tag:theconversation.com,2011:/uk/topics/economy-254/articlesEconomy – The Conversation2024-03-25T15:10:00Ztag:theconversation.com,2011:article/2262012024-03-25T15:10:00Z2024-03-25T15:10:00ZSenegal: Macky Sall’s reputation is dented, but the former president did a lot at home and abroad<p><a href="https://www.britannica.com/biography/Macky-Sall">Macky Sall</a>’s legacy as Senegal’s president since 2012 became more complex in his last year in office. The year was so filled with transgressions that they appeared to have tarnished his reputation indelibly. </p>
<p>For some months he gave the impression to his adversaries and critics that he had <a href="https://www.emerald.com/insight/content/doi/10.1108/OXAN-DB278700/full/html">third-term ambitions</a> – not uncommon in contemporary west African politics. </p>
<p>A public outcry followed his <a href="https://www.aljazeera.com/news/2024/2/3/senegals-macky-sall-postpones-presidential-election">decision</a> on 3 February 2024 to postpone the polls that had originally been scheduled for three weeks later. Then his deputies in the national assembly <a href="https://www.aljazeera.com/news/2024/2/6/senegal-parliament-delays-election-to-december-15-after-chaotic-vote">voted unanimously</a> to postpone the elections and prolong Sall’s term in office until December. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/macky-sall-throws-senegals-democratic-credentials-into-doubt-222923">Macky Sall throws Senegal's democratic credentials into doubt</a>
</strong>
</em>
</p>
<hr>
<p>On 6 March, the country’s Constitutional Council <a href="https://www.france24.com/en/tv-shows/eye-on-africa/20240215-senegal-constitutional-council-rules-election-delay-unlawful">ruled</a> that the delay was unconstitutional and that the elections would have to be held before 6 April <strong>before April 2 rather</strong>, when Sall’s presidential term expires. </p>
<p>In compliance, Sall slated Senegal’s election for <a href="https://www.bbc.com/news/world-africa-68497489">24 March</a>. With that decision, the danger of an authoritarian drift in Senegal appears to have been averted. </p>
<p>The time has therefore come for a more reasoned evaluation of his eight years in office.</p>
<p>I’ve been an <a href="https://theconversation.com/profiles/douglas-yates-1462326">observer</a> of Senegalese politics since the late 1990s, doing democracy building for the US Information Agency’s Africa Regional Bureau, teaching African politics to graduate students in Paris, and commenting in the media on developments in Senegalese politics. </p>
<p>Based on my experience, I would argue that Sall’s presidential terms have made some economic, domestic and international achievements worth remembering now, in these days of suspense and doubt. </p>
<p>In my view the legacy of <a href="https://www.presidence.sn/en/presidency/biography">Macky Sall</a> has been saved. Or at least that is how it appears.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/2024-senegal-election-crisis-points-to-deeper-issues-with-macky-sall-and-his-preferred-successor-223035">2024 Senegal election crisis points to deeper issues with Macky Sall and his preferred successor</a>
</strong>
</em>
</p>
<hr>
<h2>What he leaves behind</h2>
<p>Among his presidential legacies are major infrastructure projects, including airports, a better rail system and industrial parks. </p>
<p>Senegal’s airports were in a deplorable condition when he came to office. The country had 20 airports, but only nine had paved runways. In their poor state, these airports did not attract the major international business flyers who could set up businesses and hire the country’s educated workforce or collaborate with its innovative entrepreneurs.</p>
<p><a href="https://www.nrv-norvia.com/en/projects/blaise-diagne-international-airport">Blaise Diagne International Airport</a>, named after the first black African elected to France’s parliament in 1914, opened in December 2017. The project, which was started in 2007 by his predecessor, Abdoulaye Wade, was completed by Sall. </p>
<p>Located near the capital, Dakar, with easy access via a modern freeway, it has boosted passenger mobility and freight transport. The national airline, <a href="https://flyairsenegal.com/en/home/">Air Senegal</a>, is based here. It reaches more than 20 destinations in 18 countries. </p>
<p>Sall also built the country’s first regional express train, the <a href="https://www.railway-technology.com/projects/dakar-regional-express-train/">Train Express Regional</a>, an airport rail link that connects Dakar with a major new industrial park (also built during Sall’s tenure) and the Blaise Diagne International Airport. </p>
<p>Sall also strengthened the regional airport hubs of the country. He spearheaded the <a href="https://www.transcon.sn/en/project-intro/project-objectives">reconstruction</a> of five regional airports within Senegal. </p>
<p>The Diamniadio Industrial Park, 30km east of Dakar, financed by loans from Eximbank China, was completed in 2023. The park is a flagship industrial project of Sall’s industrialisation strategy for Senegal. </p>
<p>The new park is positioned at the heart of a network of special economic zones, including Diass, Bargny, Sendou and Ndayane. </p>
<p>Enterprises from multiple fields, including pharmaceuticals, electronic appliances and textiles, are setting up offices in the park, which is expected to manufacture high-quality products that meet local needs. </p>
<p>The airports, trains and industrial parks are expected by Sall’s supporters to make a real contribution to Senegal’s transformation from post-colonial peanut exporter to import-substitution manufacturing hub.</p>
<p>In my view, what Sall leaves behind is substantial, particularly when compared with the highly <a href="https://www.npr.org/2010/01/05/122220923/for-many-in-senegal-statue-is-a-monumental-failure">controversial African Renaissance Monument</a> of his predecessor Abdoulaye Wade. The 171-foot-tall bronze statue located on top of a hill towering over Dakar, built by a North Korean firm, has contributed little or no value to the country’s economy.</p>
<p>Sall has also made some contributions to Senegal’s reputation abroad, positioning himself as a respected and influential player on the international stage. As president of the regional economic body Ecowas in <a href="https://www.presidence.sn/en/newsroom/senegals-place-in-ecowas_1122">2015-2016</a>, he made improving economic integration the focus of his term. </p>
<p>He also worked to build closer relations with other international organisations, including the G7, G20 and the African Union. While chairman of the AU from 2022 to 2023 he <a href="https://www.forbesafrica.com/opinion/op-ed/2023/07/30/african-union-must-be-in-the-g20/">lobbied</a> for inclusion of the African Union in the G20, complaining that South Africa was the continent’s only member of any economic forum of international importance. </p>
<p>In his <a href="https://au.int/en/pressreleases/20220920/77th-session-united-nations-general-assembly-address-he-macky-sall">address</a> to the United Nations General Assembly, he championed the cause of the continent. There was no excuse, he said, for failing to ensure consistent African representation in the world’s key decision-making bodies. </p>
<p>He emphasised the importance of increased funding from developed countries for climate adaptation initiatives in developing countries, particularly those in Africa.</p>
<p>Sall’s management of the <a href="https://www.who.int/health-topics/coronavirus#tab=tab_1">COVID crisis</a>, which reached Senegal in March 2020, was his first major test of leadership. Despite its limited resources, Senegal <a href="https://www.devex.com/news/how-senegal-has-set-the-standard-on-covid-19-98266">outperformed</a> many wealthier countries in its COVID pandemic response, thanks to Sall’s leadership.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/senegals-internet-shutdowns-are-another-sign-of-a-democracy-in-peril-207443">Senegal's internet shutdowns are another sign of a democracy in peril</a>
</strong>
</em>
</p>
<hr>
<h2>Contribution to Senegal’s democratic tradition</h2>
<p>His important legacy will be his participation in the democratic tradition of Senegal. </p>
<p>Firstly, he took on Abdoulaye Wade’s dynastic ambitions to name his son Karim Wade as the heir apparent. Sall then went on to <a href="https://www.lemonde.fr/en/le-monde-africa/article/2024/02/23/senegalese-president-macky-sall-promises-to-step-down-but-does-not-set-election-date_6551927_124.html">respect</a> his two-term limit on the presidency. This means he will soon hand power over to a successor, maintaining a unique and <a href="https://2012-2017.usaid.gov/senegal/newsroom/fact-sheets/senegal-democracy-and-governance-fact-sheet">uninterrupted tradition</a> of power transition in one of west Africa’s most stable democracies. </p>
<p>It hasn’t all been plain sailing. In recent years, the temptation of power seemed to have overwhelmed Sall. He started giving out <a href="https://www.africaintelligence.com/west-africa/2023/03/02/paris-and-washington-fret-over-macky-sall-s-third-term-ambitions,109919519-eve">troubling signs</a> of his desire to remain in office beyond his constitutional mandate.</p>
<p>Then, after testing the waters and finding public opinion was strongly opposed to his violating the limits that he himself had imposed while in the opposition to his predecessor, he <a href="https://www.bbc.com/news/world-africa-66093983">declined</a> to present himself for elections. Instead, he endorsed the candidacy of his <a href="https://www.rfi.fr/en/africa/20231222-senegalese-pm-amadou-ba-named-as-ruling-party-s-presidential-candidate">then-prime minister Amadou Ba</a>. </p>
<p>But this was followed by a series of arrests of his most vocal opponents, in particular the popular social media celebrity <a href="https://www.bbc.com/news/world-africa-68562465">Ousmane Sonko</a>. </p>
<p>More than <a href="https://www.google.com/search?q=How+many+dead+in+Senegal+protests&rlz=1C1ONGR_frFR949FR949&oq=How+many+dead+in+Senegal+protests&gs_lcrp=EgZjaHJvbWUyBggAEEUYOTIHCAEQIRigATIHCAIQIRigAdIBCDQzNDJqMGo3qAIAsAIA&sourceid=chrome&ie=UTF-8">350 protestors</a> were arrested during demonstrations in March 2021 and June 2023. At least 23 died. </p>
<p>Then came his last-minute presidential decree <a href="https://www.lemonde.fr/en/le-monde-africa/article/2024/02/05/senegal-president-macky-sall-postpones-election-and-his-departure-from-the-presidency_6494443_124.html">postponing</a> the election earlier scheduled for 25 February. </p>
<p>This was followed by <a href="https://www.lemonde.fr/en/le-monde-africa/article/2024/02/10/senegal-student-killed-in-protest-against-election-postponement_6510579_124.html">democracy protests</a> and by violent police repression of urban protests, which resulted in civilian deaths. </p>
<p>After protests, Sall made another extraordinary about-turn. He <a href="https://www.aa.com.tr/en/africa/senegals-president-pledges-to-comply-with-constitutional-councils-ruling-hold-presidential-poll-soon/3139996#">announced</a> that he would respect the Constitutional Court decision, which denied him the right to prolong his presidential mandate and required that elections be held before 6 April. </p>
<p>In doing so he preserved the system of checks and balances in Senegal. In addition, his decision to <a href="https://www.france24.com/en/africa/20240315-senegal-s-top-opposition-leaders-sonko-faye-released-from-prison-says-lawyer">release</a> Sonko and his other opponents from prison and grant them amnesty has preserved the space for democratic opposition and civil liberties.</p>
<p>Sall’s legacy as a voice of Africa may offer him a lateral promotion from the presidency of Senegal to the seat of some international organisation.</p><img src="https://counter.theconversation.com/content/226201/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Douglas Yates does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>With the conduct of the 24 March elections, Senegal’s President Macky Sall appears to have saved his legacy.Douglas Yates, Professor of Political Science , American Graduate School in Paris (AGS)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2250002024-03-25T15:02:22Z2024-03-25T15:02:22ZGhana’s decades-old ambition to build an integrated aluminium industry faces a new hurdle: the clean energy transition<p>It has been more than 60 years since Ghana’s first post-independence leader Kwame Nkrumah first <a href="https://www.google.co.uk/books/edition/Living_in_the_Shadow_of_the_Large_Dams/4IVSEAAAQBAJ?hl=en&gbpv=1&dq=volta+river+project+in+ghana&pg=PR3&printsec=frontcover">mooted</a> the idea that Ghana should produce aluminium from the country’s ample supply of bauxite.</p>
<p>Under the <a href="https://www.jstor.org/stable/40567076">Volta River Project</a>, Nkrumah’s vision was to construct a dam on Ghana’s Volta River to provide dedicated electricity to a newly built smelter. The smelter was to be run by the <a href="https://thebftonline.com/2023/07/18/valco-needs-us600m-to-modernise-aging-smelter/">Volta Aluminium Company (Valco)</a> in the new industrial city of Tema. </p>
<p>The smelter would be linked to a refinery to process Ghana’s bauxite, currently estimated at <a href="https://www.mining.com/web/ghana-signs-1-2-billion-deal-to-develop-its-bauxite-resources/">900 million tonnes</a>. Ghana has the second largest reserves in Africa after <a href="https://www.usgs.gov/centers/national-minerals-information-center/bauxite-and-alumina-statistics-and-information">Guinea</a>.</p>
<p>Successive Ghanaian governments have pursued this strategy over the decades. The most recent push came in 2017 when the government embarked on its <a href="https://www.youtube.com/watch?v=wwDpGcigkac">latest drive</a> to develop an aluminium producing capacity. </p>
<p>Since then, the Ghana Integrated Aluminium Development Corporation (Giadec) has <a href="https://thebftonline.com/2022/08/25/giadec-seeks-us6bn-for-integrated-aluminium-industry/">invested</a> in <a href="https://giadec.com/giadec-selects-mytilineos-s-a-as-partner-for-project-3a-development-of-bauxite-mine-alumina-refinery/">new mines</a> and is looking to partner with foreign and domestic companies to actualise a harmonised aluminium industry, including an alumina refinery.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/lessons-about-housing-from-ghanas-volta-river-project-50-years-on-123920">Lessons about housing from Ghana's Volta River project 50 years on</a>
</strong>
</em>
</p>
<hr>
<p>The logic has always been that <a href="https://www.jstor.org/stable/1808850">heavy industries</a> that turn natural resources into useful products are critical for structural transformation. That is, <a href="https://unhabitat.org/structural-transformation-in-developing-countries-cross-regional-analysis">moving an economy</a> “from low productivity and labour-intensive activities to higher productivity and skill-intensive ones”. </p>
<p>Such transformation is also <a href="https://elibrary.worldbank.org/doi/10.1596/978-1-4648-1448-8_ch1">associated</a> with rising wages and living standards. Heavy industries can also reduce reliance on imports. </p>
<p>Recent <a href="https://www.sciencedirect.com/science/article/pii/S2214629622001426">works</a> have identified gaps in geography-specific research on industrial decarbonisation in developing economies. Sub-Saharan Africa is particularly under-researched, with research only really examining the case of <a href="https://static1.squarespace.com/static/52246331e4b0a46e5f1b8ce5/t/62f92860408b4b366da8a572/1660495974819/IDTT+5+WP5_Climate+change+policies+and+trade_202208.pdf">South Africa</a>.</p>
<p>We <a href="https://doi.org/10.1016/j.erss.2023.103337">examined</a> Ghana’s long-standing challenges to the dream of a fully developed aluminium industry. We also assessed the most recent attempts to realise these plans against the backdrop of the energy transition and <a href="https://netzeroclimate.org/sectors/heavy_industry/">industrial decarbonisation</a>. </p>
<p>We found that new uncertainties and challenges stand in the way of Ghana’s latest efforts to develop an integrated aluminium industry. These are linked to the unfolding global energy transition agenda and shifts towards “green” manufacturing. </p>
<h2>Why aluminium</h2>
<p>Aluminium is both a constraint to and an enabler of a <a href="https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-net-zero">net zero</a> future. </p>
<p>On the one hand, it has numerous energy transition <a href="https://european-aluminium.eu/about-aluminium/aluminium-in-use">applications</a>, from solar panels and wind turbines to electricity cables and batteries. </p>
<p>But aluminium is also the <a href="https://doi.org/10.1016/j.jclepro.2019.118004">second most</a> carbon-intensive industry, after steel. It accounts for <a href="https://www.carbonchain.com/blog/understand-your-aluminum-emissions">about 4%</a> of global emissions. Emission-reduction technologies are costly and, in many cases, still being developed. </p>
<h2>Challenges – old and new</h2>
<p>The <a href="https://www.researchgate.net/profile/Theophilus-Acheampong/publication/333834250_Towards_an_Integrated_Aluminium_Industry_in_Ghana_Some_Policy_Considerations/links/5d0832ce299bf1f539cb8c66/Towards-an-Integrated-Aluminium-Industry-in-Ghana-Some-Policy-Considerations.pdf">obstacles</a> Ghana has faced in its aluminium industry over the decades have included a lack of investments in new mines, lack of refinery, limited <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1467-7660.1987.tb00278.x">electricity</a> for smelting, and a lack of investments to upgrade the existing Valco smelter.</p>
<p>More recently, other constraints have come into play that make it hard for peripheral economies like Ghana to develop and sustain competitive aluminium industries.</p>
<p>Firstly, they are not financially in a position to use the latest sustainable production technologies, such as <a href="https://www.iea.org/energy-system/carbon-capture-utilisation-and-storage">carbon capture, use and storage</a> and <a href="https://www.weforum.org/agenda/2024/01/aluminium-green-transition-technologies-decarbonization/">green hydrogen</a>. These are needed to improve energy intensity and reduce emissions.</p>
<p>Secondly, Ghana faces tough new conditions, known as <a href="https://finance.ec.europa.eu/sustainable-finance/tools-and-standards/eu-taxonomy-sustainable-activities_en">“green taxonomies”</a>, being set by key export markets in the global north. Countries or trading blocs like the <a href="https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en">European Union</a> are demanding that importers in targeted heavy industrial sectors monitor and declare emissions embedded in products. They are also required to buy <a href="https://taxation-customs.ec.europa.eu/system/files/2023-12/Questions%20and%20Answers_Carbon%20Border%20Adjustment%20Mechanism%20%28CBAM%29.pdf">Carbon Border Adjustment Mechanism certificates</a> to offset such emissions. The mechanism, which has already been introduced on a trial basis, will charge levies from January 2026.</p>
<p>There are strong critics of these mechanisms, with some <a href="https://www.energymonitor.ai/carbon-markets/how-cbam-threatens-africas-sustainable-development/">arguing</a> that they <a href="https://www.lse.ac.uk/News/Latest-news-from-LSE/2023/e-May-2023/Africa-could-lose-up-to-25-billion-per-annum-as-a-direct-result-of-the-EUs-CBAM">threaten</a> Africa’s sustainable development. These arguments are unlikely to see the EU dropping these measures. </p>
<p>The third obstacle that Ghana faces revolves around how to make its refineries and smelters produce competitively priced aluminium. The cost of power is a sticking point as it has been in prior years.</p>
<p>According to Ghana’s recently published <a href="https://www.energymin.gov.gh/sites/default/files/2023-09/FINAL%20GHANA%27S%20NATIONAL%20ENERGY%20TRANSITION%20FRAMEWORK_2023_compressed%20%281%29_compressed%20%282%29.pdf">National Energy Transition Framework</a>, natural gas will serve as Ghana’s primary transition fuel. The government argues that it can provide the base load electricity that Ghana requires for industrialisation. </p>
<p>But choosing gas as the energy solution for Ghana’s aluminium chain could jeopardise the export potential of the aluminium it produces. About <a href="https://oec.world/en/visualize/tree_map/hs02/export/gha/show/157601/2019">80%</a> of Ghana’s aluminium is exported to Europe and could be subjected to carbon taxes if production is powered by gas.</p>
<p>Hydro electricity would, in many respects, be the ideal solution. It is Ghana’s cheapest and greenest energy source. And it would allow the country to compete in markets regulated by carbon considerations. </p>
<p>But this isn’t as straightforward as it may seem. If Valco and a new smelter were to operate at envisaged levels of production it would remove almost all the hydropower output of Akosombo Dam from Ghana’s broader electricity mix. The hydropower also plays a key role in bringing down overall <a href="https://rgu-repository.worktribe.com/preview/1721654/ACHEAMPONG%202021%20Ghanas%20changing%20electricity%20%28VOR%29.pdf">electricity prices</a>. </p>
<p>Thus, while hydro electricity may be a technically good solution, it may not be politically acceptable in a country where electricity prices are a key <a href="https://www.bbc.co.uk/news/world-africa-68236869">electoral issue</a>. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/ghanas-electricity-crisis-is-holding-the-country-back-how-it-got-here-217606">Ghana's electricity crisis is holding the country back - how it got here</a>
</strong>
</em>
</p>
<hr>
<p>Finally, other concerns are emerging around plans to mine bauxite in some of Ghana’s last remaining green forests, including the <a href="https://www.clientearth.org/latest/news/protecting-ghana-s-atewa-range-forest-reserve-from-bauxite-mining">Atewa Forest Reserve</a>. </p>
<p>National and international civil society organisations and environmental activists are resisting the move. Many local businesses support it, however, because of the potential economic gains a mine and refinery would bring. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/ghanas-pact-with-china-to-explore-bauxite-threatens-a-unique-forest-120815">Ghana's pact with China to explore bauxite threatens a unique forest</a>
</strong>
</em>
</p>
<hr>
<p>These are some of the trade-offs that policymakers must consider.</p>
<h2>Moving forward</h2>
<p>Collectively, these issues may frustrate Ghana’s ambitions once more. </p>
<p>At an international level, peripheral economies like Ghana need clarity about how particular energy technologies will be classified. </p>
<p>Lastly, climate financing and green technology transfer pledges from developed to developing economies need to be honoured. </p>
<p>We suggest the Ghanaian government can overcome some of these issues through dialogue with stakeholders and being frank about the trade-offs involved. But a national discussion about benefits and costs is only possible if it’s clearer what choices around energy will be made.</p><img src="https://counter.theconversation.com/content/225000/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Theophilus Acheampong is affiliated with the IMANI Centre for Policy and Education in Accra, Ghana. He has consulted in a private capacity for the Government of Ghana on the aluminium industry.</span></em></p><p class="fine-print"><em><span>Matthew Tyce does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Ghana has spent over 60 years trying to build an aluminium industry.Theophilus Acheampong, Associate Lecturer, University of AberdeenMatthew Tyce, Lecturer in International Political Economy, King's College LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2228722024-03-21T12:23:26Z2024-03-21T12:23:26ZHow safe are your solar eclipse glasses? Cheap fakes from online marketplaces pose a threat, supply-chain experts say<figure><img src="https://images.theconversation.com/files/582258/original/file-20240315-20-z9c7t4.jpg?ixlib=rb-1.1.0&rect=59%2C7%2C4923%2C3287&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Don't trust. Verify.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/woman-with-solar-glasses-looking-at-sun-royalty-free-image/82714690">Andrew Holt/The Image Bank via Getty Images</a></span></figcaption></figure><p>Americans from Maine to Texas are set for a rare treat on April 8, 2024, when a <a href="https://science.nasa.gov/eclipses/future-eclipses/eclipse-2024/where-when/">total solar eclipse</a> will be visible across much of the U.S. </p>
<p>In ancient times, eclipse-viewers thought they were watching the Sun be eaten by <a href="https://www.exploratorium.edu/eclipse/eclipse-stories-from-around-the-world">wolves</a>, a <a href="https://www.vox.com/culture/2017/8/18/16078886/total-solar-eclipse-folklore">dragon</a> or a <a href="https://www.livescience.com/53961-solar-eclipse-myths-and-superstitions.html">demon</a>.</p>
<p>Of course, we now know that the Sun isn’t really eaten during an eclipse. Instead, it does what it always does: rain ultraviolet rays on everything in its path. That’s why you should never look at a solar eclipse without protective eyewear. </p>
<p>But not just any eyewear will do. To make sure that you enjoy the total solar eclipse safely, the American Astronomical Society has specifically <a href="https://eclipse.aas.org/eye-safety/viewers-filters">warned against</a> buying eclipse glasses at the lowest price from online marketplaces like Amazon or eBay.</p>
<p>What gives? Why not save a buck on something you’ll use possibly just once for a few minutes?</p>
<p>It turns out there’s a very good reason: Deceptive counterfeit products have infiltrated retail supply chains. And some of them can pose a threat to your health.</p>
<h2>Invasion of the bogus products</h2>
<p><a href="https://scholar.google.com/citations?user=JMgbELkAAAAJ&hl=en">As experts in</a> <a href="https://scholar.google.com/citations?user=fbARgoUAAAAJ">supply-chain management</a>, we know that counterfeit products have become a growing problem in recent years.</p>
<p>While counterfeit products can be found at brick-and-mortar shops, they’re an especially big problem at online marketplaces. <a href="https://economictimes.indiatimes.com/tech/technology/amazon-removes-6-million-counterfeit-items-from-supply-chains/articleshow/99247317.cms?from=mdr">Amazon removed more than 6 million counterfeit items</a> from its supply chain in 2022 alone.</p>
<p>There are several reasons for this. First, our recent research shows that <a href="https://doi.org/10.1111/poms.13833">consumers often consider the reputation of an online retailer</a> while judging a product’s quality. Unscrupulous third-party sellers can take advantage of this fact by selling their wares through a reputable online marketplace. </p>
<p>Another complication arises from the fulfillment services offered by some marketplaces, such as Amazon, where third-party sellers directly send their merchandise to the online retailer’s warehouse for shipping and handling. These sorts of fulfillment services offer a little-known benefit to retailers: If a product is running out of stock, <a href="https://www.amazonsellers.attorney/blog/amazons-commingled-inventory-policy-risks-and-recommendations">they can “borrow” from a third-party seller’s inventory</a>. </p>
<p>Unfortunately, this also means that a consumer who agrees to buy from one retailer may actually receive merchandise – perhaps counterfeit – from a third-party seller. While there aren’t statistics showing how frequently this happens, <a href="https://www.ft.com/content/f6d85b96-359e-384d-a255-f60bf152e992">there’s evidence</a> it’s a significant problem. </p>
<p>Thankfully, customers are becoming more aware of counterfeit products and have increasingly pushed online retailers to separate inventories of authorized sellers of merchandise from those that aren’t. For instance, Amazon maintains a list of “<a href="https://www.thesellingguys.com/identifying-amazon-gated-restricted-brands-avoid-suspension/">gated</a>” brands, such as Asics and Under Armour, that require authorization before they can be sold. </p>
<p>But these protections don’t apply across the board. In fact, some counterfeit-prone brands, such as <a href="https://www.retaildive.com/news/birkenstock-pulls-products-from-amazon-over-counterfeiting-concerns/423027/#:%7E:text=Citing%2520concerns%2520over%2520counterfeiting%2520and,%252Dparty%2520Marketplace%252C%2520CNBC%2520reports.">Birkenstock</a>, refuse to sell their products through some online retailers entirely. That leaves an opening for counterfeiters, who tend to offer the lowest prices. </p>
<p>That’s why the American Astronomical Society recommends eclipse-watchers avoid buying protective glasses from the lowest-price sellers on online marketplaces. And we completely agree. After all, counterfeit sunglasses can be returned, but damage to your eyes is permanent. In 2017, one California man wearing counterfeit eclipse glasses was <a href="https://www.indystar.com/story/news/2017/08/29/eclipse-eyes-only-few-people-have-lasting-effects-staring-sun/609367001/">left with retina damage</a>.</p>
<h2>How to find safe solar eclipse glasses</h2>
<p>If you’re in the market for eclipse glasses, it’s not hard to get a safe pair. First, buying directly from one of the American Astronomical Society’s <a href="https://eclipse.aas.org/eye-safety/viewers-filters">approved list of brands and manufacturers</a> is the most reliable way. Unfortunately, many of them only sell cheaper, disposable solar eclipse viewers in bulk.</p>
<p>If you need a single pair, your next best option is to purchase one from a major brick-and-mortar chain retailer in person. Many organizations are also <a href="https://www.forbes.com/sites/jamiecartereurope/2024/03/01/where-to-get-free-solar-eclipse-glasses-for-aprils-event/?sh=3f3051ce102b">handing out free viewers</a>. If you take one, you should make sure it was made by a manufacturer on the American Astronomical Society’s list.</p>
<p>If you must buy from an online marketplace, look for evidence of manufacturer authorization. For instance, American Paper Optics – an American Astronomical Society-approved brand – maintains <a href="https://www.eclipseglasses.com/pages/amazon-approved-vendors">a list of Amazon sellers</a> approved for reselling their viewers. </p>
