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Honored to receive Luxembourg Peace Prize
I was proud today to accept the Luxembourg Peace Prize for journalism. The LPP ceremony was held both in person at the University of Luxembourg and virtually.
Being named a LPP laureate is one of the greatest honors of my professional life.
In my acceptance speech (see link; my speech begins at 4:15:30), the theme was "My Peace Journalism Family." I paid homage to all the wonderful peace journalism brothers, sisters, aunts, and uncles who have enriched and facilitated my projects around the world.
Congratulations to all of this year's Luxembourg Peace Prize laureates. (For more, see the LPP website).
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Ever since the first wave of coronavirus pushed countries into a lockdown, the central banks, mainly in the rich countries, printed US $ 9 trillion of surplus money. Well, the underlying objective was to infuse this surplus money into the pandemic hit economies, which had been left gasping for breath.
According to economist Ruchir Sharma, Chief Global Strategist at the Morgan Stanley Investment Management, this pandemic stimulus in turn made the rich add on to their wealth. “Much of that stimulus had gone into financial markets and from there into the net worth of ultra-rich,” he wrote (Financial Times, May 16). The total wealth of the super rich has increased in the same period to somewhere between $ 5 trillion to $ 13 trillion. No wonder, markets are awash with money, while countries are struggling to pull economy out of slump.
The sad irony is that what appears to be an ingenious way to indirectly transfer wealth from public coffers into the pockets of the ultra-rich happened at a time when Brookings estimated that an additional 144 million people globally, in 2020, slipped below the stringently kept poverty line. Using the World Bank and IMF poverty estimates, the calculations show that India has surpassed Nigeria when it comes to having the largest population of people living in extreme poverty. India added another 85 million poor to its existing huge numbers that have somehow been surviving below the poverty line. The devastating second wave of Covid-19 may leave a still bigger dent in poverty estimates.
But perhaps what we do not realise is that all it requires to eradicate extreme poverty from the globe is US $100 billion, a tiny fraction of the pandemic stimulus that was pumped in to revive the global economy and instead ended up rewarding the billionaires by helping them to amass more wealth. This is not the first time that such astonishing amounts of surplus money have been pumped indirectly into the hands of the super rich. For quite a number of years, central banks in rich countries have been printing surplus money. However, what remains unexplained is how come there is all the money for the rich, but the world is still unable to find enough money to fight poverty.
If only a fraction of the pandemic stimulus had gone to where it was needed -- to remove poverty, the world would have been a much better place to live.
Meanwhile, the pandemic has further widened income inequality taking it to obnoxious levels. In America, the Institute for Policy Study says the combined wealth of its billionaires increased by 44.6 per cent during the pandemic. During the same period an estimated 80 million people lost their jobs. In any case, top 50 super rich in America hold as much wealth as the bottom 165 million. In India, the income inequality is no less glaring. Just to give you an idea, the average farm income as worked out by 2013 National Sample Survey Office (NSSO) report, for roughly 50 per cent of the population dependent largely on farming, stands at a paltry Rs 6,426 per month (roughly half of it coming from non-farm activities). That is why protesting farmers have been demanding an assured income by way of an assured price for their produce.
Compare this with what an Oxfam’s ‘Inequality Virus Report’ brings out. The combined wealth of India’s billionaires has risen by 35 per cent during the pandemic, and to explain how the increase would translate in simple terms, the report states that the rise in wealth of just top 11 billionaires alone is enough to pay for MNREGA work for ten years. In any case, the top 1 per cent holds four times the wealth that the bottom 953 million has.
To understand how an increase in income works wonders for the poor, look at the outcome of this experiment on the feasibility of universal basic income. Two years before the pandemic struck, in early 2018, Foundation for Social Change, a charitable organisation, along with the University of British Columbia in Canada gave $ 7,500 Canadian dollars (or US $ 6,206) to 50 homeless families in the Vancouver region. A year later, during which time the charity kept a tab on how the money was being utilised, the results that emerged were not only astounding, but equally encouraging. More or less same results have been achieved in almost similar kind of studies conducted elsewhere.
Contrary to the public perception wherein it is generally believed that the poor don’t know how to handle money, the results clearly brought out how wisely they made use of the limited financial support, spending it on necessities like food, clothes, housing and other utilities. According to news reports, while the consumption of basic food needs went up by 37 per cent; the poor had actually cut down on drug and alcohol by 39 per cent. By moving fast into housing, these homeless actually worked to ensure a roof over their head. What the study therefore conclusively established is the significance of roti, kapda and makaan for the poor households everywhere in the world, and their strenuous efforts to work towards attaining it. In other words, such petty cash transfers have the potential to uplift the poor from the clutches of poverty.
Instead, we see more money being routed to the rich by way of tax concessions, economic stimulus packages, bank write-offs, bailouts and massive subsidies in the name of incentives for growth to bolster corporation profits with the faulty assumption that some of it will trickle down to the poor and needy. When it comes to giving poor their share, the argument is that by giving surplus money directly into the hands of the poor everyone will have more to spend, and that will lead to higher inflation.
