Aspiring politicians seeking to make jobs and China an issue should not just focus on the sheer number of jobs moving abroad, but the nature of them and what can be done to combat labor abuses. Someone who has been doing this for many years is Harry Wu, who will deliver the 2013 Center for Asian Democracy’s annual democracy lecture in January. His work chronicling the laogai includes several books, establishing the Laogai Museum in Washington, D.C., and founding the Laogai Research Foundation, for which he currently serves as Executive Director. Wu introduces people to the nature of life in these camps through the powerful perspective of his own experience. For nearly twenty years, he endured starvation, abuse, and torture with his fellow inmates whose only crimes were possessing a certain political viewpoint or being born into a particular socioeconomic class. Anyone interested in learning more about the real substance of international relations, domestic human rights issues, or the nature of the global economy, should make a point of attending his talk.

AUTHOR: Dr. Jason Abbott
URL: http://profjabbott.blogspot.com
E-MAIL: jason.abbott [at] louisville.edu

20.000 Iranian rial

Iran’s currency, the rial, fell as much as 18% on Monday to a record low against the US dollar, according to media reports. It dropped to as much as 35,000 to the dollar, according to agencies citing currency exchange sites in the country.The currency has reportedly lost 80% of its value since the end of 2011.

The fall suggests economic sanctions imposed over its disputed nuclear programme are hitting economic activity ever harder. The rates were not available on the exchanges’ websites later in the day, supposedly because Iran did ot want to make known the full extend of the fall.

Iran is all but frozen out of the global banking system as a result of US-led sanctions, which are related to Iran’s presumed ambition to obtain an atomic bomb. The sanctions, which are backed by the European Union, include a ban on the trade of Iranian oil, which means Iran is unable to sell its oil to most other countries. Analysts think it may also have to accept lower prices from countries still willing to trade with it.

According to a recent report by the Iranian newsagency Fars, which was translated by BBC Monitoring, “Iranian technological analysts” said in an open letter to the president that most of the country’s economic problems had been caused by the weakness of the currency – as imported raw materials used by manufacturers need to be paid for in hard currency. A weaker domestic currency makes imports more expensive and is expected to raise prices for people inside Iran.Latest figures indicate that inflation is running at an annual rate of 24% in Iran.

AUTHOR: Martin Hijmans
URL: http://the-pessoptimist.blogspot.com/
E-MAIL: m.hijmans [at] planet.nl

APRM-the African Peer Review Mechanism, is a program of the African Union (AU) that seeks to foster political, social and economic prosperity of the member states through participation of the people in assessing their countries governance status.

Speaking in Dar es Salaam today, the head of the APRM Unit at UNECA, Dr. Kojo Busia told the press that the workshop that will invite key planning officers from both the Union and Zanzibar governments and some representatives of the civil society will look on how to harmonize the APRM Tanzania programme of action (NPoA) with other government plans.

“This workshop presents a unique opportunity to Tanzania stakeholders with information and best practices that could form the core process for harmonizing the APRM -NPoAs with pre-existing national plans within the context of a common medium-term expenditure framework (MTEF).

“It also is a useful forum for experts from APRM participating countries to exchange views on the key challenges affecting the process and suggest concrete tools and ways to make the APRM-NPoA a credible and an operational document for the national socio-economic development of our countries,” he said.

Speaking in the event, the Coordinator of the APRM review process for Tanzania, Dr. Rachel Mukamunana from APRM Continental Secretariat in South Africa, said Tanzania has reached a significant stage in the APRM process and its report, the Country Review Report is being finalized.

On her part the APRM Tanzania Executive Secretary, Rehema Twalib thanked UNECA and UNDP for their everlasting contributions to see to it that Africa and Tanzania realize their governance improvement goals as per the APRM objectives.

“The workshop on harmonization of the APRM Programme of Action with national planning frameworks in our country comes at a very crucial moment in the APRM process when Tanzania and many other African governments are seriously pondering on how to effectively implement the very good ideas and plans they have innovatively initiated, such as the African Peer Review Mechanism,” she said.

She added that since Tanzania has completed the initial stages of governance review under the APRM, the final report will be submitted in October, 2012 ready for the country to start working on the stakeholders’ opinions.

“Finally the consolidated report will in January, 2013, be submitted to the AU meetings in Addis Ababa, Ethiopia by H.E. President Jakaya Kikwete. The encounter between H.E. President Kikwete and his African peers in Addis Ababa will then usher for Tanzania a new journey of implementing the views of the people and experts contained it its Country Review Report,” she added.

The African Peer Review Mechanism (APRM) is a mutually agreed governance assessment program of the African Union (AU) and was formerly launched in 2003. Tanzania acceded to the Mechanism in 2004; Tanzanian Parliament ratified for the domestication of the process in Tanzania in its 1st February, 2005 session.

As African governments are required to take the lead in funding the process, for coordination and budgetary purposes, APRM Tanzania was streamlined as one of the programs of the government of the United Republic of Tanzania and placed under the Ministry of Foreign Affairs and International Cooperation. To date, PRM enjoys an increasing number of its membership which is currently 34 out of 54 African countries.

AUTHOR: Shout Africa
URL: http://www.shout-africa.com
E-MAIL: news [at] shout-africa.com

Introduction

1. Sustainable growth or long-term contraction?
Can the level of steady growth and development that the US, Japan and Western Europe experienced during the early Cold War, or the kind of growth that China, India and Brazil experienced in the last two decades be sustainable and carry with it the rest of the world economy? Was such growth  achieved at the expense of periphery nations exporting raw materials and importing manufactured goods, and could the uneven trade and income relationship on a world scale continue to provide sustainable development in the 21st century? Some believe this would be the case, but if the basic geographic and socioeconomic structure does not change, is it not reasonable to conclude the same problems will exist down the road, thus precipitating contraction within spurts of growth regionally instead of sustainable growth globally?

