By Roberto Savio
ROME, Jan 22 2015 (IPS)

Every day we receive striking data on major issues which should create tumult and action, but life goes on as if those data had nothing to do with people’s lives.

A good example concerns climate change. We know well that we are running out of time. It is nothing less than our planet that is at stake … but a few large energy companies are able to get away with their practices surrounded by the deafening silence of humankind.

Roberto Savio

Another example comes from the world of finance. Since the beginning of the financial crisis in 2009, banks have paid the staggering amount of 178 billion dollars in fines – U.S. banks have paid 115 billion, while European banks 63 billion. But, as analyst Sital Patel of Market Watch writes, these fines are now seen as a cost of doing business. In fact, no banker has yet been incriminated in a personal capacity.

Now we have other astonishing data from Oxfam – if nothing is done, in two years’ time the richest one percent of the world´s population will have a greater share of its wealth than the remaining 99 percent.

The richest are becoming richer at an unprecedented rate, and the poorest poorer. In just one year, the one percent went from possessing 44 percent of the world´s wealth to 48 percent last year. In 2016, therefore, it is estimated that this one percent will possess more than all the other 99 percent combined.

The top 89 billionaires have seen their wealth increase by 600 billion dollars in the last four years – a rise of five percent and equal to the combined budgets of 11 countries of the world with a population of 2.3 billion people.

In 2010, that figure was owned by 388 billionaires, and this striking and rapid concentration of wealth has, of course, a global impact. The so-called middle class is shrinking fast and in a number of countries youth unemployment stands at 40 percent, meaning that the destiny of today’s young people is clearly much worse than that of their parents.“In a world where the value of solidarity has disappeared (Europe’s debate on austerity is a good example), apathy and atomisation have become the reality. We are going back to the times of Queen Victoria, substituting a rich aristocracy with money coming from trade and finance, not production”

It will probably take some time before those figures become part of general awareness but it is a safe bet that they will not lead to any action, as with climate change. U.S. President Barack Obama is the only leader who has announced a tax increase on the rich, although he stands little chance of succeeding with his Republican-dominated Congress.

In a world where the value of solidarity has disappeared (Europe’s debate on austerity is a good example), apathy and atomisation have become the reality. We are going back to the times of Queen Victoria, substituting a rich aristocracy with money coming from trade and finance, not production. But up to a point: 34 percent of today’s billionaires inherited all or part of their wealth, and – interestingly – “inheritance tax is the most avoidable of levies”, as James Moore noted Jan. 20 in The Independent.

The “father of modern times”, late U.S. President Ronald Reagan, saw it clearly when he said that the rich produce richness, the poor produce poverty. So let the rich pay less taxes.

Well, in a just-released report, the U.S. Institute on Taxation and Economic Policy notes that in 2015 the poorest one-fifth of Americans will pay on average 10.9 percent of their income in taxes, the middle one-fifth 9.4 percent, and the top one percent just 5.4 percent.

Now, 20 percent of the richest billionaires are linked to the financial sector and it is worth recalling that this sector has grown more than the real economy, and has regulations only at national level. At global level, finance is the only activity which has international body of some kind of governance, as do labour, trade and communications, to name just a few.

Finance is no longer at the service of the economy and citizens. It has its own life. Financial transactions are now worth 40 trillion dollars a day, compared with the world’s economic output of one trillion.

At national level, there are now attempts half-hearted attempts to regulate finance. But let us look what is happening in United States. The new bland regulation is the Dodd–Frank Wall Street Reform and Consumer Protection Act, commonly known as the Dodd-Frank, and it does not go as far as restoring the division between deposit banks, which was where citizens put their money and which could not be used for speculation, and investments banks, which speculate … and how!

This separation was abolished during the U.S. presidency of Bill Clinton, and is considered the end of banks at the service of the real economy. In any case, the lobbyists on Wall Street are intent on having the Dodd-Frank chipped away at, little by little.

There is some schizophrenia when we look at the relations between capital and politics. The U.S. Supreme Court has eliminated any limit to contributions from companies to political elections, declaring that the companies have the same rights as individuals. Of course, there are not many individuals who can shell out the same figures as a company, unless you’re one of the 89 billionaires!

