Archive for category: Economy

Information and stories about economy.

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Poverty is Reality for Struggling Spain

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The Great Recession brought economic progress to a virtual standstill in the Western World: property values plummeted, the stock market took a hit to the gut and unemployment rates spiked. In the United States, investors and employees are slowly getting back on their feet, but are still anxious due to the ping-pongish activity of the Dow Jones and mediocre new job numbers from the Department of Labor.

While Americans struggle to digest their nation’s 6.7 percent unemployment rate, some Europeans are choking on jobless numbers affecting upwards of 20 percent of the workforce, even over five years after the economy first took a nosedive.

The European Union’s austerity measures have yet to restore stability to pre-bailout levels and a recent Oxfam report revealed “only the richest 10 percent of Europeans…have seen their wealth rise” as a result of the well-intentioned policies. Macroeconomists measure the ongoing crisis in terms of government debt, budget deficits and income inequality, but the individuals and families affected in floundering nations like Spain feel the sting of poverty in an acute and personal way.

Spain, a pillar of culture and history on the European continent, hosts millions of tourists each year who yearn for a taste of Hispanic culture and a hint of the nation’s unique flavor. Few westerners would suppose that a historic power player overflowing with natural beauty is home to a poverty rate on par with former socialist nations Romania and Bulgaria.

Spain’s saga followed the same basic trajectory as that of the United States. In 2008, following a property boom, regional governments that had raked up pricey expenses found themselves with empty pockets and out-of-control debts. A shaky central government with debt of its own was unable to provide enough federal assistance to localities and the nation found itself in an economic tailspin.

E.U. interventions such as the aforementioned austerity measures have thus far been ineffective in creating jobs and a critical portion of the Spanish workforce has emigrated in search of opportunities suited for their skill set. Those remaining must clamor for dwindling, low-paying positions.

Many former middle class Spanish families have found themselves unexpectedly living under the poverty line.

A whopping 15 percent of Spaniards subsist on less than half of the national median income and nearly 10 percent have unfortunately arrived at “great poverty” status, indicating a household income below 40 percent of the national average. For Spaniards, these rates translate into monthly earnings of below 555 euros and 444 euros, respectively, for the two groups.

Women and young people are disproportionately affected by poverty in Spain. According to Eurostat, a full 1.2 percentage points (to the detriment of females) separate the number of impoverished men and women. Similarly, six percent more young people fewer than 25 years of age suffer in poverty than Spanish citizens in their late twenties and beyond.

Rising power bills, a frozen minimum wage and more expensive public transportation will add to the burden for a generation of Spaniards who, on an aggregate level, greet 2014 “a little poorer.”

Frustrated citizens, the backbone of 2011’s “los indignados” movement (a precursor to Occupy Wall Street,) will continue to push back against policy decisions negatively impacting an increasingly impoverished working class. Poverty will be synonymous with reality for over 20 percent of Spaniards until Spain’s anemic economy is jump-started back to life.

– Casey Ernstes

Sources: Eurostat, Forbes, Global Research Centre for Research on Globalization, Inequality Watch, Oxfam International, The Huffington Post, The Huffington Post WorldPost
Photo: Food Not Bombs

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Prison and Poverty

Prison and Poverty
The incarcerated population of the United States has reached over 2.3 million, making the U.S. incarceration rate the highest in the world, housing more inmates than the top 30 European nations combined.  Mass incarceration strategies were put in place, in part, to reduce crime in poor neighborhoods, but decades after their initial implementation, individuals and communities continue to suffer.

Researchers attribute some of the large increases in prison populations to longer mandatory sentencing.  Going hand in hand with longer sentencing is the fact that the incarcerated population is disproportionately concentrated among young minority men with very low levels of education.   For instance, black men experience 20% longer prison sentences than white men for similar crimes.

When people are in their twenties and are locked up for 10 to 15 years, they not only adapt to the extreme culture of prison, but when they exit, they will find it hard to assimilate into normal society.  Moreover, the slim job prospects many people faced before going into jail are worsened upon release.

