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Economy in Libya

Giancarlo Elia Valori

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Strange to say, but the Libyan economy which, as is well-known – depends much, if not almost exclusively, on oil extraction and sale, performed very well in 2017 even at a time of falling prices – currently made more complex by the Covid-19 pandemic which has led to crisis in consumer countries.

It should be recalled that the 2017 good performance of the Libyan economy came six years after the silly elimination of Colonel Gaddafi, with a +67% extraction peak compared to 2016.

 In 2018 it went much worse, with a 17.9% increase, but in 2019 GDP grew by 9.9% and currently, at the end of 2020, a 58.7% vertical drop in GDP is expected.

 Obviously there is an inextricable combination of severe internal political and military instability, pandemic-related crisis in consumer countries, as well as a different configuration of the struggle for world oil power, especially with the arrival of the U.S. shale oil.

 Basically, oil extraction and refining in Libya have almost stopped, except in the last few weeks, when some oil wells (such as El Sharara or El Feel, among the largest ones  Libya) are supposed to reopen “as soon as possible”, as the Minister said.

 The two oil wells, however, are still controlled, by Khalifa Haftar’s LNA forces. Here is the clear link between political-military destabilization and the Libyan economic crisis.

 Oil production fell by 0.1 million barrels per day as from April 2019, i.e. at the beginning of the clash between the GNA and the LNA, with a public deficit that reached 28.9% of GDP in 2019, but with inflation rate falling by 4.6% in 2019 alone, although expected to reach 22.3% by the end of 2020.

 The oil barrel global cost is supposed to keep on falling also in 2021, but production in Libya continued to grow, at least until March 2020, which was the expiry date of the moratorium granted to Libya by OPEC.

Nevertheless, the specifically political level of negotiations between Libya and OPEC – which is what matters – will be mediated mainly by Saudi Arabia, notoriously pro-Haftar, and the United States, often uncritical supporter of the Tripoli regime. A complex mediation.

However, both General Haftar’s LNA and, in many ways, the various katibe linked to Tripoli’s regime – often rather loosely – are business groups – mostly illegal – and, as always happens in these cases, constitute illegal monopolies guaranteed by the monocratic exercise of power and force.

Therefore the “mafiazation” of the economy is the obvious result of a central State which is absent, substantially unlawful or perceived as such.

General Haftar has imposed his monopoly mainly on the export of scrap metal and the sale of refined oil products.

 Many monopolies, ranging from food to the sale of technological materials, have been guaranteed more or less legally to Haftar’s LNA by the Tobruk House of Representatives.

 The activities for controlling and managing the routes of transit and sending of sub-Saharan migrants to Italy are mostly connected to the parallel networks of Haftar’s LNA, but also to Tripoli’s networks of Zawiya and the “Al Nasr Martyrs” group, always operating in that city. But there are entire sectors of the Defence Ministry, the Libyan Coast Guard, the Police and the Interior Ministry cooperating and contributing, directly or indirectly, to the big bipolar system of illegal migrant trafficking and smuggling.

This is the second source of illegal income, after the smuggling of oil products. This is what happens when you destabilize an African coastal State, without any other project than the chatter of some French pseudo-intellectual on “human rights”.

 It is the classic anti-Machiavellian paradox of modern politics. The heterogenesis of ends, as Giovanni Gentile put it.

 But Haftar’s LNA, in particular, also funds itself directly with banks: Libya’s Central Bank in the East has, in fact, backed the wages and material of Haftar’s troops for three years, with the local equivalent of at least 6.7 billion U.S. dollars.

Furthermore, with a view to funding the State and its armies, both Tripoli and Benghazi used the credits granted by merchant banks – often manu militari or through corruption or political-military connections.

In 2018 alone, the government of Cyrenaica raised 7.9 billion U.S. dollars in loans, while the Tripoli area reached a budget of over 8.1 billion U.S. dollars only with loans from credit banks.

As mentioned above, this share includes the role of corruption, which is huge and even affects the officials of the anti-corruption structure in Tripoli – to the tune of millions of dollars. Obviously this applies also to the East.

With about 70,000 soldiers, Haftar’s LNA currently controls a larger territory than France, but the core of its financial operations is still the creation, on June 5, 2017, of the “Committee for Military Investment and Public Works”, led by Air Force Colonel al-Madani al-Fakhri, whose leaders immediately began to extort money from Cyrenaica’s businessmen. In the West, the various military katibe of “martyrs” shared control over all trade and productive activities, sector by sector.