Meanwhile, banks are not only responsible for the corruption of the political system, and for the illegal activities which have earned them billions of dollars, they are also responsible for funding only big investors, and leaving everybody else out from easy credit. The efforts of the Chairman of the European Central Bank,  Mario Draghi, to have banks give credit to small companies and individuals has gone largely nowhere.

But a new and imaginative initiative comes from the very stern Dutch bankers. All 90,000 bankers in the Netherlands are now required to take an oath: “I swear that I will endeavour to maintain and promote confidence in the financial sector. So help me God”.

This is not so much oriented towards the customer, and it is very self-serving; and it brings God in as the regulator of the Dutch banking system. Perhaps the Dutch bankers have been paying heed to the words of Goldman Sach’s CEO Lloyd Blankfein who said at the time of the financial crisis in 2009 that bankers were “doing God’s work”.

Well God will have to be actively involved. All the three biggest Dutch banks – Rabobank, ABN Amro and ING Groep – have been involved in scandals that have hurt consumers, or were nationalised during the financial crisis, costing taxpayers more than 140 billion dollars. In one case, Rabobank was fined one billion dollars.

New York’s Wall Street and London’s City are said to be open to the idea of introducing a similar oath.

It is probably only that kind of Higher Power which could turn the tide in this world of growing inequality and lack of ethics. (END/IPS COLUMNIST SERVICE)

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

The author can be contacted at utopie@ips.org

Excerpt:

David Kamau on his farm in Nyeri County, Central Kenya. Although he now grows carrots for sale in addition to maize, he says his efforts are yet to pay off. Credit: Miriam Gathigah/IPS

By Miriam Gathigah
NAIROBI, Dec 17 2014 (IPS)

David Kamau is a small-scale maize farmer in Nyeri, Central Kenya, some 153 kms from the capital Nairobi. He recently diversified into carrot farming but is still not making a profit.

He says that inputs cost too much and if this trend continues he will sub-divide and sell his five hectares.

This is the story of many small-scale farmers in this East African nation, where agriculture accounts for about one-quarter of the Gross Domestic Product (GDP). But small-scale farmers – accounting for about 75 percent of total agricultural produce – barely break even.

“A 150 kg bag of carrot is now going for about 27 dollars, up from 22 dollars, but as prices go up, so does the cost of inputs,” says Kamau.“The growth of both urban and rural slums is an indication that more people are falling on hard times” – Dinah Mukami of the Bunge la Mwananchi pro-poor social movement

According to the Ministry of Agriculture, an estimated five million out of about eight million Kenyan households depend directly on agriculture for their livelihoods. Yet agriculture fails to provide an adequate return to farmers because their sector is significantly underfunded, explains Jason Braganza, an economic analyst based in Nairobi.

The percentage of the budget for the agricultural sector is 2.4 percent, down 0.6 percent from the 3 percent in the 2012/2013 budget and well below the threshold of the 2003 African Union Maputo Declaration on Agriculture and Food Security, which mandated that at least 10 percent the national budget should be allocated to agriculture.

The result, says Kamau, is that “farmers are slowly moving out of the farms and trying other economic ventures, Central Kenya used to be a breadbasket but farmlands are being replaced by residential and commercial complexes.”

Farming is not the only sector feeling an economic downslide. Small businesses in Kenya are faced with a lack of essential business support services, especially financial services. Two-thirds of Kenyans do not have access to basic financial services such as banking accounts.

“The growth of both urban and rural slums is an indication that more people are falling on hard times,” according to Dinah Mukami of the Bunge la Mwananchi [People’s Parliament] pro-poor social movement.

She says that the group is planning to hold the government responsible regarding the use of the information in the ‘Socio-Economic Atlas of Kenya’ which the government released last month. The report exposes significant disparities in poverty levels across the country.

“The Atlas is a powerful tool, but whether the government will use the information to change lives and improve living standards remains to be seen,” she says.

Felix Omondi, a resident of Kibera, a division of Nairobi considered the largest slum in Africa, and a member of the Unga Revolution, a local activist group, is one of those who believes that the Atlas is doing some good.

He told IPS that that a programme is under way to upgrade slums and said that this is “one of the ways that the government is using the Atlas to improve the lives of people in the slums.”

In the last three months, the government has been working with residents of the slums to establish income-generating projects and provide basic amenities such as toilets, lighting and drainage.