<p>What if you’ve already bought something from a no-name seller on Amazon? Let’s say you bought a pair of sunglasses, or eclipse glasses, with UV protection. It’s hard to verify UV protection properties. Sure, there are standards and certifications such as UV400 and <a href="https://www.iso.org/standard/59289.html">ISO 12312-2</a>, but as you have probably guessed, even those can be faked. For instance, you can easily buy entire rolls of UV400 stickers online. </p>
<p>Thankfully, most local opticians can <a href="https://www.allaboutvision.com/sunglasses/how-to-tell-if-have-uv-protection/">test your sunglasses’ UV protection properties in seconds</a>. In other words, when in doubt, verify.</p><img src="https://counter.theconversation.com/content/222872/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Don’t skimp on your eye safety.Yao "Henry" Jin, Associate Professor of Supply Chain Management, Miami UniversitySimone Peinkofer, Assistant Professor of Supply Chain Management, Michigan State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2222242024-03-19T10:45:17Z2024-03-19T10:45:17ZNigeria’s fuel subsidy removal was too sudden: why a gradual approach would have been better<p>Nigeria <a href="https://www.economist.com/middle-east-and-africa/2023/06/08/nigerias-new-president-scraps-the-fuel-subsidy">removed</a> fuel subsidies entirely in May 2023. This came as a surprise because of the political risks associated with subsidy removal. Previous administrations were <a href="https://www.theguardian.com/world/2012/jan/16/nigeria-restores-fuel-subsidy-protests">reluctant</a> to jettison the subsidies.</p>
<p>The subsidies had been in place since the <a href="https://www.ictd.ac/publication/fuel-subsidy-social-contract-microeconomic-analysis-nigeria-rib/#:%7E:text=Subsidies%20exist%20because%20the%20government,oil%20price%20shock%20in%201973">1970s</a>, when the government sold petrol to Nigerians at a price below cost – though most consumers weren’t aware of this. </p>
<p>The 1977 <a href="https://gazettes.africa/archive/ng/1977/ng-government-gazette-supplement-dated-1977-01-13-no-2-part-a.pdf">Price Control Act</a> made it illegal for some products (including petrol) to be sold above the regulated price. The <a href="https://www.britannica.com/biography/Olusegun-Obasanjo">Olusegun Obasanjo</a> regime introduced this law to cushion the effects of <a href="https://www.npr.org/2021/05/29/1001023637/think-inflation-is-bad-now-lets-take-a-step-back-to-the-1970s">inflation</a>, caused by a worldwide increase in energy prices.</p>
<p>Fuel subsidies have been controversial in Nigeria, and some analysts see them as inequitable. Very few Nigerians own vehicles. Nigeria is among the countries with the <a href="https://nigerianstat.gov.ng/elibrary/read/903/#:%7E:text=Estimated%20vehicle%20population%20in%20Nigeria,population%20ratio%20is%20put%200.06.">least number of vehicles</a> per capita, with <a href="https://nigerianstat.gov.ng/elibrary/read/903/#:%7E:text=Estimated%20vehicle%20population%20in%20Nigeria,population%20ratio%20is%20put%200.06.">0.06 vehicles</a> per person or 50 vehicles per 1,000 Nigerians.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/nigerias-fuel-subsidy-is-gone-its-time-to-spend-the-money-in-ways-that-benefit-the-poor-204701">Nigeria’s fuel subsidy is gone. It's time to spend the money in ways that benefit the poor</a>
</strong>
</em>
</p>
<hr>
<p>So critics have <a href="https://theconversation.com/nigerias-fuel-subsidy-is-gone-its-time-to-spend-the-money-in-ways-that-benefit-the-poor-204701">argued</a> that the subsidies benefited mainly the elites even though they could afford to buy fuel at market prices. </p>
<p>The subsidies were also considered to be a drain on public finances, costing the government <a href="https://www.reuters.com/business/energy/nigerias-nnpc-spent-10-billion-fuel-subsidy-2022-2023-01-20/">US$10 billion</a> in 2022. About <a href="https://www.dataphyte.com/latest-reports/nigerias-expenditure-on-fuel-subsidy-in-17-years-adequate-to-build-three-450000bpd-refineries-neiti/">40%</a> of Nigeria’s revenue in 2022 was spent on fuel subsidies.</p>
<p>Fuel subsidies in Nigeria were notorious for their opacity and graft. <a href="https://punchng.com/probe-missing-2-1bn-n3-1tn-subsidy-payments-or-face-lawsuit-serap-tells-tinubu/">Billions of dollars</a> were said to have been lost through corrupt practices in the payment of the subsidies. </p>
<p>These are some of the reasons they were removed. </p>
<p>But now questions are being asked about the way it was done. In a public opinion poll conducted last year, <a href="https://www.noi-polls.com/post/fuel-subsidy-removal-7-in10-nigerians-lament-over-the-negative-impact">73%</a> of Nigerians said they were dissatisfied with the manner in which the fuel subsidy was removed. </p>
<p>As <a href="https://theconversation.com/profiles/stephen-onyeiwu-170137">an economist</a> who has studied the Nigerian economy for over four decades, I can see why the fuel subsidy had to go. </p>
<p>As I argued in a <a href="https://theconversation.com/fuel-subsidies-in-nigeria-theyre-bad-for-the-economy-but-the-lifeblood-of-politicians-170966">previous article</a>, fuel subsidies were bad for the Nigerian economy. They worsened budget deficits and the country’s debt profile, encouraged corruption, and diverted resources away from critical sectors of the economy. They were also inequitable, transferring the national wealth to elites. </p>
<p>But, as has become clear from the <a href="https://theconversation.com/inflation-in-nigeria-is-still-climbing-while-it-has-slowed-globally-heres-why-222226">unprecedented inflation</a> in the country partly caused by the removal of fuel subsidies, the abrupt removal of the subsidy was not the best strategy to use. </p>
<p>I believe this action should have been staggered over several months. This would have provided a soft landing, and gradually exposed Nigerians to the full market price of fuel. Doing so in one fell swoop amounts to shock therapy that is very traumatic for an already beleaguered and impoverished citizenry.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/fuel-subsidies-in-nigeria-theyre-bad-for-the-economy-but-the-lifeblood-of-politicians-170966">Fuel subsidies in Nigeria: they're bad for the economy, but the lifeblood of politicians</a>
</strong>
</em>
</p>
<hr>
<h2>Why removing the subsidy should have been gradual</h2>
<p>The <a href="https://theconversation.com/bola-ahmed-tinubu-the-kingmaker-is-now-nigerias-president-200383">Bola Tinubu</a> administration could have chosen from various mechanisms to minimise the negative impact of subsidy removal. </p>
<p>As proposed by the <a href="https://documents1.worldbank.org/curated/en/099061623093529051/pdf/P1779950377213012089e701681a43e5558.pdf">World Bank</a>, a temporary price cap would have ensured that fuel price increases did not inflict too much pain on consumers. This approach would also have enabled the government to significantly reduce, but not eliminate, the fiscal burden of the subsidy. </p>
<p>Another approach is periodic price adjustments: setting the price based on a moving average of previous months’ import costs. These adjustments could have been made together with a price cap. The <a href="https://documents1.worldbank.org/curated/en/099061623093529051/pdf/P1779950377213012089e701681a43e5558.pdf">Philippines</a> is one country that successfully removed fuel subsidies in the 1990s, using the price adjustment mechanism.</p>
<p>Gradually phasing out subsidies would have been a better approach for a number of reasons. </p>
<p>Firstly, Nigerians had become suspicious of government’s intentions, given their economic experiences with the previous administration of <a href="https://www.britannica.com/biography/Muhammadu-Buhari">Muhammadu Buhari</a>. Those <a href="https://newtelegraphng.com/agony-over-buharis-bad-economic-legacy/">experiences</a> include high <a href="https://tradingeconomics.com/nigeria/inflation-cpi">inflation</a> and <a href="https://tradingeconomics.com/nigeria/unemployment-rate">unemployment rates</a>, rising poverty and insecurity. </p>
<p>Tinubu should have re-established government credibility and good intentions first. He could have offered economic succour such as cash transfers and food subsidies for poor Nigerians, wage increases for workers and retirees, scholarships or tuition waivers for indigent students in tertiary institutions, free lunches for primary and secondary students in public schools, and subsidised public transport. </p>
<p>After demonstrating he meant well, he should have gradually rolled out the subsidy removal. Nigerians would have been psychologically prepared for what was coming, including inflation. </p>
<p>The inflationary impact of subsidy removal would have been less severe. Nigerians would have been more tolerant of difficult economic policies. People will accept difficult economic policies if they know their government is humane and pro-people. </p>
<p>Secondly, an incremental approach would have enabled the government to come up with programmes targeted at those most likely to be hurt by subsidy removal. This would have ensured buy-in. The “<a href="https://guardian.ng/politics/tinubus-subsidy-removal-and-palliative-dilemma/">palliatives</a>” introduced by the Tinubu administration and state governments are temporary and have a <a href="https://punchng.com/palliatives-knocks-trail-distribution-beneficiaries-decry-inadequate-foodstuffs-delay/">limited reach</a>. </p>
<p>Gradual subsidy removal would have enabled the government to engage with groups that would be affected by the policy. Groups representing labour, manufacturers, students, women and others could have provided insights into what would be needed to help their members adjust. </p>
<p>This interactive approach would have promoted transparency and credibility in the conduct of government policies.</p>
<p>Many vulnerable Nigerians were already under severe economic pressure. Apart from <a href="https://tradingeconomics.com/nigeria/unemployment-rate">high unemployment</a> and <a href="https://nigerianstat.gov.ng/elibrary/read/1092#:%7E:text=In%20Nigeria%2040.1%20percent%20of,considered%20poor%20by%20national%20standards.">poverty rates</a>, <a href="https://tradingeconomics.com/nigeria/inflation-cpi">inflation</a> was biting very hard. </p>
<p>The abrupt removal of fuel subsidies, without first putting in place shock-absorbing measures, will make it more difficult for the government to achieve the policy’s long-term aims: fiscal sustainability; higher levels of investment in productive sectors of the economy; economic growth; and investment in renewable energy.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/nigerias-transport-grant-isnt-the-best-way-to-allocate-fuel-subsidy-savings-heres-what-is-172982">Nigeria's transport grant isn't the best way to allocate fuel subsidy savings: here's what is</a>
</strong>
</em>
</p>
<hr>
<h2>Minimising the negative impact of subsidy removal</h2>
<p>Tinubu should minimise the negative impact of subsidy removal and <a href="https://www.centralbanking.com/central-banks/reserves/foreign-exchange/7959058/nigeria-liberalises-exchange-rate">liberalisation</a> of the foreign exchange market. These two phenomena interact to cause the <a href="https://theconversation.com/inflation-in-nigeria-is-still-climbing-while-it-has-slowed-globally-heres-why-222226">inflation</a> that the country is facing. </p>
<p>First, savings from ending the subsidy should be used to develop productive capacities in agriculture, labour-intensive manufacturing and services. </p>
<p>Manufacturing activities like agro-processing, textiles, footwear, leather products, arts and crafts should be targeted for development. This would generate high-paying jobs that might help Nigerians to cushion the effects of inflation. </p>
<p>In an economy that’s functioning well, wages always adjust to reflect price increases. In Nigeria, however, too many people are either unemployed or in the <a href="https://www.researchgate.net/publication/352695633_EMPLOYMENT_IN_THE_INFORMAL_SECTOR_IN_NIGERIA_IMPLICATIONS_FOR_SUSTAINABLE_ECONOMIC_DEVELOPMENT">informal sector</a>, with limited opportunities to adjust their earnings to reflect inflation. </p>
<p>Funds saved from subsidy removal should be invested in public infrastructure (mass transportation, road construction, electricity generation, water supply). </p>
<p>Funds should also be used to develop people’s capabilities through massive investment in health and education. Part of the savings should be used to support and sustain the <a href="https://www.nuc.edu.ng/president-tinubu-signs-student-loan-bill/">student loan programme</a> announced by the Tinubu administration. </p>
<p>Successful radical economic reforms, such as the ones implemented in <a href="https://academic.oup.com/book/6796/chapter/150948559">Rwanda</a>, usually give people an incentive to be more productive, creative and innovative. But policies that are punitive, with marginal or no benefits, are unlikely to succeed.</p>
<p>It remains to be seen whether Tinubu’s economic policies will spur sustained and inclusive economic growth, as well as alleviate poverty.</p><img src="https://counter.theconversation.com/content/222224/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Onyeiwu does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Nigeria’s sudden and total removal of fuel subsidies was not the best strategy to use.Stephen Onyeiwu, Professor of Economics & Business, Allegheny CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2258572024-03-15T12:10:30Z2024-03-15T12:10:30ZWhy do airlines charge so much for checked bags? This obscure rule helps explain why<p>Five out of the six <a href="https://www.oag.com/blog/biggest-airlines-in-the-us">biggest U.S. airlines</a> have <a href="https://www.cnbc.com/2024/03/05/delta-is-the-latest-airline-to-raise-its-checked-bag-fee.html">raised their checked bag fees</a> since January 2024.</p>
<p>Take American Airlines. In 2023, it cost US$30 to check a standard bag in with the airline; <a href="https://www.usatoday.com/story/travel/airline-news/2024/02/20/american-airlines-bag-fees-mileage-earning/72669245007/">today, as of March 2024, it costs $40</a> at a U.S. airport – a whopping 33% increase.</p>
<p>As a <a href="https://www.bu.edu/questrom/">business school</a> <a href="https://www.bu.edu/questrom/profile/jay-zagorsky/">professor who studies travel</a>, I’m often asked why airlines alienate their customers with baggage fees instead of bundling all charges together. <a href="https://www.vox.com/2015/4/16/8431465/airlines-carry-on-bags">There are</a> <a href="https://www.usatoday.com/story/travel/columnist/2023/06/21/bag-fees-will-stay-a-while-cruising-altitude/70338849007/">many reasons</a>, but an important, often overlooked cause is buried in the U.S. tax code.</p>
<h2>A tax-law loophole</h2>
<p>Airlines pay the federal government <a href="https://www.ecfr.gov/current/title-26/chapter-I/subchapter-D/part-49/subpart-D">7.5% of the ticket price</a> when <a href="https://www.pwc.com/us/en/services/tax/library/aircraft-club-nov-2023-air-transport-excise-tax-rates-for-2024.html">flying people domestically, alongside other fees</a>. The airlines dislike these charges, with their <a href="https://www.airlines.org/dataset/government-imposed-taxes-on-air-transportation/">trade association arguing</a> that they boost the cost to the consumer of a typical air ticket by around one-fifth.</p>
<p>However, the U.S. Code of Federal Regulations <a href="https://www.ecfr.gov/current/title-26/chapter-I/subchapter-D/part-49/subpart-D/section-49.4261-8">specifically excludes baggage</a> from the 7.5% transportation tax as long as “the charge is separable from the payment for the transportation of a person and is shown in the exact amount.”</p>
<p>This means if an airline charges a combined $300 to fly you and a bag round-trip within the U.S., it owes $22.50 in tax. If the airline charges $220 to fly you plus separately charges $40 each way for the bag, then your total cost is the same — but the airline only owes the government $16.50 in taxes. Splitting out baggage charges saves the airline $6.</p>
<p>Now $6 might not seem like much, but it can add up. Last year, passengers took <a href="https://www.transtats.bts.gov/Data_Elements.aspx?Data=1">more than 800 million trips on major airlines</a>. Even if only a fraction of them check their bags, that means large savings for the industry.</p>
<p>How large? The government has <a href="https://www.bts.dot.gov/topics/airlines-and-airports/baggage-fees-airline-2023">tracked revenue from bag fees</a> for decades. In 2002, airlines charged passengers a total of $180 million to check bags, which worked out to around 33 cents per passenger. </p>
<p>Today, as any flyer can attest, bag fees are a lot higher. Airlines collected over 40 times more money in bag fees last year than they did in 2002.</p>
<p>When the full data is in for 2023, <a href="https://www.bts.dot.gov/baggage-fees">total bag fees</a> will likely top $7 billion, which is about $9 for the average domestic passenger. <a href="https://viewfromthewing.com/the-real-reason-airlines-charge-checked-bag-fees-and-its-not-what-you-think">By splitting out the cost of bags</a>, airlines avoided paying about half a billion dollars in taxes just last year.</p>
<p>In the two decades since 2002, flyers paid a total of about $70 billion in bag fees. This means separately charging for bags saved airlines about $5 billion in taxes.</p>
<p><iframe id="88MYD" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/88MYD/2/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>It seems clear to me that tax savings are one driver of the unbundling of baggage fees because of a quirk in the law.</p>
<p>The U.S. government doesn’t apply the 7.5% tax to <a href="https://www.ecfr.gov/current/title-26/chapter-I/subchapter-D/part-49/subpart-D/section-49.4261-3">international flights that go more than 225 miles</a> beyond the nation’s borders. Instead, there are fixed <a href="https://www.airlines.org/dataset/government-imposed-taxes-on-air-transportation">international departure and arrival taxes</a>. This is why major airlines charge $35 to $40 <a href="https://www.aa.com/i18n/travel-info/baggage/checked-baggage-policy.jsp">for bags if you’re flying domestically</a>, but don’t charge a bag fee when you’re flying to Europe or Asia.</p>
<h2>Do travelers get anything for that money?</h2>
<p>This system raises an interesting question: Do baggage fees force airlines to be more careful with bags, since customers who pay more expect better service? To find out, I checked with the Bureau of Transportation Statistics, which has been <a href="https://www.bts.gov/content/mishandled-baggage-reports-filed-passengers-largest-us-air-carriersa">tracking lost luggage for decades</a>. </p>
<p>For many years, it calculated the number of mishandled-baggage reports per thousand airline passengers. The government’s data showed mishandled bags peaked in 2007 with about seven reports of lost or damaged luggage for every thousand passengers. That means you could expect your luggage to go on a different trip than the one you are taking about once every 140 or so flights. By 2018, that estimate had fallen to once every 350 flights.</p>
<p>In 2019, the government <a href="https://www.bts.gov/topics/airlines-and-airports/number-30a-technical-directive-mishandled-baggage-amended-effective-jan">changed how it tracks</a> mishandled bags, calculating figures based on the total number of bags checked, rather than the total number of passengers. The new data show about six bags per thousand checked get lost or damaged, which is less than 1% of checked bags. Unfortunately, the data doesn’t show improvement since 2019.</p>
<p>Is there anything that you can do about higher bag fees? Complaining to politicians probably won’t help. In 2010, two senators <a href="https://www.nj.com/business/2010/04/us_senators_present_bill_to_ba.html">tried to ban bag fees</a>, and their bill went nowhere.</p>
<p>Given that congressional action failed, there’s a simple way to avoid higher bag fees: <a href="https://www.cnn.com/travel/article/packing-expert-travel-world-handbag/index.html">travel light</a> and <a href="https://www.nytimes.com/2023/07/08/opinion/carry-on-packing-airlines-lost-luggage.html">don’t check any luggage</a>. It may sound tough not to have all your belongings when traveling, but it might be the best option as bag fees take off.</p><img src="https://counter.theconversation.com/content/225857/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jay L. Zagorsky does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The answer lies in the tax code.Jay L. Zagorsky, Associate Professor of Markets, Public Policy and Law, Boston UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2222262024-03-14T10:35:45Z2024-03-14T10:35:45ZInflation in Nigeria is still climbing while it has slowed globally: here’s why<p>Just as Nigerians were gradually digging out from the devastating effects of the <a href="https://www.who.int/europe/emergencies/situations/covid-19">COVID-19 pandemic</a>, they were hit by high <a href="https://theconversation.com/nigerians-feel-the-pinch-as-food-prices-continue-to-spiral-there-arent-easy-solutions-188489">inflation</a>. </p>
<p>The Nigerian economy contracted by <a href="https://www.weforum.org/agenda/2020/08/africa-largest-economy-worst-contraction-in-a-decade/">6.1%</a> at the peak of COVID in the second quarter of 2020. Unemployment rate rose from 27% in the second quarter of 2020 to 33% in the fourth quarter of the same year. </p>
<p>The World Bank estimated that <a href="https://theconversation.com/nigerias-covid-19-economic-plan-has-delivered-disappointing-results-heres-why-169417">11 million Nigerians</a> were pushed into poverty during the pandemic, in addition to the 100 million (out of 200 million people in the country) who were already classified as poor. </p>
<p>Now, Nigerians have to grapple with unprecedented inflation too.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/nigerias-food-inflation-losers-winners-and-a-possible-solution-172313">Nigeria's food inflation: losers, winners and a possible solution</a>
</strong>
</em>
</p>
<hr>
<p>Nigeria’s <a href="https://www.cbn.gov.ng/rates/inflrates.asp">inflation rate</a> rose to 29.90% in January 2024, from 28.92% in December 2023. This is the highest it has been in two decades. </p>
<p>Global inflation has reached historic levels during the past three years. The International Monetary Fund expects <a href="https://www.imf.org/en/Blogs/Articles/2024/01/12/charts-spotlight-inflation-economic-growth-globalization-and-climate-change">global inflation</a> to fall, however, from 8.7% in 2022 to 6.8% in 2023 and 5.2% in 2024. </p>
<p>The <a href="https://www.bbc.com/news/business-68277677">US</a> and the <a href="https://www.ft.com/content/0c1f51ff-e42c-4bbc-938a-2cc97c73894a">EU</a> have seen inflation decline during the past few months, prompting central banks to pause interest rate hikes. </p>
<p>In fact, central banks in developed countries are <a href="https://www.weforum.org/agenda/2023/11/interest-rate-hikes-pause-and-other-economy-stories-to-read-3-november-2023/">expected</a> to begin reducing interest rates this year.</p>
<p>So why is inflation rising in Nigeria while it has been declining in other parts of the world?</p>
<p>As a <a href="https://sites.allegheny.edu/econ/faculty-staff/stephen-onyeiwu/">development economist</a> who has been studying the Nigerian economy for over four decades, I argue in this article that the factors that are pushing inflation downward in other parts of the world are moving in the opposite direction in Nigeria. </p>
<p>I also suggest that no single factor can adequately explain rising inflation and escalating food costs in Nigeria. Nigeria’s unprecedented inflation is a case of multiple factors interacting to trigger <a href="https://www.investopedia.com/articles/05/012005.asp">cost-push inflation</a>. </p>
<p>If not addressed urgently, Nigeria’s rising inflation could result in “<a href="https://www.britannica.com/money/what-is-stagflation">stagflation</a>”. This is when the lack of robust economic growth is combined with hyperinflation. </p>
<p>With high numbers of <a href="https://www.statista.com/statistics/1288721/number-of-people-unemployed-in-nigeria/#:%7E:text=Total%20unemployed%20population%20in%20Nigeria%202010%2D2021&text=As%20of%202021%2C%20the%20total,in%20any%20form%20of%20employment.">unemployed people</a> who must purchase basic necessities at very high prices, Nigeria risks widespread protests, social tensions and political instability.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/nigerias-food-insecurity-declaring-a-state-of-emergency-isnt-a-real-solution-heres-what-is-209907">Nigeria's food insecurity: declaring a state of emergency isn't a real solution - here's what is</a>
</strong>
</em>
</p>
<hr>
<h2>Fuel prices</h2>
<p>Declining <a href="https://www.cnn.com/2023/11/22/energy/oil-prices-fall-opec-meeting-delayed/index.html">oil prices</a>, caused by a slow post-pandemic economic recovery, are causing freight prices to fall, which in turn has lowered production costs and consumer prices in many countries. </p>
<p>But Nigerians are not benefiting from the global decline in oil and natural gas prices. Rather, they are paying substantially more at the pump because of the <a href="https://www.economist.com/middle-east-and-africa/2023/06/08/nigerias-new-president-scraps-the-fuel-subsidy">removal</a> of fuel subsidies. </p>
<p>Fuel prices <a href="https://www.reuters.com/world/africa/nigeria-petrol-prices-soar-record-high-after-subsidy-removal-2023-07-18/">soared</a>, from N557 (US$0.35) to N617 (US$0.39) per litre, after the removal of the subsidy in May 2023. </p>
<p>In other words, while <a href="https://www.barrons.com/articles/natural-gas-prices-51674768324">falling</a> oil and natural gas prices are reducing production costs in other countries, costs are <a href="https://www.thecable.ng/domino-effect-of-petrol-subsidy-removal-on-food-income-insecurity">rising</a> in Nigeria.</p>
<p>A World Bank <a href="https://documents1.worldbank.org/curated/en/099061623093529051/pdf/P1779950377213012089e701681a43e5558.pdf">study</a> found that complete removal of fuel subsidies, except kerosene subsidies, increases economy-wide prices by 3.4%. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/nigerias-fuel-subsidy-is-gone-its-time-to-spend-the-money-in-ways-that-benefit-the-poor-204701">Nigeria’s fuel subsidy is gone. It's time to spend the money in ways that benefit the poor</a>
</strong>
</em>
</p>
<hr>
<h2>Supply constraints and inflation</h2>
<p>Another factor that is causing global inflation to decline is the <a href="https://www.reuters.com/markets/goodbye-maybe-great-inflation-scare-world-bank-blog-2023-12-18/">easing</a> of pandemic-era supply chain bottlenecks, which has occurred faster than expected. </p>
<p>Nigeria, however, continues to endure supply constraints because of the <a href="https://apnews.com/article/nigeria-foreign-exchange-rate-naira-2d0d62bc89358b957edd602f506b7650">floating</a> of the local currency, the naira. Floating the naira means its value will from now on be determined by market forces of demand and supply, or what the Central Bank of Nigeria refers to as “the willing seller, willing buyer” <a href="https://www.cbn.gov.ng/Out/2024/TED/Circular%20on%20allowable%20limit%20of%20exchange%20rate%20quoted%20by%20IMTOs.pdf">exchange rate</a>. </p>
<p>The central bank previously adopted a “<a href="https://byjus.com/commerce/managed-floating/">managed floating</a>” policy, whereby it periodically adjusted the official exchange rate. But the adjustment criteria were considered to be too opaque and un-reflective of market fundamentals. </p>
<p>The naira depreciated by <a href="https://businessday.ng/news/article/naira-loses-69-of-its-value-against-dollar-since-fx-reforms/">69%</a> between June 2023 when the foreign exchange market was <a href="https://www.centralbanking.com/central-banks/reserves/foreign-exchange/7959058/nigeria-liberalises-exchange-rate">liberalised</a> and the middle of February 2024.</p>
<p>Currency depreciation has increased import costs. Nigeria is an import-dependent economy, and Nigerian importers are purchasing goods at prices that are already very high abroad. The costs of these goods have also gone up because of higher tariffs caused by the <a href="https://punchng.com/industrialists-parents-lament-as-troubled-naira-ends-2023-at-907/">depreciation</a> of the naira. </p>
<p>For instance, only 1% of the roughly <a href="https://www.ifpri.org/blog/russia-ukraine-crisis-presents-threats-nigerias-food-security-potential-opportunities">six million metric tonnes</a> of wheat that Nigeria consumes annually is produced domestically. The <a href="https://www.cfr.org/global-conflict-tracker/conflict/conflict-ukraine">war in Ukraine</a> has raised food prices in Nigeria, as the country imports wheat from Russia and Ukraine, in addition to fertilizers from Russia.</p>
<p>Thus, much of Nigeria’s inflation is caused by a combination of oil subsidy removal and devaluation of the naira. Making it worse are longstanding supply constraints like instability in <a href="https://www.vanguardngr.com/2024/02/what-tinubu-must-do-to-avert-food-riots-in-nigeria/">food-producing areas</a> of the country, deteriorating rural infrastructure, climate change and the exodus of rural dwellers to urban centres in search of opportunities.</p>
<p>Food inflation in Nigeria also reflects low productivity in the agricultural sector. Output has failed to keep up with population growth. Nigeria’s population has been growing by about <a href="https://theconversation.com/nigerias-growing-population-can-be-an-advantage-with-better-data-and-a-policy-focus-on-young-people-209530">2.4%</a> a year, while the growth of agricultural value added is a paltry <a href="https://tradingeconomics.com/nigeria/agriculture-value-added-annual-percent-growth-wb-data.html">1.8%</a>. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/nigerias-new-foreign-exchange-policy-is-good-news-but-it-cant-work-wonders-for-the-economy-on-its-own-207767">Nigeria's new foreign exchange policy is good news - but it can't work wonders for the economy on its own</a>
</strong>
</em>
</p>
<hr>
<h2>Uncertain inflationary outlook</h2>
<p>Inflation is cooling globally partly because of the restrictive monetary and fiscal policies of many countries across the world. Central banks hiked interest rates aggressively and many governments cut spending. </p>