Sociologists have found that once one takes into account the various socioeconomic factors, incarceration typically reduces annual earnings by 40% for the former average male prisoner.  This does not include wages lost while behind bars or the burdens endured by the prisoner’s family and community during the stint.

Prison has such a debilitating impact on the U.S. that taxpayers end up spending over $50 billion annually on maintaining the system of incarceration.  Without the significant incarceration efforts made by the U.S. government, researchers calculate that the nation’s poverty rate would be 20% below the current level, equaling to roughly 9 million people who would be less reliant on subsidies and assistance programs.  These same people would add to the tax base and make up potential consumers of American products.

Furthermore, slightly under half of federal prisoners are in jail for drug crimes and nearly half of all prisoners in state prisons are there for non-violent offenses.  As a result, the Obama administration has recognized the moral and economic need to curb prison populations.  In 2013, Attorney General Eric Holder Jr. announced policies that would increase the use of drug-treatment programs as alternatives to incarceration while expanding another program which releases inmates who committed non-violent crimes and have served significant portions of their sentences.

The experiment of mass incarceration in the name of public safety has been a clear detriment to American society.  Rather than throw away money and effort to a system that perpetuates unemployment, poor health, family instability and other conditions of poverty, the U.S. must focus on social policies that improve opportunities for those on the lower pegs of the socioeconomic ladder.

– Sunny Bhatt

Sources: New York Times, National Public Radio, Bureau of Justice Statistics

Photo: Barnard.edu

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Venezuelan Economic Spiral

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Eudomar Tovar is the Central Bank President in Venezuela and has taken the spotlight most recently for blaming a nation-wide blackout on sabotage. Accusations have been made that the Central Bank has been using their gold supply in a deal with Goldman Sachs and Bank of America to increase hard currency.

Tovar vehemently denies that the Central Bank is doing any sort of business with either Goldman Sachs or Bank of America. Henrique Capriles, an opposition leader, claims that Central Bank was involved in a value swap with Goldman Sachs for the equivalent of $2 billion dollars (USD) in gold ounces. Central Bank has also been accused of dealing with Bank of America to pay off debts owed to foreign governments. Tovar denied any such deals and claimed they were unofficial proposals, but did not elaborate or further explain the Bank’s position in regards to these claims.

The main problem is that Venezuela is experiencing a shortage of basic goods, and could potentially use its huge reserves of gold to procure a loan from such companies such as Goldman Sachs or Bank of America. Main Central Bank officials have complained that they are due a huge amount of hard currency from Washington, and that the red tape and delay in receiving this currency is causing inflation and product shortages.

Furthermore, a decrease in oil supply has caused tension on the dollar value, making some think that Venezuela is in desperate need of cash. The value of gold has decreased as well, putting a dent in the net worth of the country’s enormous gold reserves. As it stands, only government channels have access to the dollar due to harsh capital requirements, which often causes delays and bottlenecks day-to-day cash flow.

Leaders of the South American nation do not believe in free market capitalism and have tightly controlled the cash flow for decades. Consequently, the country falls more deeply into poverty every year, while the tyrannical government is not improving the situation.

President Maduro replaced the recently deceased President Chavez, who had a reputation for spending funds that could not be liquidated. Shortages have increased, inflation has risen to 55% and an inside Bank official claimed that Venezuela was indeed conversing with Wall Street. However, all three parties involved had no comment to offer on these claims. The economy is in a downward spiral, encouraged by the fact that stores cannot buy new inventory due to the cost of goods being higher than the retail price.

Questions are circulating about methods of intervention and whether American aid is appropriate, as well as questions regarding the depth of corruption in the Venezuelan government. Basic economics further show that public spending is good for the economy, when business have the right to compete with each other for capital gain.

The absence of a free market suggests that if Bank of America or Goldman Sachs loaned Venezuela the cash they need, it would just be reinvested into a corrupt system and exacerbate the problem. Solutions must involve correcting the dishonest practices of the government and its leaders so that the citizens will not continue to suffer, but instead thrive.

