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Chile should use upturn to address low productivity and high inequality

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A favourable growth outlook offers Chile an opportunity to address its low productivity levels compared to other advanced economies, improve access to quality jobs and take steps to reduce its persistently high inequality, according to a new OECD report.

The latest OECD Economic Survey of Chile says that sound macroeconomic management has placed Chile on a solid economic footing, and measures implemented by the outgoing administration to make growth more inclusive go in the right direction. It says the incoming administration needs to build on these efforts with further reforms to boost productivity growth, diversify the economy, improve adult skills and get more people into formal long-term jobs that add real value. Chile would also benefit from raising public support for research and development and stepping up infrastructure investment, which would spur innovation and competitiveness.

“Chile is in fine economic health, but the triple challenge of how to raise productivity, improve global competitiveness and reduce inequality remains,” said OECD Secretary-General Angel Gurría, presenting the Survey in Santiago. “The current global economic upswing provides a key opportunity to deepen structural reforms so that Chile can achieve its full economic potential, make the most of globalisation and share the fruits more fairly.”

The OECD projects GDP growth in Chile rising to 2.9% in 2018 and 2019 amid robust global economic conditions and firmer copper prices. Yet low productivity remains a drag on living standards.

While high relative to other Latin American countries, output per worker in Chile is stuck at half the OECD average, with too many workers employed in activities that generate little added value per work hour.

Chile’s income inequality gap is also more than 65% wider than the OECD average, with one of the highest ratios between the average income of the wealthiest 10% of its population and that of the poorest 10%. Almost a third of Chilean workers are in informal or non-permanent jobs, and an OECD survey of adult skills shows that one in two Chileans has low literacy skills. The pressure this places on the pension system and living standards will increase with Chile’s rapidly ageing population.

The Survey recommends further measures to lower entry barriers and regulatory complexity to help young firms to innovate, grow and compete. That would also help open up an export market dominated by a handful of conglomerates. Only 2% of Chilean small and medium-sized enterprises currently participate in international trade.

Recent education reforms to improve teaching and skills can be built on to improve and expand vocational training and apprenticeships, including better targeted training programmes to those most in need. Chile should address the still high share of jobs that are informal or on short-term contracts and expand access to unemployment insurance.

Continuing the pursuit of an ambitious social agenda is also critical. More can be done to use taxes and transfers for addressing inequality. Raising property and environmental taxes, or lowering personal income tax bands, could help finance higher social spending, formal employment subsidies and health insurance support. Increasing pension contributions and extending the retirement age, especially for women, could boost GDP per capita over the medium term and help raise the currently low pension replacement rates.

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Ron Paul: Biden Administration accept that it has a “Zelensky problem”

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Official White House Photo by Lawrence Jackson

Last week the world stood on the very edge of a nuclear war, as Ukraine’s US-funded president, Vladimir Zelensky, urged NATO military action over a missile that landed on Polish soil.”

This is a comment from the prominent American political leader Ronald Ernest Paul was for many years the member of the U.S. House of Representatives from Texas. Three times he sought the Presidency of the United States: once as the Libertarian Party nominee and twice as a candidate for the Republican Party. He continues in his comment:

“But there was a problem. The missile was fired from Ukraine – likely an accident in the fog of war. Was it actually a Russian missile, of course, that might mean World War III.

‘While Zelensky has been treated as a saint by the US media, the Biden Administration, and both parties in Congress, something unprecedented happened this time: the Biden Administration pushed back. According to press reports, several Zelensky calls to Biden or senior Biden Staff went unanswered.

‘The Biden Administration went on to publicly dispute Zelensky’s continued insistence that Russia shot missiles into NATO-Member Poland. After two days of Washington opposition to his claims, Zelensky finally, sort of, backed down.

‘We’ve heard rumors of President Biden’s frustration over Zelensky’s endless begging and ingratitude for the 60 or so billion dollars doled out to him by the US government, but this is the clearest public example of the Biden Administration’s acceptance that it has a “Zelensky problem.”

‘Zelensky must have understood that Washington and Brussels knew it was not a Russian missile.

‘Considering the vast intelligence capabilities of the US in that war zone, it is likely the US government knew in real time that the missiles were not Russian. For Zelensky to claim otherwise seemed almost unhinged. And for what seems like the first time, Washington noticed.

