Friday, 2 December 2016

What Happens When 86% Of A Country's Cash Is Made Worthless Overnight

One evening in early November, unscheduled and by surprise, Indian Prime Minister Narendra Modi announced on a televised broadcast that the 500 and 1000 rupee notes that constitute 86% of all cash in India, would be worthless the next day.



The announcement made on the very same day as the 2016 US Presidential election (perhaps a clever ruse to divert global attention) caused shockwaves throughout the country. To invalidate such a massive portion of cash in the economy was one thing; to enforce this just hours after the public announcement further shocked people.

But this element of surprise was a necessary one for Modi's intention behind this drastic policy- that is, to eradicate 'black money', money that is sheltered from tax authorities and used in illegal activities. So Modi's announcement came so immediately in order to spread a wave of panic among agents of the black market. "There is no shortage of money in India, the problem lies in where the money is.", the Indian Prime Minister asserted at a rally following the announcement.

So anyone with 500 and 1000 rupee notes, from the 9th of November onwards, could not use it as legal tender. But, they could be used as deposits to bank or post office accounts, or they could be exchanged with sufficient ID at a bank or post office. This was not unregulated, however- you couldn't just go with all of your notes to exchange or deposit them. There were limits set on the amount you could make use of in one transaction or one day.

"The poor who have welcomed the decision are sleeping peacefully, while those with black money are looking for sleeping pills."

This was what Modi told his supporters at a party rally as he revelled in what he believes to be a successful implementation of his policy.

The policy has indeed gone some way to weed out black money and illicit activities. Forcing people to 'register' their money by exchanging or depositing at a bank means they can be investigated- especially in suspicious circumstances, like if they try to deposit a massive amount into the bank at once. It allows the tax authorities to take register of potential black market agents.

And indeed, numerous seizures of unaccounted money were made within just days of the demonetisation.

But the major question to consider is whether this dramatic policy has been worth it. Because as well as the positive of criminals being exposed, there are a multitude of heavy costs this move has had on the Indian people.

Firstly, it's highly questionable whether the poor are "sleeping peacefully" as Modi claims, because arguably more than anyone else, they have been hit the hardest by this. Cash is used for 98% of all consumer transactions in India, and the developing popularity of credit and debit cards, particularly among urban middle and upper class Indians, means that this figure is likely to be even higher when we consider rural lower class Indians alone. The rural economy is pretty much entirely cash based.

One might argue, what is to stop these rural Indians going to their local bank or post office and exchanging or depositing the money? Especially to Westerners who have heard numerous stories of India's massive economic growth and development, this might be a pertinent question. But the primary issue here is hidden from us by the tall buildings of Delhi, Mumbai and so on. In the rural areas, very few Indians have neither bank accounts to deposit their 500 and 1000 rupee notes into, nor do they have the official documentation and identification to exchange it.

Not only do poor Indians therefore lose significant amounts of their already pitiful savings, but their very livelihood is threatened. According to the Economist, over 80% of India's workers work in the 'informal' sector- that is, they are paid in cash. As a result, many of these workers may have not only lost significant amounts of what they have earned, but cash constraints mean many of them have been laid off by their employers, putting their future into freefall.

What's more, those with the ability to deposit or exchange their money haven't exactly had a ball either. This has been one of the most shambolically executed monetary changes ever witnessed- lack of administrative capacity, and even a lack of cash money available to replace the outgoing notes, have resulted in massive queues and general chaos, reminiscent of a country in the midst of a bank run or severe economic crisis.

Admittedly, this chaos has created sparked the creativity in many Indians. The days after the announcement saw record rail ticket sales, particularly in first class ticket seats for long journeys- suspected to be bought with 500 and 1000 rupee notes to return later on in exchange for valid currency. It has created some employment in the form of people paid to stand in queue for others. Those unable to afford this have simply put their name on a piece of paper, settled on the ground with a stone on top to represent their place in line. The restrictions on how much can be exchanged in a day have left many Indians reliant on cash struggling to afford their daily needs, such as food and rent.

But there has been severe faults that put all the joviality into the shadow. 33 people died between the 8th and 18th of November, with their deaths directly or indirectly linked to demonetisation and the chaos that has ensued. Exhaustion in queuing and suicide has been one of the primary causes, but in more shocking cases, people have been left unable to pay hospital bills, leading to denial of service and in a number of cases, death as a result.