<p>Nigeria’s Central Bank governor <a href="https://www.cbn.gov.ng/AboutCBN/TheBoard.asp?Name=Mr%2E+Olayemi+Cardoso&Biodata=cardoso">Olayemi Cardoso</a> expects Nigeria’s inflation rate to decline to <a href="https://www.cbn.gov.ng/Out/2024/CCD/MPC%20Communique%20No%20150%20of%20the%20CBN%20Feb%202024.pdf">21.4%</a> in 2024, following interest rate increases and <a href="https://www.cbn.gov.ng/Out/2024/CCD/NESG%20CBN%20Governor's%20Keynote%20Speech.pdf">rising</a> agricultural productivity. </p>
<p>But I don’t expect a steep fall in Nigerian’s inflation this year. </p>
<p>First, inflation-targeting policies have lagged effects, and usually take time to make a difference to consumer prices. </p>
<p>Second, many prices are typically “sticky” downward. Once they go up they don’t come down – or only very gradually. </p>
<p>Lastly, Nigeria’s inflation targeting policy can only be effective if it is coupled with fiscal discipline by the executive and legislative branches of government. There is <a href="https://leadership.ng/tinubu-continues-with-borrowing-policy-of-previous-government/">no evidence</a> this has been the case so far under the Bola Tinubu administration.</p><img src="https://counter.theconversation.com/content/222226/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Onyeiwu does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Factors pushing inflation rates downwards in other parts of the world are achieving the exact opposite result in Nigeria.Stephen Onyeiwu, Professor of Economics & Business, Allegheny CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2170552024-03-07T13:28:59Z2024-03-07T13:28:59ZHow Florida’s home insurance market became so dysfunctional, so fast<p>Imagine saving for years to buy your dream house, only to have <a href="https://www.insurancebusinessmag.com/us/news/property/homeowners-to-face-huge-premium-jump-as-insurers-seek-50-premium-hike-476805.aspx">surging property insurance costs</a> keep homeownership forever out of reach. </p>
<p>This is a common problem in Florida, where average insurance premiums cost homeowners an eye-watering <a href="https://www.newsnationnow.com/business/your-money/florida-home-insurance-prices">US$6,000 a year</a>. That’s <a href="https://www.npr.org/2023/10/26/1208590263/florida-homeowners-insurance-soaring-expensive">more than triple</a> the national average and about three times what Floridians paid on average for insurance premiums in 2018. </p>
<p>What’s more, several major insurance carriers have <a href="https://www.pnj.com/story/money/2023/07/12/florida-insurance-crisis-farmers-insurance-home-insurance-what-to-know/70407302007/">left the state</a> over the past year, leaving residents with <a href="https://www.bloomberg.com/news/articles/2023-08-10/hurricane-season-2023-florida-s-biggest-property-insurer-is-nonprofit-citizens?sref=Hjm5biAW">limited alternatives</a>.</p>
<p>As <a href="https://www.ju.edu/directory/latisha-nixon-jones.php">a law professor</a> who specializes in disaster preparedness and resilience, I think it’s important to understand what’s driving costs higher – not least because other states could soon face a similar predicament. </p>
<p>Three primary factors are driving the insurance challenge. First, natural disasters are becoming more common and costly. Second, <a href="https://www.investopedia.com/terms/r/reinsurance.asp">the price of reinsurance</a> is skyrocketing. And finally, Florida’s litigation-friendly environment compounds the issue by making it easy for customers to sue their insurers.</p>
<h2>Disasters, like sea levels, are on the rise</h2>
<p>With its location on the beautiful-yet-hurricane-prone Gulf of Mexico, Florida has long been vulnerable to the elements. Natural disasters cost the state <a href="https://edis.ifas.ufl.edu/publication/FE1075">$5 billion to $10 billion</a> every year, the federal government estimated in 2018, the last year for which data was available.</p>
<p>Yet that likely understates the case today, since disasters have only become bigger, more common and more expensive since then. For example, climate change has <a href="https://abcnews.go.com/US/climate-change-making-atlantic-hurricanes-strengthen-weak-major/story.">made oceans warmer</a>, which <a href="https://doi.org/10.1038/s41598-023-42669-y">research suggests</a> fuels stronger, more intense hurricanes. </p>
<p>As a result, Florida has experienced billion-dollar disasters an average of <a href="https://www.ncei.noaa.gov/access/billions/state-summary/FL">four times annually</a> over the past five years – up from about one each year in the 1980s.</p>
<p><iframe id="TzHtR" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/TzHtR/1/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>This surge in disasters doesn’t just put lives at risk; it also wreaks havoc with the insurance market, as carriers are inundated with claims from one catastrophe after another. This makes it harder for them to turn a profit or obtain reinsurance to protect their stakeholders.</p>
<h2>Why reinsurance matters</h2>
<p>Insurance companies, in essence, make money two ways. First, they <a href="https://doi.org/10.1038/s41562-021-01121-9">pool risk</a> among policyholders. Risk-pooling is the practice of taking similarly situated individuals or properties, grouping them together, and charging similar prices for insurance since they face the same risk.</p>
<p>Second, they reduce risk by acquiring reinsurance. Reinsurance acts as a safeguard for insurance companies – it’s essentially insurance for the insurers. Reinsurers pledge to cover a specified portion or type of insurance claim – for instance, catastrophic hurricanes – which provides a layer of financial protection.</p>
<p>The new era of climate disasters has thrown a wrench into the process. Reinsurance companies, grappling with a surge in claims due to more frequent and severe disasters, have found themselves forced to <a href="https://www.law.com/dailybusinessreview/2023/07/12/floridas-critical-reinsurance-market-improves-but-at-a-price/?slreturn=20231012224549">raise their premiums</a> for insurance carriers. Carriers, in turn, have passed the burden to policyholders.</p>
<p>To try to navigate these challenges, some companies have chosen to limit coverage for specific types of damage. For example, some insurance companies in Florida will no longer offer hurricane or flood coverage. And in extreme cases, insurance companies have withdrawn entirely from the state. </p>
<p>Understanding this complex relationship between insurers, reinsurers and policyholders is key to understanding the broader implications of the <a href="https://www.fox13news.com/news/florida-home-insurance-crisis-cost-price-premium-institute-rates">Florida insurance crisis</a>. It underscores the urgent need for comprehensive solutions and collaborative efforts to address evolving challenges in the insurance ecosystem.</p>
<h2>Learning from Florida … one way or another</h2>
<p>Florida isn’t taking all this sitting down. In December 2022, state lawmakers responded to growing property market instability by passing <a href="https://www.flsenate.gov/Session/Bill/2022A/2A">Senate Bill 2A</a>, a package of insurance reforms. </p>
<p>One major part was a rule change designed to discourage policyholders from suing their insurers. Previously, Florida law let insured individuals recover attorney fees if they secured any amount through litigation against their insurer. </p>
<p>The idea is that making this change will discourage needless lawsuits. However, my research as an <a href="https://engagedscholarship.csuohio.edu/clevstlrev/vol71/iss3/5/">environmental justice professor</a> shows that attempts to exclude attorneys from the negotiation process often lead to more expensive litigation and less access to justice.</p>
<p>The bill also restricts <a href="https://www.myfloridacfo.com/docs-sf/insurance-consumer-advocate-libraries/ica-documents/aob-consumer-protection-tips-brochure.pdf?sfvrsn=690bdde6_5">assignment of benefits</a>, a mechanism that permits third-party entities like roofing companies to negotiate with insurance companies on behalf of Florida residents. While assignment of benefits <a href="https://www.myfloridacfo.com/division/consumers/consumerprotections/assignmentofbenefits">increased advocacy</a>, it was also linked to skyrocketing claims costs.</p>
<p>The balancing act between providing ample opportunities and containing costs has <a href="https://floridaphoenix.com/2023/10/13/advocates-hailed-a-new-law-to-help-stabilize-fls-housing-crisis-but-implementation-has-been-rocky/">sparked debate</a> among justice advocates. Florida’s legislative response reflects an ongoing effort to strike an equilibrium, ensuring fairness and accessibility while addressing the challenges faced by both insurers and policyholders.</p>
<p>Florida’s actions to address the property insurance crisis raise a critical question: Will the state serve as a blueprint for disaster-prone regions, or act as a cautionary tale? After all, states such as California and Louisiana have also seen insurance companies withdrawing from their markets. Will their legislatures draw inspiration from Florida’s? </p>
<p>For now, it’s too early to tell: The policies have only been in place since the latest round of hurricanes. But in the meantime, the rest of the U.S. will be watching – especially policymakers who care about resilience, and those who want to make sure vulnerable populations don’t get the short end of the stick.</p><img src="https://counter.theconversation.com/content/217055/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Latisha Nixon-Jones does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Florida home insurance premiums have shot up threefold in just five years.Latisha Nixon-Jones, Associate Professor of Law, Jacksonville UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2247122024-03-07T13:03:42Z2024-03-07T13:03:42ZWhy Israel’s economy is resilient in spite of the war<figure><img src="https://images.theconversation.com/files/580093/original/file-20240306-18-g3idi5.jpg?ixlib=rb-1.1.0&rect=648%2C0%2C2356%2C2005&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/back-shot-several-soldiers-israel-army-1423050641">Melnikov Dmitriy/Shutterstock</a></span></figcaption></figure><p>Israel’s war in Gaza and more limited conflict with Hezbollah on its northern border with Lebanon is taking a toll on the Israeli economy. </p>
<p>In the final quarter of 2023, Israel’s gross domestic product (GDP) – a measure of a country’s economic health – <a href="https://www.cbs.gov.il/en/publications/Pages/2024/Monthly-Bulletin-of-Statistics-February-2024.aspx">shrank by almost 20%</a>. Consumption dropped by 27% and investment by 70%.</p>
<p>It’s important to note that these are annualised figures relative to the same period a year ago. The 5.2% drop in GDP from the third quarter was substantial, but it is likely to be a temporary setback unless the war with Hezbollah intensifies.</p>
<p>The outbreak of war disrupted <a href="https://www.boi.org.il/en/communication-and-publications/press-releases/a09-11-23/">around 18%</a> of Israel’s workforce. In October, 250,000 civilians fled or were evacuated from border communities. Meanwhile, around 4% of the workforce – some 300,000 people – were called up as reservists as Israel mobilised for its military offensive.</p>
<p>Over the next few years, the war will cost Israel an estimated <a href="https://boi.org.il/media/ruuby3mw/%D7%9E%D7%A6%D7%92%D7%AA-%D7%94%D7%A0%D7%92%D7%99%D7%93-%D7%9C%D7%95%D7%95%D7%A2%D7%93%D7%AA-%D7%94%D7%9B%D7%A1%D7%A4%D7%99%D7%9D-22124.pdf">255 billion shekels</a> (£56.6 billion) due to reduced economic activity and increased expenses. But the <a href="https://www.moodys.com/research/Moodys-downgrades-Israels-ratings-to-A2-changes-outlook-to-negative-Rating-Action--PR_484801">projected rise</a> in national debt from 60% to 67% of GDP by 2025 is manageable, as is the plan to raise annual military spending from 4% of GDP to <a href="https://boi.org.il/media/ruuby3mw/%D7%9E%D7%A6%D7%92%D7%AA-%D7%94%D7%A0%D7%92%D7%99%D7%93-%D7%9C%D7%95%D7%95%D7%A2%D7%93%D7%AA-%D7%94%D7%9B%D7%A1%D7%A4%D7%99%D7%9D-22124.pdf">6%</a> or <a href="https://www.calcalist.co.il/local_news/article/s15g7mett">7%</a> by the end of the decade. </p>
<p>Israel entered the war with a relatively low national debt and foreign currency reserves equivalent to about 40% of annual GDP. Its population is young and still growing, and <a href="https://www.cbs.gov.il/he/publications/DocLib/2022/def20_1857/h_print.pdf">data</a> reveals that Israel has surpassed current military spending levels before. Between 1967 and 1972, military spending averaged 20.3% of GDP, rising to 28.7% from 1973 to 1975 before stabilising at 20.8% between 1976 and 1985.</p>
<p>The years following the Yom Kippur war in 1973 and through the first Lebanon war (1982–85) are often referred to as “lost years” for Israel’s economy. Per-capita GDP growth averaged <a href="https://www.rug.nl/ggdc/productivity/pwt/?lang=en">4.8%</a> in the 12 years before this period; over the following 12 years it dropped to just 0.8%. Inflation gradually rose, <a href="https://www.globes.co.il/finance/indexprice/inflation.asp?Lang=HE">peaking at 445%</a> during 1984.</p>
<p>So the question is not if Israel can weather the current storm, but whether the burden of higher military spending will be offset by budget cuts elsewhere to ensure economic growth resumes and public debt returns to a sustainable trajectory. </p>
<p>So far, Benjamin Netanyahu, Israel’s prime minister, and other members of his coalition have resisted <a href="https://economists-for-israeli-democracy.com/">advice</a> from economists to change the government’s spending priorities. They have done so for fear of upsetting the small but influential constituencies whose votes keep them in power.</p>
<figure class="align-center ">
<img alt="Benjamin Netanyahu speaking in front of an Israel flag with his right hand outstretched." src="https://images.theconversation.com/files/580092/original/file-20240306-20-xvroza.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/580092/original/file-20240306-20-xvroza.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=339&fit=crop&dpr=1 600w, https://images.theconversation.com/files/580092/original/file-20240306-20-xvroza.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=339&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/580092/original/file-20240306-20-xvroza.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=339&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/580092/original/file-20240306-20-xvroza.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=427&fit=crop&dpr=1 754w, https://images.theconversation.com/files/580092/original/file-20240306-20-xvroza.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=427&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/580092/original/file-20240306-20-xvroza.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=427&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Benjamin Netanyahu speaking at a meeting in Berlin, Germany, in March 2023.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/berlin-germany-20230316-prime-minister-benjamin-2276731307">photocosmos1/Shutterstock</a></span>
</figcaption>
</figure>
<h2>Political opportunism</h2>
<p>Netanyahu has demonstrated a good grasp of market economics. As finance minister between 2003 and 2005, Netanyahu implemented <a href="https://www.nevo.co.il/FilesFolderPermalink.aspx?b=books&r=%D7%9B%D7%AA%D7%91%D7%99+%D7%A2%D7%AA%5C%D7%9B%D7%AA%D7%91%D7%99+%D7%A2%D7%AA%5C%D7%9E%D7%A9%D7%A4%D7%98+%D7%94%D7%A2%D7%91%D7%95%D7%93%D7%94%5C%D7%9B%D7%A8%D7%9A+%D7%99">sweeping reforms</a> that lowered tax rates, <a href="https://muse.jhu.edu/article/543634">privatised state companies</a> and raised the state pension age. He also used his tenure to curtail the country’s bloated benefits system and introduce requirements for job training.</p>
<p>Yet since the start of Netanyahu’s second term as prime minister in 2009 (the first was 1996–99), many of these reforms have been <a href="https://main.knesset.gov.il/mk/government/documents/addCoalition2009_2.pdf">scaled back or eliminated</a>, particularly the cuts to the benefits system. This benefits system disproportionately advantages the ultra-Orthodox Haredi community, whose parties form part of Netanyahu’s governing coalition.</p>
<p>Netanyahu was once again elected as prime minister in November 2022. Though a proponent of a limited role for the state, his new government included a record 34 different ministries. This was to satisfy the appetite for patronage and ministerial salaries among the different coalition partners as well as factions within his own Likud party. </p>
<p>To secure the continued support of ultra-Orthodox parties he also promised unprecedented <a href="https://www.idi.org.il/articles/49642">levels of funding</a> for religious schools and seminaries. In seminaries, grown men spend their lives studying religious texts at the public’s expense and are exempt from military service. Despite the need to fund the war and for more young men in uniform, Netanyahu and Bezalel Smotrich, the finance minister, have <a href="https://www.calcalist.co.il/local_news/article/bkerxsacp">resisted</a> nearly all suggestions that these budget items be reduced.</p>
<p>Here we have a case study where political opportunism easily defeats ideology. We know what Netanyahu believes and what he understands about good economic policy, and we can isolate these from what he is willing to do to remain in office. </p>
<p>Will he choose to defray some of the costs the war will impose on the budget by eliminating wasteful spending on useless ministries? Or will he introduce policies that grow the economy by incentivising higher labour-force participation among the ultra-Orthodox community? The plan for the moment is to borrow more.</p>
<figure class="align-center ">
<img alt="Two ultra-Orthodox men holding signs written in hebrew." src="https://images.theconversation.com/files/580090/original/file-20240306-18-4nzv1y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/580090/original/file-20240306-18-4nzv1y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/580090/original/file-20240306-18-4nzv1y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/580090/original/file-20240306-18-4nzv1y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/580090/original/file-20240306-18-4nzv1y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/580090/original/file-20240306-18-4nzv1y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/580090/original/file-20240306-18-4nzv1y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Ultra-Orthodox men protesting for the release of a religious youth who was jailed for refusing to serve in the military in 2017.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/safed-israel-oct-19-2017-ultra-1026922030">David Cohen 156/Shutterstock</a></span>
</figcaption>
</figure>
<h2>Strong civil society</h2>
<p>We may also overestimate the role politicians and governments play in ensuring a country’s success. Since its founding in 1948, Israel’s electoral system of proportional representation has yielded weak, unstable coalitions.</p>
<p>Historically, the Likud party has strongly supported the independence of the country’s judiciary. But after the last election, Netanyahu’s government introduced <a href="https://www.bbc.co.uk/news/world-middle-east-65086871">new legislation</a> that, among other things, would have given the Knesset (parliament) the power to override Supreme Court decisions with a simple majority vote. </p>
<p>Had these changes been implemented they would have further magnified the worst properties of the country’s dysfunctional (unwritten) constitution. People do not invest money in countries where court decisions can be overturned by politicians and property rights are not secure.</p>
<p>Yet, despite the weaknesses of its government institutions, Israel has absorbed millions of poor refugees from every corner of the Earth, has fought back when attacked and has defeated far larger neighbours over its 75-year history. It has done so all while transforming itself from an impoverished backwater to a first-world economy and a centre of high-tech innovation. </p>
<p>In the first nine months of 2023, hundreds of thousands of Israelis <a href="https://www.theguardian.com/world/2023/sep/12/israel-protests-judicial-curbs-supreme-court-challenge">demonstrated</a> in the streets to defend the rule of law and the independence of the country’s judiciary. Many of those same people rushed to join their reserve units on October 7 to defend the country’s borders. Others, acting without any government direction, <a href="https://www.ynetnews.com/magazine/article/bjd1lrmlp">organised relief</a> for the survivors and displaced while ministers dithered or disappeared from view.</p>
<p>Countries with strong civil societies and highly engaged populations survive and even prosper not because of their political leaders, but despite them.</p><img src="https://counter.theconversation.com/content/224712/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael Ben-Gad does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>War is taking a toll on Israel’s economy.Michael Ben-Gad, Professor of Economics, City, University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2245452024-03-06T13:23:20Z2024-03-06T13:23:20ZNigeria: botched economic reforms plunge the country into crisis<p>Nigeria, Africa’s largest economy, is facing an economic crisis. From a botched currency redesign to the removal of fuel subsidies and a currency float, the nation has been plunged into spiralling inflation and a currency crisis with far-reaching consequences. The question now is: how long before the inferno consumes everything?</p>
<p>On October 26, 2022, the Central Bank of Nigeria announced a <a href="https://www.thecable.ng/breaking-buhari-unveils-redesigned-naira-notes">bold move</a> – that it had redesigned the country’s highest denomination notes (₦200, ₦500 and ₦1000) and would be removing all old notes from circulation. People were given a deadline of January 31, 2023 (a couple of weeks before a national election) to make this exchange, or all of the old notes would cease to be valid legal tender.</p>
<p>This initiative ostensibly aimed to curb counterfeiting, encourage cashless transactions, and limit the buying of votes during the elections. But, while the intention may have been sound, the execution proved disastrous. </p>
<p>Short deadlines, limited availability of new notes, and inadequate communication created widespread panic. It led to long queues at banks, frustration among citizens, and a <a href="https://carnegieendowment.org/2024/01/18/why-nigeria-s-controversial-naira-redesign-policy-hasn-t-met-its-objectives-pub-91405">thriving black market</a> for the new notes. </p>
<p>The confusion surrounding the currency redesign had an unintended consequence: the beginnings of a loss of confidence in the naira. People began to look to other mediums as a store of value and as a medium of exchange. The obvious choices were foreign currency like the US dollar and the British pound, as well as more stable cryptocurrencies like <a href="https://businessday.ng/business-economy/article/weak-naira-cross-border-payments-drive-nigerians-into-cryptos/">Tether’s USDT</a>.</p>
<p>The currency redesign was criticised at the time by the then-presidential candidate of the ruling party, Bola Ahmed Tinubu, who saw it as a move to <a href="https://www.vanguardngr.com/2023/01/2023-fuel-scarcity-naira-redesign-ploy-to-sabotage-my-chances-tinubu/">derail his presidential campaign</a>. However, Tinubu won the contested election and, once in power, set out to reshape the economy immediately. </p>
<p>In his inaugural address in May 2023, Tinubu <a href="https://www.premiumtimesng.com/news/top-news/601239-fuel-subsidy-is-gone-tinubu-declares.html">announced</a> that the “fuel subsidy is gone”, referring to the government’s longstanding subsidised petrol policy that ensured Nigerians enjoyed some of the lowest petrol prices in the world. Over the coming days, he would also announce the reversal of the currency redesign policy and the <a href="https://leadership.ng/tinubu-begins-monetary-policy-reforms-floats-naira/">floating of the Nigerian naira</a> on the foreign exchange market.</p>
<figure class="align-center ">
<img alt="A compilation of Nigerian naira bank notes." src="https://images.theconversation.com/files/579202/original/file-20240301-28-sej1lc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/579202/original/file-20240301-28-sej1lc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/579202/original/file-20240301-28-sej1lc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/579202/original/file-20240301-28-sej1lc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/579202/original/file-20240301-28-sej1lc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/579202/original/file-20240301-28-sej1lc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/579202/original/file-20240301-28-sej1lc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">When in office, Tinubu reversed the currency redesign policy.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/naira-currency-nigeria-200751113">Pavel Shlykov/Shutterstock</a></span>
</figcaption>
</figure>
<h2>Fuelling the flames</h2>
<p>Other underlying economic conditions around the time of Tinubu’s inauguration included a large amount of foreign debt, dwindling foreign reserves and global economic headwinds. When the removal of the fuel subsidy was announced, it was met with a mix of surprise and elation by many Nigerians, and in particular by international donor agencies like the International Monetary Fund and the World Bank, who had long been <a href="https://www.reuters.com/markets/commodities/nigeria-should-end-fuel-subsidy-speed-reforms-boost-growth-world-bank-says-2021-11-23/">advocating</a> for the removal.</p>
<p>But this was all before the effects began to bite. And bite hard they did. The price of Premium Motor Spirit (also known as gasoline or petrol), which used to retail for ₦189 (US$0.12) per litre, increased by 196% practically overnight and began to retail for <a href="https://www.reuters.com/world/africa/nigeria-triple-petrol-prices-after-president-says-subsidy-end-2023-05-31/">₦557 per litre</a>. </p>
<p>One challenge with developing economies like Nigeria is that a rise in fuel price tends to cause the price of everything else to rise. Many industries, particularly those in manufacturing and agriculture, tend to rely heavily on fuel for powering machinery and equipment due to the poor supply of grid electricity nationwide.</p>
<p>Many Nigerian households were significantly affected by the increased prices. But they saw an opportunity in that the savings from the fuel subsidy regime would be redistributed to improve education, healthcare provision and the general welfare of the people, as was promised during the electioneering. The regime cost the country an estimated <a href="https://www.premiumtimesng.com/news/top-news/582724-fuel-subsidy-now-above-n400bn-monthly-nnpcl.html">₦400 billion</a> a month at its height, after all. </p>
<h2>Enter currency devaluation</h2>
<p>Then, on June 14, 2023, the Tinubu government ended the policy of pegging the naira to the US dollar, allowing it to float and find its true market value based on supply and demand. The idea was to stop corruption and reduce arbitrage opportunities due to the difference between official and black-market foreign exchange prices. </p>
<p>Currency arbitrage happens when people buy a currency at the lower official exchange rate and immediately sell it at the higher black market rate for a profit. This practice often occurs where there are strict currency controls and black markets offer a truer reflection of a currency’s value based on supply and demand.</p>
<p>However, this was one policy change too many. The naira lost a staggering <a href="https://www.focus-economics.com/countries/nigeria/news/exchange-rate/central-bank-sets-the-naira-free-to-fall/">25% of its value</a> in one day, and the cascading effects now push the country to the brink.</p>
<p>Nigeria depends heavily on imported commodities, including essential goods like food, fuel and medicine. So the policy escalated the inflationary crisis, pushing inflation to almost 30% (the major driver being food inflation, which <a href="https://leadership.ng/food-headline-inflation-spike-to-35-4-29-9/">reached 35.4%</a>). </p>
<p>Imports in general have become significantly more expensive, and Nigerians are finding their purchasing power being eroded. Wages in Nigeria are pretty fixed. The current minimum wage in the country is <a href="https://www.statista.com/statistics/1119133/monthly-minimum-wage-in-nigeria/">₦30,000</a> per month and the average monthly income is <a href="https://wagecentre.com/work/work-in-africa/salary-in-nigeria">₦71,185</a>. </p>
<p>Businesses are also feeling the pinch, facing difficulties accessing the <a href="https://www.trade.gov/country-commercial-guides/nigeria-market-challenges">foreign exchange</a> critical for importing raw materials and equipment. </p>
<h2>Pheonix or ash?</h2>
<p>The Central Bank of Nigeria has implemented measures to counter the crisis. It recently raised interest rates from <a href="https://punchng.com/just-in-cbn-raises-interest-rate-to-22-75/">18.75% to 22.75%</a> and is selling US dollars through auctions. </p>
<p>Recovery is a possibility and there are already signs of appreciation in the currency. The <a href="https://businessday.ng/news/article/naira-records-first-gain-at-official-market-after-rate-hike/">naira appreciated</a> by 6.89% a day after interest rates were raised. But it will be a long, hard road. </p>
<p>These strategies often come with trade-offs. Higher interest rates can stifle already struggling economic growth, while currency interventions might deplete already strained reserves of foreign currency. </p>