At least 3,000 youths in Kibera will benefit from these projects. Omondi, a beneficiary, says that he is running one of the posho (corn meal) mills set up by the government to generate income.

Kenya now officially a “middle-income country”

Meanwhile, in autumn the news came out that Kenya had seen its economy grow 25 percent after statistical revision and is now officially a “middle-income country”. A few months ago, a similar type of revision brought Nigeria’s economy to the top of African countries in terms of the size of the economy, surpassing South Africa for the first time.

A growing middle class population is an important driver of this growth, but what does that middle class look like? The recently revised Kenyan figures indicate that the Gross National Income (GNI) per capita is 1,160 dollars against the World Bank’s “middle income” threshold of 1,036 dollars.

The latest income-distribution indicators for Kenya (which date back to 2005) show the following:

• 45.9 percent of the population was at the national poverty line;
• The income share held by the top 10 percent was 38 percent.

This out-of-date, official information excludes the informal economy, observes Africa Arino, professor of strategic management at the IESE Business School in Spain.

“A taxi driver makes KES 15,000 a month (about 178 dollars or 132 euro), and pays KES 3,500 (close to 25 percent of his income) to rent a room where he lives with his wife and two children,” Arino explains.

“They don’t have a kitchen or a bathroom: these are facilities shared with others in the same building lot. His income is pretty much the average salary of a driver, according to the Kenya Economic Survey 2014. Is he middle class?”

According to Braganza, one of the main challenges facing Kenya is that while the country’s economic growth is real and sustainable, the structure of the economy has remained unchanged. Resources have not shifted into the most productive sectors of the economy which would increase overall productivity and an increase in remunerative employment.

Braganza says that for people to feel the trickledown effect of the economic growth, there must also be structural transformation. “There is a need for more investment in the more productive sectors, as well as investment in emerging sectors. This will contribute towards a reduction in unemployment and poverty.”

(Edited by Phil Harris)

By Judith Niehues
COLOGNE, Sep 20 2014 (IPS)

Thomas Piketty, a French economist who works on wealth and income inequality, has triggered a debate on the distribution of income and wealth in many countries. This is no small issue because views on income inequality and concomitant redistributive preferences are crucial to the design of tax and transfer systems.

Particularly in many European countries, society is concerned about distributional issues, reflected in recurring debates on redistributive policies. However, a study presenting international survey data on subjective perceptions of inequality and redistributive preferences reveals that perceived and actual inequality diverge quite substantially in many of these countries.

Dr Judith Niehues

According to the 2009 Social Inequality Module of the International Social Survey Programme (ISSP), more than 50 percent of Germans strongly agree that differences in income are too large.

Correspondingly, a similar portion of Germans thinks that it is “the responsibility of the government to reduce the differences in income between people with high incomes and those with low incomes” – a questionnaire item which is commonly used to capture subjective preferences for redistribution.

Regarding this majority of critical views on inequality, social justice and redistribution are topics for debate that continually feature on the political agenda in Germany – reflected in the current introduction of redistributive policies, such as a minimum wage and additional pension benefits for mothers.

On the other hand, in the United States – which is characterised by a far higher degree of actual income inequality – people are less concerned about income differences, and they do not see any reason for redistributive state intervention. There is virtually no empirical relationship between the actual size of inequality within a country and how critical people view these income differences to be.

The missing link between inequality and its assessment is not specific to these two countries. In a sample of 23 European countries and the United States, there is virtually no empirical relationship between the actual size of inequality within a country and how critical people view these income differences to be.

Obviously, there might be a range of individual and national factors which may explain cross-country differences in critical views on income differences and related redistributive preferences.

For example, in line with the argument of the “American exceptionalism”, people in the United States might just accept certain inequalities as incentives because they believe in the chance of upward mobility.

On the other hand, Germans may be more convinced that income positions arise from luck or other exogenous circumstances, thus regarding inequality as more unfair, and therefore they might demand more state redistribution.

However, current research on mobility reveals that there is a tendency for countries with higher inequality to also be associated with less income mobility.

Looking instead at how types of societies are perceived – a questionnaire item also included by the ISSP – gives some clues: 54.2 percent of Germans believe that the bulk of the German population lives rather at the bottom of society.