Based on what can be inferred from “open” local sources, the GNA has extorted at least 5-6 billion dollars from businessmen and traders in 2020 alone.

 Although Western propaganda always tends to see Haftar’s LNA as the den of all evils, the two forces are similar, as far as the illegal economy is concerned.

Furthermore, nobody knows how many counterfeit dinars were printed in Russia – possibly 4 billion, at least – with Gaddafi’s effigy, which passed through Malta, greasing many wheels.

In May 2017, during the Ramadan, the banknotes printed in Russia were distributed particularly to banks in the South and in the East.

The idea, after all, was not bad. Libyans do not trust banks, under any circumstances, even when they make withdrawals.

Hence, when it comes to paying wages and salaries, the rulers in both East and West hurry to print new money, which is easily exchanged with the banknotes probably printed in Russia.

 So much so that if everyone accepts it at a lower value than the normal dinars, it becomes only a devalued currency, no longer counterfeit money. 

This is fine, even better than the official dinar, for the “grey” and “black” economy.

 Moreover, the financial-oil system does not directly support Haftar’s LNA, nor can it do so.

 Only the state-owned National Oil Company (NOC) – which is largely answerable to the West – has the possibility to sell Libyan oil, and only the Central Bank of Tripoli can accept the related payments.

 The fact is that all the military groups operating in Libya, in the East and in the West, are linked to the war economy and inextricably tied to the parallel para- or totally illegal economy.

 The economic crisis, connected with the non-existence of a strong and credible central State, perpetuates the positive incentives for all those who take advantage of the State dysfunctions.

 Dysfunctional and para-criminal economies are always based on three pillars: smuggling, extortion, theft of public resources and external patronage.

 The latter can be of a Libyan potentate or, more often, of an “external player”: Turkey, Egypt, the Russian Federation, France, Saudi Arabia, Qatar. Obviously Italy has disappeared from the Libya, since currently its foreign policy is little less than a joke.

 The operations of all these countries’ Intelligence Services are largely rewarded by the business that becomes possible for the companies linked to all external Services, if they operate in Libya. The operations of the various intelligence agencies fund themselves on their own in Libya.

I have been told that, regardless of the external player, the operations of the various Intelligence Services generate 20-25% gains, which are guaranteed by the extortion ability of the various local katibe to which the external States refer.

 There is no return from a criminal economy which generates a failed state and, above all, eliminates any alternative legal option.

 In Cyrenaica, there is now a monopoly of the illegal use of force by Haftar and his LNA. It shows signs of overstretching and some old allies are showing signs of disillusionment. But soldiers from Darfur, Chad and even Mauritania could soon strengthen Haftar and allow a new offensive towards Tripoli, also considering the presence of Syrian jihadists in the GNA, sent by the Turkish Intelligence Service.

 In the West, there is Tripoli and hence Fajez al-Sarraj’s government, often comically praised and hailed by Westerners.

In this case, however, there is another factor of structural weakness other than the LNA: the factionalism of the various katibe and their often completely interested and always partial relationship with the government in Tripoli.

 Therefore, the analytical pair with which to study the connections between Tripoli and Benghazi is Factionalism/Ovestretch. Here is the fundamental dialectic.

Again using the very useful terms of the Mafia jargon, Tripoli’s militias are a “cartel”, while in the East there is a monopoly of unlawful and illegitimate force which, however, struggles to make itself credible.

Moreover, factionalism is inherent in the Arab and, above all, Bedouin soul: “my brother and I against our cousin, my cousin, my brother and I against the stranger”.

 Thinking about the Middle East with the typically Western and European idea of the Nation-State is a mistake that will lead us to far greater disasters than those caused by the Sykes-Picot agreement, narrated in an old book with the now famous title, A Peace to end all Peaces.

Distribution of local gangs and oil wells, updated to May 2020, source

Then there is the powerful “stone guest” of the Libyan economy that we must never neglect, namely China.

It should be recalled that China abstained in the UN Security Council voting authorising military intervention in Libya against Gaddafi and also criticized NATO’s decision to create a no-fly zone. It even underlined the illegality of air strikes on the legitimate forces of Gaddafi’s regime. China was right.

 Even when Gaddafi was in power, China was very active in Libyan infrastructure, as Libya paid very well.

 At the time of Gaddafi’s fall, China had as many as 75 companies operating in Libya, with a turnover of 18.8 billion U.S. dollars.