2. Globalization under the Neo-Liberal Model.
Will the era of globalization under the neo-liberal model persist, regardless of its detrimental impact on the welfare state and on laboring and middle class incomes? If the current model does not persist, will there be a trend toward regional blocs that will become increasingly protectionist? Will there be new models of integration in Europe and US to compete with China, or will there be increased tendency toward national economic sovereignty? This a difficult question to answer, for it challenges the imagination to see how globalization under neo-liberalism can proceed without precipitating self-destructive tendencies in the economy, and creating extreme social and political volatility.

3. Does the Bretton Woods best serve the 21st century economy?
Will international agencies, especially the International Monetary Fund (IMF) and World Bank continue to play the significant role they have been in the last fifty years, or will there be a revision of Bretton Woods as the focus for economic growth shifts from West to East? Helping to manage the world economy has been easy for the IMF and World Bank because they have had the backing of governments, commercial banks and corporations behind them. How long this will last is a matter of public confidence in the political and financial institutions that back the IMF and World Bank. What if the consensus widens that these financial institutions are impediments to growth and national sovereignty, serving only very large corporate interests?

4. Concentrated Wealth and Chronic Poverty
Will there be a greater concentration of wealth or better distribution to allow for lessening of poverty and upward social mobility? Will the chronic problem of endemic poverty be solved around the world, or will it actually worsen and increasingly spread to  advanced countries as statistics currently indicate? There are optimists, arguing that endemic poverty can come to an end and upward social mobility can be realized. Maybe some day egalitarianism can be achieved, but it would have to come after systemic change in society and I seriously doubt that it will be in the 21st century that seems to be repeating some structural patterns of Imperialism in the 19th century, especially 1880-1914.

5. Global Struggle for Raw Materials
Will the struggle for water, minerals, and raw materials in general intensify and cause regional conflicts? All indications are that nations will fight on behalf of their corporation for control of raw materials and markets, using all kinds of ideological and political justifications to stake their claim. The struggle for raw materials and markets is never a ending one and it could explode into a global war in this century after a possible large-scale depression in the 2030s. However, the fear of mutual destruction owing to massive weaponry, including nuclear on the part of a number of countries, may be a deterrent.

6. What is the European Union’s role in the world economy? 
At the start of this decade, the situation appears more dire for the full and associate members of the Europe Union, once the envy of the world as the most progressive integration model of a regional bloc, but on the verge of an uncertain future. In 1947, President Harry Truman realized that without a strong and stable Europe, the US could not possibly be strong politically, economically and militarily. To some degree, this remains true today in the age of even greater inter-depedence in the world economy, and with Asian economic ascendancy threatening the traditional Western balance of power. Given that the US has spent its way into a weak monetary situation owing to record public debt and balance of payments deficits, it is in no position to help stabilize Europe as it did in 1947 with the Marshall Plan. This means that the Western nations face a very serious crisis that is at its root political but manifesting itself in the economy with social and political consequences. 

7. Can Developing Nations provide the stimulus for 21st century growth?
Can Africa, Latin America and smaller Asian and Eurasian nations that account for less than 20% of the world’s GDP provide the impetus for growth and sociopolitical stability in the 21st century, given that US, Western Europe and Japan seem to have reached a point of irresolvable contradictions in the political economy? The Third Third has the largest reserves of raw materials and cheapest labor with the largest potential for growth and development. Developing (or more accurately, underdeveloped nations) is where China certainly is investing for the 21st century, followed by the traditional G-7 nations also competing for markets and raw materials, especially strategic minerals.

Regional blocs, including the recently formed CELAC that includes 33 Latin American and Caribbean countries, but excludes the US and Canada, may have an impact on containing the globalization/neo-liberal momentum that swept across the world in the last two to three decades. Could regional blocs, nationalism and sociopolitical instability preclude the rapid growth and development of developing nations needed to provide a stimulus for the world economy in the 21st century? Does the fact that there is a heavy-handed foreign policy on the part of the US and its European partners help or hinder the development of underdeveloped nations like Iraq, Afghanistan, Middle East and Africa? Could the clash of civilizations – East versus West – continue to impede growth and development in the Islamic world that the US and the West has stigmatized with the war on terror?

8. Is finance capitalism at the root of economic volatility and decline? 
The combination of a number of things could mean a very difficult three to five years for the world economy, but longer-term there may be even bigger structural problems unless governments begin to do a better job of regulating, monitoring, and enforcing mechanisms of accountability. The idea of securing profits for the financial sector at the expense of the rest of society – profiting  when times are good and still profiting when times are bad – is not one that workers and the middle class will tolerate forever.

One can imagine a world in which banks and finance companies determine everything from monetary and fiscal policy to labor and social policy; a world where socioeconomic polarization is even worse than it was one hundred years ago on the eve of the Great War in 1914. This scenario does not have to play out, but given the current trends in the political economy of the West as well as other nations like Russia and India, it may be very plausible.

Society will not tolerate forever numerous banking scandals involving illegal activities, including deals with drug lords and other underground entities engaged in international weapons trade, while the taxpayer pays for bank bailouts. Perpetual manufactured speculation on government bonds that drives up rates and prevents a quick economic recovery in every sector from housing to manufacturing and keeping unemployment high is not something that society will tolerate forever.