– Kaitlin Sutherby

Sources: Reuters, The Wall Street Journal: The Pope, State and Venezuela, The Wall Street Journal: Blackout
Photo: Vintage 3D

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Myanmar to Reclaim Title “Asian Rice Bowl”

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Myanmar makes strides towards reclaiming the title of being the primary source of rice exports, so named the “Asian Rice Bowl,” by doubling its rice production and export.

In fact, Myanmar aims to ship 2.5 million metric tons of rice between 2014-2015 with a targeted increase of 4.8 million tons between the years 2019-2020. In comparison, Myanmar shipped approximately 690,000 tons last year, ranking 9th in the world.

Among Myanmar’s competitors are its neighboring countries: Thailand, Cambodia and Vietnam. In its favor, Myanmar holds vast arable land, a large water supply and labor force, as well as low production costs.

Myanmar’s primary beneficiaries include Russia, as well as a number of other European and African countries. Half of Myanmar’s rice shipment goes towards its largest shipper: China.

However, a key hindrance to Myanmar’s growth concerns the remnants of its past military regime. Myanmar was the largest exporter of rice between 1961-1963.

More importantly, Myanmar’s prime deterrent in reestablishing itself as a large rice exporter is its infrastructure. With almost five decades run by a military junta, Myanmar has since seen little development in mechanization, basic electricity, telephone networks, and facilities such as governmental buildings are severely lacking in computers. From processing and shipment to transport, Myanmar is also lacking in the quality of its ports.

As the nation shrugs off 49 years of dictatorship rule, Myanmar is ready to show the world, particularly foreign investors, that the rules will change. In 2010, pro-democracy and Nobel Peace Prize winner Aung San Suu Kyi was released. Since then, many more political prisoners have been released. Political parties formed and participated in parliamentary elections in 2012 and in the same year, privately owned newspapers were allowed into the country.

Results have come about. Previous economic sanctions by the United States and the European Union have been lifted. The Asian Development Bank, in a bid to jump start the fledgling regime’s economic and social institutions, granted loans to Myanmar. Furthermore, Myanmar recently regained its position in the Association of Southeast Asian Nations (ASEAN).

Despite a history of human rights abuses and ethnic and religious conflicts occurring, Myanmar is implementing necessary changes, starting with rice.

In regards to its citizens, Myanmar’s working sector is heavily tied to the rice industry in which an estimated 70% of the population partakes. Additionally, 13% of Myanmar’s gross domestic product is in the rice industry.

In order to truly be the Asian Rice Bowl, Myanmar must continue to cultivate and foster its existing industry towards creating a surplus of opportunity for its citizens.

– Miles Abadilla

Sources: BBC: Increase in Rice Exports, BBC: Reforms in Burma, Bloomberg, Thomson Reuters: Analysis, Thomson Reuters: ASEAN Chair
Photo: Giphy.com

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A Congress of Millionaires

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As Congress debated extending unemployment benefits, like Medicare and Social Security disability benefits, a report regarding other benefits was released. The Center for Responsive Politics found that, for the first time in history, more than half of the Congressional members are worth more than $1 million.

The report, released in early January, finds that at least 268 out of the 534 current members of Congress have an average net worth of more than $1 million. The numbers are based on personal disclosures filed in 2013, regarding the 2012 fiscal year. To calculate net worth, the Center added together the members’ assets, such as corporate bonds and stocks, and subtracted liabilities such as credit card loans and mortgage debt.

Overall, Senators are wealthier than House members while Democrats are slightly wealthier than Republicans.

The fact and knowledge that Congressional members are much wealthier than the average Americans they represent is not new. Intuitively, politicians need large sums of money to run campaigns, and are more likely to have access to influential donors if they themselves are wealthy.

However, this is the first time in history that we have a Congress of millionaires, where over half of Congress is worth more than $1 million. That fact is somewhat ironic, as it is Congress who determines unemployment benefits, food stamps and the minimum wage, as well as legislation to overhaul the tax code.