 The workers concerned were mainly the 36,000 Chinese, but also the about 28,000 Libyan ones or even many immigrants (Egyptians, Tunisians and Algerians).

Until 2011 there were 50 Chinese projects in Libya and it should be noted that Libya alone produced 3% of all Chinese oil imports, equivalent to 150,000 barrels a day.

  At the time of West’s maximum manipulation against Gaddafi, China always tried to maintain all its business connections, obviously rejecting the NATO military mission in its entirety.

 Moreover, like the Russian Federation, China also rejected the theory – typically Western-style in its naivety and arrogance- of Responsibility to Protect, i.e. the universal rule – stuff for boy scouts or elegant socialites-whereby States can intervene directly and militarily in other States when the protection of “human rights” is needed.

However, who establishes and ascertains the violation of human rights? A French pseudo-philosopher, a former follower of Pol Pot, two articles in the New York Times or possibly the statements of an NGO invented at the moment (in this respect, the story of NGOs working for migrants from Libya to Syria would be very interesting) or the lamentation of some “intellectuals” who do not even know where Tripoli is on the map?

Obviously, with a view not to being relegated to play the role of the only protector of the vilain Gaddafi, China finally abstained in voting on the UN Security Council Resolution on Libya, but immediately recognized the National Transitional Council (NTC), as the only semblance of unitary Libyan government left.

 ENI also recognized it, well before others, exactly two days after the start of the insurgency against the Colonel, staged only by the East and by French submarines.

As early as the beginning of June 2011, China held its first meeting with Mohammed Jibril, the Head of the NTC. A few days later, the Head of the Department for West-Asian and Middle East Affairs of the Chinese government, Chen Xiaodong, visited Benghazi very carefully.

 Obviously China pursues a policy of careful neutrality between the two factions, namely the GNA and Haftar’s LNA.

 Officially China supports the GNA, which – in a Memorandum of Understanding (MoU) signed in June 2018 -even accepted that Libya would be part of the Chinese Belt and Road Initiative, albeit with some obvious twists in the map.

China, however, has also excellent relations with Haftar and, above all, with the Tobruk House of Representatives.

 As to the Covid-19 pandemic, which – for those who know how to use it-is an opportunity for hegemonic penetration into the so-called “third” countries, China has rapidly included Libya in its humanitarian and health aid programmes, which are currently envisaged for as many as 82 countries.

However, what is the profound logic of Libya’s political and hence economic system? Unfortunately, we always see and interpret the non-Western world through the eyes of our often idiotic, fashionable ideologies. It is the biggest mistake we can currently make.

As seen above, the fact is that Libyan institutions have always been sectarian and biased in Libya, but not less powerful for this reason.

 The British Military Administration (1942-1951) built up a great deal of political-tribal mediations in Libya even equal, if not greater, than Gaddafi’s. They largely remained in place, even after the 1969 coup of the “Free Officers”, organised by the Italian intelligence services in a meeting at Abano Terme.

 Then there is the Senussi monarchy, originating from an Islamic esoteric sect, not from a specific family lineage of the monarch.

 The last King Idriss was ousted by the coup of the Nasserian and Third- World Socialist “Free Officers”, led at the time by Gaddafi, who had been selected for that purpose by the Italian intelligence Services, during a comfortable meeting – I still remember – at an excellent hotel in Abano Terme.

 The Senussi monarchy originated from a strange esoteric organization that started from a wide Islamic heterodoxy and finally shifted to a sort of quasi-Wahabi Koranic normativism, which is not at all contradictory, as it would appear in the poor minds of Westerners, who see only the servile adaptation to Western pluralism or simple “fanaticism”, old theme of the worst and naivest18thcentury Enlightenment.

As we all know, Gaddafi’s regime began in 1969, amidst counter-coup, attacks and adverse operations by the British intelligence services, which only thanks to Italy were wrecked. Revolutionary governments, however, choose only the faithful tribes, which are such because they are paid to be so.

In the case of the Senussi, the Cyrenaica Defence Forces operated – and King Idriss boasted he had never been to Tripoli – made up of agents and employees of the British Intelligence Services. Also the People’s Social Committee of Executives had military roles. Gaddafi had no mercy, of course.

 The Warfalla tribe made several unsuccessful attempts on Colonel’s life. Therefore, after the attempted coup against the Colonel in 1991 it accepted a negotiation with Gaddafi.