Prominent economists, including Kaushik Basu, Chief
Economist at the World Bank, have come out against
Modi's demonetisation.
Economic growth is also expected by most to be stunted as a result of demonetisation- forecasts for India's GDP growth have fallen by as much as 0.5%, and former Indian Prime Minister Manmohan Singh has stated that he expects GDP to fall by as much as 2% as a result of his successor's policy. The scheme "will hurt agricultural growth in our country, will hurt small industry, will hurt all of those people who are in the informal sector of the economy", the former PM stated publicly.

Concerns have also been raised over whether the policy will fulfil its intended role of weeding out the black market. Renowned Indian economist Kaushik Basu has claimed that the economics of the policy are "complex" and that "the collateral damage is likely to far outstrip the benefits". Raghuram Rajan, former governor of the Reserve Bank of India, believes that those targeted by demonetisation "find clever ways around it", meaning many remain perhaps inconvenienced, but unscathed on the whole.

So far, the policy represents the Indian government failing in its duty to the poorest in the country. The middle and upper class are relatively well off- a survey done by the Government on a smartphone app showed 90% of respondents to be in favour of the move- the large majority of the Indian population unable to enjoy the luxury of a smartphone have gone unheard. There is almost no doubt that the rural poorer Indians are the true ones who have been hit, and hit hard. And even the wealthier, urbanites of India could be hit, as overall economic growth slows as expected.

This all comes because not only does this policy represent bad economics, but its implementation has been poor. It makes one wonder whether the whole plan for demonetisation was just as rushed and immediate as its announcement.

Wednesday, 16 November 2016

The New Age of Populism

In recent years, anti-establishment, anti-immigration and far right views have been brewing across western nations, festering in areas rife with poverty and unemployment, loitering in the background, like the ever patient predator, waiting for the perfect moment to strike.
That moment was the 9th of November 2016. The election of Donald Trump as the President of the United States.
However, like a snake rattling its tail, there have been warnings of the fatal strike to come. Britain’s vote to leave the EU and the rise of anti-immigration populist parties across much of continental Europe like NPD and PEGIDA was evidence of the mounting threat of far right extremism and white populism.
Denmark, for instance, is 88 percent white Danish today — hardly a majority in jeopardy. But a generation ago, in 1980, it was 97 percent white. The anti-immigrant Danish People’s Party is now the second-largest party in the Danish Parliament. In Germany, where the foreign-born population shot up by approximately 75 percent between 2011 and 2015, the anti-immigrant, populist Alternative for Germany party is now drawing record support.  Marine Le Pen, a far right politician is also gaining momentum in her bid for the French presidency.
President elect Donald Trump noticed this trend and cleverly captivated on it, using it to become the most powerful man in the world. He recognised that a significant amount of the American people had minimal trust in the Government, who they believed favoured the elite and no one else. I must also clarify that my reference to ‘white’ populism is not only directed at the Caucasian population, but the majority group who have always enjoyed the privileges society has to offer.
A group Mr Trump has been a part of his entire life, yet he still managed to convince a large majority of the American people, he was one of them - a man of the people, who has come to unleash America from the clutches of corruption. How you may ask incredulously?
He preyed on their desperation for change. He appealed to a significant amount of Americans, who were undergoing a ‘white’ identity crisis. These individuals want to go back to the past, when America was ‘great’ and being white gave you an advantage.
These individuals long to return to a time filled with Crime, Injustice and Corruption. A time in which white supremacy was rife and dominated America and Mr Trump gave them hope of returning to that past.
So what next?
The wave of far right extremism that has jumped from nation to nation doesn’t seem to be stopping any time soon.
Is this the new age of Politics we live in? Only time will tell.

One thing is for certain, if we do not halt this onslaught of far right extremist politics, the world will be taking a major step back and as we know, those who do not learn from history are bound to repeat its mistakes.

Thursday, 10 November 2016

Trump Did Not Win It, Clinton Lost It

James Dancey warned that if Clinton did not change her tune that she would lose. Now he looks at why it was her own campaign that undermined her. 



