The looters of India and what their robbery costs the people

Subrata Roy, the head of the Sahara India group. Photo: The Hindu

A report in The Hindu, the English-language daily, of 2013 February 01 gives us some indication of the scale of robbery that the country continues to suffer, despite the anti-corruption protests that have waxed and waned over two years. The report also shows the impunity with which politically-connected business people can flout the law, evade tax, ignore court orders and stay out of jail. For the ordinary salaried Indian, a transfer from her or his bank account of 50,000 rupees or more (about USD 940 or EUR 690) must be accompanied by extra information that banks are required to demand. But for this super-rich set of looters, there are no restrictions when their transactions run into millions of dollars, euros or pound sterling.

The report in the Hindu has quoted a classified note made by the Financial Intelligence Unit of the Department of Revenue, Ministry of Finance, on 2012 March 30. This note contains what the department calls “spontaneous information” – this means information given to it by a foreign counterpart.

The report quotes the note’s contents: “Intelligence indicates that Subrata Roy Sahara, DOB 15/06/1948, has control over a financial account with a U.K. financial institution in the name of Aamby Valley (Mauritius) Ltd, account number 539469 and the account holder intends to transfer GBP 8 million from this account to SG Hambros Bank (Chanel Islands) Ltd, number 0464163 in the name of Aamby Valley (Mauritius) Ltd and a further GBP 190 million to Bank of China, London Branch account number 781505-0220-000 in the name of Aamby Valley (Mauritius) Ltd.”

The report in the Hindu said government of India “may have failed to act against the Sahara group for duping small investors in fraudulent schemes despite intelligence gathered early last year of large fund movements in overseas accounts valued at well over GBP 203 million (at current exchange rates), connected to companies associated with its Managing Director and Chairman Subrata Roy. Mr. Roy was charged by the SEBI [that is, the Securities and Exchange Board of India, which exists to protect the interests of investors including small investors] in June 2011 and by the RBI in August 2011 for unauthorised raising of funds from the public“.

That 203 million pounds was equal to the amount earned as wages by rural households in Andhra Pradesh for a year under the employment guarantee programme.

These are enormous sums of money – 203 million pound sterling!

In Indian rupees, that sum is 17,080,683,900 or 1,708 crore. That is a sum of money which is very nearly equivalent to the amount earned as wages in the state of Andhra Pradesh, for 2011-12, through the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) programme by 4,153,850 rural households! Under the MGNREGA rural residents find employment for at least 100 days a year, and the work they did for INR 1,728.13 crore in that year was on rural connectivity, on flood control and protection, on water conservation and water harvesting, drought proofing, micro-irrigation works, irrigation for land owned by scheduled caste and tribal and below poverty line families, and the renovation of traditional water bodies.

Across wintry Europe, the spectre of creeping poverty

An Europe darkened. The ESDE 2012 has said that the large unemployment shocks experienced at the beginning of the crisis and the rising shares of the long-term unemployed point towards serious risks of long-term exclusion faced by a significant share of the population.

Five years of economic crisis and the return of recession has pushed unemployment in Europe to new peaks not seen for almost twenty years. Household incomes have declined and the risk of poverty or exclusion is on the rise, especially in Southern and Eastern Europe, according to the 2012 edition of the Employment and Social Developments in Europe Review.

This, the second edition of the Employment and Social Developments in Europe (ESDE), has been released by the European Commission’s Directorate-General for Employment, Social Affairs and Inclusion. The 2012 Review builds on the integrated approach to employment and social analysis embarked upon in the first ESDE Review of 2011 which did very well to concentrate on cross-cutting themes covering employment, in-work poverty, wage polarisation and income inequalities.

In the Baltic States, Bulgaria, Greece, Hungary, Italy, Malta, Poland, Portugal and Romania the risk of entering into poverty among the population aged 16 to 64 is associated with few chances to get out again, meaning that individuals falling into poverty have limited chances to get back out of it in the following years. Among these countries, this situation is most worrying in Bulgaria, Romania, Estonia, Greece, Malta, Portugal and to a certain extent Italy. Graphic: EU-ESDE 2012

The ESDE 2012 has said that “impact of the crisis on the social situation has now become more acute as the initial protective effects of lower tax receipts and higher levels of spending on social benefits (so-called ‘automatic stabilisers’) have weakened”.