Nevertheless, it was precisely because of the Gaddafian Jamahiriya (1973-1979) that the Libyan economic networks became ever more informal and sometimes tribal, but paradoxically ever less controlled by the Colonel’s regime.

Exactly those networks killed him and hence ousted him from power, although the poor informal military economic networks believed in the Western promises of an economy integrated in the world market and in an opening of Libya to foreign investment.

 They wanted globalisation, without too many disasters, but the West gave them a useless failed state, even for Italy.

Hence within the Great Socialist Jamahiriya of the Libyan Arab People there still were popular committees that dealt with economy and business, often very seriously – but without any coordination and control by Gaddafi’s leadership, except for the NOC.

 There were GECOL (General Electricity Company of Libya), a separate committee, as well as LISCO (Libyan Iron and Steel Company), ESDEF (Economic and Social Development Fund) and ODAC (Office of Development of Administrative Complexes).

A great role was played by the free zone of the port of Misrata, and by an endless number of autonomous committees, even in the Security Services, which, however, were linked to the abstract and even scarcely “informative” structure of Jamahiriya.

 Generally speaking, the network of “people’s” Committees that managed the economy reported to the General People’s Congress, but everything was obviously in the hands of Gaddafi and his most trusted aides and collaborators – who, however, did not succeed in getting the news in time or let some operations slip away, given the level of informality of the Libyan economy, already pathological at the time.

 The only two organizations with some degree of autonomy were the Central Bank of Libya, established in 1956, well before Gaddafi’s coup – which, however, originated from a UN-established institution, namely the Libyan Currency Committee – and obviously the National Oil Corporation (NOC), created in 1970, immediately after Gaddafi’s coup.

 There is also the Libyan Investment Fund (LIA), the Libyan Sovereign Fund that supports 15 other apparently autonomous funds or financial initiatives.

 It was established in 2006. At the beginning, in the good years of oil revenues, LIA had an endowment of as many as 60 billion U.S. dollars.

 Gaddafi’s son, Saif-al Islam, was actually its leader. But, after the anti-Gaddafi “revolution”, between 2005 and 2010, also the experts who seemed capable of privatizing anything arrived. Called by France, the United States, the Libyan elite itself, but not by Italy, of course.

 At that juncture, given the solidity of the old informal Gaddafian economies and of those following the destruction of the Libyan State, the new Agencies of Libyan liberals arrived. Hence the Economic Development Board and the Privatization and Investment Board were established, in addition to the Public Projects Authority.

You privatize when there is capital available, otherwise to whom do you sell in a failed state where those who have money are already out of Libya?

 As early as the phase in which the war between Eastern and Western Libya was starting to emerge, the local governments had to “enlist” technicians, experts, economists and business jurists to understand the intricacies of post-Gaddafi economic structures which, in any case, had developed – in their baroque and elaborate complexity – since the last years of Gaddafi’s life.

We could define Libya between Gaddafi and the two current governments as an overlap between the oil rentier States, the Socialist autocracies typical of the Third International and the chaotic and incoherent liberalization attempts that the Americans made in the old Socialist economies of the East after 1989.

This adds to the unpreparedness and factionalism of the new economic and political ruling classes that came to power after Gaddafis’ elimination.

 The Colonel’s technocracy was often better than the current ones.

 No economic unifying criteria were visible among the various factions that fought and then managed the 2011 insurgency, but all this remained even in the years 2013-2015, when the high oil barrel prices gave hope that fresh capital would right the wrongs of an authoritarian planning that added to the factionalism of the economy and the Stock Exchange short-sighted naivety of post-Soviet liberalisations.

 Meanwhile, the mass of wages and salaries, in addition to subsidies, increases every year regardless of the amount of oil revenues.

 There are therefore no quick fixes or effective solutions for a mechanism that is now so structured.

The World Bank predicts that oil rents will be 47% of GDP by the end of 2021, but wages and salaries will increase by up to 49%.

 Public subsidies for oil or food will be equally high, to the tune of 10.6% of GDP, but then how will debt be refinanced?

 In Tripoli – but the situation in Benghazi seems similar – the solution will be the cash advance from the Central Bank of Libya, in addition to the sale of Treasury Bonds, especially in Cyrenaica.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

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COVID-19, major shifts and the relevance of Kondratief 6th Wave

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Covid-19 has changed the global strategic equations, it has impacted each part of human life so has it let us to ponder upon the Kondratieff cycles, as with Covid-19 there has started a new debate about sixth wave, which is about the importance of health sector, especially the biotechnology which is crucial for progress of society in future.