It was the morning after the election, whereas many people were waking up; I was just about to go to sleep, after watching Trump embarrass Hillary in many marginal states I thought it was best for me to call it a night. I had spent the previous hours of darkness speaking to many Americans, Clinton and Trump supporting and seeing the gradual change in reaction as the results came in. Clinton, who had spent 8 years waiting for the opportunity to run for President since the last attempt had once again failed, this time she had not lost to the charismatic, personable Obama, but to the aggressive, polarising, controversial Trump.

Trump was terrible, some of his actions reprehensible, and his self- control left much to be desired, he was entangled in multiple scandals for the many problematic words he had proclaimed. With all the allegations of narcissism, sexism and racism coming in, many people would ask how he could win. I’d like to ask how Hillary let him win.

In one of my previous publications about how Clinton has a terrible tendency to talk down to the public, I wrote that if she did not change her tune she would lose. She didn’t, and she lost. This was clearly reflected in the discourse, but there were other matters at hand that she also fumbled on greatly. The emails didn’t help, it was exposed that she had cheated during the Democratic debates with leaked questions, and was involved in the DNC which doomed Bernie Sanders into the barrel of should’ve been leaders.

So, that’s pretty bad, but it’s no worse than what Trump has done, why did it damage her reputation so much more than her Republican counterpart’s? Clinton had created this image, that she was this clean, honourable, righteous advocate for social justice, the scandals painted her as this crooked, establishment figure focused solely on self-interest. This specific representation of her undermined the character she had originally displayed to the public, which destroys the trust that they would in her. This can be contrasted in Trump, who always flaunted himself as this aggressive, impolite chauvinist, so a lot of what the media criticised him for didn’t really wash. The media played an important role in feeding Trump’s narrative, that there was this big, bad establishment exclusively driven to prevent this avant-garde insurgent from attaining the keys to the White House. Clinton’s campaign ads also played into Trump’s narrative, always looking for reasons to not vote Trump rather than reasons to vote Clinton.

However, none of this would’ve mattered if the Democrats had fielded a better candidate, Clinton still won the popular vote (albeit by a very small margin), and a majority of the US population are by no means pro-Trump. Nonetheless, Bernie was waiting in the wings, he would’ve motivated and inspired many Americans with his cross-party and swing state appeal (he has been an Independent senator for Vermont) and the polls had him as absolutely trouncing Trump, yet the Democrats decided to take a risk with their corporatist puppet and lost.


I endorsed neither Clinton, nor Trump, from my perspective they were both terrible in their own unique ways. Nevertheless, I could see a Trump win coming from a mile away, people are tired of Hillary’s brand of stale, cliché politics, and her dangerously low charisma. They might as well have propped her corpse up on the podium and no-one would’ve noticed. They should’ve heeded the warnings from Brexit, people are tired of being told what to do and how to do it, and now the American people will live with the implications from a tired, washed-out elite’s myopic decisions.

Wednesday, 9 November 2016

Why Donald Trump Is Now The President of the USA

The Donald has done it. 



How did this happen? Why did it happen? These questions are abound across the globe, as people wake up to news that the former reality TV star has now taken his seat as the leader of the world's richest and most powerful nation.

Donald Trump's own appeal is obvious, whether you agree with his views or not. His bigoted, nuance-free and racist views and proposals appealed to the evident mass of Americans who may have until now been hiding their views from an environment deemed too 'politically correct'. From the moment Trump glided down the escalators of his New York tower to announce his candidacy, making ridiculous blanket claims about Mexican immigrants, these people felt empowered. And when Trump pledged to ban Muslims from entering the USA, they felt empowered. Finally, they thought. Someone is putting out what we've been thinking all along into the public sphere.

Donald Trump's rallies held a cult-like buzz that was
unparalleled by Hillary Clinton.
Trump empowered the racists in American communities, something that was clearly visible before the vote, at his infamously raucous campaign rallies.

But it goes deeper than this; statistics show that a significant majority of Trump's voters were either poor, lacked college education, or both. We could write a whole book about why so many Americans are in these demographics- but one of the significant causes is lack of access to higher education. Education that is inaccessible to so many has proven a barrier to informed voting decisions, and has further increased the power of meaningless, simplistic rhetoric ('Make America Great Again') and fanciful promises.