<p>The bottom line is that if the current cost of living crisis continues, civil unrest is likely. Should this happen, who knows what – if anything – will be left behind when the flames are done.</p><img src="https://counter.theconversation.com/content/224545/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kunal Sen has received funding from ESRC and DFID. </span></em></p><p class="fine-print"><em><span>Chisom Ubabukoh does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Africa’s largest economy is in crisis, and unrest is growing.Chisom Ubabukoh, Assistant Professor of Economics, O.P. Jindal Global UniversityKunal Sen, Professor and Director, World Institute for Development Economics Research (UNU-WIDER), United Nations UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2200142024-03-01T13:32:30Z2024-03-01T13:32:30ZIs the United States overestimating China’s power?<figure><img src="https://images.theconversation.com/files/577660/original/file-20240223-28-5lgbn4.jpg?ixlib=rb-1.1.0&rect=0%2C229%2C4144%2C2586&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Made it, Mao! Top of the World?</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/illustration/dominate-the-world-royalty-free-illustration/1456554749?phrase=china+power&adppopup=true">DigitalVision Vectors via Getty Images</a></span></figcaption></figure><p>Which country is the greatest threat to the United States? The answer, according to a large proportion of Americans, is clear: China. </p>
<p>Half of all Americans responding to a <a href="https://www.pewresearch.org/short-reads/2023/07/27/americans-name-china-as-the-country-posing-the-greatest-threat-to-the-us/">mid-2023 survey</a> from the Pew Research Center cited China as the biggest risk to the U.S., with Russia trailing in second with 17%. Other surveys, such as from the Chicago Council on Global Affairs, <a href="https://globalaffairs.org/research/public-opinion-survey/americans-feel-more-threat-china-now-past-three-decades">show similar findings</a>.</p>
<p>Senior figures in recent U.S. administrations appear to agree with this assessment. In 2020, John Ratcliffe, director of national intelligence under President Donald Trump, <a href="https://www.wsj.com/articles/china-is-national-security-threat-no-1-11607019599">wrote that</a> Beijing “intends to dominate the U.S. and the rest of the planet economically, militarily and technologically.”</p>
<p>The White House’s current National Defense Strategy is not so alarmist, <a href="https://media.defense.gov/2022/Oct/27/2003103845/-1/-1/1/2022-NATIONAL-DEFENSE-STRATEGY-NPR-MDR.PDF">referring to China</a> as the U.S.’s “pacing challenge” – a reference that, <a href="https://www.c-span.org/video/?c5038077/pacing-challenge">in the words</a> of Secretary of Defense Lloyd Austin, apparently means China has “the intent to reshape the international order and, increasingly, the power to do so.” </p>
<p>As someone who has <a href="https://www.hks.harvard.edu/centers/mrcbg/about/staff/dan-murphy">followed China</a> for over a quarter century, I believe that many observers have overestimated the country’s apparent power. Recent <a href="https://mitsloan.mit.edu/ideas-made-to-matter/new-book-details-chinas-economic-rise-and-now-its-fall">challenges to China’s economy</a> have led some people to reevaluate just how powerful China is. But hurdles to the growth of Chinese power extend far beyond the economic sector – and failing to acknowledge this reality may distort how policymakers and the public view the shift of geopolitical gravity in what was once called “<a href="https://www.economist.com/graphic-detail/2018/10/27/the-chinese-century-is-well-under-way">the Chinese century</a>.”</p>
<p>In overestimating China’s comprehensive power, the U.S. risks misallocating resources and attention, directing them toward a threat that is not as imminent as one might otherwise assume.</p>
<p>Let me be clear: I’m not suggesting that China is weak or about to collapse. Nor am I making an argument about China’s intentions. But rather, it is time to right-size the American understanding of the country’s comprehensive power. This process includes acknowledging both China’s tremendous accomplishments and its significant challenges. Doing so is, I believe, mission critical as the United States and China seek to put a floor underneath a <a href="https://www.nytimes.com/2023/02/15/opinion/balloon-china-taiwan-biden.html">badly damaged bilateral relationship</a>.</p>
<h2>Headline numbers</h2>
<p>Why have so many people misjudged China’s power? </p>
<p>One key reason for this misconception is that from a distance, China does indeed appear to be an unstoppable juggernaut. The high-level <a href="https://www.belfercenter.org/publication/us-china-relations-interview-graham-allison">numbers bedazzle observers</a>: Beijing commands the world’s <a href="https://chinapower.csis.org/tracker/china-gdp/#:%7E:text=China%27s%20nominal%20GDP%20is%20the,States%20by%20a%20considerable%20margin.">largest or second-largest</a> economy depending on the type of measurement; it has a rapidly growing <a href="https://www.iiss.org/en/publications/the-military-balance/2024/editors-introduction/">military budget</a> and <a href="https://www.forbes.com/sites/michaeltnietzel/2021/08/07/us-universities-fall-behind-china-in-production-of-stem-phds/?sh=5d2ae6084606">sky-high numbers</a> of graduates in engineering and math; and oversees huge infrastructure projects – laying down nearly 20,000 miles of <a href="http://eu.china-mission.gov.cn/eng/zywj/CSTNENG/202209/P020220915789898685371.pdf">high-speed rail tracks</a> in less than a dozen years and <a href="https://www.bloomberg.com/news/articles/2015-11-20/beijing-replaces-a-huge-highway-overpass-in-only-43-hours">building bridges at record pace</a>. </p>
<p>But these eye-catching metrics don’t tell a complete story. Look under the hood and you’ll see that China faces a raft of intractable difficulties.</p>
<p>The Chinese economy, which until recently was thought of as unstoppable, is beginning to falter due to <a href="https://www.cnn.com/2024/02/15/economy/deflation-explainer-us-china-economy/index.html">deflation</a>, a <a href="https://www.bloomberg.com/news/articles/2024-01-17/china-s-debt-to-gdp-ratio-rises-to-fresh-record-of-286-1">growing debt-to-gross domestic product ratio</a> and the impact of a <a href="https://www.scmp.com/business/banking-finance/article/3253325/restructuring-specialists-boost-hong-kong-staff-china-property-crisis-stokes-demand">real estate crisis</a>. </p>
<h2>China’s other challenges</h2>
<p>And it isn’t only China’s economy that has been overestimated.</p>
<p>While Beijing has put in considerable effort building its soft power and sending its leadership around the world, China enjoys <a href="https://www.pewresearch.org/global/2023/07/27/chinas-approach-to-foreign-policy-gets-largely-negative-reviews-in-24-country-survey/">fewer friends</a> than one might expect, even with its willing trade partners. North Korea, Pakistan, Cambodia and Russia may count China as an important ally, but these relationships are not, I would argue, nearly as strong as those enjoyed by the United States globally. Even in the Asia-Pacific region there is a strong argument to say Washington enjoys greater sway, considering the especially close ties with <a href="https://www.defense.gov/News/News-Stories/Article/Article/3498451/japan-south-korea-us-strengthen-trilateral-cooperation/">allies Japan, South Korea</a> <a href="https://www.state.gov/the-united-states-australia-relationship">and Australia</a>. </p>
<p>Even though Chinese citizens report <a href="https://ash.harvard.edu/news/ash-center-researchers-release-landmark-chinese-public-opinion-study">broad support</a> for the Communist Party, Beijing’s <a href="https://thediplomat.com/2023/01/how-beijing-accidentally-ended-the-zero-covid-policy/">capricious COVID-19 policies</a> paired with an <a href="https://www.theguardian.com/world/2022/dec/04/chinas-xi-jinping-unwilling-to-accept-western-covid-vaccines-says-us-intelligence-chief">unwillingness to use foreign-made vaccines</a> have dented perceptions of government effectiveness. </p>
<figure class="align-center ">
<img alt="A seated man sits at. desk while another man is seen on a TV screen." src="https://images.theconversation.com/files/579043/original/file-20240229-16-cm5y8a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/579043/original/file-20240229-16-cm5y8a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/579043/original/file-20240229-16-cm5y8a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/579043/original/file-20240229-16-cm5y8a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/579043/original/file-20240229-16-cm5y8a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/579043/original/file-20240229-16-cm5y8a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/579043/original/file-20240229-16-cm5y8a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">President Joe Biden participates in a virtual meeting with Chinese President Xi Jinping.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/president-joe-biden-participates-in-a-virtual-meeting-with-news-photo/1353512956?adppopup=true">Alex Wong/Getty Images</a></span>
</figcaption>
</figure>
<p>Further, China’s population is <a href="https://www.nytimes.com/2023/01/16/business/china-birth-rate.html">aging and unbalanced</a>. In 2016, the country of 1.4 billion saw about 18 million births; in 2023, that number dropped to <a href="https://www.nytimes.com/2024/01/16/business/china-birth-rate-2023.html">about 9 million</a>. This alarming fall is not only in line with trends toward a shrinking working-age population, but also perhaps <a href="https://www.washingtonpost.com/opinions/2023/02/28/behind-china-collapse-birth-marriage-rates/">indicative of pessimism</a> among Chinese citizens about the country’s future.</p>
<p>And at times, the actions of the Chinese government read like an implicit admission that the domestic situation is not all that rosy. For example, I take it as a sign of concern over systemic risk that China detained a million or more people, as has happened with the <a href="https://www.cfr.org/backgrounder/china-xinjiang-uyghurs-muslims-repression-genocide-human-rights">Muslim minority in Xinjiang province</a>. Similarly, China’s policing of its internet suggests <a href="https://www.science.org/content/article/study-internet-censorship-reveals-deepest-fears-chinas-government">concerns over</a> collective action by its citizens. </p>
<p>The sweeping anti-corruption campaign Beijing has <a href="https://apnews.com/article/health-china-business-covid-economy-6618e65ef6148e0c75fce4dc2a28011f#">embarked on</a>, <a href="https://www.reuters.com/world/china/sweeping-chinese-military-purge-exposes-weakness-could-widen-2023-12-30/">purges of the country’s military</a> and the <a href="https://www.nytimes.com/2023/02/17/business/bao-fan-china-banker.html">disappearance</a> of leading business figures all hint at a government seeking to manage significant risk. </p>
<p>I hear many stories from contacts in China about people with money or influence hedging their bets by establishing a foothold outside the country. This aligns with research that has shown that <a href="https://www.hks.harvard.edu/centers/mrcbg/programs/growthpolicy/meg-rithmire-china-global-economy">in recent years</a>, on average as much money leaves China via “irregular means” as for foreign direct investment. </p>
<h2>A three-dimensional view</h2>
<p>The perception of China’s inexorable rise is cultivated by the governing Communist Party, which obsessively seeks to <a href="https://www.cfr.org/backgrounder/media-censorship-china">manufacture and control narratives</a> in state media and beyond that show it as all-knowing, farsighted and strategic. And perhaps this argument finds a receptive audience in segments of the United States concerned about its own decline.</p>
<p>It would help explain why a recent <a href="https://globalaffairs.org/research/public-opinion-survey/americans-feel-more-threat-china-now-past-three-decades">Chicago Council on Global Affairs survey</a> found that about a third of American respondents see the Chinese and American economies as equal and another third see the Chinese economy as stronger. In reality, per capita GDP in the United States is <a href="https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=CN-US">six times that of China</a>. </p>
<p>Of course, there is plenty of danger in predicting China’s collapse. Undoubtedly, the country has seen huge accomplishments since the People’s Republic of China’s founding in 1949: Hundreds of millions of people <a href="https://www.npr.org/sections/goatsandsoda/2017/01/17/509521619/whos-lifting-chinese-people-out-of-poverty">brought out of poverty</a>, extraordinary economic development and <a href="https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=CN">impressive GDP growth</a> over several decades, and <a href="https://www.washingtonpost.com/world/2023/09/21/china-global-influence-takeaways/">growing diplomatic clout</a>. These successes are especially noteworthy given that the People’s Republic of China is less than 75 years old and was in utter turmoil during the <a href="https://www.theguardian.com/world/2016/may/11/the-cultural-revolution-50-years-on-all-you-need-to-know-about-chinas-political-convulsion">disastrous Cultural Revolution</a> from 1966 to 1976, when intellectuals were sent to the countryside, schools stopped functioning and chaos reigned. In many cases, China’s successes merit emulation and include important lessons for developing and developed countries alike.</p>
<p>China may well be the “pacing challenge” that many in the U.S. believe. But it also faces significant internal challenges that often go under-recognized in evaluating the country’s comprehensive power.</p>
<p>And as the United States and China <a href="https://www.pbs.org/newshour/show/biden-pushes-for-stable-u-s-relationship-with-china-during-summit-with-xi">seek to steady</a> a rocky relationship, it is imperative that the American public and Washington policymakers see China as fully three-dimensional – not some flat caricature that fits the needs of the moment. Otherwise, there is a risk of fanning the flames of xenophobia and neglecting opportunities for partnership that would benefit the United States.</p><img src="https://counter.theconversation.com/content/220014/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dan Murphy does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Most Americans see China as the biggest threat to the US. But away from headline economic figures, China has a slew of challenges.Dan Murphy, Executive Director of the Mossavar-Rahmani Center for Business and Government, Harvard Kennedy SchoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2220922024-02-29T17:37:32Z2024-02-29T17:37:32ZIndians are fleeing their growing economy to work abroad – even in conflict zones. Here’s how to create more jobs at home<figure><img src="https://images.theconversation.com/files/576217/original/file-20240216-18-l70jpr.jpg?ixlib=rb-1.1.0&rect=0%2C59%2C7951%2C5237&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/people-workers-standing-line-outside-construction-728813566">Rahul Ramachandram/Shutterstock</a></span></figcaption></figure><p>Israel <a href="https://www.bbc.co.uk/news/world-asia-india-68027582">plans</a> to bring in 70,000 workers from abroad, including 10,000 from India, to boost its construction sector. A labour shortage has emerged after 80,000 Palestinian workers were barred from entering the country after the October 7 Hamas-led attacks.</p>
<p>Figures suggest that India is one of the <a href="https://www.spglobal.com/marketintelligence/en/mi/research-analysis/india-seizes-crown-of-fastest-growing-g20-economy-dec23.html">fastest-growing</a> economies in the world. Between July and September of 2023, it grew at a pace of 7.6%. If it continues along this current growth trajectory, India will become the world’s <a href="https://www.forbes.com/sites/benjaminlaker/2024/02/23/india-to-become-third-largest-economy-by-2027-implications-for-leaders/">third-largest</a> economy by 2027.</p>
<p>The fact that thousands of Indian workers are nonetheless queuing up to secure a job in a conflict zone abroad is a consequence of a jobs crisis at home. Despite the country’s apparent economic growth, many Indians – even those with a university degree – are struggling to secure stable employment.</p>
<p>Casual work makes up <a href="https://eastasiaforum.org/2023/04/10/indias-workforce-woes/#:%7E:text=About%2052%20per%20cent%20of,cent%20are%20regular%20salaried%20workers.">25% of the workforce</a>, while only 23% of workers are paid a regular salary. The remainder are self-employed, and quite vulnerable to irregular and insecure income too.</p>
<p>But India has a large working-age population (people between 15 and 64 years of age), so the demand for jobs is immense. India needs to create an <a href="https://eastasiaforum.org/2023/04/10/indias-workforce-woes/">estimated</a> 10 million to 12 million jobs each year for the unemployed, new workforce entrants, and surplus agricultural workers to be able to secure non-farm work.</p>
<p>How can India provide jobs for its increasingly educated young? It needs even faster economic growth and for this growth to be labour intensive. This will, in turn, generate demand in the economy from all sections of society (not just the middle class and above).</p>
<h2>Structural change</h2>
<p>Between 2004 and 2014, India’s economy grew at a rate of <a href="https://thewire.in/economy/modi-claims-india-saw-a-lost-decade-between-2004-and-14-is-that-true">nearly 8% per year</a> (despite the global financial crisis in 2008). This rapid growth was accompanied by a hastening of structural change in employment.</p>
<p>During that period, the economy created on average <a href="https://ideas.repec.org/a/spr/ijlaec/v64y2021i2d10.1007_s41027-021-00317-x.html">7.5 million</a> new non-farm jobs every year. The number of manufacturing jobs in India rose from 53 million in 2004 to 60 million by 2012.</p>
<p>However, ₹500 (£4.78) and ₹1000 (£9.56) notes were <a href="https://www.aeaweb.org/articles?id=10.1257/jep.34.1.55">taken out of circulation</a> in 2016, making 86% of India’s currency illegal. The cash recall was intended to accelerate the country’s transition towards a formal economy. But it led to acute shortages of cash, destroying jobs in the construction and manufacturing sectors.</p>
<p>Growth slowed to 2020 when, at the beginning of the COVID pandemic, the Indian government imposed a nationwide lockdown at <a href="https://www.bbc.co.uk/news/world-asia-india-52081396">four hours’ notice</a>. The lockdown caused India’s gross domestic product (GDP) to <a href="https://www.indiabudget.gov.in/economicsurvey/">contract by 5.8%</a> – more than twice the rate at which the global economy shrank.</p>
<figure class="align-center ">
<img alt="Six Indian police officers wearing masks and standing on a city street." src="https://images.theconversation.com/files/576586/original/file-20240219-22-2qhktj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/576586/original/file-20240219-22-2qhktj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/576586/original/file-20240219-22-2qhktj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/576586/original/file-20240219-22-2qhktj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/576586/original/file-20240219-22-2qhktj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/576586/original/file-20240219-22-2qhktj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/576586/original/file-20240219-22-2qhktj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Police in Gujarat, India, enforcing the COVID lockdown.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/bharuch-gujarat-india-april-05-2020-1702650391">Kunal Mahto/Shutterstock</a></span>
</figcaption>
</figure>
<p>Employment in manufacturing jobs fell again, especially in labour-intensive manufacturing where employment had already been in decline for five years following the botched implementation of demonetisation. Around <a href="https://thewire.in/economy/what-we-know-about-indias-post-covid-economy-recovery-and-rising-inequality">60 million workers</a> returned to jobs in agriculture, reversing the structural change in employment that had been underway for 15 years.</p>
<p>To take advantage of its bulging working-age population, India needs to create more non-farm jobs. In his new book, “Breaking the Mould”, the former governor of the Reserve Bank of India, Raghuram Rajan, <a href="https://www.penguin.co.in/book/breaking-the-mould/">says</a> that India needs to focus on exports of services, drawing on the country’s new digital infrastructure and IT-based services growth for the domestic (and export) market.</p>
<p>But a focus on services alone will not suffice. This “New India” economy currently constitutes <a href="https://indianexpress.com/article/opinion/columns/indian-economy-gdp-growth-capex-global-market-share-digital-public-infrastructure-9073549/">less than 15%</a> of the country’s economy and a fraction of that in employment. Such a strategy will generate jobs mainly for highly skilled people, rather than the millions of Indian workers that are searching for non-farm jobs.</p>
<p>What India needs is a <a href="https://www.eastasiaforum.org/2022/02/03/make-in-india-a-work-in-progress/">manufacturing strategy</a> akin to China’s that focuses on labour-intensive manufacturing. China has pursued an industrial policy since the 1950s, which has become even more evolved since the 1980s, helping the country establish dominance in global high-tech manufacturing.</p>
<h2>Creating jobs in India</h2>
<p>In India, the demand for jobs will only be met if several different factors come together. Construction activity needs to continue at its current brisk pace. But, for the next year or two, it must be led by public sector investment as private investment remains sluggish. </p>
<p>India’s investment-to-GDP ratio is <a href="https://www.indiabudget.gov.in/economicsurvey/">still below 30%</a>, and has remained below the 31% inherited by the current government when it came to power ten years ago. The potential for a twofold increase in construction employment (a trend that was observed between 2004 and 2012) over the next five years hinges on the revival of private investment.</p>
<figure class="align-center ">
<img alt="A group of workers in hi-vis jackets at a construction site." src="https://images.theconversation.com/files/576587/original/file-20240219-28-phmg80.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/576587/original/file-20240219-28-phmg80.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=397&fit=crop&dpr=1 600w, https://images.theconversation.com/files/576587/original/file-20240219-28-phmg80.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=397&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/576587/original/file-20240219-28-phmg80.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=397&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/576587/original/file-20240219-28-phmg80.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=499&fit=crop&dpr=1 754w, https://images.theconversation.com/files/576587/original/file-20240219-28-phmg80.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=499&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/576587/original/file-20240219-28-phmg80.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=499&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Labour workers building an overhead metro in Bangalore, India.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/bangalore-karnataka-india-january-21-2014-282302282">PI/Shutterstock</a></span>
</figcaption>
</figure>
<p>Labour-intensive manufacturing by micro, small and medium enterprises also needs a sustained fillip. The government’s focus is currently on large companies – so-called “national champions” like industrial conglomerates Tata and Mahindra – which are being encouraged through <a href="https://thewire.in/political-economy/why-the-modi-government-policy-of-national-champions-is-unravelling">subsidies</a>.</p>
<p>If these subsidies were instead redirected towards smaller enterprises, they might do more for employment generation. Large corporations <a href="https://www.cambridge.org/core/books/planning-in-the-20th-century-and-beyond/817DA53ABC693583B3E3D052CA5B2CE5#fndtn-information">typically</a> use highly capital-intensive methods of production, whereas smaller ones tend to absorb more labour. Historically, it is the latter that has generated <a href="https://archive.org/details/developmentwithh0000unse/mode/2up">most</a> of the non-farm jobs in developing countries.</p>
<p>The third area where employment can be generated is, indeed, services. Public expenditure should prioritise public health, education, vocational training and universities.</p>
<p>These sectors are labour-intensive, contribute to the creation of public goods, and will build the human capital needed by both manufacturing and modern export-oriented services. That is the only way India’s health and education services can reach the <a href="https://www.adb.org/sites/default/files/publication/385696/hcd-sa.pdf">levels observed</a> in east Asia and attract more foreign investment.</p>
<p>A renewed focus on smaller enterprises across these sectors is needed. Inclusive growth requires providing jobs rapidly at the bottom of the pyramid, not only at the top of the wage – and skill – distribution.</p><img src="https://counter.theconversation.com/content/222092/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Santosh Mehrotra does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>India needs to follow a path akin to China’s to find answers to its job woes.Santosh Mehrotra, Visiting Professor at the Centre for Development Studies, University of BathLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2238692024-02-28T14:41:38Z2024-02-28T14:41:38ZGhana: Street vending helps migrants to survive in Accra, but it’s illegal – a solution for all is needed<p>Moving to the city is a common strategy for the rural poor in the global south. Economic hardship pushes individuals out of their rural communities in search of opportunities. These tend to be found in urban centres, where facilities and services are concentrated. </p>
<p>The <a href="https://worldmigrationreport.iom.int/wmr-2020-interactive/">World Migration Report</a> indicated that 740 million people were migrants in their own country in 2009. </p>
<p>Even in the city, there’s no guarantee of finding a job. Many people therefore resort to informal ways of making a living, like street vending. In Ghana, about <a href="https://library.fes.de/pdf-files/bueros/ghana/10496.pdf">80% of the workforce</a> are employed in the informal sector.</p>
<p>We were among a group of urban planning researchers who recently <a href="https://link.springer.com/article/10.1007/s43545-023-00698-4">studied</a> the role of street vending in the lives of migrants in Ghana’s capital, Accra. In most <a href="https://www.wiego.org/sites/default/files/publications/files/IEMS-Sector-Report-Street-Vendors-Exec-Summary.pdf">African cities</a>, between 2% and 24% of informal workers are street vendors. </p>
<p>Our study showed that street sales were a source of jobs, income and survival for the urban poor in Ghana. This is even though street vending is illegal in the country.</p>
<p>We also assessed the effects of street vending from the lens of city authorities. Over the years, city authorities have failed to manage the activities of street vendors. Understanding all the relevant perspectives may help to find ways to meet people’s various needs in Ghanaian cities.</p>
<h2>Street vendors in Accra</h2>
<p>The study focused on street vending activities in the <a href="https://www.researchgate.net/figure/Map-of-Accra-Central-Business-Area-Showing-the-Study-Area-Source-Survey-Dept_fig2_330913282">central business district</a> of Accra Metropolis. The area was selected due to the concentration of street vending activities such as the sale of hardware goods, electrical appliances, cosmetics, clothing, food and beverages, and the activities of financial institutions. </p>
<p>We interviewed 80 migrant street vendors and some city authorities. In assessing the socio-economic effects of street vending on the livelihoods of migrants, we monitored key livelihood indicators:</p>
<ul>
<li><p>income</p></li>
<li><p>access to social services (education and healthcare)</p></li>
<li><p>asset acquisition (property such as land)</p></li>
<li><p>social ties </p></li>
<li><p>educational assistance (helping relatives in their education) </p></li>
<li><p>family relationships. </p></li>
</ul>
<p>We found that a majority (60%) of the participants used to earn a monthly income of less than GH₵50.00 (US$4) before they took up street vending. After moving to Accra and entering into street vending, 72% of the respondents indicated that they earned over GH₵200 (US$16). </p>
<p>Over a third (68%) of the respondents indicated that their access to social services such as education, healthcare and recreational facilities had improved since migrating from their place of origin and starting street vending. This could be a result of the increased income coupled with the presence of social facilities and services in urban centres. </p>
<p>Half (50%) of the respondents had not acquired any assets for their family members since they started street vending. However, the other 50% had been able to acquire assets for their family members in their home of origin. These assets included land for residential and agricultural purposes. </p>
<p>Also, 58% of the respondents indicated that street vending enabled them to support family members’ education back home. </p>
<p>Most of the vendors said they were selling on the streets because they had limited skills. And the cost of living was high in the city. </p>
<p>The challenges they faced included: </p>
<ul>
<li><p>limited access to shelter</p></li>
<li><p>risk of arrest by city authorities (street vending is illegal in the capital)</p></li>
<li><p>limited access to food and related consumer items </p></li>
<li><p>inability to access social services by some street vendors</p></li>
<li><p>cultural shock and cultural difference.</p></li>
</ul>
<h2>The city’s view</h2>
<p>City officials who took part in the research highlighted the challenges street vendors posed. These included: </p>
<ul>
<li><p>getting in the way of pedestrians and vehicles </p></li>
<li><p>forcing pedestrians to walk on the streets, increasing their chances of accidents </p></li>
<li><p>littering, which has environmental consequences and increases the cost of waste management.</p></li>
</ul>
<p>The city authorities indicated that the most sustainable approach to managing the activities of street vendors was to allot portions of the pavements to them. One strategy suggested was to block specific roads on specified days to allow street vendors to sell their wares. </p>