Henceforth, the countries that are working on these sectors know that the most important engine for our economic and social development will be health in the 21st century. For example we have USA that focused on these and now has created around 2/3rd of its jobs in health sectors along with that has invested about $3,500 billion on health sector back in 2017. Also a 2008 report said about 4,700 companies all across worked in  field of biotechnology whereby 42% were in North America, and 35% in Europe, which depicts these states long-term understanding of the emerging scenario as seen from the emergence of Coronavirus. But then the on the other side if we look into the health structure of underdeveloped states, we can easily conclude that these states will suffer the most if a global health issue emerges, and in the contemporary world it has emerged in the form of COVID-19.

COVID-19 has brought changes in the political and economic arrangement. It has not limited itself to the China from where it has been started but has impacted the whole world. The virus that is itself unseen has shaken the structure, with severe consequences for all states. No matter if it’s the USA that is the super power or any small states, the pandemic has divulged the capability and integrity of all in their response to the Covid-19. With some having the capabilities to deal with it, but most lacking in these sectors which resulted in huge loss not only of human life but also of resources. Time has come when the world is criticizing globalization at one hand because globalization is the reason for the spread of COVID-19. This has marked the end of one era with the emergence of a new one.

Mention below are some of the major shifts which Covid-19 has resulted in economic sectors in both the developed and the underdeveloped states, along with the major political shift that has led many to debate about the new structure of world after the crisis would be over.

The Covid-19 that was first reported in China, in November has changed the world completely and resulted in a lot of economic and political changes all across. For example the global economy due to Covid-19 crisis have a setback of $590 trillion. Apart from this many people lost their jobs, the household incomes have reduce, moreover World Bank report say nearly 49 million people will move into extreme poverty because of pandemic. Then World largest real estates are having economic problems, the Tourism industry has declined. An estimate showed the loss of about $1.2 to $3.3 trillion in this area of tourism all over world. Also report of International Air Transport Association predicted a loss of $63-$113billion. Moreover the oil sector also faced problem as it was for the first time that its price has gone negative. Henceforth, it can be predicted that once the pandemic is over the world will have a lot to calculate.

The impact of this crisis is seen in both core and periphery states. In core states like the US and china COVID-19 has brought huge economic impact but along with this also a question of who will act as the world saviour. As Chinese economy is expected to decline by 13% in February also the Belt and toad initiative is at halt, but still apart from the economic problem this pandemic has helped a core state like china to use the situation and move towards the status of Global power. Thus this struggle of Global saviour resulted in US and China at odds with each other. Indeed, COVID-19 has brought political repercussions along with economic consequences. When it comes to Europe the industrial production decline by 17%. Likewise USA is also effected by COVID-19 as by this pandemic about 39 million American have lost their jobs, also US economy seen to decline by 20% so US health sector has been in the eye of analyst for its failure to curtail the coronavirus. Then covid-19 has more devastating impact on peripheral states as there health care facility is not well developed. For example the GDP of Bangladesh fell by 1.1%, then many African states that look for tourism as a source of economy faced a loss of about $50 billion. Also 29 million in Latin America fell into poverty. Though they have been exploited in past but the need of the hour is that the world must help them.

Global dynamics are showing transformation amid coronavirus. The pandemic has shown how China is using its trump cards to transform the contemporary situation in its favour while bolstering its image as the “global saviour”. China’s emergence from the sick man of Asian to the positing of global saviour has opened the prospect of a tilt in the global status of Hegemon from US towards China. The question is that will the Chinese strategy amid COVID-19 will hinder the prestige of US who instead of acting as the global leader has shown a deterioration in its role in global governance.

The future of China’s pre-eminence in the global spectrum has been widened by the pandemic. All of this has been further bolstered by the broad rejection of Trump to engage in Europe and elsewhere. COVID-19 not only emerged as an impetus to shift the global dynamic but has helped China to strengthen its position. In response to the confident play by China, US hasn’t come up with any convincing tactics to prevent the increasing role of China in achieving its interest. Recently, a move by Trump administration to withhold US funds of around $400million will surely leave a gap, moreover will be an opportunity for china to bolster its position in WHO. Taking backseat in its global role amid pandemic, then the withdrawal from global treaties, and withholding of funds from WHO shows a pattern which will further create a vacuum for China to take advantage of the prevailing situation. 