This means, the ESDE has added, that a new divide is emerging between countries that seem trapped in a downward spiral of falling output, fast rising unemployment and eroding disposable incomes and those that have so far shown good or at least some resilience. [The link to the full report [pdf 23 MB] is here.]

The situation has been described as “especially catastrophic in southern and eastern European countries” by the website of the International Committee of the Fourth International (ICFI). Previously, only wars have devastated national economies so thoroughly in such a short time as have the austerity measures of the European Union, the ICFI has observed.

This scene, as if from another age of blithe consumption in Europe, is now more likely to be found (instead of in Berlin where I took the picture) in the metropolises of Asia

Indeed the ESDE findings are a deep shade of gloom. The average EU unemployment rate climbed to almost 11%. The report confirms a new pattern of divergence, which is most striking between the North and the South of the eurozone. The unemployment rate gap between these two areas was 3.5 points in 2000, fell to zero in 2007 but then has widened fast to 7.5 points in 2011.

Despite the social catastrophe they have provoked with their austerity policies, European governments are intent on tightening the fiscal screws. They are no longer limiting themselves to the periphery of the euro zone, but are ever more ferociously attacking the working class in the core countries. In Greece and Spain, one in four is officially unemployed, and over half of all young people have no work.

Average household income has fallen by 17 percent in Greece over the past three years and by 8 percent in Spain. The health care, pension and social security systems face total collapse. And yet new, draconian austerity plans have been drawn up for Italy, France and Germany. In Britain, where almost a quarter of the population already lives in poverty, the Cameron government is systematically dismantling the National Health System, public education and social welfare.

Official, how the rise of the 1% deepened social inequality in the USA

The report, ‘Trends in the Distribution of Household Income Between 1979 and 2007′, by the Congressional Budget Office (October 2011) on income inequality underscores the total disengagement between the Obama administration and the entire political system on the one hand and the interests and desires of the vast majority of Americans on the other. In the USA, the political and media establishment is presently occupying itself instead with a debate over how much further taxes for the corporations and the rich should be cut and how much more deeply social programs for workers and poor people should be slashed.

The Congressional Budget Office (CBO) report stated: “To assess trends in the distribution of household income, the Congressional Budget Office (CBO) examined the span from 1979 to 2007 because those endpoints allow comparisons between periods of similar overall economic activity (they were both years before recessions). The growth in average income for different groups over the 1979–2007 period reflects a comparison of average income for those groups at different points in time; it does not reflect the experience of particular households. Individual households may have moved up or down the income scale if their income rose or fell more than the average for their initial group. Thus, the population with income in the lowest 20 percent in 2007 was not necessarily the same as the population in that category in 1979.”

The massive growth of social inequality over the past three decades has been the result of an unrelenting ruling class offensive against the working class. That assault has been carried out under Democratic as well as Republican administrations.

The CBO report stated: “Real (inflation-adjusted) mean household income, measured after government transfers and federal taxes, grew by 62 percent between 1979 and 2007. Over the same period, real median after-tax household income (half of all households have income below the median, and half have income above it) grew by 35 percent. Because the mean (or average) can be heavily influenced by very high or very low incomes, the large gap between mean and median income growth signals a pattern of growth that was heavily weighted toward households with income well above the median.”

The offensive against American labour and the working class was launched in earnest during the Ronald Reagan presidency, as early as 1981. That was the signal for more than a decade of wage-cutting, strike-breaking, union-busting and labor frame-ups, made possible by the complicity of the trade union bureaucracy. It deliberately isolated and betrayed scores of bitter struggles in order to break the militant resistance of the working class.

The CBO report stated: “The distribution of after-tax income (including government transfer payments) became substantially more unequal from 1979 to 2007 as a result of a rapid rise in income for the highest-income households, sluggish income growth for the middle 60 percent of the population, and an even smaller increase in after-tax income for the 20 percent of the population with the lowest income.”

The spread of social misery in the midst of soaring corporate profits and CEO pay is starkly shown in the growth of poverty in US suburbs. The New York Times recently reported that the ranks of the poor living in the suburbs of US cities rose by more than half between 2000 and 2010. Two thirds of these new suburban poor dropped below the official poverty line between 2007 and 2010. The Times article, reporting analyses of US Census data by the Brookings Institution, said the increase in poverty in the suburbs was 53 percent, compared with 26 percent in the cities.