To what extent does this perceived type of society match with actual income distribution in Germany? Although there are different ways of demarcating society into a “bottom”, a “middle” and a “top”, studies generally reveal that the middle class represents by far the largest group in German society.

In particular, independently from the chosen definition of income groups, people on middle incomes are far more numerous than those at the bottom of the income distribution scale. This rather pessimistic view on income equality is typical of the European countries studied.

In most countries, the population significantly overestimates the degree of inequality. This is particularly true for former socialist countries such as Hungary, Slovenia as well as the Czech and Slovak republics.

In Hungary, for example, 56.6 percent of the population views Hungarian society as “a small elite at the top, very few people in the middle and the great mass of people at the bottom”, although the country is characterised by one of the lowest income inequalities in the European Union.

Thus, it is not that former socialist countries view already small income differences as much more critical, but that the population is just not aware of the small level of income inequality.

The situation is different in the Scandinavian countries. Here the various populations are much more realistic about the low levels of inequality and truly identify their societies as “typical middle class models”.

In contrast to the European countries, the United States reveals a completely different picture: U.S. citizens substantially underestimate the extent of inequality in their country. The lower income group in the United States is considerably larger than Americans suppose

This varnished view on inequality in the United States is not new – but it is rather new that in European countries it tends to be the other way round.

These results provide an explanation of why redistributive policies find more support in some countries than in others.

Although results from previous ISSP surveys suggest that cross-country differences in views on inequalities and redistributive preferences tend to change slowly, it would nevertheless be interesting to see if critical views on income differences and redistributive preferences would change if citizens were aware of the actual degree of inequality in their countries.

Interestingly, the overestimation of inequality is adversely related to the absolute level of living standards in corresponding countries. Thus, it might also be the case that the perceived structuring of the society is more associated with absolute levels of living standards than commonly suggested.

(Edited by Phil Harris)

Excerpt:

Batman, a familiar character in demonstrations in Rio de Janeiro, supports the “rolezinho” in front of Shopping Leblon with a placard reading “We are all equal.” Credit: Fabiana Frayssinet/IPS

By Fabiana Frayssinet
RIO DE JANEIRO, Feb 7 2014 (IPS)

They poured into shopping malls en masse to have some fun. But the reaction, a mixture of fear, admiration and heavy-handed repression, brought a new youth movement into being in Brazil: the “rolezinhos.”

In Brazilian youth slang, “rolar” means to go out with friends on a leisurely stroll, and the call to join these mass outings has become, in the view of some, a revolutionary movement, while for others it mirrors the consumerist longings of the emerging middle class.

It started in December 2013, when a group of young people used Facebook to plan a rolezinho (little outing) at a shopping centre in the southern city of São Paulo, “to have a bit of fun” in a country where entertainment and cultural events are expensive. Six thousand youngsters showed up. For social organisations and those on the left, rolezinhos express popular discontent or the fight against discrimination.

Police repression and the Brazilian government’s fears for the FIFA World Cup it will be hosting in June and July 2014 have only caused rolezinhos to spread to other cities.

“We came to prove that poor young people are consumers too,” Iata Anderson, a geography student, told IPS when a rolezinho took place Jan. 19 in front of the upmarket Shopping Leblon in Rio de Janeiro, leading to its preventive closure, in spite of the low numbers who came.

Anderson, like many other rolezinhos (a participant in a rolezinho is also called a rolezinho), is under 20. Although he lives in a “favela” (shanty town), he represents the new Brazilian middle class, who are studying at public universities and have access to the internet, credit and purchasing power, thanks to a decade of leftwing governments under former president Luiz Inácio Lula da Silva (2003-2011) and current president Dilma Rousseff.

“I came to support the rolezinhos in São Paulo, which are being met with tear gas and police beatings. This only happens because the participants are Afro-Brazilians from the periphery, who are seen as out of place in the luxurious sophistication of the shopping malls,” he said.

On Jan.11 militarised police used rubber bullets and pepper spray against some 1,000 young people engaged in a rolezinho at a shopping centre on the periphery of the city. There were 60 arrests.

The Brazilian Association of Shopping Centres (ABRASCE) says the malls are “democratic spaces catering to people of all social profiles and different ages” and that they “welcome diversity and social inclusion, frequently in areas with few entertainment options.”