<p>The Metropolitan Assembly <a href="https://ama.gov.gh/doc/bye-laws.pdf">bye-law</a> states that there should be no hawking by street vendors. The assembly monitors their activities and sometimes evicts them.</p>
<p>These management strategies are expensive and ineffective. Authorities lack political will to enforce them. Most mayors allow street vendors to operate without restrictions during election years. </p>
<h2>Next steps</h2>
<p>Street vendors believe their activities are legitimate and present social and economic opportunities. For example, they believe they can make a living and support their families by vending. They say relocating to Accra has strengthened their livelihoods and improved their access to healthcare services and other social facilities. </p>
<p>On the contrary, city authorities see street vending as an illegal activity that poses environmental threats to the city. They associate it with problems such as obstruction to pedestrians and vehicles, littering and petty crime. </p>
<p>Our study concludes that halting street vending without alternative livelihoods will mean denying thousands of people their livelihood. </p>
<p>Over the years, government skills training and growth <a href="https://thebftonline.com/2023/08/15/yea-exceeds-2023-youth-employment-target-by-16/">interventions</a> have excluded informal sector actors such as street vendors. The only way to get the vendors off the streets is to offer alternative sources of livelihood that will provide competitive income. </p>
<p>We propose that policymakers design skills training programmes for street vendors that will offer them sustainable and improved livelihoods. These programmes should be designed and carried out in a politically neutral way.</p>
<p>Also, institutions such as the Ministry of Roads and Highways, Transport Ministry, <a href="https://mofep.gov.gh/sites/default/files/pbb-estimates/2022/2022-PBB-NDPC.pdf">National Development Planning Commission</a> and local authorities should incorporate the activities of street vendors in the design of layouts, roads, plans and policies.</p><img src="https://counter.theconversation.com/content/223869/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Street sales are a source of jobs, income and survival for the urban poor in Ghana.Stephen Appiah Takyi, Senior Lecturer, Department of Planning, Kwame Nkrumah University of Science and Technology (KNUST)Owusu Amponsah, Senior Lecturer, Department of Planning, Kwame Nkrumah University of Science and Technology (KNUST)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2222332024-02-21T13:24:18Z2024-02-21T13:24:18ZYoung people are lukewarm about Biden – and giving them more information doesn’t move the needle much<figure><img src="https://images.theconversation.com/files/576872/original/file-20240220-16-qvln0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Young voters in Ann Arbor, Mich., fill out applications to cast their ballot in the midterm elections in November 2022. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/zachary-rose-fills-out-an-application-to-cast-his-ballot-news-photo/1244584443?adppopup=true">Jeff Kowalsky/AFP via Getty Images</a></span></figcaption></figure><p>Recent polling for the November 2024 election shows that President Joe Biden is struggling with young voters, who have traditionally supported Democrats. </p>
<p>A <a href="https://www.nytimes.com/interactive/2023/12/19/us/elections/times-siena-poll-registered-voter-crosstabs.html">December 2023 poll</a> showed that 49% of young people supported former President Donald Trump, while just 43% of 18- to 29-year-olds said they preferred Biden. </p>
<p>Biden is even struggling with young people who identify as Democrats. A <a href="https://iop.harvard.edu/youth-poll/46th-edition-fall-2023">Fall 2023 Harvard Kennedy School</a> poll shows that just 62% of Democrats aged 18 to 29 years old said they would vote for Biden in 2024. </p>
<p>Many Democrats are <a href="https://thehill.com/homenews/campaign/4138154-democrats-worry-young-people-souring-on-party/">increasingly anxious</a> that young voters who <a href="https://www.cnn.com/election/2020/exit-polls/president/national-results">supported Biden in 2020</a> will boycott the general election in 2024, support a third-party candidate or <a href="https://www.vox.com/politics/24034416/young-voters-biden-trump-gen-z-polling-israel-gaza-economy-2024-election">vote for Trump</a>. </p>
<p>Polls this far from Election Day are <a href="https://gking.harvard.edu/files/abs/variable-abs.shtml">notoriously variable</a> and not reliable for predicting election results. Furthermore, some political pundits are asking whether young voters <a href="https://www.nytimes.com/2023/11/27/upshot/poll-biden-young-voters.html">will return to the Biden coalition</a> once the campaign season heats up and they learn more about the two candidates. </p>
<p>As scholars of <a href="https://neilobrian.com">public opinion</a> and the <a href="https://scholar.google.com/citations?user=J4Vp11wAAAAJ&hl=en&oi=sra">U.S. presidency</a>, we are deeply interested in the prospect of young voters, particularly Democrats, defecting from the Biden coalition. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/576870/original/file-20240220-28-6gi2uw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A young, white woman with brown hair wearing shorts and a beige cardigan walks past a bulletin board with flyers on it for vioting." src="https://images.theconversation.com/files/576870/original/file-20240220-28-6gi2uw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/576870/original/file-20240220-28-6gi2uw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/576870/original/file-20240220-28-6gi2uw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/576870/original/file-20240220-28-6gi2uw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/576870/original/file-20240220-28-6gi2uw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/576870/original/file-20240220-28-6gi2uw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/576870/original/file-20240220-28-6gi2uw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">An Emory University student in Atlanta walks past voting information in October 2022.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/young-woman-walks-past-voting-information-flyers-on-the-news-photo/1244204334?adppopup=true">Elijah Nouvelage/AFP via Getty Images</a></span>
</figcaption>
</figure>
<h2>Mixed evidence on young voters’ support for Biden</h2>
<p>About <a href="https://www.pewresearch.org/politics/2015/04/07/a-deep-dive-into-party-affiliation/">51% of young voters</a>, aged 18 to 29 years old, identify as Democrats. This compares with 35% of these voters who identify as Republicans. In 2020, young voters in this age group made up an <a href="https://circle.tufts.edu/latest-research/election-week-2020#when-and-how-young-people-voted">estimated 17%</a> of the electorate. </p>
<p>In a close election, securing the youth vote will be paramount in order for Biden to win reelection.</p>
<p>We wanted to understand how young voters might change their election pick preferences if they learn more about different topics, such as the economy, likely to feature in this election season. </p>
<p>We recruited 1,418 respondents from across the country to participate in an online survey experiment in December 2023, including 860 people who identify as Democrats.</p>
<p>In this experiment, we exposed respondents to different messages that the Biden campaign might employ, to see if young Democrats could be persuaded back to Biden.</p>
<p>A quarter of the respondents saw information about how <a href="https://apnews.com/article/biden-inflation-reduction-climate-anniversary-9950f7e814ac71e89eee3f452ab17f71">inflation and</a> <a href="https://apnews.com/article/biden-unemployment-jobs-inflation-interest-rates-b1c21252024d697765d047a60f41e900">unemployment decreased</a> during the Biden administration. </p>
<p>Another quarter of respondents were given information about Trump’s norm-violating behavior, such as <a href="https://www.reuters.com/legal/government/us-capitol-riot-probe-turns-focus-trump-allies-extremist-groups-2022-07-12/">encouraging an insurrection</a> at the U.S. Capitol building on Jan. 6, 2021.</p>
<p>The next quarter of respondents were given information about Biden’s and Trump’s positions on abortion, and whether the U.S. should accept immigrants from the Gaza Strip. </p>
<p>The final group of respondents received no information about a particular topic.</p>
<p>In our research, which has yet to be published, we found mixed evidence that undecided young Democrats would be persuaded to vote for Biden based on any new information we shared with them. </p>
<p>Among the people we polled who were given no information, 66% of 18-year-old to 34-year-old Democrats said they would vote for Biden. This roughly tracks with national polling. </p>
<p>Would learning about the strength of the economy boost Biden’s support? </p>
<p>About 69% of young Democrats who read about dropping inflation and unemployment rates said they would vote for Biden, compared with 31% who said they would vote for Trump or another candidate. This reflects a modest increase in support for Biden, compared to people who had no information on this topic. </p>
<p>We then tested whether providing information to voters about the candidates’ policy positions would change support for Biden. </p>
<p>It is possible that voters are just unaware of the candidates’ positions on issues <a href="https://www.nytimes.com/2023/11/16/upshot/kamala-harris-biden-voters-polls.html?action=click&module=RelatedLinks&pgtype=Article">and, after getting more information</a>, will change their views. </p>
<p>We found that 71% of respondents who learned about Biden’s and Trump’s policy positions on abortion and Palestinian refugees from Gaza said they would vote for Biden, compared with the 66% who did not read any new information on these topics before deciding their pick. </p>
<p>Finally, we gave people information about Trump’s norm-violating behavior. This actually marginally decreased support for Biden, dropping from the 66% among people who did not have any of this information given to them in the survey to 63% among people who did. This change, though, lacked what social scientists call statistical significance – meaning that we cannot say this difference is not just attributable to chance alone. </p>
<p>Overall, we found that giving young Democrats access to three different pieces of information generally led to small increases in whether they said they would vote for Biden or not. </p>
<p>Next, we asked respondents “How enthusiastic would you say you are about voting for president in next year’s election?” and how likely they are to vote in the upcoming presidential election. We found that the three different pieces of information each led to a small increase in reported vote intention among young Democrats, but didn’t, on average, increase their enthusiasm about voting. In other words, if young voters feel compelled to vote, they may do so, but without enthusiasm.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/576873/original/file-20240220-20-e11nih.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Young people sit around a table, and two young people, both wearing white T-shirts, stand near a screen that says 'Canvass training'" src="https://images.theconversation.com/files/576873/original/file-20240220-20-e11nih.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/576873/original/file-20240220-20-e11nih.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/576873/original/file-20240220-20-e11nih.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/576873/original/file-20240220-20-e11nih.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/576873/original/file-20240220-20-e11nih.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/576873/original/file-20240220-20-e11nih.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/576873/original/file-20240220-20-e11nih.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Abortion rights canvassers gather for a canvass training in Columbus, Ohio, in November 2023.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/pro-choice-canvassers-gather-for-a-canvass-training-meeting-news-photo/1766360809?adppopup=true">Megan Jelinger/AFP via Getty Images</a></span>
</figcaption>
</figure>
<h2>The power of persuasion</h2>
<p>Taken together, these results show little movement among young Democrats. This is particularly striking when compared to older Democrats in our sample. </p>
<p>When presented with information about the strength of the economy, the candidates’ divergent policy positions or Trump’s norm-violating behavior, support for Biden among likely voters who were 55 years old or older and identified as Democrats increased from 73% to around 90%.</p>
<p>These results suggest an uphill battle for the Biden campaign to bring back young voters. Young voters, even if they identify as Democrats, are perhaps less attached to a party, or democratic institutions more generally, <a href="https://www.washingtonpost.com/opinions/2023/12/18/democracy-young-people-voters-trump/">than older voters</a>. This means campaign messages about democratic norms might be less persuasive among younger voters. </p>
<p>On the other hand, there are reasons to expect young voters might return to Biden: The economy is doing well, which <a href="https://news.northeastern.edu/2023/11/06/presidential-election-predictions-polls/">tends to help incumbents</a>. </p>
<p>Furthermore, partisanship, particularly in this polarizing environment, remains a powerful influence, and may still exert a pull on young Democrats over the campaign.</p>
<p>Democrats, after all, successfully ran on an anti-Trump campaign in the <a href="https://www.pewresearch.org/politics/2023/07/12/voter-turnout-2018-2022/">2022 midterm elections</a>, <a href="https://morningconsult.com/exit-polling-live-updates/?mkt_tok=eyJpIjoiTTJGbU9EZ3dNalZtTURZMiIsInQiOiJTOTZTRHBrN0lNWG9IVisxUXhEdUdtcUxYaENlS2tIYlJ1YTZyTzhkNjBQM2o0dWVwZlVad3lxaTk1N0FtelwvMkJDOTdsYWtmVDU5eVVDQjhjcjJLUDBocGFaWjRRalVaXC9paTE1dGhzSmxrYWtjUnlXWEk2cVlDc0xPS1FQZ0RPIn0%3D#section-100">2020 general election</a> and the <a href="https://www.nytimes.com/2018/11/06/us/politics/midterm-elections-results.html">2018 midterm elections</a>.</p><img src="https://counter.theconversation.com/content/222233/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>While young voters say they would be more likely to vote for Biden after they learn more about the economy and other topics, they did not appear affected by Donald Trump’s norm-defying behavior.Neil O'Brian, Assistant Professor of Political Science, University of OregonChandler James, Assistant Professor of Political Science, University of OregonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2235982024-02-16T13:19:53Z2024-02-16T13:19:53ZMexico is suing US gun-makers for arming its gangs − and a US court could award billions in damages<figure><img src="https://images.theconversation.com/files/575682/original/file-20240214-30-2tfucu.jpg?ixlib=rb-1.1.0&rect=45%2C13%2C4315%2C2857&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A sign in Laredo, Texas, reminds motorists not to smuggle guns into Mexico.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/sign-warns-motorists-not-to-smuggle-weapons-or-ammunitions-news-photo/91474155">Gilles Mingasson/Getty Images</a></span></figcaption></figure><p>The government of Mexico is <a href="https://www.forbes.com/sites/siladityaray/2024/01/23/us-appeals-court-allows-mexicos-10-billion-lawsuit-against-us-gunmakers-to-proceed/?sh=7f16abcb3071">suing U.S. gun-makers</a> for their role in facilitating cross-border gun trafficking that has <a href="https://stopusarmstomexico.org/invisible-weapons-indelible-pain/">supercharged violent crime</a> in Mexico.</p>
<p><a href="https://www.courthousenews.com/wp-content/uploads/2021/08/mexico-smith-wesson-complaint.pdf">The lawsuit seeks US$10 billion</a> in damages and a court order to force the companies named in the lawsuit – including Smith & Wesson, Colt, Glock, Beretta and Ruger – to change the way they do business. In January, a federal appeals court in Boston <a href="https://tlblog.org/first-circuit-allows-some-of-mexicos-claims-against-gun-manufacturer-to-move-forward/">decided</a> that the industry’s immunity shield, which so far has protected gun-makers from civil liability, does not apply to Mexico’s lawsuit.</p>
<p>As <a href="https://scholar.google.com/citations?user=yQUI6yEAAAAJ&hl=en">a legal scholar</a> who has <a href="https://press.umich.edu/Books/S/Suing-the-Gun-Industry2">analyzed lawsuits</a> against the gun industry for more than 25 years, I believe this decision to allow Mexico’s lawsuit to proceed could be a game changer. To understand why, let’s begin with some background about the federal law that protects the gun industry from civil lawsuits.</p>
<h2>Gun industry immunity</h2>
<p>In 2005, Congress passed the <a href="https://www.law.cornell.edu/uscode/text/15/chapter-105">Protection of Lawful Commerce in Arms Act</a>, which prohibits lawsuits against firearm manufacturers and sellers for injuries arising from criminal misuse of a gun.</p>
<p>Importantly, <a href="https://dx.doi.org/10.2139/ssrn.4357413">there are limits</a> to this immunity shield. For example, it <a href="https://www.law.cornell.edu/uscode/text/15/7903">doesn’t protect</a> a manufacturer or seller who “knowingly violated a State or Federal statute <a href="https://theconversation.com/sandy-hook-lawsuit-court-victory-opens-crack-in-gun-maker-immunity-shield-113636">applicable to the sale or marketing</a>” of a firearm. <a href="https://www.courthousenews.com/wp-content/uploads/2021/08/mexico-smith-wesson-complaint.pdf">Mexico’s lawsuit</a> alleges that U.S. gun-makers aided and abetted illegal weapons sales to gun traffickers in violation of federal law.</p>
<h2>Mexico’s allegations</h2>
<p>Mexico claims that U.S. gun-makers engaged in “<a href="https://www.courthousenews.com/wp-content/uploads/2021/08/mexico-smith-wesson-complaint">deliberate efforts to create and maintain an illegal market for their weapons in Mexico</a>.”</p>
<p>According to the lawsuit, the manufacturers intentionally design their weapons to be attractive to criminal organizations in Mexico by including features such as easy conversion to fully automatic fire, compatibility with high-capacity magazines and removable serial numbers.</p>
<p>Mexico also points to industry marketing that promises buyers a tactical military experience for civilians. And Mexico alleges that manufacturers distribute their products to dealers whom they know serve as transit points for illegal gunrunning through illegal <a href="https://www.nssf.org/articles/beware-the-straw-purchase/">straw sales</a>, unlicensed sales at gun shows and online, and off-book sales disguised as inventory theft.</p>
<p>In short, Mexico claims that illegal gun trafficking isn’t just an unwanted byproduct of the industry’s design choices, marketing campaigns and distribution practices. Instead, according to the lawsuit, feeding demand for illegal weapons is central to the industry’s business model.</p>
<p>In response, <a href="https://perma.cc/RRT6-PVDZ">the gun-makers insist</a> that Mexico’s attempt to hold them legally responsible for the criminal activity of others is precisely the type of lawsuit that the federal immunity shield was designed to block. They argue that merely selling a product that someone later uses in a crime does not amount to a violation of federal law that would deprive a manufacturer of immunity. Additionally, the gun-makers assert that, even if Mexico’s lawsuit were not barred by the immunity law, they have no legal duty to prevent criminal violence that occurs outside the U.S. </p>
<h2>The next legal steps</h2>
<p>In January 2024, a federal appeals court in Massachusetts decided that Mexico’s allegations, if true, would deprive the gun-makers of immunity, and it <a href="https://tlblog.org/first-circuit-allows-some-of-mexicos-claims-against-gun-manufacturer-to-move-forward/">sent the case back to trial court</a>. Mexico now needs to produce evidence to prove its allegations that the industry is not only aware of but actively facilitates illegal gun trafficking. </p>
<p>Additionally, to win, Mexico will need to convince a Boston jury that the manufacturers’ design choices, marketing campaigns and distribution practices are closely enough connected to street crime in Mexico to consider the companies responsible for the problem. This is known as “<a href="https://www.law.cornell.edu/wex/proximate_cause">proximate cause</a>” in the law.</p>
<p>For their part, the gun-makers have asked the trial judge to <a href="https://www.reuters.com/world/us/gun-makers-ask-us-supreme-court-bar-mexicos-lawsuit-2024-02-09">put the case on hold</a> while they pursue an appeal to the U.S. Supreme Court. However, <a href="https://www.nytimes.com/2019/11/12/us/politics/supreme-court-sandy-hook-remington.html">the Supreme Court has been reluctant</a> to weigh in on gun industry cases until they have reached their conclusion in the lower courts, where most of them <a href="https://casetext.com/case/ileto-v-glock-inc-2">are dismissed</a> and a few <a href="https://apnews.com/article/sandy-hook-school-shooting-remington-settlement-e53b95d398ee9b838afc06275a4df403">have settled</a>. </p>
<h2>High stakes for the industry</h2>
<p>If Mexico does win at trial, its demand for $10 billion in damages could drive several of the nation’s largest firearm manufacturers into <a href="https://www.epiqglobal.com/en-us/resource-center/articles/when-mass-tort-meets-bankruptcy">bankruptcy</a>. Even if the case were to settle for much less, a victory by Mexico would provide a template for a wave of future lawsuits that could change the way the gun industry operates.</p>
<p>Similar theories about dangerous product designs, irresponsible marketing and reckless distribution practices in opioid litigation have transformed the pharmaceutical industry. Civil lawsuits have forced the drugmakers to <a href="https://www.nytimes.com/2020/12/08/business/mckinsey-opioids-oxycontin.html">take public responsibility</a> for a nationwide health crisis, <a href="https://doi.org/10.1007/s11606-021-06799-1">overhaul the way they do business</a> and <a href="https://www.opioidsettlementtracker.com/globalsettlementtracker">pay billions of dollars</a> in judgments and settlements.</p>
<p>Mexico’s lawsuit holds out the prospect that the gun industry could be next.</p><img src="https://counter.theconversation.com/content/223598/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Timothy D. Lytton has provided expert consulting services to law firms representing gun violence victims.</span></em></p>Mexico claims that US firearm manufacturers are fueling illegal cross-border gun trafficking and violent crime abroad.Timothy D. Lytton, Regents' Professor & Professor of Law, Georgia State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2210782024-02-08T13:40:56Z2024-02-08T13:40:56ZThe myth of men’s full-time employment<figure><img src="https://images.theconversation.com/files/572004/original/file-20240129-25-80mw1z.jpg?ixlib=rb-1.1.0&rect=7%2C46%2C5114%2C3478&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">He's not alone.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/businessman-made-redundant-royalty-free-image/643678742">Image Bank/Getty Images</a></span></figcaption></figure><p>Men’s employment in the U.S. reached a 20-year high in 2023, with <a href="https://www.frbsf.org/economic-research/publications/economic-letter/2023/october/mens-falling-labor-force-participation-across-generations/">nearly 90%</a> of men ages 25 to 54 in the workforce, according to <a href="https://www.bls.gov/opub/ted/2023/labor-force-participation-rate-for-people-ages-25-to-54-in-may-2023-highest-since-january-2007.htm#:%7E:text=Among%20men%20ages%2025%20to,pandemic%20level%20in%20April%202023.">the Bureau of Labor Statistics</a>. This supports the <a href="https://doi.org/10.1177/0891243216649946">broad expectation</a> – some might say stereotype – that full-time employment is the norm for American men. </p>
<p>Yet examining employment at a single point in time leaves out important information about whether people are able to maintain stable work. <a href="https://doi.org/10.1177/23780231231197031">Our recent study</a> of male baby boomers’ working lives – spanning more than two decades – tells a very different story. </p>
<p>In fact, men’s labor force participation has been <a href="https://fred.stlouisfed.org/series/LNS11300001">steadily declining</a> since the 1970s, and workers are experiencing greater labor market precarity – that is, shorter job spells, greater job insecurity and more long-term unemployment. </p>
<p>In our research <a href="https://scholar.google.com/citations?user=VoDOQ44AAAAJ&hl=en&oi=ao">as experts</a> in the study of <a href="https://scholar.google.com/citations?user=zTqwiBYAAAAJ&hl=en">people’s employment</a> over time, we have <a href="http://doi.org/10.1007/s13524-016-0464-z">previously challenged the myth</a> that most women “opt out” of the workforce, establishing that the majority of women work steadily and full time. That led us to suspect that the picture of men’s employment could also be incomplete.</p>
<p>To understand these long-term trends, we studied data from about 4,500 men collected over more than 25 years. We were looking for patterns in the amount of time these men spent employed, unemployed and looking for work, and out of the workforce and not looking for work. </p>
<p>We were surprised to find that <a href="https://doi.org/10.1177/23780231231197031">only 41%</a> of late baby boomer men – those who were between 14 and 21 years old in 1979 – worked steadily and continuously, which we defined as working almost every week of the year between ages 27 and 49. This is a cohort of men who were widely thought to have taken a “<a href="https://www.google.com/books/edition/The_Career_Mystique/dIDgkBiqMO8C?hl=en&gbpv=1&dq=phyllis+moen+roehling&pg=PP13&printsec=frontcover">lockstep</a>” approach to work: entering the labor market when they finished their schooling and remaining employed until retirement.</p>
<p>We found most men didn’t fit this stereotype. About a quarter didn’t reach steady employment until they were nearly 50. Another quarter either found themselves increasingly unemployed and out of work as they aged or able to find only intermittent work. Finally, a smaller group of men left the labor market entirely – some leaving paid work at relatively young ages, while others leaving as they reached middle age.</p>
<p><iframe id="fh9kX" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/fh9kX/5/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Problems with precarity</h2>
<p>We don’t know exactly why these men followed such a wide range of work patterns during what economists call their “prime earning years.” But we think increasing labor market precarity – which researchers say is driven in large part by <a href="https://www.google.com/books/edition/The_State_of_Working_America/WdM77z0HUcAC?hl=en&gbpv=0">increases in layoffs</a> and <a href="https://doi.org/10.1093/qje/qjab012">decreases in unionization</a> – played a big role. </p>
<p>For example, we found that men who worked as “<a href="https://usa.ipums.org/usa/volii/occ1980.shtml#operator">operators, fabricators and laborers</a>” or in “<a href="https://usa.ipums.org/usa/volii/occ1980.shtml#precision">precision production, craft and repairs</a>” were at greater risk of unemployment. These are jobs that provided our own grandfathers with good, well-paying work, but they are also jobs that have become <a href="https://arnekalleberg.web.unc.edu/books/good-jobs-bad-jobs/">increasingly rare</a> since the 1970s.</p>
<p>We also found that men were at greater risk if they lived in counties with a higher unemployment rate or in states with more unionized jobs when they first entered the labor market. That latter point likely put them at greater risk of job loss <a href="https://doi.org/10.1177/2378023116656847">when those jobs went overseas</a> in the 1980s and 1990s.</p>
<p>Men who experienced unemployment, more job turnover before the age of 25 or transportation barriers to finding a good job also followed less steady work patterns, suggesting that they may have been forced to take “bad jobs” that provided fewer opportunities to move up the ladder or to earn a living wage.</p>
<p>Our findings paint a troubling portrait of employment in America. If this kind of unsteady employment characterizes the work patterns of the baby-boom generation, what awaits those of us who follow them? Is there anything we can do about it?</p>
<h2>Ideas for improvement</h2>
<p>The good news is there are solutions for workers, employers and the federal government. Our <a href="https://doi.org/10.1177/23780231231197031">research</a> <a href="https://doi.org/10.1177/07308884231162949">shows</a> that a college degree could protect men from the risk of unemployment or time out of work. The government can support this goal by <a href="https://www.amacad.org/sites/default/files/academy/multimedia/pdfs/publications/researchpapersmonographs/CFUE_Economic-Impact/CFUE_Economic-Impact.pdf">making college more affordable for workers</a>, as the current administration has <a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2021/10/29/a-proclamation-on-national-college-application-month-2021/">proposed doing</a>. </p>
<p>For employers, our findings suggest that making work less precarious – in other words, making it more stable, with better pay and more schedule control – would be a win-win proposition. Research suggests that employers consistently <a href="https://hbr.org/2019/06/the-financial-case-for-good-retail-jobs">underestimate the costs</a> of losing employees. Given how hard it’s been for employers to stay fully staffed – especially in retail and service work – making jobs more appealing to workers could pay off in terms of retention. </p>
<p>Walmart, for instance, has <a href="https://hbr.org/2017/12/the-right-thing-to-do">increased pay and schedule control</a> for its workers. Such moves have been shown to benefit both the employers, through the <a href="https://equitablegrowth.org/improving-u-s-labor-standards-and-the-quality-of-jobs-to-reduce-the-costs-of-employee-turnover-to-u-s-companies/">reduction in employee turnover costs</a>, and the employees, through improved work conditions and work benefits.</p>
