I’m not so sure. What is the current public debt crisis about, and what is causing it? Well, let’s find out, shall we?

‘In short, private finance in northern states began flooding into the periphery states… saw consumption spike and house prices continually rise’

We should begin with the Eurozone itself. A single currency needs to have an effective unified economic state for it to effectively combat economic downturn by sharing risk responsibility, strengthening the no-bailout clause designed to undercut the moral hazard trade that led to the core economies over-lending (in a bid to drive up financial profits by leveraging high-risk debts against foundations of safe assets) and curbing excessive fiscal deficits (Blyth, 2013. Berger et al, 2018). All of which is only be feasible under a single fiscal union where countries and their people understand their responsibilities to one another. Otherwise, you end up with 19 different states operating within a system for their own national interest and therefore operating competitively both within the Eurozone and outside it rather than co-operatively.

‘It was a bank bailout, centred around protecting the wealthier core economies…’

This is what we saw in the aftermath of 2008. The financial sectors of periphery states were on the verge of collapse, while the states themselves were unable to bail out their own financial sectors because the avenues that were available to other states, such as the UK and US for example, were not available to periphery states who did not have their own currency. A contagion risk grew in the periphery states where the financial institutions of the core economies and non-Eurozone countries were at substantial risk of collapse themselves. This is because investors cutting losses in one periphery state banking sector would then have to rebalance their portfolios through all periphery states and eventually into the core states (Metiu, 2012). The result was numerous bank bailouts that effectively brought failing financial assets onto the public balance sheet in periphery states, protecting them from defaulting and enabling contagion risk to be reduced in the core states banking sectors that over-borrowed to the periphery economies in the first place (Blyth, 2013). It was a bank bailout, centred around protecting the wealthier core economies financial sectors who over-borrowed (the cause of the virus) rather than the periphery economies that over-spent (the symptom of the virus).

The constraints of the Eurozone’s fiscal rules made things worse, you had a system similar to that of the gold standard, where you cannot utilise inflation or devaluation to solve economic catastrophe because you lack control of your own national currency (Blyth, 2013). Such as how Italy growth in the 1970s was in part due to how the lira was devalued in the 1970s (Marro, 2018). In which the lack of control over their own currency means the Italians lost a large amount of policy space to stimulate and grow the economy or reduce their levels of debt. Along with a burden of a large-scale austerity program designed to bring about export price deflation in a system that is set up to be deflationary, it is no wonder Italy largely failed to recover and has seen debt balloon. Austerity and the bailout undercut the only avenue of economic investment in the economy at a time when the private sector was contracting. Simply, they were being forced to operate like Germany without the economic structure to make that evolution. (Guerrieri & Esposito, 2012). All while systematically attempting to bail out their banking sector which is effectively dead.

The result of which is that the Italian state goes against the economic policy dimensions set by the European Central Bank and the Eurozone’s fiscal rules in a bid to provide the economic stimulation that should be coming from the core Northern states and the European Central Bank. Because, whether they like it or not, they share the same bloody union and Italy’s decades-old problems aren’t going to be solved by putting the Italian state under the axe.

Bibliography

Berger, H. Dell’Ariccia, G. Obstfeld, M. (2018) Revisiting the Economic Case for Fiscal Unionin the Euro Area, International Monetary Fund.

Blyth, M (2013) Austerity: A History of a Dangerous Idea, New York: Oxford University Press 

Guerrieri, P, Esposito, P (2012) Intra-European imbalances, adjustment, and growth in the eurozone,Oxford Review of Economic Policy, Vol 28(3), pp.532-550.

Marro, E (2018) Debito pubblico: come, quando eperché è esploso in Italia, Il Ore 24 Sole, Available at: https://www.ilsole24ore.com/art/finanza-e-mercati/2018-10-18/debito-pubblico-come-quando-e-perche-e-esploso-italia-172509.shtml?utm_medium=FBSole24Ore (Accessed on: 14th December, 2018).

Metiu, N (2012) Sovereign Risk Contagion in the Eurozone, Economic Letters, Vol 117(1), pp. 35-38.  

The Future of the European Union project

source: http://www.nouvelle-europe.eu/en/three-seas-initiative-european-regionalism-supranational-nature

The year 2018 is nearly over, soon everyone will be bustling around the house, getting everything ready for Christmas. Okay, not everyone. It is just how I recall this time of the year as I was growing up in Central Europe, where Christian tradition is a lot more pronounced, especially over Christmas. Attention! Do not be fooled by this seemingly unrelated introduction. I have mentioned Central Europe and its traditions deliberately as it may play a decisive role in the future of the European Union as we know it.

This decade has been somewhat rough for The European Union, which seems to be in a very deep crisis. Euro, immigration, economic decline, the sovereignty of member states- these are only a few issues the EU has been dealing with lately. People’s disapproval for recent policies reflects the rising popularity of eurosceptic parties in member states like Romania, Austria, Hungary, Poland or Italy. (Szczerbiak, Taggart 2018). Obviously, the most evident example of rising Euroscepticism is Brexit. It has been a bone of contention for most political commentators, who see it either as a one-off case because the UK has been bestowed with a unique geopolitical location, or it may initiate a further erosion of the EU. Judging from recent tensions between Brussels and Poland or Hungary, the crisis can advance quicker than we think.

The reason behind the conflict between Brussels and countries of central Europe is quite simple: differences in moral values and traditions( Witte, Birnbaum, 2016). The common error made by the European political establishment is that they look at the countries of the former Eastern block through the ‘western lenses’. In other words, the values and mechanisms that apply to fully fledged democracies of the West are being imposed onto fundamentally different societies of the former Eastern block ( Jan Kubik, 2017). Let’s have a look at the situation in Poland or Hungary. Those two countries have been oddly reluctant to accept the supremacy of the EU law over domestic legislation. Surprisingly, this rebellious attitude has resulted in increasing support of the society. Historically speaking national sovereignty is perceived differently in Poland and any restrictions on this matter will fuel fierce protest from the Polish People. What is more, Poland still remains one of the top pro-EU countries (The Guardian, 2016). I am not saying that Poland should have privileges, but certain claims made by the EU officials that Poland owes something to Europe (Poland first stood up against Nazi-Germany, lost sovereignty and millions of citizens) are simply not the best examples of statecraft and will cause nothing but rage (Khan, 2018). It is difficult to foresee if those issues will be resolved as the situation is dynamic. Nevertheless, is there a real alternative within Europe?