Josh Bivens, director of research at the Economic Policy Institute, was quoted in the New York Times as saying, “Congress not only seems more responsive to policy desires of the very rich, but increasingly they are the very rich.

These findings also come at a time when wealth disparity within the United States of America is becoming a political focus. During the summer of 2013, Obama decried the “inequality of opportunity” while Pope Francis recently drew attention to growing economic inequalities – a message that Congress supported.

These issues of inequality are likely to weigh heavily on the 2016 election. Whether or not the pressure will result in a more economically diverse group of representatives remains to be seen.

– Claire Karban

Sources: Open Secrets, New York Times, LA Times, Time, New York Times Blogs
Photo: Nation of Change

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NPR Makes a T-Shirt

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Take a look at the shirt you’re wearing. Odds are it’s better traveled than you are.

National Public Radio’s (NPR) Planet Money recently published a multimedia series on the making of a T-shirt and its extraordinary journey through the world economy.

Believe it or not, your shirt and others like it are a wonder of the modern world.

The five part series follows a T-shirt from cottonseed to ink print. It would seem like a simple process, but the Planet Money special reveals the hidden complexity of a global enterprise.

Behind each of these cheaply produced shirts are multinational corporations and complex trade deals between nations — but, most of all, people’s lives. While the series takes a look at the entire process, it is the human connection that it seems most poised to drive home.

Although the chapters are mostly delivered through a dispassionate reportage, the deleterious effects of the garment industry in the developing world are likely to ignite the passions of most viewers.

Perhaps the most illuminating of these stories is that of Jasmine in Bangladesh.

More than 4 million people like Jasmine work in the garment industry in Bangladesh. Many of these people work for less than 35 cents an hour.

Cramped living and working environments, the absence of electricity and running water as well as disease make life extremely difficult. Jasmine, herself, lives in a small group home without running water and sends most of her earnings to her parents.

However, these hardships pale in comparison to the risk many of these workers face.

For instance, while the Planet Money team was filming, a major garment building in Bangladesh collapsed killing over one thousand workers. The online series shows difficult images of bodies tangled in the framework of the building.

Tragically, without the garment industry, NPR argues, Bangladesh would be worse off still.

In the end, the shirt they made traveled thousands of miles by air, by land and by sea. Even so, it’s total production cost just over 12 dollars. The cost in time, travel and human toil, however, is something a bit larger.

It is a complicated process with complicated results but for people in developing nations that make the goods that the developed world buys, the garment industry’s work is a double bind.

On the one hand, it sustains their entire nation and on the other, it does not sufficiently provide for, or protect, its workers. If nothing else, NPR has created a series that does not shy away from presenting a complex image of an industry, its products and its people.

– Chase Colton

Sources: NPR, Al Jazeera
Photo: Giphy.com

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Economy Strong, Poverty in Israel

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Over the last several years, Israel has enjoyed economic growth and low unemployment. Unfortunately, that is not all good news. A report recently released by Israel’s National Insurance Institute and the Central Bureau of Statistics indicate that over 1.7 million people, or 23.5 percent of the population, live below the poverty line. Of the 1.7 million people living in poverty, 817,000 of them are children and 180,000 of them are elderly. In addition, one in five households is living at or below the poverty line.

In recent years, Israel has been seen as up and coming in the high-tech sector, drawing international attention. Even though Israel is seeing significant progress, The Organization for Economic Cooperation and Development (OECD) released a statement saying, “Israel’s output growth remains relatively strong, unemployment is at historically low levels…However, average living standards remain well below those of top-ranking OECD countries, the rate of relative poverty is the highest in the OECD area.” The report also adds that the poverty problem is affecting some groups more than others, “Among Arabs and in the rapidly growing ultra-Orthodox Jewish community poverty is over one in two, mainly due to low employment rates among Arab women and ultra-Orthodox men”

The OECD indicated that Israel surpassed some of the average measures of other OCED members; it ranked far below average in similar social themed categories. These categories included housing, education and skills, social connections, work life balance, environment quality, personal security, and civic engagement. Fixing some of these social problems could help alleviate poverty in Israel. Action that should be taken should target groups that are endemic with poverty and other related problems such as Arabs and the ultra-Orthodox Jewish community.