They are also “meeting places for the majority of young people,” it said.

In the view of sociologist Ignacio Cano, of the Laboratory for the Analysis of Violence at the University of Rio de Janeiro, the police reaction “was disproportionate”, as was the closure of shopping centres in order to thwart rolezinhos.

This episode was “in contradiction to the historical tendency of shopping malls, which are temples of consumerism and now also entertainment centres, which increasingly attract ever more diverse people, whether or not they make purchases, and recently are also providing public services,” he told IPS.

Cano says it will be disappointing if shopping centres lose their “universalist” vocation and become “more elitist” instead.

However, for many people that is already the case.

“A dark-skinned person at a shopping centre is immediately targeted for close watching by the security staff, who think we are probably going to steal something,” cargo assistant Diego Meier told IPS, adding that he regards these malls as “palaces of the bourgeoisie and capitalism.”

“At times I am badly served by staff and I notice that it is dark-skinned Afro-Brazilians who work the security shifts or clean toilets. We must have the same rights, independently of skin colour, social class and purchasing power,” said Anderson, an Afro-Brazilian like Meier.

Rousseff herself criticised the harsh police response and prejudice against poor young people.

Minister for Racial Equality Policies Luiza Bairros said that rolezinhos were “peaceful demonstrations” and that black people should not automatically be associated with the idea of crime, as is customary.

“The problems arise when white people are afraid of young black people,” she said.

“The shopping centre is a novelty. We want to get to know a place that used to be only for the upper classes,” information technology student Waldei Teixeira told IPS.

Brazil’s middle and upper classes associate the presence of overwhelming numbers of poor black youngsters in public spaces like the beaches, with the danger of “dragnet” attacks by mobs of thieves.

But rolezinhos do not loot or steal or destroy.

“There are much larger crowds in the shopping malls during the Christmas shopping season. Is that a threat to the security of the shopping centre?” asked Anderson.

What started out as a collective way to have some fun evolved largely because of the way it was repressed, which “creates a political goal, because when young people feel challenged they try to overcome the prohibitions against them,” Cano said.

The upcoming world football championship and the presidential elections next October make the rolezinhos a political instrument, Fernando Gabeira, a journalist and former member of Congress for the Green Party (Partido Verde), told IPS.

“Small movements can grow into big movements, as happened in June 2013, with the outbreak of large protests against fare increases in public transport and corruption, and demands for better health care and education,” he said.

At first, the reason for the rolezinhos was “to democratise the space for whoever wanted to enjoy the beauty of the shopping centres,” said Gabeira. Now, in his view, everyone tags the phenomenon with “his or her own political and ideological aims.”

For social organisations and those on the left, rolezinhos express popular discontent or the fight against discrimination.

The government, on the other hand, views them as “an expression of dynamism, social mobility and the changes that have occurred in Brazilian society in recent years.”

This mobility is expressed in the consumerism of this new “niche market”, which paradoxically, is being catered to by the shopping centres themselves, consisting of a new middle class avid for cellular phones, computers, the latest televisions or stylish clothes.

In Gabeira’s view, rolezinhos are clamouring for their right to consume, as part of the consumer society.

The transformation from a social class that up until recently had no future, into another that has dreams, is expressed in the music that young people taking part in rolezinhos listen to at top volume in the shopping centres.

The lyrics and videos of “ostentation funk” proclaim that the road to happiness involves climbing the social ladder, marked by the possession of luxury goods and, afterwards, going out with blondes.

“This kind of funk was a preview of the rolezinho phenomenon. It shows a desire, conscious or unconscious, for social integration. But it’s also part of the culture,” film student Gonzalo Gaudenzi, who studied the history and origins of the genre, told IPS.

Brazilian funk (inspired by U.S. rap music) was born in the urban peripheries with lyrics on everyday topics such as drug trafficking, narcotics, police repression or sex.

But with the spread of social welfare, it began to reflect the aspirations of many of the 30 million people, in this country of nearly 200 million people, who were lifted out of poverty thanks to an economic model based on domestic consumption as the springboard for growth.

“If the music they listen to all day is telling them that to get the best girls and the highest social status they have to have the best cars, clothes and watches, even if they can’t buy them they will want to get close to that world and feel its presence. And where can they do that? At the shopping malls,” said Gaudenzi.