The countries of former Eastern block, despite minor differences, have always had a similar mindset, interests, and values. In the 1990s Czechia, Slovakia, Poland, and Hungary formed an alliance aimed at fostering cooperation and stability in Central Europe called Visegrad Group. The project was not intended to compete with the EU on any level, rather support it (http://www.visegradgroup.eu/about). Secondly, the Three Seas Initiative which was established in 2016 in order to facilitate trade with the U.S, improve infrastructure and education in countries of the Baltic, Adriatic and Black sea ( Reuters, 2017). It is worth noting, that in case of profound differences between the ‘old member states’ of the EU and countries of central Europe, the Visegrad Group combined with Three Seas Initiative can make up a solid foundation for the alternative organization in the East of Europe. This might look like a deeply pessimistic picture as a further unraveling of the EU would entail massive changes within the continent. Nonetheless, since the U.S is feeling threatened by the perspective of establishing the EU army, it would be reasonable to assume their support for this project (Hershenhorn, 2018).

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Kubik ,J (2017) Brexit can wait. Europe’s pressing worry is its fracturing eastern democracies The Guardian, available at: https://www.theguardian.com/commentisfree/2017/feb/12/europe-fragile-democracies-real-danger-of-populist-politics

The Guardian (2016) Is Britain the most Eurosceptic country? available at: https://www.theguardian.com/news/datablog/2016/jun/23/is-britain-most-eurosceptic-country

Mehreen Khan JANUARY 22, 2018 Brussels faces clash with Poland over budget link to rule of law, Financial Times  available at:  https://www.ft.com/content/223b1e26-fead-11e7-9650-9c0ad2d7c5b5

(2017) Three Seas Initiative summit in Warsaw, Reuters available at: https://uk.reuters.com/article/uk-poland-usa-trump-factbox/factbox-three-seas-initiative-summit-in-

Merkel joins Macron in calling for EU army to complement NATO (2018), Politico available at: https://www.politico.eu/article/angela-merkel-emmanuel-macron-eu-army-to-complement-nato/warsaw-idUKKBN19P0U1

Visegrad Group available at:  http://www.visegradgroup.eu/about

Szczerbiak, A. Taggardt,P. (2018) Putting Brexit into perspective: the effect of the Eurozone and migration crises and Brexit on Euroscepticism in European states  Journal of European Public Policy, Volume 25, Issue 8, The Politics and Economics of Brexit, pages 1194-1214 available at: https://www.tandfonline.com/doi/full/10.1080/13501763.2018.1467955

Aid in Africa: is it doing more harm than good? A Zimbabwean case study

A typical representation of Africa. But is it fair?

Foreign aid is a means of helping impoverished nations, for decades now host countries have got involved in humanitarian activity through giving aid to poorer countries. This has allowed to diplomatic relations between countries to flourish due to this, and the recipient country as a token of appreciation has always opened its doors to its giver by allowing them to use their military sources or letting them use their country as a base.

Financial aid has allowed some less economically developed countries to invest in improving their economies and their countries, such as their infrastructure or injecting money in their education. It has also allowed them to eradicate common diseases in their countries.

However, it’s not all good news.

Corruption; the enemy of progress. Many poor countries tend to slip through the note with regards to their accountability and where their money is spent, but not anymore. Exhibit A, Zimbabwe.

Robert Mugabe, the president of Zimbabwe, also known as the ‘Man who ruined Zimbabwe’. Money that was given to the country as aid, went through Mugabe and his regime before it was then used to ‘benefit’ the country.With reports of money going missing from the Reserve Bank, and Mugabe’s closest allies being quite closely linked to the bank itself, it’s quite clear the funds went towards him and his families lavish lifestyles. His son commonly reported to be wearing expensive watches, and his first lady always jewellery shopping, the financial aid was only pocketed by a few individuals rather than its main purpose, eradicating poverty in the country. Foreign aid is clearly not always put to good use and can be used to contribute towards wealth inequality when placed into the hands of corrupt leaders.

Relying on aid won’t always be the answer to a progressive economy, if a country continued to receive a said amount of money from a host country every year, that recipient country has now become dependent on the funds coming in externally rather than investing in its work force to boost their economy. Communities have now also become dependent on the money that is donated, they’re not quite used to their own livelihoods. That is one of the main downsides to foreign aid, reliance. This also feeds into western-centralism. The dependency theory applies here; “third world” countries are not underdeveloped in their natural state, rather underdevelopment is caused by developed nations, one way in which is through aid. Rather than collecting revenue from its citizens through taxes for example, governments receiving aid instead rely on foreign governments. This is corrosive and breaks ties between the government and its people, states Angus Deaton, economist and Nobel prize winner from Princeton University (World Economic Forum, 2015).

A Zimbabwean blog, The Patriot, states that “Africa is a new frontier from which to generate vast profits which in turn can be used to reinvigorate ailing Western economies.” Africa is too often just seen as a monolithic continent with vast resources up for grabs, and where cheap labour with few regulations can be obtained, rather than a prospering continent in and of itself.

Dependency can be seen in Zimbabwe as it is currently trying to pick up the pieces left by Mugabe. A current downfall in Zimbabwe’s economy was initially caused by a tax hike in electronics as a means to collect more revenue, yet the basis for this is down to Mugabe’s monetary policies. Left without any major investment, the new Zanu-PF party is scrambling for foreign investment; “Zimbabwe very much needs to access multilateral funding for its debt and if that doesn’t happen we will be in crisis,” states Mutodi, a deputy foreign minister (Guardian, 2018). There has been a hike in food and medicine prices, school fees, as well as outbreaks of infectious diseases such as cholera. However, despite the clear need for aid, some recognise that pumping more aid into the economy might not be the smartest thing to do. Biti, former finance minister states “You can’t reform without reformers. We need a paradigm shift from predatory to inclusive politics. You can give this country billions of dollars, but you won’t have resolved anything. All you will have done is entrench the regime.” (Guardian, 2018).