The lack of a coordinated monetary policy on the part of central banks, with the ECB playing games with rhetoric instead of adopting a realistic monetary policy to free the regional bloc from its downward trend indicates that the creditor-debtor nation gap will impede growth and development, not just regionally, but globally. In the absence of monetary and fiscal policy intended to absorb the large unemployed and underemployed population and raise living standards does not leave room for optimism. Not only will there not be steady economic growth and development given the policies intended to concentrate capital in the top one percent of the world’s population, but there will not be harmonious social and political conditions in the rest of the decade or the rest of the century.

9. Can the BRIC nations save the world economy?
So where do we go in this century, given where we have been in the past and were we are currently with the BRIC nations providing some light at the end of the economic contraction cycle? The global economy at the start of the 21st century is not off to a good start, although the notable exceptions are Brazil, Russia, India and China (BRIC) countries with enormous potential but with the largest percentage of the world’s population and the world’s poor. Besides having a serious poverty problem, BRIC nations are not exactly models of social justice or Norwegian-style democracies. Moreover, they have the potential of sociopolitical instability owing to the contradiction of rapid short-term GDP growth, while the poor-rich gap persists due to a very slow upward mobility that would account for a strong middle class. In short, the ‘Asian-Eurasian’ miracle has a limited time span with some structural risks.

10. Is there a Science/techno fix for society?
Can science and technology provide a solution to economic problems and can science and technology alter the consumerist atomistic values that go along with the existing political economy, or is the solution strictly political? Every government and every international organization from the UN agencies to the OECD emphasize that innovation is key to societal economic and social health in the 21st century. Science and technology will make vast strides to improving the quality of life, but that quality of life would be too expensive to afford for the majority of the earth’s population. Science and technology available today can solve world hunger and water shortage problems, but if it is not profitable for corporations to do so, it does not take place. Science and technology can provide medical assistance to children in sub-Saharan Africa and Central America, but if it is not profitable for pharmaceutical companies, they will do nothing. The science/techno-fix is a mirage unless policy is behind it to support its application to humanity, all of humanity.

11. Lessons from history
After the end of the Cold War, a number of scholars from around the world tried to determine what geopolitical model the world resembles, agreeing that most likely it is that of pre-1914. The world’s political economy based on globalization and neo-liberalism, combined with raw US-NATO military intervention in non-Western areas as a means of resolving conflict certainly suggests that we may be back in the pre-1914 era. However, history may resemble itself but never exactly repeats itself because conditions change on a daily basis. The world of regional blocs today is very different than the spheres of influence in the pre-WWII era, or even in the Cold War eras when the Soviet bloc, the US-bloc and the non-aligned represented a certain order with a degree of predictability. Today we have very distinct signs of instability in the political economy, signs that may predict sociopolitical instability.

a. Expansionary Cycle of neo-liberalism and globalization1980-2000
 Easy credit/low interest rate era of 1980-2000 coincided with the Reagan-Thatcher launch of strengthening corporate welfare capitalism at the expense of social welfare and middle class incomes. This era was also known for neo-liberal triumph and globalization embolded by the downfall of the Communist bloc. Finance capital took advantage of the impetus that neo-liberalism provided to free itself of many regulatory restrictions that had been in place as a safety net in periods of economic contraction. Although the credit economy under a regime of regulations can function to best serve a pluralistic society, the credit economy cannot possibly be blamed because finance capitalists abuse, manipulate and corrupt the credit system in order to score quick and large profits, knowing that the entire house of cards will come down crashing as it did when the Lehman Brothers case erupted to trigger the current global recession.

Despite the deep economic contraction of the market economy from 2007 until the present, neo-liberals continue to defend the exact same system that caused the contraction. Refusing to accept that capital concentration causes vast distortions as it chokes off demand and leaves surpluses that the market cannot absorb, they argue that government is at fault because government has monopoly on the money supply and the fiscal system. This is true, except that government monetary and fiscal policy follows whatever direction finance capital wishes, because the ‘national interest’ is currently identified with finance capitalism – to some degree even in quasi-statist China. Anything that impedes finance capitalism, such as social welfare programs and a progressive tax system, is deemed dangerous to the political economy that has proved self-destructive and ruinous to the general welfare of society.

Added to this era of ebullient neo-liberalism and globalization was the advent of China that helped to provide an immense stimulus to the world economy. That China took a global lead in capitalism, although its own brand of a mixed economy, emboldened the apologists of globalization under the neo-liberal model. What went wrong in the process of all of the global economic growth was the loosening of regulations and relaxed oversight to the degree that banks were dealing with drug international lords and illegal gun dealers, to say nothing of fixing Libor rates and manipulating the bond market through hedge funds/CDS products, buying government debt and concealing it so that creditworthiness is not impacted, etc.; all of these illegal or at the very least highly questionable activities under the watchful eye of the political class that did nothing while receiving funding to run political campaigns, or bribes to supplement personal wealth.

We are now witnessing the convergence of a number of factors accounted for the beginning of the 21st century crisis, which entailed using the public debt as a pretext to transfer income from the middle class and workers to the corporate and finance capital sector, as well as capital transfer from the periphery countries to the core where capitalism has been suffering from its worst crisis since the Great Depression of the 1930s. Given the structure of the political economy from 1980 to 2000, which followed finance capital’s directives as evidenced by fiscal and monetary policies, in essence central banks serving the markets instead of regulating them for the general welfare of society, the contracting cycle was inevitable.
 
b. Recessionary Cycle 2007-present: Public Debt Crisis and Austerity
The manufactured war on terror after the tragedy of 9/11, combined with a new wave of defense spending in the first decade of the 21st century, and the wars in Iraq and Afghanistan that cost an estimated one trillion dollars, put an enormous strain on the global civilian economy. The crisis of finance capitalism promoted by the ‘below prime’ and other speculative enterprises caused public debt crises not just in the US and core nations (G-7), but sent public debts of many nations into risky territory that allowed for speculators to bid for higher interest rates until it became prohibitive to borrow in the free market.