In fact, average real after-tax household income for the 1 percent of the population with the highest income grew by 275 percent between 1979 and 2007. Average real after-tax income for that group has been quite volatile: It spiked in 1986 and fell in 1987, reflecting an acceleration of capital gains realizations into 1986 in anticipation of the scheduled increase in tax rates the following year.

Income growth for the top 1 percent of the population rebounded in 1988 but fell again with the onset of the 1990–1991 recession. By 1994, after-tax household income was 50 percent higher than it had been in 1979. Income growth surged in 1995, averaging more than 11 percent per year through 2000. After falling sharply in 2001 because of the recession and stock market drop, average real after-tax income for the top 1 percent of the population rose by more than 85 percent between 2002 and 2007.

A Christmas troika from the ILO

Three excellent titles have been released by the International Labour Organization (ILO) since November, the Global Wage Report 2010-11, World Social Security Report 2010-11 and Extending Social Security to All.

Global Wage Report 2010-11. Social security represents an investment in a country’s “human infrastructure” no less important than investments in its physical infrastructure. At an early stage of economic development the priority is, of course, to put in place a basic level of provision; the evidence adduced in this Guide points to its affordability for, essentially, every country. While this message lies at the heart of the Guide, it is important to keep in mind that, at a later stage, the basic level can and should be augmented, and the ILO’s long-standing approach to social security offers the framework to do so.

While the financial, fiscal and economic affordability and sustainability of social protection systems has become – rightly or wrongly – a major concern for countries at all stages of economic development, the Guide provides testimony showing that some level of social security can be afforded even at early stages of national development. Social security systems remain affordable moreover when economies mature and population age. Hence, a country’s national investment in social security can be well justified, whether or not an extensive social security system has already been developed.

More on the title here. Get the pdf here.

World Social Security Report 2010-11. This is the first in a new series of biennial reports that aim to map social security coverage globally, to presenting various methods and approaches for assessing coverage, and to identifying gaps in coverage. Backed by much comparative statistical data, this first report takes a comprehensive look at how countries are investing in social security, how they are financing it, and how effective their approaches are. The report examines the ways selected international organizations (the EU, OECD and ADB) monitor social protection and the correlation of social security coverage and the ILO Decent Work Indicators. The report’s final section features a typology of national approaches to social security, with a focus on countries’ responses to the economic crisis of 2008 and the lessons to be learned, especially concerning the short- and long-term management of pension schemes.

Social security systems play a critical role in alleviating poverty and providing economic security, helping people to cope with life’s major risks and adapt to change. They can have a remarkable effect on income inequality and poverty in developing countries through income transfers. The 2008-09 financial crisis has shown that they are also powerful economic and social stabilizers, with both short- and long-term effects. However, there are serious problems of access to social security around the world which the crisis has shown into sharp relief, and the financing of systems has been put at risk by shrinking national budgets.

More on the title here. Get the pdf here.

Extending Social Security to All. The second in a series of ILO reports focusing on wage developments, this volume reviews the global and regional wage trends during the years of the economic and financial crisis of 2008 and 2009. In Part I, the report highlights the slow down in the growth of monthly average wages as well as some short-term fluctuations in the wage share. These changes happened against a backdrop of wage moderation in the years before the crisis and a long-term trend of rising wage inequality since the mid-1990s. Part II of the report discusses the role of wage policies in times of crisis and recovery. Collective bargaining and minimum wages can help achieve a balanced and equitable recovery by ensuring that working families share in the fruits of future economic growth.

At the same time, preventing the purchasing power of low-paid workers from falling can contribute to a faster recovery by sustaining aggregate demand. The report shows that policy strategies and design are crucial to ensure that low-paid workers benefit from union representation and minimum wages, and argues that wage policies must be complemented with carefully crafted in-work benefits and other income transfers. Part III concludes with a summary of the report and highlights issues that are critical for improving wage policies.

More on the title here. Get the pdf here.