No other statement can sum up the argument better.

Farrah-Rose Wahby

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References:

Burke, J. (2018). Zimbabwe’s economic crisis will deepen without aid, ruling party warns.

Available at: https://www.theguardian.com/world/2018/oct/19/zimbabwe-needs-aid-to-prevent-further-crisis-warns-ruling-party(Accessed on 13th December)

Zhuwarara, R. (2014). Western dependency: The black-man’s burden – part one. Available at: https://www.thepatriot.co.zw/old_posts/western-dependency-the-black-mans-burden-part-one/(Accessed on 14th December)

University of Delaware. (1999) Politics ofDeveloping Nations, Dependency Theory. Available at: https://udel.edu/~jdeiner/depend.html(Accessed on: 14th December 2015)

Swanson, A. (2015). Does foreign aid always helpthe poor? Available at: https://www.weforum.org/agenda/2015/10/does-foreign-aid-always-help-the-poor/(Accessed on 14th December 2018)

Labor force in the era of globalization

Today we are wondering how it is to be a labor force in the process of globalization and open competition on the world market.What does it means? Does this lead us to a greater possibility of looking for work and gaining a protection at work? These concepts depend on which part of the world we are living, and in which state, because many of us are often in a situation that they have to work longer than full-time with their employer. Sometimes this kind of work is paid, and sometimes it’s not. What is always a fact is whether this work contributes to productivity and how much really such work is necessary in the conditions of free competition.

A report on the situation in the UK where there is now a tendency to reduce the cost of one hour of workers and the increasing use of zero-hours workers who are mostly paid around the minimum or a bit below. This is a risk, as report says, for states where workers are forced to work under such conditions. (The Guardian,2018) Let us compare with America, which equally has a very serious system of law and working conditions, so that unemployed waiting for work, if they possess the skills necessary for jobs offered to them on the market and demanded by employers, they can find it. Even the number of jobs in the US labor market has increased, so jobs can be found for 600,000 unemployed who are currently waiting for employment. (Financial Times, 2018)

Although there seems to be a crisis in leading economies, the minimum or even working conditions that are not satisfactory to the “West” standard are largely inadequate to many developing countries and other parts of the world.”The loan conditions enforced by the World Bank and the IMF on developing countries prevent governments from regulating wages and enforcing labor rights.” Economic experts begin to admit that global economy has failed to address persistent problems of poverty and inequality in the world. (JackieSmith, 2014, pg 875)

If we compare it with developing countries, the percentages tell us one side of the price. Even 45%, if not more than the population in Latin America, parts of Asia are paid below the national average of that country, compared with Western countries like the UK where 1.2% are just paid below the national level. (Uma Rani,Patrick Belser, 2012, pg. 50). These disproportions in payment can lead to crucial issues that arise themselves, namely whether a national government should conduct economic policy or be handed over to the management of technocrats which, in some periods of crisis (such as Greece), lead to are they a solution for the depoliticization of institutions and professional management of the state? (Peter Burham, 2014, pg194-5)

There is certainly no correct solution. What leads to a very inconvenient position most workers are times of crisis and situations that force most workers to act in accordance with the conditions prescribing to them, even if their labor law has been imperiled. It is a game without rules, the state would certainly have to regulate the behavior of employers towards employees. It is not, of course, the goal to exploit workers simply because it would contribute statistically to reducing unemployment in the country. Law in developed countries is very well regulated and working conditions, so it is actually a question of how underdeveloped countries can manage to regulate their rights for workers. In the conditions of globalization, these people will, because of their unemployment in their countries, go abroad to developed countries and work illegaly or will consciously fall into a problem with an employer who can threaten them.

The development of other parts of the world with the help of institutions such as the IMF and the World Bank and their strategies to open their markets lead exclusively to positive solutions, and can even produce political instability due to great dissatisfaction in the country. One should be cautious in giving advice on how to influence states to pursue their policies, and in the end, no one is thinking about that little worker who always turns out to be out of the “big” decisions that cut his fate out of it’s safe cabinet. In the end, it is always the most important effective implementation of laws and, of course, the protection of workers guaranteed by national and international acts.

Bibliography:

  1. The Guardian, More regular work wanted by almost half those on zero-hours, oct 2018, Avaliable at: https://www.theguardian.com/uk-news/2018/oct/03/regular-secure-work-wanted-by-almost-half-on-zero-hours-contracts-flexible-gig-economy, Accessed at: 12.12.2018.
  2. Financial Times, Booming US labour market draws new jobseekers, may, 2018, Avaliable at: https://www.ft.com/content/61a6c41e-8122-11e8-8e67-1e1a0846c475 Accessed at:13.12.2018.
  3. Jackie Smith, Economic Globalization and Labor Rights: Towards Global Solidarity, feb 2014, Vol. 20, Issue 2, Article 15, Avaliable at: https://scholarship.law.nd.edu/cgi/viewcontent.cgi?article=1187&context=ndjlepp
  4. Uma Rani, Patrick Belser , The effectiveness of minimum wages in developing countries: The case of India, International Journal of Labour Research 2012 Vol. 4 Issue 1, Avaliable at: http://nationalminimumwage.co.za/wp-content/uploads/2015/09/0202-The-effectiveness-of-minimum-wages-in-developing-countries-The-case-of-India.pdf
  5. Peter Burham, Depoliticisation: economic crisis and political management, Policy & Politics, 2014 vol 42, no 2 Avaliable at: https://mdx.mrooms.net/pluginfile.php/1372196/mod_resource/content/1/Peter%20Burnham%20and%20the%20state.pdf

Written by Sofija Pantic M00690323

Is overpopulation affecting the Global Political Economy?

What is the most urgent issue in GPE today? 

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Dr. Helen Hawthorne 

POI 2100 Global Political economy

Overpopulation has been an issue for some time now with many arguing that it is making the economy harder to grow. As of 2018 there are around 7.6 billion people on this planet and almost half of them are living in poverty. As the lifestyle around the planet got better with medicine, food and many other resources people started to have more kids as they knew that it would be easier to take care of them, in 1804 was when we first reached one billion in population form then on your could see how medical advancements increased making so much easier for couples to have children. There is also the factor that couples would have children to work for them as free labour when they became capable to do takes, if you look at 19th century there was a lot of family owned businesses especially in the United States as migrants just came over form Europe. 