Austerity policies imposed across Southern and Eastern Europe, something that was unthinkable two decades ago, suggests a heavy handed neo-imperialist direction, given that such policies have been reserved for Third World nations far too vulnerable to resist the power of core nations imposing austerity. In essence this means that the EU is creating a two-tiered economy with the strong and thus hegemonic economies on the northwest tier and the weaker and “dependent” economies in the south and east. Especially amid this crisis, creditor countries demand from weaker EU members lower taxes for direct foreign investment, fewer restrictions on capital movement, liberalization of all vital sectors of the economy, including privatization of public enterprises so that foreign investment penetrates and eventually dominates such sectors.

In return, they extend loans with interest rates higher than most home mortgages, and they saddle the debtor countries with cumulative foreign debt that will keep them perpetually dependent in every respect, from finance and trade to technology and essential pharmaceuticals. In an environment where the strong capitalist countries have been trying to perpetuate their economic, financial, monetary, trade, military, ideological and political hegemony over weaken nations the world is now experiencing a redefinition of the integration models based on some level of reciprocity. Clearly, the regional blocs were and remain in a state of realignment, as the models of integration are changing to reflect a sphere of influence scenario – as in pre-1914 – rather than mutual benefit scenario as globalization and neo-liberalism had promised.

c. Declining incomes and the specter of economic nationalism 
Statistics regarding working class and middle class incomes in most countries, including the G-7, suggest a steady decline for the past three decades or so. For example, in 1978, the US average hourly wage was $8.96 in real terms as compared with $8.57 in 2008, reflecting not just wage stagnation, but real downward socioeconomic mobility. It is estimated that 80% of the total income increase in the last three decades has been going to the top 1% of income earners, while the middle and bottom income groups resorted to increased borrowing at the same time as the public sector that was spending to buttress the corporate welfare system.

As workers and the middle class feels the downward income pressure amid rising personal debt, and as they are not optimistic about their children’s future, the tendency is to become more inclined to support economic nationalism. As time passes, economic nationalism of both the left and right ideological orientations is gaining momentum at the grassroots level. Europeans are losing faith in the common currency – Southern and Eastern Europeans losing faith for different reasons than northwest Europeans. Economic nationalism is also finding expression as a reaction to globalization in Latin America and around the world, in areas where people identify globalization with the corporate structure of the G-7. It is possible that popular support for economic nationalism increases throughout the first half of this century, expressing itself in a variety of political parties, business circles and social movements. This would entail an uphill battle for the continuation of globalization under the neo-liberal model.

12. The Population vs. Resources Debate
If population were to remain frozen for the next two decades, would the world avoid a possible great depression in 2030s; even if population were to drop by one billion, and resources across the board were to rise by 20% would the capitalist economy avoid a major contracting cycle under the model of massive capital concentration, uneven economic development, speculative, parasitic and corrupt banking and corporate practices, a state fiscal structure intended to buttress finance capital?

Finally, if poverty rises during contracting cycles, why has much of the Western World experienced downward social mobility in the past four decades amid a period of economic growth? Even if the state were to do everything that finance and corporate capital requested, short of allowing people to die of starvation in the streets, is it theoretically possible that the market economy can avoid economic contractions in the future, and a major one in the 2030s?

The projections for the rise in the population from the current 7 billion to 11 billion by the middle of the 21st century, and the limited energy, water, and food resources will be a major source of global sociopolitical instability, especially since the exploitation of natural resources rests primarily in the control of Western multinational corporations. Considering that the US has just under 5% of the world’s population but accounts for 25% of the world’s consumption, or 5% more than China and India combined whose population is more than seven times higher than the US. It is troubling, if not the ultimate social injustice, that 12% of the world’s population in North America and Western Europe currently accounts for 60% of the world’s private consumption spending, while one-tird of the world people living in Asia and sub-Sahara Africa account for just 3.2 percent of the world’s private consumption.

Some are optimistic that urbanization in Asia and Africa will result in higher living standards. While it is true that no rural-based economy has reached high income levels, and that rich countries are urban, it is not true that all urban countries are rich. If that were the case, Latin America with a large concentration of its population in urban areas should have been as developed as US and Canada. In the first decade of the 21st century, the average annual  urbanization growth was 2%, while in the Middle East and Africa it was 3%, and in Asia Pacific 2.7%. Concerned about rapid population growth and the lack of resources to meet the rising demand, the UN has warned about a global labor market recession especially in the underdeveloped nations and possible social unrest.
 
UN figures show that 324 cities with a population of over 750,000 has a rise of 20.0% in the last decade, with Africa, Middle East, Asia Pacific and Latin America as leaders. Currently at one billion people, Africa will see a doubling of its population in the next half century, thus accounting for 20% of the world’s population. Multinational corporations are counting on a continued surplus labor force that will keep consumption expanding horizontally, while keeping wages low.

13. The Green Solution – Cyber-Eco-Bourgeois Revolution?
Some have argued that 21stcentury economics means thinking ‘green’, but I have argued that the green movement is not much more than a Trojan Horse of finance capitalism. (Green Movement: Corporate Trojan Horse) To a large degree, not just governments, but a large segment of the population chose to surrender national  sovereignty to finance capital in exchange for the promise of consumerist paradise. Prevalent in developed and semi-developed countries, the cyber-eco-bourgeoisie (1970s-present) are now on the verge of a new revolution that is redefining the foundations of bourgeois liberal democracy. There is a “cyber-eco-bourgeois revolution” currently unfolding; a systemic change not in the mode of production but in thought and way of life that is a continuation of the Enlightenment spirit. Technology and contradictions in the political economy will continue to foster the evolutionary development of this post-web middle class. The cyber-eco-bourgeoisie will become more evident once it emerges from its nascent stage and reconfigures the entire social and institutional structure just as the mercantile bourgeoisie and their successors did in their time. 