The economic growth model therefore has been very cleverly designed to help widen income inequality, and make the fat cows still fatter. The poor are expected to fend for themselves. #
Growth should take the poor into account. The Tribune. May 22, 2021 https://www.tribuneindia.com/news/comment/growth-should-take-the-poor-into-account-256674?fbclid=IwAR3OX6dgsHwmg3kBgPxtksZkQKxPaSjOxe9v10eK0wxIlMXZskwip2RXvAE
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In an address to Congress, US President Joe Biden stated: “Trickle down economics has never worked. And it’s time to grow the economy from the bottom and the middle out.” This is probably the first time any US President has acknowledged the failure of a dominant economic thinking that is ostensibly behind much of the socio-economic crisis the world is faced with.
Trickle down is surely an outdated economic concept. So much so, that it should have been erased from the economic thought process by now. And yet, it continues to be part of the economic curriculum and whether we like it or not helps formulate the global economic policies thereby acerbating inequality, and continuing to keep the world in grip of poverty and hunger.
Whether the US President’s acknowledgement will bring about a change in the way the World Bank/IMF as well as the credit rating agencies have been promoting policies that hinges on to the failed trickle down theory, only time will tell. But let us hope economic institutes, including business and management schools, initiate a debate on how to shift to more realistic policies that “grow the economy from the bottom and middle out” as Joe Biden had envisioned.
Similarly, there are several other economic concepts and hypothesis that should have been discarded by now. After all, economics is a progressive science and it should move with changing times, improving on ideas with new learning’s. Holding on to outdated ideas, and teaching young students the same outgrown concepts leads to building up a generation of economists whose economic orientation leaves much to be desired.
This becomes more relevant in the context of the ongoing debate on the three central farm laws. The predominant economic thinking that free markets leads to better price discovery for farmers, given the supply demand equilibrium, has actually failed to translate into higher incomes for small farmers across the globe. To be told that less the population in farming, the higher will be the farm incomes; and bigger the land holdings the higher will be the bargaining power thereby enhancing farm incomes, too has failed.
While economists refuse to acknowledge that these hypotheses are perhaps outdated and need to be discarded, the same is being reiterated as the possible way to double farm incomes in India. Given that roughly 50 per cent of the workforce, directly or indirectly, is engaged in agriculture in India, it is amusing to read a report that says policy makers believe that increasing the rate of farm migration from the existing 1.81 per cent to 2.4 per cent per year in India will automatically lead to higher farm incomes. If this was indeed true, I wonder why the same economic thought has failed to hold true for farmers in the developed countries.
As I have often said, in the United States, farming population has come down to 1.5 per cent, and the average farm size has increased to over 440 acres. Still, farm incomes are on a steep decline. This defies the economic theories that we were made to believe. Just to give you an idea, the wheat price farmers get is much less than what they were getting 150 years back at the time of the American Civil War. More recently, while the median farm income has remained negative for some years, farmers were saddled with a bankruptcy of $425 billion in July 2020. Let me reiterate, the rate of farm suicides in America is 45 per cent higher in rural areas compared to urban centres. If the markets were so good, there is no reason why agricultural subsidies should in reality substantiate farm incomes to the tune of 40 per cent.
In neighbouring Canada, where the farming population has shrunk to about 1.7 per cent, and the farm size has grown enormously, farmers are indebted to the tune of roughly $102 billion. Clearly shows that the popular economic understanding that farm incomes go up when the population in farming drops, and as the farm size grows, has not worked here either.
This is not only true for North America. Europe is no better. In Sweden, since 1990, the numbers of farms have declined by 30 per cent. While the farm size increased, the number of farmers has come down to less than 2 per cent. Despite the dominant economic thinking envisaging higher farm incomes when the proportion of farm population drops, farm incomes too have slumped there. According to the 2018 Common Agriculture Policy (CAP) Strategic Plan of the European Commission, 54 per cent of the average farm income in Sweden is made up by subsidy support. With a direct income support, which is double than what an average European Union farmer receives, Swedish farmers are able to supplement farm incomes reaching some level of parity.
The same holds true for France, Germany, Denmark, Belgium, Ireland, Spain and UK to name a few of the EU’s major agricultural players. Europe provides a farm subsidy support of $ 100 billion, and yet farm protests against falling incomes are only increasing.
That free markets have failed to prop up farm incomes in the rich developed countries clearly shows that something is fundamentally wrong in our economic thinking and approach. We can argue about the virtues of markets till the cows come home, but the fact remains that market principles we learnt in our economic courses have failed to translate into higher farm incomes, the only visible beneficiary being the agribusiness companies. How will the same market principles work for small farmers in India, constituting 86 per cent of the farming population, remain a dilemma?
This calls for an economic rethinking. To make farming a viable proposition, perhaps US President Joe Biden needs to include farm income parity or guaranteed farm incomes as the guiding principle for boosting ‘the economy from the bottom and middle’. #Hot XXX Collection
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