This increase in population was good for awhile meaning that more people could work less stress added on just one person the workload could be distributed better and evenly making life easier for everyone. For a long period of time this growth was great as a lot of people did manual labour like work in the coal mine, chopping wood down and many more professions that are not available today. However, the transition within the new century made people question is rapid growth within the world, near the end of the 19th century children started to work in the coal mines which was now know to give you the black lung and the time most likely end in death, for grown men the process took longer and their bodies have developed already you could have work in the coal mines for 10 years but when you looks at a child it is still in developing which makes the body harder to cope with the toxins down there. 

With all of this growth happening it has made it harder for people to find jobs decent ones anyway, this was a problem in the 20th century and it is still a even bigger problem in the 21st century with nearly half of the population living in poverty this does not really include the western countries like USA and Europe whilst people int those countries are also living in poverty they have a better life style that most of the world, I am comparing this to Continents like Africa and most of Asia.  With Asia becoming more of prominent power with countries like China and Japan, the economic powers have shifted in a way as China make for of products that we use in our day to day lives it has unbalanced the structure of the western economic system as the western countries have to rely on them to produce products such as phones, clothing and general products that everyone needs nowadays. 

This new system which is not fully controlled by the west can sound amazing to someone that does not live there however the sad fact is that because of overpopulation people get paid considerably less than they should making this huge gap between the rich and the poor. Allowing this to happen has made the world into a cash hungry machine with nearly every single company wanting to produce products at the cheapest level whilst charging an extortionate prices. This has manly come from the west, the Global Political Economy book by Ravenhill in a way address the process of economic today saying that the process of economy today is not moving around but it is just standing still, which can make it very hard to sustain especially the distinction of domestic and world economy increasingly problematic. I believe that what Ravenhill is trying to tell us in that without movement in the economy there becomes this unbalance with is what is happening right now with the overpopulation as people are not getting jobs or any kind of work. This can have a huge impact on the future of the economy as countries will have take care of people who can not make a living, making harder to help the rest fo the country and the economic market. 

 Easterlin R, (1967) Effects of Population Growth on the Economic Development of Developing Countries https://journals-sagepub-com.ezproxy.mdx.ac.uk/doi/pdf/10.1177/000271626736900110

Shah A, (2013) Poverty Facts and Stats

http://www.globalissues.org/article/26/poverty-facts-and-stats

Kuo G, (2012) MegaCrisis? Overpopulation Is the Problem https://journals-sagepub-com.ezproxy.mdx.ac.uk/doi/pdf/10.1177/194675671200400306

Dovers S, Butler C, Population and Environment: A Global Challenge https://www.science.org.au/curious/earth-environment/population-environment

Ravenhill J, (2017) Global political economy (pp. 257-258) Oxford University Press.           (Accessed 5 December) 


THE VENEZUELAN EXODUS: Political and Economic crisis in Latin America

The situation in Venezuela calls for desperate measures from the international community and neighbouring countries. This region of Latin America suffers from prolonged economical, political and humanitarian crisis that has left this nation’s populous in a distraught state, forcing a significant proportion to abandon their home country and seek refuge in others. As the extent of this refugee crisis came to light, it is said to be the biggest migration crisis in Latin America’s history, now called the Venezuelan Exodus. The country’s long haul of political crisis has driven a multifaceted economic and social emergency with the rising threatening consequences to the large population. Venezuela has suffered a precipitous economic decline under the current government/ Political system, which has left one the historically richest economies in Latin America in a decrepit state. 

Strangled by the implosion of an unstable governing body, has led this country into major financial ruin.  As hyperinflation, corruption and poverty increases, food and financial security is threatened, rendering it almost impossible for the common man to meet their daily living requirements. As the government fails to create adequate practical solutions, the current political climate has impacted the economy in an almost irreversible manner by falling to a danger zone. 

To further elaborate on this ongoing event, this blog will be segregated into 3 parts. Part 1 would discuss the reasons and events that lead to the Economic crisis in Venezuela, Part 2 will explore the Causes from the Political crisis of the country and Part 3 will explore how the scale of the phenomenon, has led Columbia to affirm their solidarity with Venezuela and put forward the role for help in such a humanitarian and economic emergency.

Economic crisis 

Source EPA.

The economic downfall in Venezuela had reached a peak level of intensity since the Nicolas Mauro’s came into power in 2013. Venezuela’s macroeconomic status began to dwindle even before the price of oil began to drop in 2014. (Evan Ellis,2018) Significant drops in imports have created major shortages in food and medication. Within the first few months of 2016 imports were reduced by 40%, a 60% drop from the same period in 2014 which was a 40% drop from the imports in the first quarter of 2012 (Sanderson & Schipani 2016). An overvalued currency and demanding prices on basic goods creates the ideal breeding ground for corruption. 

As a result of Venezuela’s economic crisis, smuggling routes to neighbouring countries have begun to emerge along with fierce competitions, which has been an immense concern. The opportunities for smuggling is further increased as the variety of smuggled goods increases, primarily caused due to the exchange rate and price differentials. One example is the smuggling of cattle from Venezuela to Colombia, as meat sells at a much higher rate, almost three folds in Colombia. (Crisis group,2018). 

The large-scale effects of the rapid economic meltdown in the nation are most notably felt in the food scarcity. Middle class and the majority of low income families are the most effected populous as soaring prices and mass inflation makes surviving almost impossible.  Recent surveys suggest that most of the people hold the government responsible for the unforgiving conditions in the region (Dantanalis, 2016)  

(Source, National Assembly Index of Consumer Prices)

As the price of oil, which was one of the major commodities that provided valuable income for the country plummets, and the additional economic mismanagement by consecutive governments over the years has created the highest inflation, skyrocketing poverty index followed by severe malnourishment and disease, has spurred the out migration of the people.