Cyberspace-Eco Social Order is inevitable with the evolution of the bourgeoisie, largely because objective conditions will bring it about. The working class or at least a segment will be co-opted into the cyberspace-eco-bourgeois movement in more conservative countries like the US and UK, where institutions are under the firm control of traditional socioeconomic and political elites. In countries with a history of strong working-class consciousness labor will maintain greater socio-political cohesion and may forge alliances with other radical groups–students and cyber-eco bourgeoisie–as a way of retaining political influence. Whether co-opted by or antagonistic to the cyber-eco bourgeoisie, the comprador bourgeoisie inside and outside the formal economy, as well as the working class and its role in society will be influenced, if not largely determined, by the new middle class. Though this is already a reality in the rapidly evolving division of labor for the most advanced countries in high-tech sectors, it will become a reality for the entire world for that is at the core of the both the mode of production and mode of technology.

14. Conclusions

a. Social Discontinuity
Capitalism has been evolving in the past five centuries and it will continue to evolve in the 21st century in order to meet the economic, social and political conditions of societies and the nation-state. Short of grassroots revolutions in the core nations spreading to the periphery, I do not see social discontinuity threatening the capitalist system for the next one hundred years. This is because the system still has enormous room to grow and expand geographically and to continue integrating more segments that are currently on the fringes but have tremendous market-based potential. None of this spells good new for social justice, just as it entails continued uneven social and economic growth on a world scale under very tenuous political and social conditions.

b. War and Revolution
In the distinct absence of political multilateral solutions to conflicts, the advanced capitalist countries will resort to militarist hegemony solutions that will impede economic and social progress. Small wars and uprisings will likely be on the rise during this century. These are always an impediment to economic growth and development, especially for the countries on whose soil the conflict unfolds. Given current trends on the political economy, wars on a small scale as well social unrest not just in developing but also in advanced capitalist countries are a certainty owing to the reality that instant information and communications systems have made people more aware of the social injustice that exists and options before them. In fact, the 21st century may experience much worse social turbulence than the second half of the 20th century. In such social uprisings, and not the kind funded from foreign governments like those in Libya and Syria, may rest the seeds of systemic change and the hope for a better future.

c. Value System Change
For culture to survive and flourish society must have a degree of shared values it is willing to wholeheartedly embrace – spiritual as Hoffman maintains or material as Marxists argue – but also prosperity even if concentrated within a small group of people, hegemonic elites that foment the growth of the education, the arts, sciences and other cultural endeavors. At the same time, hegemonic elites that essentially create and propagate the dominant or mainstream culture are invariably successful in convincing the majority of the population to revere the cultural values and aesthetic achievements emanating from it only if there is not only an idealistic ultimate goal but a practical aesthetic aspect to culture.

While economic determinism has an impact in cultural trends–in everything from elite to popular culture–economic determinism is by no means alone in shaping culture from ancient to modern times. Value system change is inevitable and with it will come systemic change. However, throughout history there are rare examples of the elites that hold power yielding it voluntarily. This means that the 21st century will go through very difficult times as societies struggle to change in order to best serve the majority of the people and not an increasingly small minority.

AUTHOR: Jon Kofas
URL: http://jonkofas.blogspot.com
E-MAIL: jonkofas [at] yahoo.com

Harry Kitillya, Commissioner General, Tanzania Revenue Authority

African civil societies have been warned not to leave the issue of tax administration in the hands of the governments alone, instead they should form parallel institutions to monitor the same.

This call was made on Monday last week at the Kunduchi Beach Hotel during an International Training in Tax Administration.

The training to representatives of civil societies drew attendants being trainers and other participants from East Africa, West Africa and Southern Africa.

In the workshop that was convened by the Policy Forum NGO. It was learnt that tax collection is turned into a political weapon by many African countries Tanzania inclusive.

It was learnt that the political oligarchy tend to muzzle through tax collection the commercial people who are contrally to their tastes and they tend to give offers in various forms like havens, holidays, and exemptions those in their favour.

But this nasty game which has long term calculated moves to evade tax involves the multinational companies no wonder there are changes of names and ownership in some big companies in order to evade capital gain tax.

For instance in Tanzania there have been such changes with some five stars hotels and mobile phone companies which have been changing names with a short span of time in order to escape capital gain tax.

It was with such changes that the civil society and investigative journalists were counseled to investigate the motives behind such changes.

During his opening remarks the Policy Forum (PF) Coordinator Semkae Kilonzo said that tax administration has caused a lot of problems in African countries.

This is due to evasions which are manipulated through various corrupt means. He delineated that a lot of revenues are left untapped and therefore denying people adequate services.

“If taxes are not collected properly it means some of the Government’s revenues are left outside and hence denying the people income through services which are essential,” he commented.

He added that it was the duty of the civil society to ensure that reports are published and there is transparency on who should to pay what.

Dr William Mgimwa, Minister for Finance Tanzania

“The tax regime is poor in Tanzania and many other African countries because the whole issue has been left to the civil servants hence corruption and capital fight out of Africa have become common phenomenon,” he added.

Jack Ranguma a tax expert from Kenya said that he has conducted a lot of researches just to find that proper collection of taxes can be effective if various community groups are involved in the monitoring programmes.