The OECD did offer several options for different solutions that could help alleviate poverty in Israel. One major suggestion was to improve education, especially in areas with severe levels of poverty. Another suggestion was to begin the process of pension and welfare reform to ensure that it is capable of coping with an aging population. Finally, the OECD favored sales tax increases over income tax increases so the tax does not become more of a burden on already cash-strapped families.

– Colleen Eckvahl

Sources: Your Middle East, JTA
Photo: Ivarfjeld

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Merchant Marines and Food Aid Bill

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For some, the U.S. Merchant Marine represents an organization that shuttles American imports and exports around the world during peacetime while becoming a naval auxiliary during wartime. For others, they represent the largest obstacle to food aid reform.

Current food aid regulations stipulate that at least 80% of aid must be shipped by U.S. citizens on U.S. flagged vessels. Critics argue that needless money and time is spent hauling items around the world when food could be purchased locally in a much more timely fashion.

President Obama proposed a food aid overhaul in 2014’s fiscal budget that would reach an estimated 2 to 4 million more people within the year. Specifically, he wished to expand local and regional procurement procedures and food vouchers.

U.S. mariners were not amused by this proposal, however. When the food aid amendment attached to the farm bill reached the Congress floor, maritime lobbyists worked strenuously to ensure it wouldn’t pass, and succeeded.

The U.S. merchant marines provide a unique service for the United States. As they are not employed by United States military, they are able to service both the government and private sector.

The duality of their role in regard to the United States is significant for a number of reasons. The Navy League, a special interest group representing the U.S. maritime community, reports that they provide over 33,000 jobs for Americans, account for $1.9 million in economic output and $24 million in household earnings. Although food aid reformists argue that the shift in these numbers would be slight, by only a few hundred, Merchant Marine advocates contend that change would usher in the end of the merchant marines all together.

The Merchant Marine’s ability to transport troops and supplies during wartime, known as sealift, may be severely impacted if reform results in job loss. The U.S. Maritime Service was established by President Roosevelt in 1938 in anticipation of needed shipping vessels to both the European war front and Pacific Theater. The Merchant Marine provided invaluable service during the war, and current mariners argue that their services are still necessary.

Despite the mariners concerns, the Obama Administration has plans to counteract any negative effects the reform may usher in by providing aid directly to the U.S. Merchant Marine.

The administration proposes shifting $25 million of the efficiency savings that will be obtained through the food aid reform to the Department of Transportation’s Maritime administration. According to the White House International Food Aid Fact Sheet, this additional funding will provide a vehicle to support sustainment of militarily-useful vessels and a qualified pool of citizen merchant mariners.

Although this may not be the solution the merchant mariners were hoping for, the strong advocates for food aid reform may ensure that this is the best they can expect.

– Emily Bajet

Sources: The Center for Public Integrity, U.S. Merchant Marine FAQ, The Maritime Executive, The White House: International Food Aid Fact Sheet
Photo: Giphy.com

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UN Economic and Social Council

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On January 23, 1946, the first session of the United Nations Economic and Social Council (ECOSOC) was held.  Almost 68 years later, ECOSOC is still grappling with the world’s economic, social and environmental challenges.  The broad categorization is daunting, especially since the Council and its subsidiary bodies are responsible for about 70 percent of the entire U.N. human and financial resources.  The span of ECOSOC encompasses economic, social, cultural, educational and health concerns, according to the U.N. Charter.  The Council’s subsidiary bodies demonstrate the diversity under ECOSOC’s umbrella of responsibility: U.N. Forum on Forests, Commission on Narcotic Drugs, Commission for Social Development, and the various regional commissions.