<p>The government could also implement policy changes, such as the <a href="https://www.congress.gov/bill/118th-congress/house-bill/20">Protecting the Right to Organize Act</a>, to promote workers’ right to unionization, since unionization is consistently linked to <a href="https://doi.org/10.1016/j.eeh.2017.08.003">higher wages</a> and <a href="https://doi.org/10.1177/0003122411414817">lower levels of inequality</a>. </p>
<p>We don’t think the U.S. needs the jobs that our grandfathers held to return; instead, it needs to turn today’s available jobs into good jobs. The recent National Labor Relations Board “<a href="https://www.nlrb.gov/sites/default/files/attachments/pages/node-9558/joint-employer-fact-sheet-2023.pdf">joint employer</a>” ruling, for example, should do this by making it easier for workers at national chains to unionize across franchises, which could improve the working conditions of millions of people in the service industry.</p>
<p>Finally, government can take action to make unemployment a less miserable experience. Our findings, both here and elsewhere, suggest that unemployment does considerable harm to <a href="https://doi.org/10.1177/07308884231162949">workers’ careers</a> <a href="https://doi.org/10.1177/08982643221091775">and health</a>. <a href="https://www.epi.org/publication/section-5-benefit-levels-increase-ui-benefits-to-levels-working-families-can-survive-on/">Reforming the current unemployment insurance</a> system by expanding eligibility and creating progressive wage replacement rates may make it easier for workers to <a href="http://www.nber.org/papers/w27574">find jobs that better fit their skill set</a>, which <a href="https://www.google.com/books/edition/The_Tolls_of_Uncertainty/DkgHEAAAQBAJ?hl=en">our research</a> suggests could help them return to stable employment.</p>
<p>Our findings are the canary in a coal mine. They suggest that for future generations, steady employment may be a thing of the past. But the good news is that we can heed the warning and take steps to give everyone access to better jobs and more stable employment.</p><img src="https://counter.theconversation.com/content/221078/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sarah Damaske receives/has received funding from the Eunice Kennedy Shriver National Institute of Child Health and Human Development, the National Science Foundation, the Woodrow Wilson National Fellowship Foundation, the American Sociological Association, and the Pennsylvania State University and its Population Research Institute.</span></em></p><p class="fine-print"><em><span>Adrianne Frech has received funding from the National Institutes of Health.</span></em></p>Think the norm is to join the workforce straight after school, work for five decades and then retire? Think again.Sarah Damaske, Professor of Sociology and Labor and Employment Relations, Penn StateAdrianne Frech, Associate Professor of Population Health, Ohio UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2218192024-02-06T15:56:29Z2024-02-06T15:56:29ZTurkey earthquakes one year on: the devastation has exposed deep societal scars and women are bearing the brunt<p>In the early hours of February 6 2023, the south-eastern region of Turkey was rocked by a series of powerful earthquakes. One year on, large parts of Hatay, the worst-affected province, remain in ruins. In a <a href="https://www.youtube.com/watch?v=a6jxgqvi4xY">vlog</a> from Hatay on January 24, journalist Cüneyt Özdemir remarked: “The city is like a construction site mostly under rubble.” </p>
<p>The <a href="https://earthquake.usgs.gov/earthquakes/eventpage/us6000jllz/executive">first earthquake</a>, measuring 7.8 on the Richter scale, struck near the border with Syria, killing at least 1,500 people as they slept. This was followed by a <a href="https://earthquake.usgs.gov/earthquakes/eventpage/us6000jlqa/executive">7.5-magnitude quake</a> nine hours later, located around 59 miles (95km) to the south-west. Hatay, already in ruins, was shaken again by a <a href="https://www.theguardian.com/world/2023/feb/20/turkey-new-6-point-4-magnitude-earthquake-hatay">6.4-magnitude tremor</a> two weeks later.</p>
<p>The disaster resulted in the <a href="https://reliefweb.int/report/turkiye/devastating-earthquakes-southern-turkiye-and-northern-syria-december-15th-2023-situation-report-30-entr">deaths</a> of more than 50,000 people while injuring a further 107,000. A total of 9 million people have been affected, including 1.7 million refugees who had fled the civil war in Syria. </p>
<p>One year on, the region’s economy and society remain shaken. The devastation has exposed deep societal scars, and the task of rebuilding is still immense.</p>
<h2>Economic ramifications</h2>
<p>The affected areas represented <a href="https://www.tobb.org.tr/Sayfalar/Eng/Detay.php?rid=29752&lst=MansetListesi">13.3%</a> of Turkey’s total employment before the earthquakes. The quakes rendered around 220,000 workplaces <a href="https://www.ilo.org/wcmsp5/groups/public/---europe/---ro-geneva/---ilo-ankara/documents/publication/wcms_873893.pdf">unusable</a>, leading to a 16% reduction in working hours. Particularly hard-hit provinces such as Hatay, Kahramanmaraş and Malatya lost <a href="https://www.tobb.org.tr/BilgiErisimMudurlugu/Sayfalar/sanayi-kapasite-raporu-istatistikleri.php">more than 10%</a> of their combined industrial capacity.</p>
<p>A year on, unemployment remains a dire problem in these areas. Over 230,000 people in the region applied for <a href="https://media.iskur.gov.tr/79379/12-aralik-2023-aylik-istatistik-tablolari.xlsx">unemployment benefits</a> throughout 2023, but less than 40% of these applications met the necessary criteria. </p>
<p>The Turkish government has recently launched a <a href="https://www.ekonomim.com/ekonomi/gunluk-850-lira-odenecek-deprem-bolgesinde-istihdama-donus-programi-baslatildi-haberi-725793">programme</a> to help people return to employment in the region. But <a href="https://www.evrensel.net/haber/508685/deprem-bolgesinde-istihdama-donus-programi-patronlara-bedava-depremzede-isci">labour unions</a> view this as a way of providing cheap labour to employers, and have asked the government to focus more on satisfying the urgent needs of workers, such as housing.</p>
<figure class="align-center ">
<img alt="A group of people standing in front of crumbled buildings with a cloud of smoke overhead." src="https://images.theconversation.com/files/573731/original/file-20240206-24-ex9dv1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/573731/original/file-20240206-24-ex9dv1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/573731/original/file-20240206-24-ex9dv1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/573731/original/file-20240206-24-ex9dv1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/573731/original/file-20240206-24-ex9dv1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/573731/original/file-20240206-24-ex9dv1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/573731/original/file-20240206-24-ex9dv1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Hatay was devastated by last February’s earthquakes.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/hatay-iskenderun-turkey-february-7th-2023-2260847503">Doga Ayberk Demir/Shutterstock</a></span>
</figcaption>
</figure>
<h2>Fractured society</h2>
<p>The earthquakes shattered not only the region’s economy but the very fabric of society. More than 850,000 buildings collapsed in the initial quakes and the thousands of aftershocks that followed. This exposed <a href="https://www.bbc.co.uk/news/64568826">inadequacies</a> in construction practices and a widespread lack of compliance with building regulations. </p>
<p>The government <a href="https://www.reuters.com/world/middle-east/turkey-issues-earthquake-rebuilding-rules-after-millions-left-homeless-2023-02-24/">pledged</a> to rebuild 650,000 homes within a year – but progress has been slow. A mere <a href="https://www.barrons.com/news/fear-uncertainty-and-grief-year-after-turkey-s-quake-3bd85540">15%</a> of these new homes have been built, and hundreds of thousands of people remain displaced. Today, more than <a href="https://sheltercluster.org/turkiye-earthquake-2023/documents/20240118-shelter-sector-turkiye-earthquake">670,000 people</a> are still living in small, temporary, metal container homes.</p>
<p>The earthquakes also had a profound impact on education in the region. Damage to schools and other educational facilities disrupted the in-class teaching of around <a href="https://dergipark.org.tr/en/download/article-file/3091756">7 million</a> students. </p>
<p>On January 2 2024, Turkey’s minister of education, Yusuf Tekin, <a href="https://basinmus.meb.gov.tr/www/bakan-tekin-haberturk-canli-yayininda-egitim-gundemini-degerlendirdi/icerik/105">admitted</a> that only a quarter of the educational facilities that were destroyed by the quakes have been rebuilt. During the most recent school term (mid-September to mid-January), students were taught mostly in <a href="https://www.egitimis.org.tr/guncel/sendika-haberleri/2023-2024-egitim-ogretim-yili-1-yariyil-degerlendirmesi-4360/">sites under construction</a>.</p>
<h2>Roadmap for recovery</h2>
<p>Turkey’s government claims to be focusing on <a href="https://time.com/6255896/turkey-rebuild-earthquake-climate-resilience/">“building back better”</a>. Its stated aim is to construct cities and communities that are more resilient to any such shocks in the future. This is commendable (provided it does in fact happen), but it’s crucial that efforts to recover go beyond mere reconstruction. </p>
<p>The government’s response to the disaster has, for example, largely <a href="https://www.mei.edu/publications/building-back-better-gender-mind-centering-turkeys-women-and-girls-earthquake-recovery#:%7E:text=Recommendations%20for%20building%20back%20better&text=More%20must%20be%20done%20to,rights%2Dbased%20disaster%20management%20framework.">failed</a> women and girls. Following the quakes, women and girls have <a href="https://eca.unwomen.org/sites/default/files/2023-04/UN%20Women%20Brief%20on%20Earthquake%20in%20Turkiye%20Gendered%20impacts%20and%20response.pdf">faced</a> heightened care and domestic work responsibilities, health challenges (particularly related to <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10084526/">pregnancy</a>), and an increased susceptibility to violence.</p>
<p>On top of this, they grapple with enduring poverty. A <a href="https://ekmekvegul.net/gundem/deprem-bolgesinde-kadinlarin-ucreti-asgarinin-altinda">recent report</a> which surveyed 60 women in the affected region revealed that most are earning what is called a “women’s daily wage”. This wage has emerged in the region in the aftermath of the quakes and falls below the national minimum wage, further worsening <a href="https://turkiye.unfpa.org/en/gender-equality#:%7E:text=Labor%20force%20participation%20rate%20of,the%20rest%20of%20the%20world">existing gender inequality</a> in the country.</p>
<p>According to the same report, wages below the minimum wage have become the norm for women in the region – including those women in white-collar jobs.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/in-turkey-women-are-feeling-the-worst-aftershocks-of-the-earthquake-disaster-this-disparity-may-lead-to-dwindling-trust-in-government-200801">In Turkey, women are feeling the worst aftershocks of the earthquake disaster – this disparity may lead to dwindling trust in government</a>
</strong>
</em>
</p>
<hr>
<p>While the Turkish government’s response to last February’s earthquakes has been widely criticised, it still enjoyed <a href="https://www.theguardian.com/world/2023/may/26/turkey-quake-zone-voters-backing-erdogan-in-runoff">strong support</a> in the national election in the summer of 2023. Turkey’s current government, led by President Recep Tayyip Erdoğan, and its alliance came out on top in ten of the 11 earthquake-affected provinces.</p>
<p>Turkey is now gearing up for local elections this spring. The <a href="https://www.dailysabah.com/politics/elections/turkiyes-ak-party-eyes-another-victory-in-municipal-elections">current political rhetoric</a> is dominated by a focus on replacing old buildings not resistant to major disasters with new ones. But it is clear the affected regions need solutions that include all members of society – which will only be possible with the help of the national government.</p>
<p>Yet, in a <a href="https://www.dw.com/tr/erdo%C4%9Fandan-hataya-yerel-se%C3%A7im-mesaj%C4%B1/a-68167503">speech</a> on February 3 2024, Erdoğan hinted there would be a sustained absence of assistance in the disaster-stricken areas if central government and local administration “do not join hands and are not in solidarity”. However, the nature of this alignment – whether the president meant cooperation or political ideology – remains unclear.</p><img src="https://counter.theconversation.com/content/221819/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ufuk Gunes Bebek does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>It has been one year since Turkey’s deadly earthquakes – the road ahead remains daunting.Ufuk Gunes Bebek, Assistant Professor in Economics, University of BirminghamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2224602024-02-01T00:24:27Z2024-02-01T00:24:27ZWith the economy looking bright enough, the Federal Reserve seems content to play the waiting game<figure><img src="https://images.theconversation.com/files/572543/original/file-20240131-29-ugwtym.jpg?ixlib=rb-1.1.0&rect=43%2C410%2C5783%2C3468&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">When will Fed Chair Jerome Powell lower the curtains on the inflation battle?</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/FederalReservePowell/90516627fabd4f71b1122b964a78a211/photo?Query=jerome%20powell&mediaType=photo&sortBy=creationdatetime:desc&dateRange=Anytime&totalCount=2461&currentItemNo=1">AP Photo/Alex Brandon</a></span></figcaption></figure><p>If there’s one thing you can say about Fed policymakers, it’s that they don’t make decisions on a whim. When the Federal Open Market Committee met on Jan. 31, 2024, it <a href="https://www.nbcnews.com/business/economy/federal-reserve-interest-rate-decision-january-2024-increase-decrease-rcna136429">held interest rates steady</a> – <a href="https://finance.yahoo.com/news/federal-reserve-leaves-interest-rates-unchanged-tempers-expectations-on-rate-cuts-ahead-190255912.html">as most</a> observers expected. That marks six months since the Fed last changed the base rate.</p>
<p>And people should expect to wait a little while more: Fed Chair Jerome Powell <a href="https://www.cnbc.com/2024/01/31/fed-chief-jerome-powell-says-a-march-rate-cut-is-not-likely.html">said a rate cut was “not likely</a>” to come at the next meeting in March. But over the course of his news conference after the meeting, he emphasized that nothing is set in stone.</p>
<p>The Federal Reserve has what is called a <a href="https://www.stlouisfed.org/in-plain-english/the-fed-and-the-dual-mandate">dual mandate</a>: Its job is to achieve maximum employment and keep prices stable. Often there’s a trade-off between these goals: Cutting rates often helps with the former, while lowering them helps with the latter. </p>
<p>And in recent months, controlling inflation has been the focus of Fed policy. In his remarks on Jan. 31, Powell made it clear that Americans shouldn’t expect the Fed to do anything to rates until the U.S. gets <a href="https://sites.lsa.umich.edu/mje/2023/09/04/why-the-2-inflation-target/#:%7E:text=This%20meant%20that%20costs%20only,and%20an%20increase%20in%20prices.">closer to its target of 2% inflation</a>. And that could take some time.</p>
<p>There’s a reason Powell and his fellow policymakers are focused on the 2% inflation target. So long as <a href="https://www.bls.gov/cpi/">consumer price index inflation</a> is above 2%, the concern is that any lowering of interest rates could stimulate the economy too much and reignite inflation. </p>
<p>Still, the <a href="https://www.federalreserve.gov/monetarypolicy/fomc.htm">federal funds rate</a>, which helps determine mortgage and loan rates and quite a bit more, remains at 5.5%, higher than it’s been in 16 years. The Fed has raised rates 11 times since early 2022. </p>
<p>That aggressive rate-hiking has had the desired effect of putting the brakes on the economy. But it comes with some pain for borrowers – and some are now eager to bring rates back down. </p>
<p>Cutting rates usually makes sense when the economy is getting significantly worse, and there’s not much reason to think that’s happening now. Fourth-quarter gross domestic product grew <a href="https://www.bea.gov/news/2024/gross-domestic-product-fourth-quarter-and-year-2023-advance-estimate">3.3% on an annualized basis</a>, ending 2023 on a strong note. The economy added <a href="https://www.bls.gov/news.release/pdf/empsit.pdf">more than 2 million jobs</a> over the course of 2023. And consumer price index inflation is running at <a href="https://www.bls.gov/news.release/pdf/cpi.pdf">about 3.3% in December 2023</a>.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/gRTBRV2_S5Q?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">The chair of the Federal Reserve addresses reporters on Jan. 31, 2024.</span></figcaption>
</figure>
<p>“This is a good situation,” Powell said during his news conference. “Let’s be honest: This is a good economy.”</p>
<p>So what comes next? The Fed recently indicated that it expects to cut rates <a href="https://www.bloomberg.com/news/articles/2024-01-11/us-inflation-accelerates-tempering-case-for-fed-to-cut-rates?sref=Hjm5biAW">three times in 2024</a>. But as Powell was at pains to make clear, if the data changes, the Fed’s decision-making will, too.</p>
<p>The labor market data looks relatively sunny. There’s greater balance between the number of people who want jobs and the number of open positions than there was last year. Wage growth looks likely to continue at current rates. So unless there’s a sharp increase in unemployment, which <a href="https://apnews.com/article/retail-sales-december-economy-consumer-spending-800f78ae0a4428be3be7733238d16f40">doesn’t seem likely at the moment</a>, there seems to be little reason to cut interest rates.</p>
<p>There’s always a concern that keeping rates too high for too long may tip the economy into a recession. But recent history doesn’t suggest that will happen. </p>
<h2>Taking the long view</h2>
<p>Taking a historical perspective can be revealing. The 30-year fixed mortgage rate is about 6.6% – high by recent standards. However, back in 1998, the year I bought my first home, the rate was 6.9%. At that time, it was a real deal! </p>
<p>Mortgage rates have been as high as 18% if you go back to 1981. That’s not to say either I or the Fed believe there’s room to increase rates any time soon – just that rates are nowhere near record highs.</p>
<p>Powell did say there’s no reason for any rate increases, so the current Federal funds rate of 5.5% is likely the current cyclical peak. </p>
<p>The next meeting will start March 19. The odds are that the U.S. economy will continue to grow, and inflation will continue to moderate – however slowly. So I would expect the Fed to follow through on Powell’s noncommittal prediction and hold off on cutting rates until later in the year.</p>
<p>So there’s no soft landing yet – Powell said as much. But we look surprisingly close.</p><img src="https://counter.theconversation.com/content/222460/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Christopher Decker does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The central bank is ‘really in risk management mode,’ its chairman said.Christopher Decker, Professor of Economics, University of Nebraska OmahaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2215652024-01-29T18:13:40Z2024-01-29T18:13:40ZChild poverty is on the rise in Canada, putting over 1 million kids at risk of life-long negative effects<figure><img src="https://images.theconversation.com/files/571536/original/file-20240125-19-ibw47t.jpg?ixlib=rb-1.1.0&rect=221%2C0%2C6488%2C4466&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Poverty reduction has the potential to initiate a beneficial cascade that would improve the lives of children and youth.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/child-poverty-is-on-the-rise-in-canada-putting-over-1-million-kids-at-risk-of-life-long-negative-effects" width="100%" height="400"></iframe>
<p>At first glance, Canada ranks among the top third of countries for its work in addressing child poverty. But that isn’t the whole story.</p>
<p>Based on current rates of and overall progress in reducing child poverty, the latest <a href="https://www.unicef.ca/en/unicef-report-card-18">UNICEF report card</a> ranks Canada 11th out of 39 of the world’s wealthiest countries. Initially, it seems Canada is doing well; between 2012 and 2021, child poverty fell by 23 per cent. </p>
<p>In reality, since 2021, the number of children living in <a href="https://www.unicef.org/globalinsight/media/3291/file/UNICEF-Innocenti-Report-Card-18-Child-Poverty-Amidst-Wealth-2023.pdf">monetary poverty</a> has <a href="https://www.unicef.ca/sites/default/files/2023-12/UNICEFReport%20Card18CanadianSummary.pdf">sharply risen from 15.2 per cent in 2020 to 17.8 per cent in 2021</a>, and more than <a href="https://www.newswire.ca/news-releases/canada-still-in-the-middle-of-high-income-countries-on-child-poverty-new-unicef-report-852057195.html">one million Canadian children</a> live in poverty today. </p>
<p>This means that one in five children live in persistent fear and stress, face barriers to having their basic needs met, such as stable housing and nutritious food, and experience a lack of opportunity, including access to quality early childhood experiences. As a child psychologist and a health economist, we know that the consequences of child poverty are lifelong and are worth prioritizing.</p>
<p>We know that <a href="https://www.nccp.org/publication/childhood-and-intergenerational-poverty/">poverty persists</a>, generation by generation. This is why, although Canada ranks in the top third of countries, we shouldn’t lose sight of our reality. Canada is presently experiencing rising <a href="https://theconversation.com/an-economist-explains-what-you-need-to-know-about-inflation-188959">inflation</a> and <a href="https://theconversation.com/heres-how-the-bank-of-canadas-interest-rate-hike-to-5-will-impact-canadian-households-209369">interest rates</a>, both driving the cost of living crisis and the increase in child poverty rates. And while the economy continues to place constraints on all Canadians, it has a magnifying effect on those most vulnerable, including children. </p>
<h2>Building a solid foundation for the future</h2>
<p>Child poverty is a pernicious childhood adversity that has detrimental long-term impacts on children’s health, development and well-being throughout life. Children living in poverty have lower <a href="https://doi.org/10.2307/1602387">academic outcomes</a>, including school readiness and academic achievement, than financially better-off children. Poverty is also a risk factor for behavioural and emotional difficulties. </p>
<p>These educational and social gaps are associated with chronic stress that persists over time, leading to lower earning potential, poorer health and <a href="https://doi.org/10.1073/pnas.1604756114">poorer well-being</a>. Poverty, including income loss, housing insecurity and material hardship, is also <a href="https://doi.org/10.1002/car.2795">strongly associated</a> with abuse and neglect, which are known toxic stressors for children and youth. </p>
<p>Poverty reduction has the potential to initiate a beneficial cascade that would improve the lives of children and youth. Taken together, addressing child poverty has the potential to put children on a more optimal developmental course and reduce their risk for poor outcomes. </p>
<h2>Balancing today’s needs with tomorrow’s</h2>
<p>Between 2012 and 2021, Canada made great strides in addressing child poverty. In 2016, the <a href="https://www.thestar.com/business/canada-child-benefit-payments-to-increase-this-month-for-many-families-here-s-how-much/article_1b689540-3a7b-5cd0-aa11-8f1855455c54.html">Canada Child Benefit (CCB)</a> was introduced as a monthly tax-free supplement for eligible families to support the cost of raising children. Families in low to middle-income households benefited the most; the <a href="https://doi.org/10.1086/721379">CCB reduced poverty</a> by 11 per cent in single-parent families and 17 per cent in two-parent families. </p>
<p>The Canada Emergency Response Benefit (CERB) program provided additional temporary relief for eligible individuals during the <a href="https://nationalpost.com/news/politics/pandemic-benefits-reduced-child-poverty-government-should-build-on-success-report">COVID-19 pandemic</a>. And, in recent years, the minimum wage has also increased for Canadians. </p>
<p>Although there is evidence that <a href="https://doi.org/10.1016/j.jadohealth.2022.02.011">monetary interventions</a>, such as cash transfers, help reduce mental health symptoms among youth experiencing poverty, there remains <a href="https://globalnews.ca/news/9999605/minimum-wage-hikes-cost-of-living-advocates/">debate</a> on whether these increases have helped families overcome challenges to the cost of living. </p>
<p>Furthermore, the CERB, provided during the pandemic, has now been discontinued, increasing the hardship among Canadian families. Until families are provided with adequate support, the reality is Canada may continue experiencing a rise in rates of child poverty with significant cascading effects.</p>
<h2>Long-term payoffs of addressing child poverty</h2>
<p>Addressing child poverty has long-term payoffs. <a href="https://doi.org/10.1257/pol.3.3.175">Child benefit programs</a> in Canada have been shown to positively affect children’s educational attainment and improve mothers’ health and mental health. These improvements can subsequently lead to improved health and mental health among children, which reduces long-term public costs. </p>
<p>In addition to being a <a href="https://www.un.org/development/desa/en/news/social/poverty-is-denial-of-childrens-rights.html">human rights issue</a>, addressing child poverty makes <a href="https://doi.org/10.1503%2Fcmaj.69470">economic sense</a>. This is why addressing child poverty needs to remain a priority for all Canadians. Governments, employers and communities must partner to reduce the risk of poverty. They can do this by:</p>
<ol>
<li>Adopting a national <a href="https://www.livingwage.ca/">living wage</a> policy, where the hourly minimum wage supports the cost of living in Canadian communities. </li>
<li>Reducing <a href="https://proof.utoronto.ca/food-insecurity/">food insecurity</a> by enhancing access to nutritional food through nationally available school food programs. </li>
<li>Increasing school readiness by providing universal access to <a href="https://www.unicef.org/eca/press-releases/investing-ECD-essential-children">quality early childhood development</a> programs across Canada.</li>
</ol>
<h2>Some are more at risk than others</h2>
<p>In its <a href="https://www.unicef.ca/en/unicef-report-card-18">report card</a>, UNICEF identified single-parent families, families living in Indigenous communities, and families with racialized or disabled children as being at higher risk of poverty. These risks come with cascading health, social and justice <a href="https://doi.org/10.1503%2Fcmaj.171508">consequences</a>. Further multidimensional and targeted approaches are needed to support families that are more severely affected. </p>
<p>The Government of Canada has a legislated target to <a href="https://www.canada.ca/en/employment-social-development/programs/agenda-2030/poverty.html">reduce poverty by at least 50 per cent</a> relative to 2015 levels by 2030 in line with the Sustainable Development Goals. </p>
<p>As we saw before the pandemic, it is possible to reduce child poverty in Canada. However, unless the impact of the current economic climate on families is considered and suitably responded to, Canada may continue experiencing a rise in rates of child poverty, putting our collective future at risk. Canada can do better, and we should do better for our kids.</p><img src="https://counter.theconversation.com/content/221565/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nicole Racine receives funding from the Canadian Institutes of Health Research, the Social Sciences and Humanities Research Council, the University of Ottawa, and holds a Chair in Child and Youth Mental Health at the Children's Hospital of Easter Ontario Research Institute. She sits on the Board of Trustees for Strong Minds Strong Kids, Psychology Foundation of Canada. </span></em></p><p class="fine-print"><em><span>Shainur Premji receives funding from the Canadian Institutes of Health Research, the Social Sciences and Humanities Research Council, and the National Institute for Health and Care Research.</span></em></p>Over one million Canadian children live in poverty. Child poverty is a pernicious childhood adversity that has detrimental long-term impacts on health, development and well-being throughout life.Nicole Racine, Assistant professor, School of Psychology, Scientist, Children's Hospital of Eastern Ontario Research Institute, L’Université d’Ottawa/University of OttawaShainur Premji, Research Fellow, Centre for Health Economics, University of YorkLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2213932024-01-22T13:29:16Z2024-01-22T13:29:16Z‘No cash accepted’ signs are bad news for millions of unbanked Americans<p>How many people don’t have a bank account? And just how difficult has it become to live without one?</p>
<p>These questions are becoming increasingly important as <a href="https://www.chicagotribune.com/business/ct-biz-cashless-backlash-20180710-story.html">more businesses refuse to take cash</a> <a href="https://www.wmtw.com/article/cashless-businesses-south-portland-come-under-fire/40450267">in cities across the U.S.</a> People without bank accounts are shut out from stores and restaurants that refuse to accept cash.</p>
<p>As it happens, a lot of people are still “unbanked”: <a href="https://www.fdic.gov/analysis/household-survey/2021report.pdf">roughly 6 million</a> in the U.S., the latest data shows, which is about the population of Wisconsin. And outside of the U.S., <a href="https://www.worldbank.org/en/publication/globalfindex/Data">more than a billion people</a> don’t have a bank account.</p>