Political Crisis 

The country’s deep political crisis is brought up by the legitimacy battle between the opposition and the government. After, President Nicolas Maduro came into power, the nation has been driven into an authoritarianism, by creating issues such as marginalizing the opposition-led legislature, shutting down the free press and baring opposition parties from participating in election. In 2017, Maduro generated an illegitimate election for a constituent assembly by braking the constitution democratic order. Critics blame Maduro’s corruption and economic mismanagement for the financial collapse in oil prices. (Crisis group,2018)

Venezuela’s increasing health crisis is also mainly due to the week governing system. Maduro’s has been resistant towards implement policies and reforms that would help the country’s economic stability.  Another important element put forward by the behaviour of the Venezuelan government is the influence of ‘Structural Power’, this needs need to be identified to create a more liberal direction that leads to global peace and democracy (O’Brien and Williams, 2016)

What Next?

The economic and humanitarian predicament of the nation along with mounting political oppression, have forced countless Venezuelans to flee the country. The World Bank has estimated that as of 2018, over a million Venezuelan reside in Colombia. To comprehend the reason behind Colombia’s welcoming and hospitality towards their neighboring incoming refugees lies in a key part of its history. 

During the 18thcentury, Columbia and Venezuela were one nation known as ‘Gran Colombia’, which eventually drifted apart giving rise to the modern states of today. years later, Columbia began to experience one of the worst with guerrilla wars. More than seven million people were displaced during this period of unrest. As Columbians fled the war-torn region seeking refuge in Hundreds and Venezuela, where the economy was booming, the two nations reunited. Venezuela continued to offer refuge and welcome Colombians fleeing from the Guerilla war as well.

The refugee crisis compelled the Colombian government to assign more than $3.5 million (U.S.) for health services to the migrants, an aiding service in which even the Colombian locals participated in. The epicenter of this massive migration flow highlights the significance of the Simon Bolivar Bridge that connects both neighboring regions Colombia to Venezuela, over 3,500 people is said to cross this bridge every day in the hope for better living conditions. (Nationalgeography.co.2018)

Prioritizing the prompt incorporation of migrants into the job market, modifying weaknesses brought about by poverty, as well as prompting a dialogue on local, national and regional politics are essential for a successful improvement. The Colombian government has responded swiftly and proactively, taking coordinated measures to facilitate the efficient settlement and incorporation of migrants into their new lives.

It could be said that Venezuela’s collapse is primarily instigated by human creation. The product of misguided political and economic choices and the determination of individual leaders to hold onto their seat of power. Venezuela has the natural and human resources to recuperate, but it will not be able to do so alone. Colombia has responded proactively and has assigned significant assets to help both migrants and the population living in the receiving areas. However, the degree of this relocation entails a better assurance from the international community. The slower the crisis awaits, the slower it will get.

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References


The Economic Road Map: Three Strengths and Three Weaknesses of China’s One Belt One Road Initiative

(Image source:Guardian.co.uk)

The One Belt One Road Initiative (OBOR) is a foreign policy and economic strategy of China where the two ends of Eurasia, as well as Africa and Oceania, are economically linked to China. This OBOR initiative was first declared during the during China’s president, Xi Jinping’s visit in 2013 to Central and Southeast Asia. In March 2015, this OBDR document was released with its Action and vision on jointly building the 21stCentury, Economic and Maritime Silk roads. Its main aim consists of connecting the European, African and Asian continents and to increase support of partnerships among the BRI towards to promoting significant importance of aspects the different aspects of sustainable development; balanced, diversified, independent.

OBOR has two routes, firstly; The Land route calledThe SilkRoad Economic Belt which focusses on connecting the Baltic states; Russia, Europe, Central Asia and China together. Furthermore, the belt is completed by The Sea route, called the 21stCentury Maritime Silk Road, this road map would begin from the coast of China to Africa, Europe through the South China Sea and lastly the Indian ocean all in one economic direction(Kuo and Kommenda,2018) This Belt and Road Initiative (BRI) is an ambitious effort for the improvement in connectivity aiming on a trans-continental scale and to promote strong regional cooperation.

Three Strengths of China’s One Belt One Road Initiative 

Firstly, concentrating on the vast Investment and OpportunityOBDR offers to developing nations. International trade routes have existed for many years in order to transfer goods and services to and from countries and increase connectivity (O’Brian,2016) Belt Road Initiative (BRI) economies generate up to 66% of the world’s population and 33% of global trade and GDP. Additionally, the percentage of population in terms of the poverty line, has been high- Kenya 25%, Djibouti and Uzbekistan 23% and Laos 21%. With the growing potential that the BRI contributes, it would have successful influence towards benefiting a large percentage of low income countries, thus leading to greater impact on global welfare and sustainability. (World Bank,2016)

Secondly, it contributes to promoting infrastructure and facilitating networks. The BRI economies has huge scope towards connecting the world in aspect of the large growing unexploited potential. However, mostly China and majority of BRI economies are responsible for the high percentage of these exports. The BRI trade between countries such as Laos, Afghanistan and Nepal is poor, due to the lack of policies, infrastructure etc. (World Bank,2016). The Belt and Road intuitive could help reduce these gaps and contribute to boosting and strengthening trade relations and investment. Particularly help target countries that could not incorporate with the world’s economy. 

Thirdly, OBDR plays a significant role in Increasing global connectivity and existing economic communities. The increase in development for an improved transport system of railways could encourage improves and increased growth, investment and border trade (The trade post,2018). It is imperative for regional cooperation to play a vital role on the improvements of infrastructure to resolve this global connectivity challenge. If it is successfully resolved BRI projects would create easy trade to most of the important economic corridorsin the world.

Three Weaknesses of China’s One Belt One Road Initiative 

Firstly, the implementation of Thick borders has been pressured by Policy barriers. Issues such as restrictions on FDS, delays to cross borders and custom procedures have been of much focus in countries of BRI in comparison to other regions. For example, in Central Asia, procedures for imports of goods and services could take up to a 50 day. In comparison to G7 (Group of seven) countries taking 10 days. FDI policies have become restrictive towards BRI countries (Csis,2018) The organization for economic co-operation, OECD and its 38 member countries, have more benefit to accessing industrial land, foreign business and determining commercial disputes. This encourages policy reforms and cooperation to boost connectivity and infrastructure projects.