A global week’s food

One week of food for the Aboubakar family in Chad (Menzel and D'Aluisio, 2005)

How much food does your family need in a week? That depends on where you are (Ecuador or Mexico, Bhutan or Egypt, Chad or Germany) and what you can afford. These pictures below are a remarkable sociological inquiry into what the global food price crisis can mean for families around the world. They can be found in the presentation by Ricardo Uauy (Institute of Nutrition, University of Chile) who draws on the world-spanning work of Menzel and D’Aluisio in 2005.

His presentation can be found in the very timely book, Mitigating the Nutritional Impacts of the Global Food Price Crisis, by Elizabeth Haytmanek and Katherine McClure (Institute of Medicine), which can be read as a pdf from the National Academies Press.

One week of food for the Namgay family in Bhutan (Menzel and D'Aluisio, 2005)

What does this series of pictures tell us? In situations such as Egypt and Ecuador, if it is necessary to make do with a reduced income, it is possible to decrease food quantity without necessarily sacrificing the food quality. Ironically, a reduced income might cause the family to cut out the unnecessary processed foods and soft drinks, which would improve this family’s nutritional status.

A family in Chad spends only US$1 on food each week. The essence of their meagre diet is cereals and some legumes, and almost exclusively features plant foods. A family in Bhutan can only afford US$5 per week for its food. There is less food overall, and it is basically plant foods, including fresh fruits and vegetables. There are less animal foods, as grains figure prominently.

One week of food for the Ayme family in Ecuador (Menzel and D'Aluisio, 2005)

In Quito, Ecuador, however, families spend about US$32 on food, and sacks of cereals, wheat, and some legumes are featured prominently. Less fruits and vegetables are seen as compared to the previous families’ diets. In this scenario where there is less variety, if some foods are eliminated from the picture, the family’s consumption will suffer in nutritional quality. In Cairo, a family spends US$69 dollars per week on food. This amount of weekly expenditure in Egypt still enables a fairly varied diet, with fruits and vegetables seen as prominent in their mix.

In Cuernavaca, Mexico, families spend about US$189 per week. Here fruits and vegetables are abundant, although processed foods and sweetened beverages figure prominently. In Germany, families spend about US$500 per week to feed a family of four. There is much variety, including a great deal of processed foods, although fresh fruits and vegetables are also prominent in the household.

One week of food for the Ahmed family in Egypt (Menzel and D'Aluisio, 2005)

These pictures demonstrate what foods people buy with the amount of money they have to spend on food each week. While these photos convey the present status of these populations, they suggest what people might stop buying if they had less money, during a food crisis, for example.

In crisis situations, families preserve diets based on less expensive foods. If their income is sharply reduced, families do away with animal foods and nonstaple foods. They eat less meat, less dairy, less processed foods, less vegetables, and less fruits; they are predominately dependent on cereals, fats, and oils. They find ways to get adequate energy at a very low price, but may forego appropriately nutritious foods, which results in poor quality diets that are inadequate in terms of micronutrients.

One week of food for the Casales family in Mexico (Menzel and D'Aluisio, 2005)

Peter Menzel and Faith D’Aluisio’s book is an around-the-world exploration of average daily life in 24 countries, focusing on food. Hungry Planet: What the World Eats, details each family’s weekly food purchases and average daily life. The centerpiece of each chapter is a portrait of the entire family surrounded by a week’s worth of groceries accompanied by interviews and detailed grocery lists.

What about South Asia? In Mitigating the Nutritional Impacts of the Global Food Price Crisis, Josephine Iziku Ippe, Nutrition Manager with Unicef (United Nation’s Children’s Fund) in Bangladesh, explained that issues affecting prices at the regional level include trade barriers, especially with India, and export bans.

One week of food for the Melander family in Germany (Menzel and D'Aluisio, 2005)

The large flood of 2007 also affected food prices. Despite this, in 2007, the percentage of food grain imports dramatically increased and reached 6% of total imports compared to 3% in previous years. The food price shock clearly worsened the food security situation in 2008 with 40% of households in Bangladesh reporting that they were greatly affected.

Due to the higher food prices, a majority of households in Bangladesh lost purchasing power. In 2008, the real monthly income per household decreased by 12% when compared to 2005 incomes. Real wage rates remained stable while the terms of trade (daily wage/rice price) further decreased in 2008. Moreover, expenditures (particularly for food) increased to an unprecedented level of 62%. of the total expenditures for households. Overall, about one in four households nationwide was affected.