<p><a href="https://www.bu.edu/questrom/profile/jay-zagorsky/">I am a business school professor</a> <a href="https://blogs.bu.edu/zagorsky/">who researches society’s transition</a> from cash to electronic payments. I <a href="https://www.govtech.com/workforce/data-seattle-area-becoming-increasingly-cashless">recently visited Seattle and was amazed</a> by the mixed signals I saw in many storefronts. Numerous shops had one sign proudly proclaiming how welcoming and inclusive they were — next to another sign saying “No cash accepted.” This tells people without bank accounts that they aren’t welcome.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/xHIMhUNyrAs?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Not far from Seattle, Mount Rainier National Park stopped accepting cash in May 2023.</span></figcaption>
</figure>
<h2>Why not have a bank account?</h2>
<p>Why would someone want to avoid using banks? Every two years, the Federal Deposit Insurance Corporation surveys households about their connections to the banking system and asks people without bank accounts <a href="https://www.fdic.gov/analysis/household-survey/2021execsum.pdf">why they don’t have one</a>. People can respond with multiple answers. In 2021, the top reason — with over 40% of respondents choosing it — was that they didn’t have enough money to meet the minimum balance.</p>
<p>This is consistent with data showing that poorer households are less likely to have bank accounts. About one-quarter of those earning less than $15,000 a year are unbanked, the FDIC found. Among those earning more than $75,000 a year, almost every person surveyed had some type of bank account.</p>
<p>The second- and third-most common answers show that some people are skeptical of banks. Roughly one-third of survey respondents agreed that “Avoiding a bank gives more privacy,” while another one-third said they simply “don’t trust banks.”</p>
<p>Rounding out the top five reasons were costs of dealing with a bank. More than one-quarter of respondents felt bank account fees were too high, and about the same proportion felt fees were too unpredictable.</p>
<p>While many middle-class and wealthy people don’t pay directly for their bank accounts, fees can be costly for those who can’t maintain a minimum balance. A recent Bankrate survey <a href="https://www.bankrate.com/banking/checking/checking-account-survey/">shows basic monthly service fees</a> range between $5 and $15. Beyond these steady fees, <a href="https://www.fdic.gov/resources/consumers/consumer-news/2021-12.html">banks earn $4 to $5</a> each time people withdraw cash from an ATM or need services <a href="https://www.bankrate.com/banking/checking/what-is-a-cashiers-check/#fees-for-a-cashier-s-check">like getting cashier’s checks</a>. Unexpected bills can result in <a href="https://www.bankrate.com/banking/checking/checking-account-survey/#overdraft-fees">overdraft fees of about $25</a> each time an account is overdrawn.</p>
<h2>Being unbanked in America</h2>
<p>The FDIC calls people without a bank account “<a href="https://www.pbs.org/newshour/show/millions-of-unbanked-americans-lack-adequate-access-to-financial-services">the unbanked</a>.” People with a bank account but who primarily rely on alternative services such as check cashing outlets are called “<a href="https://guides.loc.gov/fintech/21st-century/unbanked-underbanked">the underbanked</a>.”</p>
<p>The latest FDIC data shows almost 6 million unbanked and 19 million underbanked U.S. households. Given that <a href="https://www.census.gov/content/dam/Census/library/visualizations/time-series/demo/families-and-households/hh-6.pdf">2.5 people live in the average household</a>, this means there are over 15 million people living in a home with no connection to banks, and 48 million more in homes with only a tenuous connection to banks.</p>
<p>Combining the two figures means roughly one out of every five people in the U.S. has little or no connection to banks or other financial institutions. That can leave them shut out from stores, restaurants, transportation and medical providers that don’t take cash.</p>
<p>The true number of unbanked people is likely higher than the FDIC estimates. The questions on being banked or unbanked are supplemental questions <a href="https://www.census.gov/programs-surveys/cps/about.html">added to a survey</a> given to people at their homes. This means it misses homeless people, transients without a permanent address and <a href="https://www.dhs.gov/immigration-statistics/population-estimates/unauthorized-resident">undocumented immigrants</a>. </p>
<p>These people are likely unbanked because you need a verified address and a government-issued tax-identification number <a href="https://www.federalreserve.gov/boarddocs/supmanual/bsa/bsa_p5.pdf">to get a bank account</a>. Given roughly <a href="https://www.npr.org/2023/12/22/1221006083/immigration-border-election-presidential">2.5 million migrants crossed the U.S.-Mexico border</a> in 2023 alone, there are millions more people in the cash-only economy than the FDIC estimates. </p>
<h2>How many people globally are unbanked?</h2>
<p>While the U.S. has relatively high rates of people with bank accounts, the picture is different in other parts of the world. The <a href="https://www.worldbank.org/en/topic/financialinclusion/overview">World Bank has created a database</a> that shows the percentage of each country’s population that has access to financial services. The World Bank’s definition of being banked is broader than the FDIC’s, since it includes anyone who uses a cellphone to send and receive money as having a bank account.</p>
<p>Overall, the World Bank estimates about <a href="https://www.worldbank.org/en/publication/globalfindex">one-quarter of the world’s adults</a> don’t have access to a bank or mobile-phone account. But that varies dramatically by region. In countries that use the Euro, almost everyone has a bank account, while in the Middle East and North Africa, only about half the population does.</p>
<p><iframe id="Yzxpv" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/Yzxpv/2/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>A more inclusive economy</h2>
<p>Many of us swipe our credit cards, tap our phones or insert a debit card to pay without thinking. However, there are at least 6 million people in the U.S. and almost <a href="https://ufa.worldbank.org/en/ufa">1.5 billion worldwide who are unbanked</a>.</p>
<p>When businesses stop accepting cash, the unbanked are forced to use payment methods like prepaid debit cards. However, these <a href="https://www.consumerfinance.gov/ask-cfpb/what-types-of-fees-do-prepaid-cards-typically-charge-en-2053/">prepaid cards are costly</a>. For example, Walmart, one of the largest U.S. retailers, <a href="https://www.walmartmoneycard.com/">offers a reloadable basic debit card</a>. The card <a href="https://www.investopedia.com/articles/personal-finance/112315/6-ways-load-your-walmart-money-card.asp">costs $1 to buy</a> and charges <a href="https://www.walmartmoneycard.com/helpcenter/getting-started/why-walmart-moneycard/how-can-i-waive-my-monthly-fee-for-walmart-moneycard">$6 per month in fees</a>, in addition to <a href="https://www.walmartmoneycard.com/helpcenter/adding-money/how-much-does-it-cost-to-use-walmart-rapid-reload">$3 each time someone wants to load the card with cash</a> at Walmart’s registers. Paying a minimum of $10 just to set up a debit card for a few purchases is a steep price.</p>
<p>The next time you see a sign in a shop or restaurant window stating “No cash accepted,” you’re really looking at a business excluding many unbanked and underbanked people. Insisting that all businesses accept cash is a simple way to ensure everyone is financially included in the modern economy.</p><img src="https://counter.theconversation.com/content/221393/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jay L. Zagorsky does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A cashless economy is a less inclusive economy.Jay L. Zagorsky, Clinical Associate Professor of Markets, Public Policy and Law, Boston UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2214642024-01-19T16:54:17Z2024-01-19T16:54:17ZGermany’s economy must be fixed – here are three top priorities<p>The <a href="https://www.ft.com/content/792a1a09-701c-4c9d-aa77-0d9575d5bda9">latest figures</a> on German gross domestic product (GDP) are far from reassuring. Output was 0.3% lower in 2023 than the year before, turning Germany into the worst-performing large economy in the world.</p>
<p>By comparison, the International Monetary Fund (IMF)‘s <a href="https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD">latest calculations</a> show the US economy growing 2.1% in 2023 and China 5%. The European Union as a whole achieved 0.7%, dragged down by Germany, its largest contributor. </p>
<p>Germany has been hit hard by the rise in energy costs, especially having relied almost entirely on cheap Russian energy until Russia’s invasion of Ukraine in 2022. Sizeable inflationary pressures have put pressure on German companies’ production processes, which are optimised for efficiency.</p>
<p>Rising interest rates have made it harder for German companies to secure financing, as well as increasing their operating costs and weakening domestic and foreign demand. </p>
<p>And China has slowed down and also started to invest in self-sufficiency, reducing its dependence on foreign technology and the import of foreign products and services. This is clearly a problem for German companies that have <a href="https://www.nytimes.com/2023/07/06/world/europe/germany-china-business-economy.html">relied massively</a> on the Chinese market over the past two decades.</p>
<p><a href="https://www.unido.org/news/germany-worlds-leading-manufacturer-according-unidos-cip-index">According to</a> the UNIDO Competitive Industrial Performance (CIP) Index, Germany remains the world’s leading manufacturer, having maintained the top rank since 2001. Yet China has entirely filled the gap over the past years, as illustrated below. </p>
<p><strong>German vs Chinese manufacturing</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/570323/original/file-20240119-25-vrg2ix.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Chart comparing German and Chinese manufacturing" src="https://images.theconversation.com/files/570323/original/file-20240119-25-vrg2ix.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/570323/original/file-20240119-25-vrg2ix.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/570323/original/file-20240119-25-vrg2ix.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/570323/original/file-20240119-25-vrg2ix.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/570323/original/file-20240119-25-vrg2ix.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/570323/original/file-20240119-25-vrg2ix.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/570323/original/file-20240119-25-vrg2ix.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The UNIDO index measures countries’ capacity to produce/export manufactured goods, technological progress and global influence on manufacturing.</span>
</figcaption>
</figure>
<p>The results of the <a href="https://www.imd.org/centers/wcc/world-competitiveness-center/rankings/world-competitiveness-ranking/">IMD World Competitiveness Ranking</a> confirm that Germany has been losing ground among top economies. Ranked 15th overall in 2022, it dropped seven positions in 2023, deteriorating across all the dimensions considered in the ranking: economic performance, business efficiency, government efficiency and infrastructure.</p>
<p>So what can be done for Germany, at a time of huge geopolitical friction and with many countries <a href="https://www.fdiintelligence.com/content/news/industrial-policies-are-mostly-motivated-by-protectionism-not-geopolitics-83358">adopting industrial policies</a> to distort and limit trade to protect local industries? Three strategic priorities stand out:</p>
<h2>1. Diversify, diversify, diversify</h2>
<p>Germany must fix its over-reliance on China as its biggest trading partner. <a href="https://www.reuters.com/markets/china-remains-germanys-main-trading-partner-seventh-year-2023-02-08/">China has been</a> Germany’s most important trading partner since 2015, and trade between the two countries rose to a record level in 2022. </p>
<p>Berlin has recognised its excessive dependence on China for some time, but manufacturing footprints take time to change, and it can’t be done without a fallout in terms of economic performance.</p>
<p>Take Volkswagen. <a href="https://www.cnbc.com/2023/11/17/volkswagen-nissan-and-hyundai-on-track-for-worst-china-sales-in-years.html">It remains</a> a major player in China with around 3 million vehicles sold a year, but it was selling over 4 million units as recently as 2018. This is because China’s swift transition to electric cars has benefited local players like BYD. </p>
<p>The <a href="https://www.ft.com/content/1386906c-5dd1-4167-bc96-72940fc473bf">market share</a> of foreign cars in China has fallen from 64% in 2020 to 44% in 2023. The challenge for German companies like Volkswagen is to transform this into an opportunity for greater diversification.</p>
<p>Diversifying while maintaining existing trade and investments in China will be difficult, however, as we should expect the Asian country to charge a higher price to foreign companies for the access to its domestic market. Yet at such a time of geopolitical uncertainty, diversification must be the first strategic priority. </p>
<p>A <a href="https://www.ifw-kiel.de/publications/news/cost-of-decoupling-from-china-for-german-economy-severe-but-not-devastating/">recent study</a> from the German-based Kiel Institute for the World Economy suggests that if there was an abrupt halt to trade with China, it would cause Germany’s economy to shrink by 5% – a slump comparable to the global financial crisis or the COVID-19 pandemic. </p>
<h2>2. Borrow to invest</h2>
<p>In 2009, Germany added a “<a href="https://en.wikipedia.org/wiki/Debt_brake_(Germany)">debt brake</a>” to its constitution. <a href="https://www.dw.com/en/what-is-germanys-debt-brake/a-67587332">The rule</a>, which severely restricts Germany’s ability to borrow and run deficits, was seen as incentivising sensible spending and ensuring that the public finances would remain healthy.</p>
<p>This became the mantra used by Angela Merkel and the so-called <a href="https://en.wikipedia.org/wiki/Troika_(European_group)">Troika</a> of the European Commission, European Central Bank and IMF in the years following the global financial crisis as Greece and other countries struggled with their debts. </p>
<p>The landscape has now fundamentally changed, however. Germany’s constitutional court <a href="https://www.reuters.com/world/europe/german-court-make-key-ruling-budget-manoeuvre-2023-11-15/#:%7E:text=BERLIN%2C%20Nov%2015%20(Reuters),billion)%20hole%20in%20its%20finances.">recently blocked</a> the transfer of €60 billion (£51 billion) from a pandemic budget to a climate fund precisely because of the “debt brake” clause. This has led to a <a href="https://www.ft.com/content/60674329-5be3-4802-a05a-851ee2990efd">budget crisis</a> that is yet to be resolved. </p>
<p>More generally the debt brake has become a major challenge because Germany, and the EU as a whole, are competing against other countries that are subsidising their companies. For instance, <a href="https://ec.europa.eu/commission/presscorner/detail/en/ip_23_4752">Brussels recently launched</a> an investigation on the likely presence of major market distortions resulting from Chinese state subsidies in the automotive sector. </p>
<p>The only way forward for Germany is to invest heavily in infrastructure, research & development (R&D), and more efficient state operations to help companies transform themselves and stay competitive globally. To finance this, greater reliance on debt is unavoidable. </p>
<h2>3. Attract investments from abroad, bet on Europe to innovate</h2>
<p>Recent <a href="https://www.reuters.com/markets/europe/foreign-direct-investment-germany-dives-35-bln-euros-h1-2023-09-12/">Bundesbank figures</a> show that foreign direct investment in Germany decreased to €3.5 billion in the first half of 2023 from €34.1 billion in the same period in 2022. This is a dramatic fall and the lowest inflow figure in almost 20 years. It calls for careful reflection on Germany’s loss of competitiveness and its ability to attract foreign investment.</p>
<p>The only way to fix this downtrend is to bet on innovation driven by EU-led R&D investments. Innovation has long been the engine of German (and EU) economic performance. Germany is <a href="https://sciencebusiness.net/news-byte/horizon-europe/eu-rd-intensity-falls-2022-despite-increased-spending">one of the</a> highest spenders on R&D in the bloc, at slightly over 3% of GDP per year. </p>
<p>Yet this is in the same ballpark as a decade ago, while the US and Japan now invest close to 3.5% of GDP. Stepping up R&D and keeping pace with the latest technological developments is a must for Germany (and the EU).</p>
<p>In a world where countries from China to the US are increasingly subsidising their corporations, and enacting policies to protect their local economies, Germany must make long-term investments in infrastructure, government efficiency and stimulating corporate ecosystems. This will attract greater investment from abroad, which will be crucial for Germany and its EU counterparts to innovate and thus stay competitive in the global arena.</p><img src="https://counter.theconversation.com/content/221464/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Niccolò Pisani does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The EU’s biggest economy is on its uppers. Turning it around may involve additional pain in the short term.Niccolò Pisani, Professor of Strategy and International Business, International Institute for Management Development (IMD)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2212632024-01-18T13:29:47Z2024-01-18T13:29:47ZWhy did Alaska Airlines Flight 1282 have a sealed-off emergency exit in the first place? The answer comes down to money<figure><img src="https://images.theconversation.com/files/569625/original/file-20240116-29-1acz42.jpg?ixlib=rb-1.1.0&rect=90%2C38%2C8536%2C5703&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The door plug area of an Alaska Airlines Boeing 737 MAX 9 aircraft awaits inspection on Jan. 10, 2024. </span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/BoeingEmergencyLanding/f0eebc33866f4efd9f75429155b4d229/photo">Lindsey Wasson/AP Photo</a></span></figcaption></figure><p>The aviation industry is still in shock from a <a href="https://www.nytimes.com/2024/01/07/us/alaska-airlines-boeing-passengers.html">near disaster</a> on Jan. 5, 2024, in which a 60-pound “door plug” blew out from a nearly new Boeing 737 MAX 9 in flight at 16,000 feet, leaving a gaping hole in the fuselage. </p>
<p>In response, <a href="https://apnews.com/article/alaska-airlines-portland-oregon-emergency-landing-b522e36ff228b5ea9a89ea13ee24f597">the Federal Aviation Administration grounded</a> all 737 MAX 9 planes with such plugs, and aviation authorities in other countries have <a href="https://www.reuters.com/world/asia-pacific/indonesia-temporarily-grounds-three-boeing-737-max-9-planes-transport-ministry-2024-01-08/">followed suit</a>. </p>
<p>The industry is watching closely. </p>
<p>A lot of news coverage has emphasized the <a href="https://www.nytimes.com/2024/01/09/opinion/alaska-airlines-safety.html">impressive safety record</a> of the global airline industry, particularly since an Alaska Airlines crew managed to land the plane with no fatalities. I commend the outstanding performance of airline employees, air traffic controllers and emergency responders who achieved this impressive feat.</p>
<p>However, as a former United Airlines pilot <a href="https://som.yale.edu/faculty-research/faculty-directory/amy-fraher">now lecturing in Yale University’s School of Management</a>, I believe the wrong questions are being asked about what happened on Alaska Airlines Flight 1282. As the <a href="https://www.ntsb.gov/investigations/Pages/DCA24MA063.aspx">National Transportation Safety Board</a> and numerous <a href="https://www.kgw.com/article/news/local/airplane-plug-door-door-plugs-explainer/283-2f5d3371-fec8-409c-86e4-88658d0acd02">news outlets</a> have explained, door plugs are commonly used to seal unused exits on commercial airliners. The question we need to ask is: Why wouldn’t an airline use all of an aircraft’s emergency exits? Wouldn’t that make passengers safer?</p>
<p>It’s all about money.</p>
<h2>Safety isn’t free</h2>
<p>Airlines have lots of expenses. Some, such as <a href="https://www.iata.org/en/publications/economics/fuel-monitor">jet fuel</a>, are easier to calculate. Others, such as emergency exits, are more opaque to travelers. </p>
<p>Believe it or not, every functioning emergency exit comes at a price for an airline. Each requires routine maintenance and frequent inspections – for example, to make sure that emergency evacuation slides work properly – and flight attendants must staff emergency exits during takeoff and landing for safety reasons.</p>
<p>In other words, every working exit comes with associated costs in salaries, health benefits, pension plans, training and related expenses. Sealing off an emergency exit cuts costs.</p>
<p>But is every one of those emergency exits crucial? From the U.S. government’s perspective, not necessarily.</p>
<h2>Why you get more emergency exits in Indonesia</h2>
<p>In the U.S., airlines must comply with federal aviation regulations, which dictate aircraft maintenance procedures and in-flight personnel assignments – and minimum standards for emergency exits.</p>
<p>The issue is that Boeing sells the same airplane to different airlines with different needs.</p>
<p>Boeing notes that its 737 MAX 9 can carry up to 220 passengers, which, under U.S. regulations, requires it be built with a specific number of emergency exits. This <a href="https://www.reuters.com/graphics/ALASKAAIR-BOEING/klvydkrlopg/">dense seating configuration</a> is common among lower-cost global airlines such as Jakarta-based Lion Air.</p>
<p>However, given Americans’ desire for legroom, most U.S. carriers are equipped with considerably fewer than 220 seats – and when there are <a href="https://www.reuters.com/graphics/ALASKAAIR-BOEING/klvydkrlopg/">fewer than 190</a> seats, the rules allow fewer emergency exits to be in service. The Alaska Airlines Max 9 had just <a href="https://www.reuters.com/graphics/ALASKAAIR-BOEING/klvydkrlopg/">178 seats</a>.</p>
<p>Under these conditions, the federal rules allow air carriers to disable these exits and plug the openings. That’s precisely what happened with Alaska Airlines Flight 1282 – and how “door plug” suddenly entered the American vernacular.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/ZqVCDpF-k_0?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">A Portland-area science teacher found the missing door plug in his backyard.</span></figcaption>
</figure>
<p>Although this sort of workaround is authorized, it’s unclear to me that this is in the best interest of air safety. Wouldn’t it be better for the FAA to require that all exits are available for use in an emergency, regardless of aircraft seating capacity, even if it required some additional expense for airlines?</p>
<h2>A worrying safety record</h2>
<p>The 737 MAX is a plane of many firsts – not all of them positive.</p>
<p>The MAX is the latest addition to Boeing’s 737 family of aircraft. The 737 family has far eclipsed all rivals as the <a href="https://www.businessinsider.com/boeing-737-max-timeline-history-full-details-2019-9">most popular commercial airliner ever built</a>, with over 10,000 sold worldwide since its introduction in 1967.</p>
<p>Some carriers, such as Southwest Airlines in the United States and Ryanair in Ireland, fly only 737s; it’s a critical element of their low-cost business strategy. By flying just one type of aircraft, these airlines significantly improve scheduling flexibility while cutting maintenance and training costs.</p>
<p>That’s all to say that demand for the latest 737 was high. In 2017, when the FAA certified the 737 MAX safe for flight, Boeing <a href="https://boeing.mediaroom.com/2017-03-09-Boeing-737-MAX-8-Earns-FAA-Certification">had already received</a> more than 3,600 new orders from 83 customers. </p>
<p>But very shortly afterward, <a href="https://www.theguardian.com/business/2021/nov/11/boeing-full-responsibility-737-max-plane-crash-ethiopia-compensation">two crashes</a> that <a href="https://www.nbcnews.com/news/world/indonesia-report-finds-fatal-lion-air-jet-crash-due-boeing-n1071796">together killed 346 people</a> grounded the 737 MAX for nearly two years – another first as <a href="https://democrats-transportation.house.gov/committee-activity/boeing-737-max-investigation">the longest airline grounding in aviation history</a>. Destined to profit US$12 million on the sale of each $121 million MAX, there was <a href="https://www.businessinsider.in/heres-how-much-boeing-is-estimated-to-make-on-each-737-max-8-plane/articleshow/68399220.cms">significant incentive</a> for Boeing to press on with MAX development even though it had already proved to be a dangerously problematic aircraft design.</p>
<p>In 2020, <a href="https://www.oig.dot.gov/sites/default/files/FAA%20Boeing%20737%20MAX%20Return%20to%20Service%20Final%20Report%5E4.26.2023_revised.pdf">the FAA recertified the MAX as “safe for flight”</a>; by 2023, Boeing had logged more than 7,000 total orders for the MAX, <a href="https://www.boeing.com/commercial/orders-deliveries">far eclipsing</a> the sale of any other type of airliner. This fact alone ought to raise safety concerns. It may soon prove impossible to avoid flying on a 737 MAX, particularly in the U.S. domestic market. United, American, Southwest and Alaska airlines <a href="https://simpleflying.com/boeing-737-max-airlines/">all currently fly the MAX</a>. </p>
<p>When airplane parts and passengers’ cellphones are <a href="https://www.cbsnews.com/news/iphone-sucked-out-alaska-airlines-plane-fell-16000-feet-found-still-works/">raining from the sky</a>, it could be a sign that the industry needs to think harder about unintended costs – and consequences.</p><img src="https://counter.theconversation.com/content/221263/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Amy Fraher does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A commercial pilot turned management expert and author of ‘The Next Crash: How Short-Term Profit Seeking Trumps Airline Safety,’ explains the economics behind the near-deadly disaster.Amy Fraher, Lecturer in Management, Yale UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2207972024-01-15T17:30:09Z2024-01-15T17:30:09ZWar in the Middle East has put Lebanon on the brink of economic disaster<figure><img src="https://images.theconversation.com/files/569297/original/file-20240115-15-36cdmc.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5982%2C3988&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/beirutlebanon10112019-revolution-lebanon-protests-1560428381">P.jowdy/Shutterstock</a></span></figcaption></figure><p>The recent return of violence to Lebanon derails hope that the worst of the crises that have plagued the country over the past four years have been left behind. </p>
<p>After a spiral of <a href="https://theconversation.com/lebanon-one-year-after-beirut-explosion-failing-state-struggles-amid-poverty-and-sectarianism-165543">hyperinflation, debt default and crumbling public services</a>, modest signs of economic recovery from one of the “<a href="https://www.worldbank.org/en/news/press-release/2021/05/01/lebanon-sinking-into-one-of-the-most-severe-global-crises-episodes#:%7E:text=The%20World%20Bank%20estimates%20that,40%20percent%20in%20dollar%20terms.">most severe crisis episodes [seen] globally since the mid-19th century</a>” was predicted for 2024. But this glimmer of optimism has waned as Lebanon risks being dragged into war with Israel. </p>
<p>On January 2, Israel <a href="https://www.nbcnews.com/news/world/live-blog/israel-hamas-war-live-updates-rcna132013">assassinated senior Hamas political officer</a> Saleh al-Arouri in south Beirut after daily rounds of Israeli shelling in southern Lebanon.</p>
<p>The conflict has already resulted in the displacement of <a href="https://dtm.iom.int/reports/mobility-snapshot-round-18-04-01-2024?close=true">more than 75,000 citizens</a> within Lebanon, as well as the deaths of 25 more. The Gaza conflict also prompted the cancellation of “<a href="https://www.al-monitor.com/originals/2023/12/gaza-war-throw-lebanon-back-recession-world-bank#ixzz8OcLv2jv3">more than half of travel reservations to Lebanon</a>” during the winter holidays. The shock to tourism spending will quickly reverse the limp economic growth that was projected for 2023.</p>
<p>The mood in Lebanon over Christmas was one of deep concern at the prospect of conflict. Any spillover of conflict in the country would cause further internal displacement and stretch state services beyond their breaking point. </p>
<p>The last <a href="https://casebook.icrc.org/case-study/israellebanonhezbollah-conflict-2006">conflict between Israel and Lebanon</a> – in 2006 – resulted in an <a href="https://www.reuters.com/article/idUSL08225712/">estimated US$6.75 billion (£5.3 billion)</a> worth of damages and lost revenue and thousands dead or displaced from their homes. </p>
<p>A repeat of the 2006 Lebanon war would cause a humanitarian disaster and worsen the state of Lebanon’s already beleaguered economy. Notably, a new conflict would probably force thousands of those living in Lebanon to flee the country, adding to an already existent trend in outward migration, a fact not lost on nearby <a href="https://www.al-monitor.com/originals/2023/12/gaza-war-throw-lebanon-back-recession-world-bank#ixzz8OcLv2jv3">Mediterranean states</a>. </p>
<h2>Prelude to war?</h2>
<p>Backed by Iran, the Lebanese militant Hezbollah movement sees itself as a <a href="https://www.cfr.org/backgrounder/what-hezbollah">resistor against Israel</a>. Hezbollah holds an estimated <a href="https://www.bbc.co.uk/news/world-middle-east-67307858">130,000 rockets and missiles</a> ready for any conflict with Israel. </p>
<p>But, despite this antagonistic stance, the group’s secretary general, Hassan Nasrallah, was restrained in his rhetoric, a hopeful sign that he is seeking to avoid war. </p>