Secondly, the Potential risks connected with the main projects for Infrastructure Development.  This has brought dangers in the aspect of corruption, environment and social and governance standard involvement. Thus, creating loss of biodiversity and degradation of environment. Essentially these factors are highlighted in BRI countries, which have a weak electoral system and government. In order to reduce these negative attributes, more importance to the understanding and identifying of such risks should reduce the weakness of the negative feature to BRI. Important roles played in support of the BRI investments, by the Multilateral Development Banks and World Bank group could help support these issues of concern(Trade post,2018)

Thirdly, the risingIssue of Macro Risks for BRI projects. The inclination of the expanding debt crisis has made required financing for project development to unmanageable levels. For example, the railway construction project in Kunming- Singapore has approximately led to US$6 Billion worth of cost, which accumulates to 40% of GDP in the country in 2016. Many of the countries authorities have taken up the challenge of this impact by the use of public finances, thus leading to limitation in involvement to $0.7 billion, in return of which the $0.5 billion Chinese loan, is paid to the government (World Bank,2018) According to a recent estimate given by the Center for Development, it has been expected that there would be an increase in debt to GDP ratios by BRI projects for BRI countries. The Participation of countries in such project development set by BRI countries would need a scrupulous balance with the link between the exposure of debt levels and such development projects.

M00581240 

References

  • O’Brien, R. and Williams, M. (2016.). Global political economy. Evolution and Dynamics
  • China’s “One Belt, One Road” Initiative: An ESCAP Report. (2017). Population and Development Review, 43(3), pp.583-587.


Soybeans

(Pablo Martinez Monsivais/AP/REX/, 2018)

As you walk down the aisle at your local grocery store you might start to notice that your usual 20 bucks don’t stretch as much as they use to. So, instead of consuming unnecessary goods you’ll simply buy what’s needed. Now you have a zero-tolerance budget on what you can spend and as prices go higher your consumption habits go down. That’s what tariffs do, they complicate your life, which, eventually, hits your country’s economy. What was meant to be a positive measure to increase national production, is, in reality, affecting medium size businesses, your wallet and the economy as a whole. The financial crisis that hit the world 10 years ago has created a growing disbelief towards current structures and is now feeding this monster called Populism, which fears globalisation and free markets. However, to go back to an isolated economy is pure ignorance, since it downplays how incredibly and irreversibly connected the world is.

It all started with solar panels and washing machines, when President Trump decided to begin 2018 with safeguard tariffs against imports from China (Bown and Kolb, 2018). From then it has only derailed, from an outside perspective it can be seen as a back and forth discussion that could potentially be resolved, but instead is threatening peoples’ livelihoods. In April The White House released a statement accusing China of stealing US’s intellectual property and threatened to impose tariffs on $50 billion imported Chinese products (The White house, 2018). On the next day China responds by publishing a list of $50 billion worth of American products that would have a tariff of 25% (Bown and Kolb, 2018). After this response, Trump wanted to add tariffs on $100 billion products and started a war with the world by imposing tariffs on steel (Bown and Kolb, 2018). All I can envision in my dizzy confused brain is two partners screaming at each other “Oh yeah Mister. Well, I’m going to do this. How do you like that!?” It ultimately ended with one partner screaming at the top of his lungs that he would take it to the extreme and charge a rate of 10% on $200 billion worth of products. Which would in January 2019 turn into 25%. Leaving the Chinese partner looking scared and astonished as he only had imposed tariffs on $60 billion worth of products (Bown and Kolb, 2018).

China in 2016 represented 7.97% of US’S total exports (WITS, 2018), while they represent 18.39% of China’s total exports (WITS, 2018). Therefore, there’s an unbalanced trade relationship. Besides, it’s a well-known fact that China never played by the rules. That is how they have achieved economic success. As the President of the US, you want to solve this. Nonetheless, by imposing tariffs you are only creating more damage. Other ways must be found and that is why global cooperation/negotiation are the key.

Backlash from these trade measures were especially felt by Soybeans producers, since China is the biggest consumer of Soybeans it made sense that their retaliation would tackle this $12 billion export. This affected deeply Midwestern farmers who saw their clients turning to Brazil as a supplier (Meyer, 2018). Tariffs started as a way to tackle US’s unemployment and increase the consumption of national products. Mr Trump needs to understand that production exceeds domestic consumption, which makes a large number of American producers rely on exports as their income. Furthermore, China has been used by the States to do finishing works to originally made America products, with tariffs it only increases its final costs. Leaving American producers/sellers to either take the hit of the costs, so that can stay competitive in the global market, or increase their products’ prices and loose competitiveness.

In the recent 2018 G20 meeting both Presidents agreed on a 90-day truce in which both countries will implement agreed measures and start an open discussion on their future economic relation (The White House, 2018). This deal brought some needed stabilisation. Nevertheless, it seems unlikely that this is the beginning of the end for this Trade War. Especially, after the ground-breaking news of Huawei’s CFO arrest in Canada on behalf of the US, only a few days after the deal (Financial Times, 2018). This added tension to an already fragile relation.

These pressures are constantly being reflected on stock markets through irregularities. After Huawei’s events the S&P 500 fell 2.3 %, its worst since March (Shellock, 2018). In the mists of all these disputes, the WTO has been receiving countries complains to investigate the US (Baschuk, 2018). This organisation can be the vehicle to handle such disputes that will always emerge, its importance cannot be underrated. Nevertheless, it’s in need of a reform to help strengthen its power (Capling and Higgott, 2009).

Trading conflicts between countries pose a threat to the global economic system. So, it’s everyone’s concern that this dispute finds its settlement. With globalisation at its finest and populism rising, uncertainties emerge on whether we’re at a regression point. Which is normal to happen after years of a sudden growth followed by an economic crisis which brought stagnation. There’s no doubt that this unsustainable capitalistic system in place is failing. The world desperately needs to innovate its establishments. But, returning to memory lanes won’t help. Instead, let us create new sustainable and global lanes.

Mariana Morgane- M00640526

Bibliography

Martinez Monsivais, P. (2018) President Donald Trump with China’s President Xi Jinping during their bilateral meeting at the G20 Summit, in Buenos Aires, Argentina on Dec. 1, 2018. Available at: https://www.rollingstone.com/politics/politics-news/trump-china-trade-deal-762420/ (Accessed/downloaded: 7 December).