The current international order set by US will be subject to testation as the changing shifts in the geopolitics have to be catalyzed by the COVID-19. For it is now the right time for us all to ponder the relevance of Kondratieff 6th wave in current scenario of Covid-19. As now the focus has diverted towards the health care system and biotechnology since the world has in current situation saw a blame game between states with few called corona virus as naturally occurring but some regarded it as ‘Chinese virus’. This has led to the realization that that warfare scenario has entered into discussion over biotechnology. So after the Covid-19 pandemic, the policy makers of both periphery and core state will work on new technological area which has the Medical technologies, Nanotechnologies, Biotechnologies etc. for the improvement in health sector will be crucial for the progress in future.

Conclusively, the current COVID-19 as a bioweapon has resulted in a clear impetus and will definitely bring a shift in the states attitude towards medical research and the multiple fields of technology in future, this is so because COVID-19 has created a ground for relevance of Kondratieff 6th wave.

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How U.S.’s Response to Covid-19 Could Precipitate 2nd Great Depression

Eric Zuesse

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On March 10th of this year, there were 290 daily new U.S. cases of Covid-19 (coronavirus-19).

On March 13th, U.S. President Donald Trump declared a pandemic national emergency, because the number of daily new cases was now suddenly doubling within only three days. However, no lockdown was imposed. The policy-response was instead left to each individual. This is in accord with America’s libertarian idelogy. Trump even announced that “he was allowing his health secretary to bypass certain regulations to provide more flexibility to doctors and hospitals responding to the outbreak” — outright reducing, insead of increasing, federal regulations, this being his way to address the matter. That’s the libertarian response.

Covid-19 (coronavirus-19) cases started soaring in the U.S., from 600 daily new cases on March 13th, to 25,665 on March 31st. Americans were scared to death, and facemask-usage soared, and independent small businesses started laying people off en-masse. (Restaurants, hair salons, travel agencies, inns, dental offices, etc., were hard-hit.)

Immediately, the alarming rise in new cases halted on April 4th (at 34,480), and the daily new cases remained approximately flat, but slightly downward, from March 31 to June 9th (when it reached bottom at 19,166), but then soared yet again, to 78,615, on July 24th.

But, then, it again declined, so that, on September 8th, it was at only 28,561. This was already returning to around what the new-cases rate had been back on March 31st. So: despite peaking again on July 24th, the rate of daily new cases was little changed between March 31st and September 8th. And, all during that 5-month period, people were coming back to work.

The key immediate and direct economic variable affected by Covid-19 is the unemployment rate. Here, that economic effect is clearly shown:

U.S. unemployment: March 4.4%, April 14.7%, May 13.3%, June 11.1%, July 10.2%, August 8.4%

Though the daily-new-cases rate went down after March 31st and after July 24th, the unemployment rate progressed far more gradually downward after March 31st: the small businesses that had been panicked by the explosion of new cases during March were now gradually re-opening — but they remained very nervous; and, so, unemployment still was almost twice what it had been during March.

Here, that experience will be compared with two Scandinavian countries, starting with Denmark, which declared a pandemic national emergency on March 13th, just when Trump also did. “Starting on 13 March 2020, all people working in non-essential functions in the public sector were ordered to stay home for two weeks.” The daily new cases fell from the high of 252 on March 11th, down to the low of 28 on March 15th, but then soared to 390 on April 7th, and gradually declined to 16 (only 16 new cases) on July 9th. Then it peaked back up again, at 373, on August 10th, plunged down to 57 on August 26th, and then soared yet again back up to 243 on September 8th. The new-cases rates were thus irregular, but generally flat. By contrast against the experience in U.S., Denmark’s unemployment-rate remained remarkably stable, throughout this entire period:

Denmark: March 4.1, April 5.4, May 5.6, June 5.5, July 5.2

Sweden’s Government pursued a far more laissez-faire policy-response (“The government has tried to focus efforts on encouraging the right behaviour and creating social norms rather than mandatory restrictions.”), and had vastly worse Covid-19 infection-rates than did the far more socialistic Denmark, and also vastly worse death-rates, both producing results in Sweden more like that of the U.S. policy-response than like that of the Danish policy-response, but far less bad than occurred on the unemployment-rate; and, thus, Sweden showed unemployment-increases which were fairly minor, more like those shown in Denmark:

Sweden: March 7.1, April 8.2, May 9.0, June 9.8, July 8.9

That was nothing like the extreme gyration in:

U.S.: March 4.4%, April 14.7%, May 13.3%, June 11.1%, July 10.2%, August 8.4%

Why was this? 