Ranguma who is former Commissioner of Kenya Revenue Authority is currently working as a consultant with the Kenyan Tax Research Institute.

He mentioned such groups as parliamentary groups, villagers, and distribution functionaries with the aim of ensuring that there is justice in tax administration and that there is enough capacity building in order to create awareness.

“If people are reluctant to pay tax then it means that they do not see the direct benefit of paying taxes to their government and this is a reflection that either tax rates are too high, or the tax authorities are weak,” he commented.

Ranguma said that the main problem with developing countries like Tanzania is the fact that they give priority to the expenditure side than to the income generation one.

He challenged that this trend eventually deprives some important projects like hospitals, schools, infrastructures and hence leading to the vicious cycle of poverty.

He further explained that once there is proper collection of taxes there will be stable economy of a country. He warned that without this stability the rich tend to manipulate the economy much to their advantage.

“I am convinced that Africa, and other poor countries need to discuss with the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) more seriously, and constructively for both sides,” he commented.

The tax expert also argued that the failure to monitor social security funds and pensions which are other forms of tax, denies the weaker equity while at the same time these are more beneficial to the high ranking officials.

“Even social security fund is a tax but in a different name, that is why there are a lot of political involvements in these funds. These are meant for re-investment while other employees pay for the retirees,” he added.

Vituz Azeem who presented a paper on the link between tax justice and development said that tax is meant to support development, and if there is poor collection of the same this will be reflected in the national budget.

He warned that many African countries fall prey of corrupt officials in the customs and excises to the extent that big amounts are pocketed to their personal accounts than to the governments.

“Tax administration needs a lot of ethics, if you are working with the tax authority you need to declare your property, also these workers need to report their properties periodically,” he cautioned.

On the issue of tax leakages was Savior Mwambwa who presented a paper on the role of multinationals in tax exemptions, competition, and capital flight.

He said that exemptions are always issued in the pretext of attracting more foreign direct investments, reducing poverty and creation of jobs as well as to allow big growth of the economy.

But in many cases these exemptions are issued through ill motives. However he warned that a good number of such exemptions in various names be it haven, holidays etc, are doing harm to Africa economies than good.

“In many cases tax exemptions is just a creation of a room for corruption, there is a need to create independent body for scrutiny and independent prosecutors who can handle the matters in the court,” he counseled.

Dereje Alemayehu presented a paper on how to mobilize domestic resources in order to avoid dependency. He counseled that citizens must be induced to like payment of tax because in many cases a good number of people do not like payment of such.

“If citizens realize that there is a value for their money they will just be attracted to pay without any kind of harassments or intimidations,” he commented.

Alemayehu mentioned that there are four measures to make people tax willingly; to make state income transparent, to make equity in the provision of services, and minimize the externalization of costs.

Another method is to give voice to the citizenry in regard to public expenditures, on how incomes are generated and spent.

On his side Michael Otieno from the Kenya’s National Taxpayers Association (NTA) said that there is a need for the civil society to institutionalize mechanisms of verifying how tax is collected and spent in a country.

He counseled that through civil society advocacy people must understand that paying tax is amoral obligation and duty which has benefit to their lives.

AUTHOR: Elias Mhegera
URL: http://mhegeraelias.blogspot.com
E-MAIL: mhegeraelias [at] yahoo.com

The problem is echoed in other fields, with some blaming the inability of economists to understand institutions and politics a contributing factor to the 2008 financial crisis.

Economists were not always this ignorant. Thinkers such as Adam Smith and David Ricardo—known today as founders of the profession—considered themselves “political economists;” they never used the term “economics” by itself. The term didn’t stand by itself until the late 19^th century when it was separated into a stand-alone discipline.

This separation has been exacerbated by the mathematization of the field in recent years: the more econometrics forms the centerpiece of PhD programs and economists need to publish articles based on econometric studies to get ahead, the more the field depends on a numerical understanding of events. But, many of the most important issues that affect how policies play out are not translatable into numbers. The hyper-quantification of economics has encouraged a belief—never held by men like Smith—that politics (and institutions) do not matter. It has led to answers to important questions that work perfectly well in some office in Washington or Chicago, but that do not play out well in Lagos, Karachi, and Kinshasa.

As former World Bank President Robert Zoellick, who is not an economist, said in 2011,

Too often research economists seem not to start with the key knowledge gaps facing development practitioners, but rather search for questions they can answer with the industry’s currently favorite tools. . . . We need to know what works: we need a research agenda that focuses on results.

He has also expressed frustration that economists have not figured out the most important issues related to development, including what makes countries grow rapidly over a long period of time.

Although there have been attempts to put politics back in its proper place in recent years, the effort is hindered by the dominant role of economists in the development field (and has mostly failed). Whereas “development economists” have a leading role both in academia and in international organizations, there are no “development political scientists” because the profession does not exist. Many of the few people who work on the politics of development are trained as sociologists, anthropologists, or regional specialists, or learned first-hand on-the-ground how development works. Others are political scientists who have chosen development as their area of focus. They see development for what it is, not as how it has been explained in a classroom or in some theoretical application.

But such people remain a very small minority in the overall development field—and nothing happening now suggest that this will change in the future.

There is only one way to change this dynamic: create a separate profession that has equal stature to development economists but that focuses on political development and the politics of development. This new profession would have its own academic departments, own journals (some already cover aspects of the field), and own theories on development. It would encompass people like Douglass North, Francis Fukuyama, Barry Weingast, and the late Samuel Huntington in academia and David Booth, Mick Moore, and Sue Unsworth in the policy community. And it would offer a counter argument for how states evolve to the current widely-accepted model that equates democracy promotion with political development and underweights the role of politics in policy formulation and implementation.