<p>In the direct aftermath of the assassination of al-Arouri in Beirut, Nasrallah discussed the opportunity to <a href="https://www.washingtonpost.com/world/2024/01/05/nasrallah-hezbollah-israel-border-fighting/">“liberate” all of Lebanese territory through talks</a> and halt Israel’s use of Lebanese airspace and land to launch attacks into Syria. There is precedent for such talks. In 2022, US-mediated negotiations between Lebanon and Israel established clear boundaries within which both states could explore for natural gas.</p>
<p>Nasrallah’s coded message seems to have been heard by the US. On January 11, senior US energy advisor Amos Hochstein <a href="https://www.reuters.com/world/middle-east/white-house-official-visit-beirut-seeking-ease-israel-lebanon-tensions-2024-01-11/">landed in Beirut</a> to discuss how to reduce tension between the two countries. </p>
<p>While the overtures might appear positive, the Lebanese public are aware of the precarious situation ahead. Nasrallah is walking a tightrope between keeping Lebanon out of conflict it cannot afford while trying to ensure that Hezbollah keeps its credibility as the “resistance” to Israel. </p>
<p>The fear in the streets of Lebanon is that this is an impossible path to negotiate and eventually Hezbollah will be sparked into further action, escalating the conflict. Reports that <a href="https://www.theguardian.com/world/2024/jan/14/israel-risking-serious-escalation-by-killing-hezbollah-leaders-say-diplomats">Israel assassinated two Hezbollah commanders</a> in southern Lebanon on January 14 only add to the pressure on Hezbollah to respond.</p>
<h2>Why Lebanon is so fragile</h2>
<p>Several overlapping crises over the past decade have already conspired to bring Lebanon to the point of collapse. The civil war in neighbouring Syria since 2011 has seen an <a href="https://www.unhcr.org/lb/at-a-glance">estimated 1.5 million refugees</a> seek shelter in Lebanon. The country hosts the largest number of refugees per capita and per square kilometre in the world. </p>
<p>Lebanon has also been facing a <a href="https://reliefweb.int/report/lebanon/acaps-thematic-report-lebanon-effect-socioeconomic-crisis-healthcare-19-october-2023">severe economic crisis</a> since 2019, which was worsened by the onset of the COVID pandemic. As a result of this crisis, approximately 80% of Lebanese now live in poverty and 36% below the extreme poverty line. </p>
<p>This crisis was worsened in 2020 following the <a href="https://www.aljazeera.com/news/2022/8/4/infographic-how-big-was-the-beirut-explosion">Beirut port explosion</a>, which killed 218 people and devastated parts of the country’s capital. The explosion rendered half of Beirut’s healthcare centres nonfunctional, impacted 56% of private businesses in the city, and caused up to US$4.6 billion in material damage.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/569295/original/file-20240115-17-jjoek9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Rubble surrounding the remains of a large building next to the sea with tower blocks in the background." src="https://images.theconversation.com/files/569295/original/file-20240115-17-jjoek9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/569295/original/file-20240115-17-jjoek9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/569295/original/file-20240115-17-jjoek9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/569295/original/file-20240115-17-jjoek9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/569295/original/file-20240115-17-jjoek9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/569295/original/file-20240115-17-jjoek9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/569295/original/file-20240115-17-jjoek9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The Beirut port explosion damaged large parts of Lebanon’s capital city.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/beirut-lebanon-08-11-2020-port-1793936191">Ali Chehade/Shutterstock</a></span>
</figcaption>
</figure>
<p>Lebanon’s precarious situation is exacerbated by its power-sharing government – which is mired in corruption – and dysfunctional institutions. Lebanon is ranked <a href="https://www.transparency.org/en/countries/lebanon">150 out of 180 countries</a> for corruption, the government has failed to pass a budget in over a decade, and credible allegations of <a href="https://freedomhouse.org/country/lebanon/freedom-world/2022">vote buying and political interference in elections</a> have been recorded.</p>
<p>Lebanese citizens who have borne the brunt of these crises have directed their anger at the government. In October 2019, as the economic collapse unfolded, an estimated 2 million people took to the streets to <a href="https://merip.org/2019/12/lebanons-thawra/">demand the government’s resignation</a>. </p>
<p>Survey evidence also points to rapidly declining levels of trust in the state’s government and leaders. Only 8% of Lebanese citizens say they have a great deal or quite a lot of trust <a href="https://www.arabbarometer.org/wp-content/uploads/ABVII_Lebanon_Country_Report-ENG.pdf">in the government</a>. </p>
<p>This is significantly lower than in other Middle Eastern countries surveyed. In Iraq, where citizens have the next lowest level of trust in their government, a much higher proportion (26%) say they have a great deal or quite a lot of trust in the government.</p>
<h2>Ceasefire essential</h2>
<p>In light of Lebanon’s fragility, the prospect of a war between Israel and Lebanon needs to be avoided at all costs. And an immediate ceasefire in Gaza is needed. </p>
<p>Beyond this, a potential framework for an agreement between Israel and Hezbollah is already available. <a href="https://peacemaker.un.org/israellebanon-resolution1701">UN Security Council resolution 1701</a> stipulates that Israel respects Lebanese sovereignty and requires UN peacekeeping forces to be deployed on the border. </p>
<p>Robust <a href="https://www.mei.edu/publications/robust-diplomacy-washingtons-only-chance-stop-lebanon-israel-war">international mediation and pressure is urgently needed</a> to enforce the agreement to prevent a humanitarian disaster.</p><img src="https://counter.theconversation.com/content/220797/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Conflict between Lebanon and Israel looms – it would throw the Lebanese economy further into crisis.John Nagle, Professor in Sociology, Queen's University BelfastDrew Mikhael, Scholar at Centre for the Study of Ethnic Conflict at Queen's University Belfast, Queen's University BelfastLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2209892024-01-11T23:03:10Z2024-01-11T23:03:10ZWhen can we stop worrying about rising prices? The latest inflation report offers no easy answers<figure><img src="https://images.theconversation.com/files/568931/original/file-20240111-29-4eets5.jpg?ixlib=rb-1.1.0&rect=0%2C6%2C2136%2C1389&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Aisle be damned! Inflation is proving stubborn as the economy moves into 2024.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/handsome-asian-male-searching-for-groceries-from-royalty-free-image/1437990851?phrase=inflation+worry&adppopup=true">miniseries via Getty Images</a></span></figcaption></figure><p><em>Tired of thinking about inflation’s impact on your wallet? You’re not alone. But like it or not, higher prices continue to be an economic and – with the presidential race – a political issue as we enter the early months of 2024.</em></p>
<p><em>The Conversation asked two <a href="https://www.sciencedirect.com/science/article/pii/S0929119921002406">financial economists</a>, <a href="https://scholar.google.com/citations?user=VxWst50AAAAJ">D. Brian Blank</a> at Mississippi State University and Appalachian State University’s <a href="https://scholar.google.com/citations?user=FKJSqjEAAAAJ">Brandy Hadley</a>, what they make of the <a href="https://www.bls.gov/news.release/cpi.toc.htm">inflation report</a> that dropped on Jan. 11, 2024, and whether there might be a time before too long when we can all stop worrying about increasing costs.</em></p>
<h2>Was inflation higher or lower in December 2023?</h2>
<p>Both, unfortunately. </p>
<p><a href="https://www.rba.gov.au/education/resources/explainers/inflation-and-its-measurement.html">Economists have many ways</a> of measuring how prices change over time. Two key measures are overall, or “headline,” inflation, which tracks the prices for a basket of goods and services, and “core” inflation, which tracks many of the same items but excludes those with unusually jumpy prices, such as gasoline. </p>
<p>In the Bureau of Labor Statistics’ Jan. 11 report, which measured how much prices changed in December 2023, these indicators <a href="https://www.bls.gov/news.release/pdf/cpi.pdf">moved in different directions</a>. In other words, the higher one, core CPI – short for consumer price index – declined from an annual rate of 4% in November to 3.9% in December. And the lower one, headline inflation, rose from 3.1% to 3.4%.</p>
<p>While previously <a href="https://twitter.com/LizAnnSonders/status/1745448037105963151/photo/1">falling prices</a> for clothing, alcohol, new vehicles and gas <a href="https://twitter.com/LizAnnSonders/status/1745448037105963151">reversed course</a> in December, core inflation finally fell below 4.0%.</p>
<h2>But what does all this inflation confusion mean?</h2>
<p>What everyone wants to know is when will inflation go back to normal, or at least closer to the Federal Reserve’s target of 2%. And while no one knows the answer, <a href="https://fortune.com/2023/12/15/congressional-budget-office-inflation-unemployment-2024-2025/">there are reasons to believe</a> <a href="https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202401">it may</a> <a href="https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_real_yield_curve&field_tdr_date_value_month=202401">happen soon</a>.</p>
<p>At this point, people should be <a href="https://www.goldmansachs.com/intelligence/pages/gs-research/macro-outlook-2024-the-hard-part-is-over/report.pdf">less worried about inflation</a> than they were in December 2022, when the <a href="https://fred.stlouisfed.org/graph/?g=rocU">headline figure was 6.4%</a>. While inflation is still higher than we have gotten used to over the past decade, it’s much lower than it has been over the past couple of years. </p>
<p>Hopefully, that indicates the Federal Reserve is <a href="https://www.usbank.com/investing/financial-perspectives/market-news/federal-reserve-tapering-asset-purchases.html">approaching the end of its battle</a> with inflation and may be able to <a href="https://newsroom.bankofamerica.com/content/newsroom/press-releases/2023/11/bofa-global-research-calls-2024--the-year-of-the-landing--.html">finally lower interest rates</a> later this year. Over the past two years, the <a href="https://www.cnbc.com/2023/12/13/the-federal-reserve-held-rates-steady-heres-what-that-means-for-you.html">central bank has raised rates 11 times</a> to tame consumer demand and prices.</p>
<p>But concerns remain about inflation persisting. <a href="https://www.gzeromedia.com/podcast/podcast-trouble-ahead-the-top-global-risks-of-2024">One risk factor</a> is <a href="https://www.lazard.com/research-insights/global-outlook-2024/">the impact that conflicts</a> in <a href="https://www.ssga.com/library-content/assets/pdf/global/global-market-outlook/2023/gmo-2024-full.pdf">Ukraine and now the Middle East</a> will have <a href="https://www.privatebank.bankofamerica.com/articles/what-rising-geopolitical-tensions-could-mean-for-the-markets-and-economy.html">on trade routes</a>, such as <a href="https://www.cnbc.com/2024/01/11/red-sea-crisis-could-jeopardize-inflation-fight-as-shipping-costs-spike-globally.html">those in the Red Sea</a>. Another area of concern may be <a href="https://twitter.com/biancoresearch/status/1745502587854709054/photo/1">home prices</a>, which builder <a href="https://finance.yahoo.com/quote/KBH/">KB Homes</a> reports <a href="https://www.barrons.com/articles/kb-homes-fourth-quarter-earnings-outlook-eb236fe0">may be rising more this year</a>.</p>
<p>Those worries could lead the Fed to wait <a href="https://abcnews.go.com/Business/inflation-expected-risen-slightly-december/story?id=106222654">just a bit longer</a> to make any big decisions on <a href="https://twitter.com/LizYoungStrat/status/1745495575070429639/photo/1">whether to ease off</a> the brakes any time soon.</p>
<h2>So why did headline inflation tick higher?</h2>
<p>Overall inflation came in higher than forecasts largely due to <a href="https://www.wsj.com/livecoverage/stock-market-today-cpi-report-inflation-01-11-2024/card/the-rent-is-too-damn-high-jCrjio72Nbm7L0TEaonc">the rising price of housing</a>.</p>
<p>Rent accounts for a <a href="https://www.reuters.com/markets/us/us-consumer-prices-unexpectedly-rise-november-2023-12-12/">huge part of inflation</a>, since it’s one of many people’s largest expenses. However, CPI is calculated using rental data over the past year, which means the <a href="https://en.macromicro.me/collections/5/us-price-relative/49740/us-cpi-rent-zillow-rent-yoy">data lags behind real-time rent changes</a>. What’s more, real estate marketplace Zillow’s estimates of rent <a href="https://www.zillow.com/research/december-2023-rent-report-33579/">are falling</a> – a trend that’s expected to continue as <a href="https://twitter.com/jayparsons/status/1742925447409947099/photo/1">more apartments are built this year</a>.</p>
<h2>What matters to people: Prices or inflation?</h2>
<p>Even though inflation is slowing, costs are <a href="https://www.minneapolisfed.org/about-us/monetary-policy/inflation-calculator/consumer-price-index-1913-">18% higher than four years ago</a> and aren’t falling, which makes many people less optimistic about the economy than before the pandemic.</p>
<p>Some Wall Street forecasters and economists <a href="https://theconversation.com/economic-lookahead-as-we-ring-in-2024-can-the-us-economy-continue-to-avoid-a-recession-220007">struggle to understand people’s concerns</a> when labor markets are strong and the <a href="https://www.bnymellonwealth.com/content/dam/bnymellonwealth/pdf-library/articles/BNY_CMA_V4.4_21Nov2023.pdf">stock market is rising</a>. Still, consumer prices are near <a href="https://www.bls.gov/news.release/cpi.nr0.htm">all-time highs</a>, which is neither exciting for most people nor surprising to economists given that prices typically rise over time.</p>
<p>Despite high expenses, people still have a <a href="https://www.troweprice.com/content/dam/iinvestor/resources/insights/pdfs/tectonic-shifts-create-new-opportunities.pdf">degree of disposable income</a>. The cost <a href="https://wpde.com/news/nation-world/groceires-vs-going-out-what-may-be-behind-the-price-difference-consumer-price-index-food-home-away-sean-snaith-economic-forecasting-grocery-cost-servers-restaurants-wages-pay-thanskgiving-dinner">to eat out continues</a> to increase three times as fast as the <a href="https://www.businessinsider.com/food-prices-cheapest-option-groceries-restaurants-fast-food-2023-12">cost to eat at home</a>, which is both one of the largest differences on record and evidence that people <a href="https://www.pymnts.com/economy/2023/budget-constrained-consumers-prioritize-dining-out/">still have income to spend eating out</a>. </p>
<p>That shows the <a href="https://twitter.com/ConversationUS/status/1742516107133558804">mismatch between consumer behavior and “vibes”</a>: Americans <a href="https://fred.stlouisfed.org/series/CPIRECSL">have the money</a> to travel and go to restaurants, but still complain about <a href="https://www.bls.gov/news.release/cpi.t02.htm">airfare and menu prices</a>. </p>
<h2>When can we stop talking about inflation?</h2>
<p>We may have to wait until people stop feeling the <a href="https://www.privatebank.citibank.com/doc/investments/outlook/Citi_Wealth-Outlook-2024.pdf.coredownload.inline.pdf">inflation impacts</a> before they stop wanting to complain about it – and focus on it – each month. Could the Fed stop the inflation preoccupation <a href="https://saf.wellsfargoadvisors.com/emx/dctm/Research/wfii/wfii_reports/Investment_Strategy/outlook_report.pdf">by lowering rates</a>? Or does the Fed need to <a href="https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/market-insights/mi-investment-outlook-uk-en.pdf">hold rates higher</a> for longer? <a href="https://www.morganstanley.com/ideas/global-investment-strategy-outlook-2024">Only time will tell</a>.</p><img src="https://counter.theconversation.com/content/220989/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Two important inflation indicators are trending in different directions. What gives?D. Brian Blank, Associate Professor of Finance, Mississippi State UniversityBrandy Hadley, Associate Professor of Finance and the David A. Thompson Distinguished Scholar of Applied Investments, Appalachian State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2157452024-01-09T13:26:06Z2024-01-09T13:26:06ZLGBTQ+ workers want more than just pride flags in June<figure><img src="https://images.theconversation.com/files/563397/original/file-20231204-22-q8cyee.jpg?ixlib=rb-1.1.0&rect=65%2C40%2C5398%2C3571&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Recognition helps. Benefits may help more.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/worried-woman-in-lgbt-organisation-office-royalty-free-image/618025276">Kosamtu/iStock/Getty Images Plus</a></span></figcaption></figure><p>Every year, more and more companies seem to recognize <a href="https://theconversation.com/us/topics/pride-month-54582">Pride Month</a>. But a recent analysis shows that LGBTQ+ workers expect more than this once-a-year acknowledgment from their employers. In fact, some employees actually criticize such behavior as <a href="https://www.lgbtqnation.com/2022/07/what-is-pinkwashing/">mere pinkwashing</a>.</p>
<p>So, what do LGBTQ+ workers want? In 2023, the jobs website Indeed conducted a <a href="https://www.indeed.com/career-advice/news/lgbtq-legislation-affect-work">survey of LGBTQ+ full-time workers</a> from across the U.S., and the results provide a clear picture of their needs.</p>
<p>As a lesbian transgender woman and a <a href="https://theconversation.com/profiles/dorian-rhea-debussy-517479">queer studies scholar</a>, I wasn’t surprised by what Indeed found. Even so, non-LGBTQ+ workers – particularly managers – can learn a lot from this survey. It may help them realize what LGBTQ+ workers already know: Employers must do better if they want to retain talent.</p>
<p>Workers are troubled by three big issues, the survey found: the impact of new anti-LGBTQ+ laws, workplace discrimination, and benefits packages that don’t meet their needs.</p>
<h2>Workers say anti-LGBTQ+ laws derail careers</h2>
<p>With a <a href="https://www.usatoday.com/story/news/nation/2023/03/31/650-anti-lgbtq-bills-introduced-us/11552357002/">historic rise in anti-LGBTQ+ legislation</a>, 2023 proved to be a particularly challenging year for LGBTQ+ rights – <a href="https://www.washingtonpost.com/dc-md-va/2023/04/17/anti-trans-bills-map/">especially transgender rights</a>. In its survey, Indeed found that nearly two-thirds of respondents were concerned about how anti-LGBTQ+ laws could hurt their work opportunities. </p>
<p>In fact, more than three-quarters of respondents said they would hesitate to apply for a new job in a state with anti-LGBTQ+ legislation. More than half said they would never apply for a position in such a state.</p>
<p>With anti-LGBTQ+ bills now becoming law across the country, their impact on states’ economies is still uncertain. However, we’ve long known that discrimination is <a href="https://www.americanprogress.org/article/the-costly-business-of-discrimination/">bad for business</a>. In fact, the Federal Reserve Bank of San Francisco recently found that systemic racial and gender wage gaps – which distort labor markets, reduce productivity and harm job satisfaction – have cost the U.S. economy <a href="https://www.frbsf.org/economic-research/publications/working-papers/2021/11/">nearly US$71 trillion</a> since 1990. </p>
<p>Whatever effects this rise in anti-LGBTQ+ legislation will have, history suggests it <a href="https://time.com/6297323/malaysia-1975-matty-healy-lgbt-economic-costs/">won’t be good</a>. </p>
<h2>LGBTQ+ people face workplace discrimination</h2>
<p>Along with anti-LGBTQ+ laws, discrimination continues to harm LGBTQ+ workers. Sixty percent of respondents reported that they lost a promotion because of anti-LGBTQ bias, while a similar number said they were targeted with a performance improvement plan because of their identity. More than half said that they’re paid less than their similarly qualified cisgender and straight colleagues.</p>
<p>The reality is that LGBTQ+ people do encounter <a href="https://www.americanprogress.org/article/discrimination-and-barriers-to-well-being-the-state-of-the-lgbtqi-community-in-2022/">workplace discrimination</a>. For instance, transgender people face bias at work at <a href="https://www.mckinsey.com/featured-insights/diversity-and-inclusion/being-transgender-at-work">alarming rates</a>. And while all LGBTQ+ workers are statistically likely to <a href="https://www.hrc.org/resources/the-wage-gap-among-lgbtq-workers-in-the-united-states">encounter a wage gap</a>, transgender people – especially women and people of color – face <a href="https://19thnews.org/2022/01/transgender-workers-wage-gap-lowest-paid-lgbtq/">even wider disparities</a>.</p>
<h2>Culturally responsive benefits are crucial</h2>
<p>More than half of survey respondents said that it was important for employers to offer LGBTQ-specific benefits such as family planning support and comprehensive transition-related health care coverage. However, less than one-quarter said their own employer did so. In terms of transgender-specific benefits, nearly three-quarters of respondents said they worked for a company that didn’t offer any.</p>
<p>When asked to share what benefits they looked for in a job posting, respondents cited health care services with LGBTQ+ friendly medical providers and fertility assistance, among others. Transgender respondents said they looked for two specific benefits: health insurance plans with coverage for gender-affirming surgical treatments, and financial assistance for gender-affirming treatments that insurers often deem “cosmetic.”</p>
<p>In this survey, LGBTQ+ workers were quick to share what benefits appealed most to them. But the fact remains that many employers don’t offer such benefits. In fact, the Human Rights Campaign’s <a href="https://www.hrc.org/resources/corporate-equality-index">2022 Corporate Equality Index</a> notes that more than one-third of Fortune 500 companies still don’t offer trans-inclusive benefits. They also report that only about 72% of Fortune 500 companies require LGBTQ+ competency training.</p>
<p>However, LGBTQ+ employees increasingly expect more of their employers, as organizations such as the Society for Human Resource Management <a href="https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/employer-support-lgbtq-workers-employee-benefits.aspx">have observed</a>. And on the heels of the <a href="https://www.pewresearch.org/short-reads/2022/03/09/majority-of-workers-who-quit-a-job-in-2021-cite-low-pay-no-opportunities-for-advancement-feeling-disrespected/">“great resignation,”</a> employers would be wise to take notice. At this <a href="https://www.adl.org/resources/tools-and-strategies/anti-lgbtq-bills-are-impacting-children-families-and-schools">fraught moment</a> for LGBTQ+ rights in the U.S., workers aren’t likely to be content with pinkwashed companies that won’t offer real support.</p><img src="https://counter.theconversation.com/content/215745/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dorian Rhea Debussy does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Less hype and more health care, please.Dorian Rhea Debussy, Lecturer of Women's, Gender, and Sexuality Studies, The Ohio State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2205412024-01-08T19:17:35Z2024-01-08T19:17:35ZAttacks on cargo ships in the Red Sea threaten Australia’s trade – we need a Plan B<figure><img src="https://images.theconversation.com/files/568158/original/file-20240108-17-hdyfm4.png?ixlib=rb-1.1.0&rect=117%2C115%2C1117%2C702&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.google.com.au/maps/place/Red+Sea/@15.4781896,44.2562381,3z/data=!4m6!3m5!1s0x15b91b7a37f530e5:0xbab428a1529071c7!8m2!3d20.280232!4d38.512573!16zL20vMDZqZmQ?entry=ttu">GoogleMaps</a></span></figcaption></figure><p>Australia is 11,000 kilometres from the Red Sea but it is not immune from the <a href="https://www.washingtonpost.com/world/2023/12/15/two-maps-show-why-shipping-firms-are-suspending-routes-red-sea/">drone and missile attacks</a> on container ships attempting to move through one of the world’s busiest thoroughfares.</p>
<p>Since November, Iran-backed Houthi rebels in Yemen have launched more than <a href="https://www.vox.com/world-politics/2024/1/6/24027735/yemen-houthi-red-sea-united-states-navy-coalition-maersk-hamas-gaza-israel">20 attacks</a> on container ships using drones, ballistic missiles, and in one case, an explosive unoccupied vessel. The attacks have come in response to the war in the Gaza Strip.</p>
<p>This has prompted logistics firms including Maersk, Hapag-Lloyd and Evergreen as well as the oil giant BP, to pause ship movements through a channel that carries <a href="https://www.afr.com/world/middle-east/shipping-giant-halts-red-sea-route-in-blow-to-global-trade-20231216-p5erwd">12%</a> of the world’s seaborne cargo, mostly between Europe and Asia and locations further south including Australia and New Zealand.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-yemens-houthis-are-getting-involved-in-the-israel-hamas-war-and-how-it-could-disrupt-global-shipping-219220">Why Yemen's Houthis are getting involved in the Israel-Hamas war and how it could disrupt global shipping</a>
</strong>
</em>
</p>
<hr>
<p>The impact has been significant, particularly for China, India, Vietnam, Thailand and Indonesia as well as European countries including the United Kingdom, Germany, France, Spain and Italy.</p>
<h2>Australia impacted</h2>
<p>While just <a href="https://www.afr.com/world/middle-east/freight-oil-climb-as-red-sea-attacks-shut-down-shipping-20231219-p5esg0">16%</a> of Australia’s container imports come from Europe, the supply chain between Australia and the European Union is critical for many Australians.</p>
<p>In 2022, Australia imported about <a href="https://tradingeconomics.com/european-union/exports/australia">A$60 billion</a> in products including pharmaceuticals, machinery, road vehicles, electrical and electronic equipment and medical apparatus from Europe. Much of it was shipped through the Red Sea.</p>
<p>Over the same period, Australia exported goods valued at <a href="https://tradingeconomics.com/european-union/imports/australia">A$23 billion</a> to Europe. The most traded items were mineral fuels, oils and distillation products. Others included wine, fruits, grain, seeds, nickel and aluminium.</p>
<p>Maersk and other companies have started diverting their containers around South Africa’s Cape of Good Hope, but this much-extended route takes longer and has led to major delays, shortages and <a href="https://www.afr.com/world/middle-east/freight-oil-climb-as-red-sea-attacks-shut-down-shipping-20231219-p5esg0">additional shipping costs</a>. </p>
<p>These extra costs are most likely to be passed on to <a href="https://thescarbroughgroup.com/the-red-sea-crisis-impact-on-shipping-costs-delays-and-possible-port-congestion/">businesses and consumers</a>. The UK is already experiencing <a href="https://inews.co.uk/news/red-sea-attacks-increase-uk-food-prices-2832471">shortages</a> of tea, wine, meat and fish.</p>
<h2>International pressure on the rebels</h2>
<p>Last week Australia, the US and 11 other countries affected by the disruption issued a <a href="https://www.afr.com/world/middle-east/australia-partners-warn-houthis-against-further-attacks-in-red-sea-20240104-p5ev2c">statement</a> condemning the attacks as “illegal, unacceptable, and profoundly destabilising”.</p>
<p>“Let our message now be clear. We call for the immediate end of these illegal attacks and release of unlawfully detained vessels and crew,” it said.</p>
<p>It came after Australia last month turned down a request from the US to send a warship to the region, saying it needed to prioritise the Indo-Pacific.</p>
<h2>It’s time to develop Plan B</h2>
<p>Global disruptions have intensified in the last few years as a result of COVID, cyber-attacks, natural disasters and geopolitical tensions. They are likely to intensify further.</p>
<p>Meanwhile, industrial action at Australian ports is also hurting trade.
The dispute between the Maritime Union and the stevedore DP World over a new workplace deal has <a href="https://www.smh.com.au/business/the-economy/shoppers-warned-to-expect-empty-shelves-delays-if-ports-strike-continues-20240105-p5evd6.html">disrupted</a> container terminal operations in Sydney, Brisbane, Melbourne and Fremantle, slowing imports of <a href="https://www.msn.com/en-au/news/australia/shoppers-warned-to-expect-empty-shelves-delays-if-ports-strike-continues/ar-AA1mxr78">furniture, food and clothing</a>.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/us-led-taskforce-deploys-in-red-sea-as-middle-east-crisis-threatens-to-escalate-beyond-gaza-220164">US-led taskforce deploys in Red Sea as Middle East crisis threatens to escalate beyond Gaza</a>
</strong>
</em>
</p>
<hr>
<p>To minimise the impact of all of these disruptions, businesses need to develop backup plans that can be implemented quickly.</p>
<p>They include diversifying supply sources, being prepared to use alternative shipping routes and <a href="https://mhdsupplychain.com.au/2023/10/11/preparing-for-the-next-crisis/">onshoring</a> critical manufacturing.</p>
<p>Resources ought to be allocated now and planning done in collaboration with local and international partners.</p>
<p>The businesses that best prepare will be those best able to ride out and gain from the next disruption.</p><img src="https://counter.theconversation.com/content/220541/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sanjoy Paul does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>An increase in global tensions is placing at risk the free flow of goods traded around the world.Sanjoy Paul, Associate Professor, UTS Business School, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.