‘As a result, there has been a minor – but hopefully growing – revolt among conservatives in Washington over this dangerous episode. Georgia Rep. Marjorie Taylor-Greene introduced legislation demanding an audit of the tens of billions of dollars shipped to Ukraine – with perhaps $50 billion more in the pipeline.

‘When the Ukraine war hysteria finally dies down – as the Covid hysteria died down before it – it will become obvious to vastly more Americans what an absolute fiasco this whole thing has been,” writes Ron Paul.

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The G20 is dead. Long live the G20

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The seventeenth G20 Heads of State and Government Summit held in Bali, Indonesia, on 15–16 November stands out as a consequential event from many angles. The international politics is at an inflection point and the transition will not leave unaffected any of the institutions inherited from the past that is drifting away forever. 

However, the G20 can be an exception in bridging time past with time present and time future. The tidings from Bali leave a sense of mixed feelings of hope and despair. The G20 was conceived against the backdrop of the financial crisis in 2007 — quintessentially, a western attempt to burnish the jaded G7 by bringing on board the emerging powers that stood outside it looking in, especially China,  and thereby inject contemporaneity into global discourses. 

The leitmotif was harmony. How far the Bali summit lived up to that expectation is the moot point today. Regrettably, the G7 selectively dragged extraneous issues into the deliberations and its alter ego, North Atlantic Treaty Organisation (NATO), made its maiden appearance in the Asia-Pacific. Arguably, the latter must be counted as a fateful happening during the Bali summit. 

What happened is a negation of the spirit of the G20. If the G7 refuses to discard its bloc mentality, the cohesion of the G20 gets affected. The G7-NATO joint statement could have been issued from Brussels or Washington or London.  Why Bali? 

The Chinese President Xi Jinping was spot on saying in a written speech at the APEC CEO Summit in Bangkok on November 17 that “The Asia-Pacific is no one’s backyard and should not become an arena for big power contest. No attempt to wage a new cold war will ever be allowed by the people or by the times.” 

Xi warned that “Both geopolitical tensions and the evolving economic dynamics have exerted a negative impact on the development environment and cooperation structure of the Asia-Pacific.” Xi said the Asia-Pacific region was once a ground for big power rivalry, had suffered conflicts and war. “History tells us that bloc confrontation cannot solve any problem and that bias will only lead to disaster.”

The golden rule that security issues do not fall within the purview of G20 has been broken. At the G20 summit, the western countries held the rest of the participants at the Bali summit to ransom: ‘Our way or no way’. Unless the intransigent West was appeased on Ukraine issue, there could be no Bali declaration, so, Russia relented. The sordid drama showed that the DNA of the western world hasn’t changed. Bullying remains its distinguishing trait.

But, ironically, at the end of the day, what stood out was that the Bali Declaration failed to denounce Russia on the Ukraine issue. Countries such as Saudi Arabia and Turkey give reason for hope that G20 can regenerate itself. These countries were never western colonies. They are dedicated to multipolarity, which will ultimately compel the West to concede that unilateralism and hegemony is unsustainable. 

This inflection point gave much verve to the meeting between the US President Joe Biden and the Chinese President Xi Jinping at Bali. Washington requested for such a meeting on the sidelines of the G20 summit, and Beijing consented. One striking thing about the meeting has been that Xi was appearing on the world stage after a hugely successful Party Congress. 

The resonance of his voice was unmistakable. Xi underscored that the US has lost the plot, when he told Biden: “A statesman should think about and know where to lead his country. He should also think about and know how to get along with other countries and the wider world.” (here and here)

The White House readouts hinted that Biden was inclined to be conciliatory. The US faces an uphill challenge to isolate China. As things stand, circumstances overall work to China’s advantage. (here , here and here)

The majority of countries have refused to take sides on Ukraine. China’s stance amply reflects it. Xi told Biden that China is ‘highly concerned’ about the current situation in Ukraine and support and look forward to a resumption of peace talks between Russia and China. That said, Xi also expressed the hope that the US, NATO and the EU ‘will conduct comprehensive dialogues’ with Russia.   