But it wasn't just the racists and bigots who formed Trump's support. So many more people voted for Trump for a simple reason; they are sick of the corporatist Establishment. The political elite that have transgressed the boundaries of right and left wing, supported by and doing the bidding of massive corporations, regardless of the impact on the public. It's the Establishment that were largely responsible for catastrophes- whether it's the Iraq War, or the 2008 Financial Crisis.

And Trump, right from the start, made it clear he was not part of the Establishment. During the GOP Primaries, he stood out for his constant criticisms of his competing Republican candidates as puppets of wealthy donors. His outspoken and unpredictable nature makes him a nightmare for those who would want to try to take control of his policymaking. And after years and years of the status quo in the Oval Office, people wanted something new, something fresh.

On the left, this desire manifested itself in Bernie Sanders taking Clinton right to the wire in the Democratic primary. On the right, it has led to today- Trump going against the initial odds to become President.

But as much as Donald Trump was responsible for standing out in this election as the anti-Establishment candidate, it's the DNC's fault for putting out perhaps the worst response they possibly could to Trump.

Clinton proved a weak Establishment answer to
Donald Trump
In Hillary Clinton, not only do you have someone mired in political and personal controversies, but you have arguably the most pro-Establishment candidate ever. Polished, extremely well prepared and scripted, Clinton may have been impressive in the elections of the 20th century, but for today's context, she is totally inappropriate. Fascinatingly, Clinton has been able to unify the left and the right in distrust and dislike of her- whether for her shady ties to Wall Street, hawkish foreign policy proposals or the email scandal. The latter has been shown to be a false accusation- but it doesn't matter so much when it comes to the vote, as the accusation itself immediately left an impression on a significant numbers of people.

Furthermore, she lacks the 'X-factor' of Donald Trump. She's too scripted, too predictable, too typically 'politician'. As a result, the main appeal of Hillary for many many voters was not because of what she stood for, or what she was, rather what what she wasn't- Donald Trump. And this fact seemed to be one of the things she relied upon for much of her campaign. The whole potential for a first female President was something similar (demonstrated in her motto, "I'm with her").  There was really a lack of any meaningful other definition to her campaign.

And this should have been picked up by the Democratic National Committee, the DNC, 8 years ago, when their supporters declared their desire for someone fresh in Barack Obama. And when Bernie Sanders, a popular candidate who threatened to turn over the Democrat status quo, came around, they did their best to stop him winning, as revealed by WikiLeaks. Even if it meant breaking neutrality rules and pushing forward a candidate who had less chance of winning against Trump nationally, the DNC wanted to protect the status quo. At all costs- even the resignation of their chair.

It is important to remember that it's the DNC who fended off perhaps the most qualified candidate to fight Trump. And this shameful behaviour means the DNC have a massive role to play in what has happened today.

But Hillary Clinton was still was predicted to beat Trump after accepting the Democratic nomination. It should have on paper been an easy victory for someone who could take advantage of a competitor as unstable, politically inexperienced and controversial as Donald Trump. This is a man, remember, who has a public record of treating women as objects on multiple counts, someone who continuously commits the political faux pas of professing how wealthy he is (even more wealthy than he might actually be), and someone who has repeatedly offended individuals, communities, and entire nations throughout this campaign. How can Hillary lose to this person? That's what we all thought.

But it seems Clinton had underestimated Trump- perhaps even relying too much on his self-destruction to hand her the Presidency. Clinton failed to sweep up many of the voters who felt disenfranchised by the Democratic party's rejection of Sanders, as well as many anti-Establishment Republicans for whom Trump proved too extreme. She did nothing to quell trust issues held by so many with her. She picked one of the most uninspiring VPs in Tim Kaine. She failed to win over millennials. These moves reeked of overconfidence, and proved fatal on Clinton's part.

At the end of the day, however, we had all underestimated Trump. And, perhaps, we overestimated the American voting population.

On this sombre day, it's important to reflect and learn from how and why exactly Donald Trump fended off Hillary Clinton. Sure, it'll be 4 years until the decision can be changed- but the work starts now to minimise the damage Trump causes, and make sure he can't do it for long.

Because there could be a silver lining to this cloud. This is a momentous moment that has shaken both major political parties to the core. The Establishment and the moneyed interests in American politics has been troubled by Trump's success. The next decade or so could prove to be decisive in changing the fundamentals of politics in America- perhaps, just perhaps, the real fight for progressivism has just begun.