Bown, C; Kolb, M. (2018) ‘Trump’s Trade War Timeline: An Up-to-Date Guide’, PIIE, 1 December. Available at https://piie.com/blogs/trade-investment-policy-watch/trump-trade-war-china-date-guide (Accessed: 7 December).

The White House (2018) Statement from President Donald J. Trump on Additional Proposed Section 301 Remedies. Available at: https://www.whitehouse.gov/briefings-statements/statement-president-donald-j-trump-additional-proposed-section-301-remedies/ (Accessed: 7 December).

Lynch, D and Rauhala, E (2018) ‘Trump pushes back on fears of a trade war with China’, The Washington Post, 4 April. Available at: https://www.washingtonpost.com/world/asia_pacific/china-fires-back-at-trump-with-tariffs-on-106-us-products-including-soybeans-cars/2018/04/04/338134f4-37d8-11e8-b57c-9445cc4dfa5e_story.html?noredirect=on&utm_term=.acde107fb831 (Accessed: 7 December).

WITS (2018) United States Exports By Country and Region 2016. Available at: https://wits.worldbank.org/CountryProfile/en/Country/USA/Year/LTST/TradeFlow/Export/Partner/all/ (Accessed: 7 December).

WITS (2018) China Exports By Country and Region 2016. Available at: https://wits.worldbank.org/CountryProfile/en/Country/CHN/Year/LTST/TradeFlow/Export/Partner/all/ (Accessed: 7 December).

CNN BUSINESS (2018) Explaining a US-China ‘trade war’ with soybeans. Available at: https://www.youtube.com/watch?v=00cCDWzU6UI (Accessed: 7 December).

Meyer, G. (2018) ‘Chinese importers resume purchases of US soybeans’, Financial Times, 13 December. Available at: https://www.ft.com/content/f418b1ea-fe6d-11e8-aebf-99e208d3e521 (Accessed: 13 December).

Shellock, D. (2018) ‘Trade war concerns keep US stocks under pressure’, Financial Times, 7 December. Available at: https://www.ft.com/content/2cda1c8a-f9be-11e8-8b7c-6fa24bd5409c (Accessed: 10 December).

The White House (2018) Statement from the Press Secretary Regarding the President’s Working Dinner with China. Available at: https://www.whitehouse.gov/briefings-statements/statement-press-secretary-regarding-presidents-working-dinner-china/ (Accessed: 7 December).

The editorial Board. (2018) ‘Donald Trump makes Huawei CFO Meng Wanzhou a bargaining chip’, Financial Times, 12 December. Available at: https://www.ft.com/content/cccf5fe2-fe1f-11e8-ac00-57a2a826423e (Accessed: 13 December).

Baschuk, B. (2018) ‘Europe, U.S. Escalate Trade War with New Disputes at the WTO’, Bloomberg, 18 October. Available at: https://www.bloomberg.com/news/articles/2018-10-18/wto-members-request-an-investigation-into-trump-s-metal-tariffs (Accessed: 7 December).

Capling, A, Higgott, R. (2009) ‘The future of the multilateral trade system: what role for the World Trade Organization? Global Governance, vol. 15, no. 3, p. 313-326.  Available at: https://heinonline.org/HOL/Page?collection=journals&handle=hein.journals/glogo15&id=319&men_tab=srchresults (Accessed: 7 December).

Discrimination in the Workplace

This blog will briefly cover discrimination in the workforce and how this could prevent or negatively impact an individual’s right to be employed. This can be read as an extension to another blog I have written ‘Declining Unemployment Rate – Too Good to be True’ otherwise it is a blog that is perfectly capable of being read on its own.

(Image: Skillroads, 2018)

In the modern day, there are laws and regulations that employers must abide by when it comes to hiring employees in order to protect workers from being discriminated against in the workplace. They vary from country to country depending on where you are from. For example the United Kingdom (UK) government’s page states that the UK law can protect you from being made redundant, dismissed and whether you are recruited or not due to discriminatory factors (GOV.UK, 2018). Other forms of discrimination a British citizen would also be protected from under the law are: promotion; transfer opportunities; wage; benefits; and employment terms and conditions, with exceptions of discrimination in instances similar to ’employing only women in a health centre for Muslim women’ (GOV.UK, 2018). Despite all these laws to protect one from being unfairly treated in the workplace, discrimination still and will occur to happen unless we get rid of ridiculous biases and or/ stereotypes that prevent us from seeing someone’s potential to contribute and offer new skills to a workforce.

A frequently and largely discriminated against group are young people who can be often categorised with unskilled or more commonly known as low-skilled workers, another group that is largely discriminated against. In relation to employment, these groups are often seen as less desirable and have the worst performance and can and are usually discriminated against by being given poorer wages in comparison to their older and more experienced colleagues also doing the same work. Additionally, young and/or low-skilled workers are more likely to be subjected to a higher job insecurity and an increased job strain as opposed to their ‘better’ counterparts OECD, 2016). It is suggested that young people are discriminated against to such a high degree that in the 1990s when unemployment dropped significantly, young people still found difficulty in being employed and continued to be marginalised to the workforce (Fevre, 2011).

Image result for gender pay gap growth
(Image: Office for National Statistics, 2017)

Women are another prominent group that faces heavy discrimination what with the large pay gap between men and women doing the same job roles as I’m sure you all know. When you pit a man and a woman against one another in a battle of intelligence, most people whether consciously or unconsciously will presume the man to be smarter. But whose fault is this? And can you be blamed for thinking that when it has been ingrained in our heads that men are the key thinkers, the breadwinners and the Einsteins of the world? Girls as young as six years old are not exempt from this way of thinking as a study suggests that young girls ‘can be led to believe men are inherently smarter and more talented than women’ (Fortune, 2017) in fact young and highly impressionable minds are where it all tends to begin.

Within the law, it can be clearly written that discrimination should not take place in the workforce and penalties should be enforced to ensure that any and unfair inequality is quashed. Not only should discrimination be eradicated from the labour force but outside of it too, there is no need and no room for unnecessary discrimination in society. If we could solve this problem then we would also effectively deal with workplace discrimination: killing two birds with one stone. I like it.