A leading university and development think tank should take the lead and create this new profession. As a start, they should launch a new academic program that trains development political scientists. Combining knowledge from the fields of history, political economy, economics, sociology, and anthropology, this new field would produce experts that can play a role equal in prominence to development economists in interpreting and recommending policy for developing countries. They should work with leading experts who do related work (such as the New Institutionalists) to build up the field. The greater the stature of the field, the more the specialists in it are recognized, and the larger and more comprehensive the output they produce, the more likely that developing country governments and development agencies will place the emphasis on politics that it deserves.

AUTHOR: Seth Kaplan
URL: http://www.fragilestates.org
E-MAIL: seth [at] sethkaplan.org

1. TIPNIS consultation begins
Consultation with communities that live in the TIPNIS national park and indigenous territory began on 29 July, to decide whether they accept or reject the plans to build a road through the park. Consultations will be carried out with each of the communities in the area during the next three weeks. Previously a second indigenous march within a year had reached La Paz to protest against the road project, but after 14 days in the capital they decided to return to the TIPNIS to oppose the consultation. The leaders of the march say the consultation process is flawed because it is not ‘prior’ as a contract was signed in 2008; they also argue that the government is not acting in ‘good faith’ since it wants the project to go ahead.

The first community to be consulted was the Oromomo, which voted in favour of the road and also asked for economic compensation for the parts of the road that pass through their territory. Subsequently, the community of San Miguelito voted to reject the road. The consultations are expected to continue up to 25 August, with the final results due to be announced on 6 September.

The leaders of the IX indigenous march, who oppose the consultation, have appealed to the Constitutional Court in an attempt to stop the process from proceeding. They argue that the government is not complying with a previous ruling of the Court that instructed the government to reach agreement with the indigenous communities of the TIPNIS before moving forward with the consultation process.

There were also criticisms of the form of the consultation, which refers to the question of intangibility, meaning a ‘no’ vote would also affect other economic activities that the local population carry out in the park. Amnesty International issued a public declaration criticising this aspect of the consultation. Amnesty also expressed concern about compliance with the Constitutional Court ruling.

2. Mallku Qhota: government nationalises mining concession
The dispute over the mining concession in the area of Mallku Qhota intensified at the end of June and in early July as the community took engineers from the mining company and a police officer hostage, and one community member died in subsequent confrontations. The government announced that it will nationalise the mine, which appears to have quelled the conflict.

The hostages were taken by the community to pressure for the freedom of Cancio Rojas, a local leader, and for the government to expel the company which controls the mining concession there – Compañía Minera Mallku Khota, a subsidiary of the Canadian mining firm, South American Silver.

Following the taking of hostages, police were sent to the area where they clashed with members of the local population. One community member died and several others were injured. Several policemen suffered injuries because of the dynamite and stones hurled at them by the protesters.

The government and community resumed dialogue following these clashes. Negotiations held between President Morales and indigenous leaders led to an agreement to nationalise the mine – which contains large deposits of silver as well as indium and gallium (valuable metals used in electronic components). The community has been divided over whether to expel the company.

In a subsequent press conference, Vice-president Álvaro García Linera said that the Bolivian state has sufficient “economic strength” to carry out exploration, exploitation and processing of the minerals in Mallku Qhota, and that South American Silver would be compensated for the investments it had made prior to the nationalisation. On 2 August the nationalisation was formally approved, with the state company, COMIBOL, taking over the running of the mine.

3. Indian steel company Jindal abandons Mutún project
The Indian company Jindal Steel & Power has announced that it will leave Bolivia after it failed to meet conditions required by the Bolivian government. The company had entered into a joint venture with the a state mining company in 2007 in which it would produce iron ore and subsequently steel from the large El Mutún deposit in Santa Cruz, but the agreed investment did not materialise.

The company announced it would leave the country after the Bolivians asked it to deposit a further guarantee of $18 million. Jindal had accused the government of failing to comply with agreed conditions, principally in the supply of natural gas for the production of iron and steel.

The relationship has ended in acrimony as the Bolivian government accused the company of speculative practices and initiated judicial proceedings against executives. Jindal announced it would launch a case for damages against the Bolivian state, and Bolivia responded with a counter-claim against the company for non-compliance with its investment contract.

Following the exit of Jindal, the government announced it would put the venture out to tender once again, with 13 international investors already having apparently expressed an interest in the project. Meanwhile, the president of the state mining company Empresa Siderúrgica del Mutún (ESM), which was set up to work on 50% of the Mutún deposit, announced that it expects to produce 2 million tonnes of iron ore for export in 2013 and to produce up to 400,000 tonnes of steel for internal demand by 2015.

4. Santa Cruz governor faces suspension
Rubén Costas, the governor of Santa Cruz, risks suspension on account of accusations by the public prosecutor’s office of misusing state funds. On July 27, the departmental assembly in Santa Cruz decided to shelve the accusation, but lawyers argue that the assembly is duty bound to suspend Costas under the Law of Autonomies. Costas is accused of using 10 million Bolivianos to organise an illegal referendum on departmental autonomy in 2008. Attempts to mobilise support for Costas on the streets of Santa Cruz have failed to elicit a strong public response. The Comité Pro Santa Cruz (CPSC), once the most powerful civic committee in Bolivia has lost much of its influence in recent years. The powerful economic groups in Santa Cruz now look askance at an institution that helped foment violence on the streets; the CPSC allegedly even lacks the cash to pay its own monthly wage bill.