Monday, 31 October 2016

The Economics of Obesity.

Statistics from last year show that the number of obese adults in the developing world has quadrupled since 1980 to a one billion. Over one third of American adults are deemed obese, as are more than a quarter of British adults, resulting in Britain's NHS spending over £5bn a year on health problems associated with being overweight or obese.

Obesity is evidently a growing epidemic, but why? It is almost undoubtable that economic-related factors play a significant role in this.

One of the most notable shifts in the lifestyle of our society has been that the wealthy and the poor have almost switched positions with regards to levels of obesity. A study undertaken by the American Journal of Preventative Medicine compared the dietary and health lifestyles of poorer and wealthy individuals, and determined that those earning under $20k are 50% less likely to exercise sufficiently than those earning over $75k, and instead they are 50% more likely to purchase over the counter 'diet pills' which are pretty much quack medications.

It seems the major reason for this is the lack of time many poorer people are likely to have. With almost 7 million Americans working multiple jobs, and 41 million Americans receiving insufficient hours of sleep according to the Centre for Disease Control, time is becoming a premium for many poorer Americans whose economic straits lead them to take up multiple jobs or jobs with hours that reduce their ability to lead a healthy lifestyle. These people are likely to have less time to go out and exercise (hence their purchasing of 'get slim quick' pills), are more likely to be drawn towards processed 'fast food' as opposed to home cooking and thus are more likely to live a lifestyle that will make them overweight. Wealthier middle and upper class people, on the whole, have access to more free time, which allows them to spend more time cooking their meals from scratch and going out to exercise. In the UK, this is reflected in how average household income of a gym member is 35% higher than the national average.

But you could mention the 8.2% of people who are unemployed in the States, and other developed countries. They should have plenty of free time, no, to go out and run and cook meals? Well, most likely, yes. But this brings us to the other issue in this obesity crisis.

Food prices are becoming more diverse than ever. A study by Dr Pablo Monsivais of the University of Cambridge found that, in 2012, healthy foods were three times more expensive per calorie than less healthy foods. For a more specific example, take a frozen pizza, a typically 'unhealthy' food- in 2002 1000 calories worth of frozen pizza cost £2.10, falling to £1.58 10 years later. On the other hand, 1000 calories worth of tinned tomatoes more than doubled in the same time period. This is emphasised by the massive increase in reliance upon food banks, which are currently unable to provide for a sufficient number of people to change the status quo.

You can see it every day in the shops- look at how much more expensive the top brand meals, which are usually made with less additives and purer ingredients, are than their cheaper, diluted, lower quality alternatives. Look at the difference in price between organic and 'basic' stuff.

Not only are the poorer in society lacking time to create healthy, nutritious meals, but they evidently lack the finances. Ready meals, frozen foods, fast foods (a McDonald's burger for $1, really?) and so on having devastating impacts on the health of not just the poorer in society but its sheer popularity means it is affecting society as a whole.

So it is undoubtable that economic conditions play a significant role in one's health, particularly with regards to the issue of obesity.

Recent trends present a shift from past centuries. Throughout history, a large belly was seen to be a sign of wealth, and indeed it was- it meant you could not just fill your appetite but also afford to indulge in food. The poor in society barely got enough to survive, let alone become overweight. But as society has progressed and peoples' economic standards have risen, this has changed. Significantly more people (though poignantly still not all) in developed countries can afford to feed themselves, but there remains much to improve with regards to quality of life. We are able to feed most people in the developed world- perhaps a move we will soon have to look to is to ensure what people are eating is beneficial for them.


RECOMMENDED READS

Researchers Point to Economic Reasons for Obesity http://www.consumeraffairs.com/news/researchers-point-to-economic-reasons-for-obesity-020415.html

Impatience, Incentives and Obesity http://onlinelibrary.wiley.com/doi/10.1111/ecoj.12124/abstract


Trying to Lose Weight: The Association of Income and Age to Weight-Loss Strategies in the USA http://www.ncbi.nlm.nih.gov/pubmed/24842735

Price Gap Between More and Less Healthy Food Grows http://www.cam.ac.uk/research/news/price-gap-between-more-and-less-healthy-foods-grows

Sources for evidence and data can be found within the hyperlinks in the text.