H.C M00575573

Bibliography:

Fevre, R. (2011) ‘Still on the scrapheap? The meaning and characteristic of unemployment in prosperous welfare states’. Work, Employment & Society. 25(1), pp. 1-2.

Fortune (2017) Girls start believing men are smarter than women as early as 6 years old. Available at: http://fortune.com/2017/01/27/girls-believe-boys-smarter-young-age/ (Accessed: 14 December 2018).

GOV.UK (2018) Discrimination: your rights. Available at: https://www.gov.uk/discrimination-your-rights/discrimination-at-work (Accessed: 14 December 2018).

OECD (2016) New data show importance of quality as well as quantity of jobs and how both evolved during crisis. Available at: http://www.oecd.org/employment/the-crisis-has-had-a-lasting-impact-on-job-quality-new-oecd-figures-show.htm (Accessed: 08 December 2018).


The Case Against Animal Agriculture

image from itv

Experts estimate that somewhere around 56 billion land animals are killed each year for the purpose of food. This is around 150 million each day, and that’s without including fish and other sea life, whose deaths are measured in weight rather than number of lives lost. Despite this massive loss of life in the name of food, hundreds of millions of people go hungry every year, and the carbon footprint created by the industry is larger of that than all the motor vehicles on the planet (Cameron and Cameron, 2017). Combine this with the strain placed upon healthcare systems around the world by the consumption of animals, as well as the political influence the largest animal agriculture conglomerates hold, and one might consider how on earth things got so bad. 

An important fact to consider when talking about animal agriculture, is that for a method of food production, the consumption of animals (although a calorically dense food) takes a vast amount of energy to produce, and vegetable almost always produce more calories for the same area of land used (waldeneffect.org, 2010). If you pair this the fact that ‘The American Academy of Nutrition and Dietetics’ (the world’s largest nutritional organization) views a vegetarian diet as suitable for “all stages of the life cycle, including pregnancy, lactation, infancy, childhood, and adolescence, and for athletes” one has to wonder what the need is to continue eating meat. 

Perhaps the most compelling argument against the industry of animal agriculture is the environmental impact it has upon the world, especially when one considers the scientific consensus of how terrible climate change is. Eating beef 1-2 times a week uses the same amount of energy as heating the average UK home for 95 days (Stylianou, Guibourg, and Briggs 2018). An interactive estimate of food usage to climate impact is available HERE. Animal agriculture not only effects the climate environment, but local environments too, The Environmental Integrity Project (2018) Reports that “Three quarters of large U.S slaughter houses violate water pollution permits”. A link can also be drawn to political geography, since most slaughter houses in the U.S are nearer to lower income areas, where people are not likely to be able to escape the effects of local pollution. O’Brien and Williams (2016, pg.253) make the case that sustainable development is possibly the most important issue in the political economy of the environment; and yet it is difficult to see how there can be sustainable development with the current state of the animal agriculture industry. New research implicates that “without meat and dairy consumption, global farmland use could be reduced by more than 75%… and still feed the world” (Carrington, 2018). 

However obvious it appears that animal agriculture is not the way forward in terms of the environment, and even health (The World Health Organisation views processed meat as a group one carcinogen, and red meat as a group 2 carcinogen (World Health Organisation, 2015). The industry of animal agriculture, despite all this still has massive influence over government, through lobbying and the funding of biased bias studies. Upwards of $500bn is spent in subsidies to agriculture industries (Carrington, 2018). The influence such industries have over the political establishment is astounding, and sometimes particularly petty. In 2017 the European Court of Justice ruled in favour of the dairy industry, making it so that plant-based alternatives to butter, milk, cheese, cream and yoghurt cannot use the dairy derived names as they could confuse customers – a fairly ridiculous ruling that seems to highlight the dairy industry trying to fight back against its slumping profits in the face of a generation who increasingly ditching their products due to ethical, environmental and health reasons. 

Most people are raised believing that there is nothing wrong with eating animals, that they are good for you, and the animals can live a happy life before having their throats slit mercilessly. The impact of animal agriculture upon the global political economy, particularly that of the environment, is seldom mentioned. With new research coming out daily about the negative impacts of meat upon the environment, it would be hypocritical for one who consumes animal products, to able to consider themselves an environmentalist. 

Lewis Cruickshank 

Bibliography:  

Cameron, J., Cameron S.A. (2017) ‘Animal Agriculture is Choking the Earth and Making Us Sick. We Must Act Now’ The Guardian. 4th December. Available at: https://www.theguardian.com/commentisfree/2017/dec/04/animal-agriculture-choking-earth-making-sick-climate-food-environmental-impact-james-cameron-suzy-amis-cameron (accessed December 2018) 

Waldeneffect.org. (2010) ‘Calories per acre for various foods’ available at: http://www.waldeneffect.org/blog/Calories_per_acre_for_various_foods/ (accessed December 2018) 

Stylianou, N., Guibourg, C., Briggs, H. (2018) ‘Meat or two veg? Find out your food’s climate footprint’ BBC News 13 December. Available online: https://www.bbc.co.uk/news/science-environment-46459714 (accessed December 2018) 

The Environmental Integrity Project (2018) ‘Three Quarters of U.S Slaughter Houses Violate Water Pollution Permits’. October 11th Available online: http://www.environmentalintegrity.org/news/slaughterhouses-violate-water-pollution-permits/ (accessed December 2018) 

O’Brien, R., Williams, M. (2016) ‘Global Political Economy’ 5th Edition. Palgrave Macmillan  

Carrington, D. (2018) ‘Avoiding meat and dairy is ‘single biggest way’ to reduce your impact on Earth’ The Guardian 31st May. Available online: https://www.theguardian.com/environment/2018/may/31/avoiding-meat-and-dairy-is-single-biggest-way-to-reduce-your-impact-on-earth (accessed December 2018) 

The World Health Organisation. (2015) ‘Q&A on the carcinogenicity of the consumption of red meat and processed meat’. Available online: https://www.who.int/features/qa/cancer-red-meat/en/ (Accessed December 2018)