5. Cristina Fernández visits Bolivia to negotiate gas deal
Argentine president Cristina Fernández de Kirchner made a flying visit to Cochabamba where she met with Evo Morales to sign new contracts guaranteeing Bolivian gas exports for the next 15 years. Also discussed were future deals by which Argentina would purchase butane, propane and/or Liquefied Natural Gas (LNG) from Bolivia.

Fernández and Morales also signed agreements in the areas of education and culture. Both countries agreed to recognise each other’s university degrees and they set up initiatives to share knowledge and experience to increase digital inclusion.

6. The Bolivian economy grew 5.17% in 2011
According to data from the National Statistics Institute (INE) Bolivia’s GDP grew 5.17% in 2011. This was 1.04% more than the growth registered for 2010. The departments with the highest levels of economic growth were La Paz (6.02%), Santa Cruz (5.58%) and Tarija (6.34%). Bolivia’s finance minister, Luis Arce Catacora, commented that Bolivia’s high economic growth was the result of income redistribution policies, which increased internal demand. At the same time, foreign reserves have hit a new high of $12.7 billion, equivalent to 55% of GDP. Both Moody’s and Standard and Poor’s have recently upgraded Bolivia’s credit rating. Despite declining mineral prices, Bolivia’s exports in the first half of 2012 were up 25% on the same period last year.

AUTHOR: Bolivia Information Forum
URL: http://www.boliviainfoforum.org.uk/
E-MAIL: enquiries [at] boliviainfoforum.org.uk

Probably not a great deal. It means, of course, that Kenya has managed its debt well. It means that data can reveal a great deal, but that one data point may not reveal all that much. It means that Kenya might well be ripe for investment, but that the investment has not yet come in substantial amounts. It means that Kenya’s fundamental economic limitations right now are probably political, and that while the country could use a great deal of work on the political front, if Kenya can reach some state of political equilibrium, it could be a leader in the coming surge of African Lions.

AUTHOR: Derek Charles Catsam
URL: http://africa.foreignpolicyblogs.com
E-MAIL: derekcatsam [at] hotmail.com

Business is booming on the African continent, which means an increased need for talent management. In recognition of this, the popular Best Employers research is being extended to include the best HR performers on the continent.

Africa is thriving: GDP is increasing at an average of 5% each year and, in anticipation of the typical emerging-market benefits (low-cost labour and a vast pool of new customers) businesses are flooding into the continent in the hope of long-term growth. From a business point of view things have never looked better.

As Africa grows in importance on the world stage, the CRF Institute, which identifies choice employers via international HR policy and practice research, is extending its tried and tested Best Employers South Africa index into Africa, identifying top performers in the area of human resources (HR) through independent assessment.

“As businesses increase their foothold on the continent, it becomes more and more important to develop applicable, relevant HR policies and practices alongside,” says Samantha Crous, South African manager at the CRF Institute. “These policies become fundamental for preventing exploitation and managing the massive redistribution of talent that will be necessary to sustain successful business development in the continent’s many emerging markets,” she says. “And it’s for this reason that we are expanding the Best Employers index to create the Top Employers in Africa audit.”

Looking closer to home for answers

According to a study by Roland Berger Strategy Consultants, 80% of the world’s employees work in emerging markets; yet much of our human resource management intel comes from developed countries. As Elijah Litheko, CEO of the Institute of People Management South Africa puts it: “The only thing all our HR professionals seem to have in common is that they have all read the latest management books coming out of the US. We think it’s time to start looking at homegrown wisdom, and at solutions that have worked for the problems that arise in our particular context.”

It’s no coincidence that successful expansion is being seen by the companies that prioritise the wellbeing of their staff, and the retention of top talent. But the challenge lies in providing long-term financial, career and development opportunities to Africa’s massive, and currently largely untapped, talent pool. “As all companies operating in Africa are looking for the same kind of workers without thinking about the reasons of the shortage of skilled candidates, they end up in the same place: nowhere,” says Elisee Okanda Loma, an HR consultant specialising in issues of African development. “We already know that Africa has suffered a huge brain drain, and as a result many African countries have lost some of their highly skilled professionals, [who] have left to work in countries with more stable economies and possibilities such as the USA, Canada, France, the UK, Australia and the Gulf States.”

The global village means more available talent

But, says Loma, all is not lost. If companies are willing to prioritise their HR practices and offer attractive benefits to a fresh new crop of talent, they can use the African diaspora to their advantage. Many of the people who left in search of better opportunities abroad want to return; what they need is an attractive package to make it possible. “Instead of poaching skilled workers from competitors, focus on the new generation of Africans that have studied or worked abroad and who want to return to Africa to contribute to the development of the continent,” says Loma. According to UNESCO, there are currently over 300 000 highly qualified Africans overseas, 30 000 of whom have PhDs.

In light of this, building attractive reward packages for staff becomes more important than ever. “The first step is always to focus on the external or internal factors which may attract (or not) qualified workers within your company,” says Loma. “These are always good indicators and are often the beginning of the answer.”

Some important HR challenges include managing diversity and equalising opportunities; and the recognition of the unique personal needs of each staff member, say experts. Use globalisation to your advantage, says Litheko: “When people are mobilised around such positive and collective energy driven by business… possibilities which were before invisible, will become visible and the country will start benefiting from its diversity.” The great advantage of globalisation is that it has made talent much more accessible to companies wishing to expand (and vice versa), regardless of the geographical boundaries.

And now it just remains to use that to mutual advantage. The CRF, in recognition of Africa’s rising significance in the business world, will be announcing the Top Employers in Africa on 29 August at the official Best Employers Certification Awards in Johannesburg.

AUTHOR: Shout Africa
URL: http://www.shout-africa.com
E-MAIL: news [at] shout-africa.com