Even though Sweden’s policy-effectiveness was more like America’s than like Denmark’s at keeping down the percentages of the population who became infected, and who died from Covid-19 (i.e., it was not effective), Sweden’s policy-effectiveness at keeping down the percentage of the population who became unemployed was more like Denmark’s (i.e., it was effective, at that). Unlike America, which has less of a social safety-net than any other industrialized nation does, Sweden had, until recently, one of the most extensive ones, and hasn’t yet reduced it down to American levels (which are exceptionally libertarian). Therefore, whereas Swedes know that the Government will be there for them if they become infected, Americans don’t; and, so, Americans know that, for them, it will instead be “sink or swim.” Make do, or drop dead if you can’t — that is the American way. This is why Swedish unemployment wasn’t much affected by Covid-19. When a Swede experienced what might be symptoms, that person would want to stay home and wouldn’t be so desperate as to continue working even if doing that might infect others. Thus, whereas Sweden’s unemployment-rate rose 27% from March to May, America’s rose 202% during that same period. Americans were desperate for income, because so many of them were poor, and so many of them had either bad health insurance or none at all. (All other industrialized countries have universal health insurance: 100% of the population insured. Only in America is healthcare a privilege that’s available only to people who have the ability to pay for it, instead of a right that is provided to everyone.)

On September 9th, Joe Neel headlined at NPR, “NPR Poll: Financial Pain From Coronavirus Pandemic ‘Much, Much Worse’ Than Expected”, and he reported comprehensively not only from a new NPR poll, but from a new Harvard study, all of which are consistent with what I have predicted (first, here, and then here, and, finally, here), and which seems to me to come down to the following ultimate outcomes, toward which the U.S. is now heading (so, I close my fourth article on this topic, with these likelihoods): 

America’s lack of the democratic socialism (social safety-net) that’s present in countries such as Denmark (and residual vestiges of which haven’t yet been dismantled in Sweden and some other countries) will have caused, in the United States, massive laying-off of the workers in small businesses, as a result of which, overwhelmingly more families will be destroyed that are at the bottom of the economic order, largely Black and/or Hispanic families, than that are White and not in poverty. Also as a consequence, overwhelmingly in the United States, poor people will be suffering far more of the infections, and of the deaths, and of the laying-off, and of the soon-to-be-soaring personal bankruptcies and homelessness; and, soon thereafter, soaring small-business bankruptcies, and ultimately then big-business bankruptcies, and then likely megabank direct federal bailouts such as in 2009, which will be followed, in the final phase, by a hyperinflation that might be comparable to what had occurred in Weimar Germany. The ceaselessly increasing suffering at the bottom will ultimately generate a collapse at the top. Presumably, therefore, today’s seemingly coronavirus-immune U.S. stock markets, such as the S&P 500, are now basically just mega-investors who are selling to small investors, so as to become enabled, after what will be the biggest economic crash in history, to buy “at pennies on the dollar,” the best of what’s left, so as to then go forward into the next stage of the capitalist economic cycle, as owning an even higher percentage of the nation’s wealth than now is the case. Of course, if that does happen, then America will be even more of a dictatorship than it now is. Post-crash 2021 America will be more like Hitler’s Germany, than like FDR’s America was.

The Democratic Party’s Presidential nominee, Joe Biden, is just as corrupt, and just as racist, as is the Republican nominee, Donald Trump. And just as neoconservative (but targeting Russia, instead of China). Therefore, the upcoming November 3rd elections in the U.S. are almost irrelevant, since both of the candidates are about equally disgusting. America’s problems are deeper than just the two stooges that America’s aristocracy hires to front for it at the ballot-boxes.