The fault lines that appeared at Bali may take new forms by the time the G20 holds its 18th summit in India next year. There is reason to be cautiously optimistic. First and foremost, it is improbable that Europe will go along with the US strategy of weaponising sanctions against China. They cannot afford a decoupling from China, which is the world’s largest trading nation and the principal driver of growth for the world economy. 

Second, much as the battle cries in Ukraine rallied Europe behind the US, a profound rethink is under way. Much agonising is going on about Europe’s commitment to strategic autonomy. The recent visit of German Chancellor Olaf Scholz to China pointed in that direction. It is inevitable that Europe will distance itself from the US’ cold war aspirations. This process is inexorable in a world where the US is not inclined to spend time, money or effort on its European allies.

The point is, in many ways, America’s capacity to provide effective global economic leadership has irreversibly diminished, having lost its pre-eminent status as the world’s largest economy by a wide margin. Besides, the US is no longer willing or capable of investing heavily in shouldering the burden of leadership. Simply put, it still has nothing on offer to match China’s Belt and Road Initiative. This should have had a chastening influence and prompted a change of mindset toward cooperative policy actions, but the American elite are stuck in the old groove.

Fundamentally, therefore, multilateralism has become much harder in the present-day world situation. Nonetheless, the G20 is the only game in town to bring together the G7 and the aspiring developing countries who stands to gain out of a democratised world order. The western alliance system is rooted in the past. The bloc mentality holds little appeal to the developing countries. The gravitation of Turkey, Saudi Arabia and Indonesia toward the BRICS conveys a powerful message that the western strategy in conceiving the G20 — to create a ring of subaltern states around the G7 — has outlived its utility. 

The dissonance that was on display in Bali exposed that the US still clings to its entitlement and is willing to play the spoiler. India has a great opportunity to navigate the G20 in a new direction. But it requires profound shifts on India’s part too –away from its US-centric foreign policies, coupled with far-sightedness and  a bold vision to forge a cooperative relationship with China, jettisoning past phobias and discarding self-serving narratives, and, indeed, at the very least, avoiding any further descent into beggar-thy-neighbour policies.

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President Biden under fire

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Official White House Photo by Adam Schultz

Republicans announced that they are launching an investigation that will focus on President Biden himself and any illicit or unethical financial ties he had to his son Hunter’s overseas dealings, writes “The Daily Mail”.

Now Joe Biden and his family are facing an onslaught of subpoenas from the House majority members, who say they know where the proverbial bodies are buried.

Rep. James Comer led the press conference, where he made clear that the president himself was the target of the House GOP’s probe. He is a ranking member of the House Oversight Committee, will have the power to issue legally-backed demands for documents, information and testimony once the 188th Congress begins on January 3.

The congressman laid out his plans to use that power to go after the Bidens for alleged wire fraud, tax evasion, money laundering, illegal foreign lobbying and defrauding the government.

The evidence Comer is currently combing through, and is seeking to claw via subpoena, could ultimately result in articles of impeachment for the president and prison for the First Son.

Comer is also asking the Treasury for copies of more than 150 suspicious activity reports (SARs) involving the Bidens, filed by banks under anti-financial crime laws, that could be key to tracing the flows of foreign funds to the family’s coffers.

Amid all the shocking messages involving Joe Biden, possibly the most important email of the 154,000 on Hunter’s abandoned laptop is the infamous ‘big guy’ email, suggesting that the president was secretly involved in, and set to profit from, an alleged Chinese influence operation.

In total Joe met with fifteen of Hunter’s business associates according to White House visitor logs and records from the First Son’s laptop.

Emails on Hunter’s abandoned laptop published by DailyMail.com show that Hunter and Joe paid each other’s bills, and Hunter’s business partner Eric Schwerin did Joe’s taxes and visited the then-VP at the White House at least 27 times.

Joe also hosted Hunter’s best friend, business partner and now convicted fraudster Devon Archer at the White House just days before Archer and Hunter were appointed to the Burisma board (Ukraine) in 2014.

Archer was entertained at the West Wing on April 16 2014 according to visitor logs. Joe traveled to Kiev five days later on April 21. The next day, Archer joined the Ukrainian gas company’s board. On April 28, British officials froze $23million in accounts belonging to Burisma owner Mykola Zlochevsky, accusing him of fraud. The following month Hunter also joined the gas firm’s board.

Soon we may see some ugly tricks of Biden’s Ukrainian friends revealed…

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