The U.N. General Assembly elects the 54 member-governments, with each region allocated a certain number of seats.  The U.S.’ three year term began in 2012 and will end in 2015.  The Colombian representative is currently President, with four Vice-Presidents from Albania, Austria, Pakistan and Sudan.  The year 2013 has seen major reform efforts from the Council, aiming to make ECOSOC more effective, more issues-oriented, and more responsive.  For example, the Commission on Sustainable Development held its final session in September after it was slated to be dismantled due to lack of progress in its sector.  The chairperson acknowledged that though the Commission greatly influenced the 21st century environmental goals, it did not create the change sought out by the larger Council.

As a result of its extensive areas of focus, ECOSOC is one of the most important humanitarian bodies in the United Nations.  One of the early acts by ECOSOC was to adopt the Commission on Human Rights’ Universal Declaration of Human Rights, an early stepping-stone in the path to equality.  The current reforms mark an important return to an issue-centered approach that many hope will lead to greater progress in the subsidiary bodies’ foci.

– Katey Baker-Smith

Sources: UN News Centre, UNISDR

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Cambodian Garment Worker Clash Turns Deadly

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One bystander was killed and 20 people were injured when police clashed with protesting garment workers in Phnom Penh, Cambodia on November 12, 2013.

Workers at the SL Garment Processing Ltd. Factory, one of the largest in Cambodia and a supplier to many western brands including Gap and H&M, marched from the factory towards Prime Minister Hun Sen’s Phnom Pehn home to protest unfair wages and poor factory conditions. They were, however, blocked by police at Stung Meanchey bridge. Reports differ on which side started the violence, which escalated to more than 100 police officers firing tear gas, rubber bullets and live ammunition into the crowd, who were armed mainly with rocks and sticks. Police arrested 37 people, including seven monks, who were later released.

The march marked the three-month anniversary of 4,000 workers walking out of the SL factory to protest the presence of armed military police, which they viewed as an intimidation tactic meant to expel unions. Company shareholder Meas Sotha incited rage among workers with his claim that police were only there to protect the factory. SL 2 joined the strike, demanding raised salaries as well as a $3 per day lunch stipend and Sotha’s ousting.

Conditions in Cambodia’s more than 500 garment factories, though better than in some areas of the nation, are dismal. Wages are low—workers at SL, for example, make just $75 monthly—and factories are unsafe, with poor ventilation, recent collapses and regular fainting masses of malnourished workers. About 500,000 Cambodians work in garment and shoe factories, supporting the industry that accounts for 80% of the country’s exports. In 2012 alone, Cambodia exported $4.45 billion in products to the United States and Europe.

The protests erupted at a time of international attention on the garment industry following several deadly incidents at factories in Bangladesh, including a factory collapse at Rana Plaza that killed over 1,100 people in April. According to the New York Times, many multinational organizations are now looking to Cambodia as an alternative to factory locations in Bangladesh. Unfortunately, in Cambodia, strikes are frequent, though factory concessions are small and rare.

Workers at Alim Cambodia Co. Ltd. blocked a road in Phnom Phen on November 13, 2013 also protesting for higher wages. The demonstration was short-lived, breaking up due to rain when protestors became concerned they would get sick.  The Alim protestors were demanding a $1 lunch stipend, and were angry that the factory was paying new workers $93 monthly to their $89.

The Cambodian government has made few efforts to back garment workers, and seems largely indifferent to workers’ rights. In fact, government-official-mediated talks about wages between unions and SL ended in a deadlock.  Although the Cambodian People’s Party raised the monthly minimum wage from $61 to $75 earlier this year, reports by the local Community Legal Education Center and United Kingdom-based organization Labour Behind the Label found that a single garment worker needs at least $150 monthly to cover basic needs.

The United Nation’s International Labor Organization (ILO) released a report calling for the compliance of the Cambodian government and garment companies in improving workplace conditions in the garment industry, specifically concerning fire safety, child labor as well as worker safety and health. The ILO also announced in September it plans to continue the practice of “naming and shaming” factories that violate the law.

– Sarah Morrison

Sources: The New York Times, NPR, The Cambodia Daily: Garment Worker Clash, The Cambodia Daily: Protest, AlJazeera, AlJazeera America