Author’s note: first posted at Strategic Culture

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Economy

Democracy in the doldrums

Samudrala VK

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It is clear that during the COVID-19 pandemic  times, Democracy has gone pear shaped throughout the world. Power and Political activity are considered as alpha and omega of the modern day democracy.
The Modern state(political authority),which is based on legitimacy and a tool to deliver political, economical and social justice, has been rendering yeoman service to
corporates, both domestic and foreign. The ruling dispensations all around the globe have resorted to authoritarianism under the guise of health emergency. In addition, the topsy turvy of Democracy, through excessive centralisation and the iron curtain imposed on political activities during this pandemic, has left minimal space to raise the concerns of the urban poor. The pandemic, a bolt from the blue, has caught our health systems off guard. In India, the labour class has caught between the devil and the deep sea, thanks to the recent twin moves of the central government, privatization and the helter-skelter lockdown. The pernicious effects of the lockdown are yet to hit the masses. Seemingly, the rudderless policies of central government have created enough space to further pauperization of masses, mostly have-nots.
Now, the federal governments of third world countries have to walk on razor edge by meeting the fiscal deficit targets on one hand and by connecting the welfare dots on the other.It is not surprising to say that the big corporates are making good fortunes with the relaxation of tax rates and new labour codes. As unemployment is hanging like the sword of domacles over the working class, the corporate class would expect this surplus labour to be at their beck and call.The early warnings of intelligentsia on the consequences of disastrous lockdown  were remained as the voices crying in the wilderness. The ruling elite has been trying to enshroud the general despondency among the civic force by shifting the propaganda machinery to sensitive elements like religion, hyper nationalism and sloganeering-not to mention self aggrandizement.

Neo-liberalism and corporatisation

The diktats of the world bank and the IMF(International monetary fund) on the third world nations like pruning the subsidies, roll back of welfare measures and the abatement of labour laws as an essential sina qua non for any sort of relief package during the crisis of BOP(Balance of payments) have left labour class of the thrid world nations in quandary. The US with the support of the WTO( World Trade Organization)had exhorted all these countries to provide untrammeled access its products. Apparently, the aims and paths of federal governments of these nations ,the WTO and the IMF are congruent with regard to free trade and the globalization of capital. The lawful protections for the working class under the labour laws have proved disastrous for the interests of the capitalist class and being viewed as shackles for the exploitation. The decades-long struggle to retain these labour rights in independent nation states has been ending in smoke due to weakened trade unions and the decline of social capital. The time has come to fight tenaciously and move heaven and earth to restore their rights which are otherwise go to the dogs. When the market space is being dominated by Monopoly or Duopoly or Tripoly, the free and fair competition which the unhindered market guarantee is an absolute sham. Extolling the virtues of Neo-liberalism, the modern nation states have centred their development agenda in and around urban centres. Economically, in the post-liberal era of India, the upward mobility is largely confined to a few sections of the urban middle class.

Welfare economics

It is wrong to mention that welfare economics is based on “Rob Peter to pay paul principle” when Peter has direct access to resources(natural, political, economical and social) vis-a-vis Paul. It is not the Peter but the Paul who is running from the pillar to post in search of opportunities. The notion of political equality of liberal ideological stream revolves around freedom and liberty of an individual and overlooks the core elements of equality like social and economical justice. The central governments all over the world have successfully repudiated the pro-poor agenda and this volte face from welfare state to pro-capitalist state has pushed the labour class out of the frying pan into the fire.

Nexus between political class and biggies

The unholy nexus between the political class  and corporates has been riding roughshod over the interests of poor. This alliance behooves the political class to safeguard the vested interests of corporate bigwigs. It is apposite to mention that representative democracy has been metamorphosing into a turncoat democracy. Back in the day, Politicians were known for their erudition, statesmanship and uncompromising ideological commitment. On the contrary, present day representatives are turning into snollygosters for their personal gains. There are several voluminous reports from different corners on rising economical disparities in the post-liberal era on which no political party is keen to act upon. As Michael Jackson, king of pop, penned in one of his famous tracks “All I want to say is that they don’t really care about us”-the lyrics are still relevant in this pandemic times.

Globalization and dependency

The South Asian nations have started their LPG (Liberalisation, privatization and Globalization) path at the same time, with the exception of Sri Lanka which had opened its economy by fits and starts.They had adjusted their economical apparatus with a new global integration process at a time when the global economical architecture was dominated by unipolar power, the US.
The lopsided globalization process has been converting many third world countries as dependents and in some cases almost to a level of aid recipients upon the erstwhile colonial powers or the US. Under the banner of global integration, all these nations were dragged into this complex whole, in most of the cases through persuasion. In the name of free trade, the Western powers have been  bleeding these nations white of their resources. The asymmetrical globalization has also challenged the sovereignty of these nations while the same has remained intact in case of developed nations. The US has been playing a rigged game of globalization under the auspices of the WTO, the world bank and other agencies. The time has come for these players to bury their hatchet and rise as a one voice to have a just order at the international sphere.

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